SOURCE: Supertex

October 21, 2008 16:05 ET

Supertex Reports Second Fiscal Quarter Results

SUNNYVALE, CA--(Marketwire - October 21, 2008) - Supertex, Inc. (NASDAQ: SUPX) today reported financial results for the second fiscal quarter ended September 27, 2008. Net sales for the second fiscal quarter were $23,453,000, a 3% increase compared to the prior quarter of $22,751,000 and a 6% increase compared to $22,029,000 for the same quarter last year. On a GAAP basis, net income in the second fiscal quarter was $4,549,000, or $0.35 per diluted share, as compared with $4,440,000 or $0.34 per diluted share in the prior fiscal quarter, and $4,501,000 or $0.32 per diluted share in the same fiscal quarter of the prior fiscal year.

For the first six months ended September 27, 2008, net sales were $46,204,000 compared to $42,791,000 for the same period of the prior fiscal year, and on a GAAP basis, net income was $8,989,000, or $0.70 per diluted share, as compared with $8,974,000, or $0.64 per diluted share, in the same period of the prior fiscal year.

Non-GAAP earnings per diluted share for the second fiscal quarter were $0.40, excluding pre-tax employee stock-based compensation of $676,000, compared with $0.39 in the prior quarter, excluding pre-tax employee-stock based compensation of $668,000, and $0.35 in the same quarter of the prior fiscal year, excluding pretax employee-stock based compensation of $504,000. For the six months ended September 27, 2008, non-GAAP net income per diluted share was $0.80, excluding pre-tax employee stock-based compensation of $1,344,000, as compared to $0.72 for the same period of the prior fiscal year, excluding pre-tax employee stock-based compensation of $1,160,000.

"I am pleased to report a second quarter of sequential sales growth despite the weakening global economic conditions," commented Dr. Henry C. Pao, President and CEO. "We have benefited from our diverse markets. Medical product shipments continued to run at a record pace. Imaging product sales recovered from the prior quarter as inventories at hubs and distributors were reduced. Our industrial product shipments were very strong. However, LED and Telecom driver shipments declined, although we expect them to recover in the coming quarters."

Dr. Pao added, "Gross margin increased to 57% from 56% in the prior quarter, and operating expense was flat sequentially. Our operating margin improved sequentially to 24% from 22%. Interest and other income, however, declined to $714,000 from the $975,000 earned in the prior fiscal quarter, as interest rates on our investments declined and averaged only 2.6% versus 3.4% in the prior quarter. Our tax rate increased to 28% from 25% sequentially. Our combined cash, short term and long term investments grew $4,651,000. With our solid financial position and continued positive cash flow, we decided to capitalize on this weakening global economic situation and as a result we have aggressively recruited and we continue to aggressively recruit engineering talent to support our record number of ongoing new product research and development projects. Across all our markets, customer activities designing our chips into their products have been very strong."

Dr. Pao further commented, "We expect our sales may be down moderately in our third fiscal quarter primarily because of declining legacy EL driver IC demand and normal seasonal softness in medical ultrasound products."

Forward-Looking Statements:

The industry in which we compete is characterized by extreme rapid changes in technology and frequent new product introductions. We believe that our long-term growth will depend largely on our ability to continue to enhance existing products and to introduce new products and features that meet the continually changing requirements of our customers. All statements contained in this press release that are not historical facts are forward-looking statements. They are not guarantees of future performance or events. They are based upon current expectations, estimates, beliefs, and assumptions about the future, which may prove incorrect, and upon our goals and objectives, which may change. Often such statements can be identified by the use of the words such as "will," "intends," "expects," "plans," "believes," "anticipates" and "estimates." Examples of forward-looking statements include statements concerning our expected moderate sales decline in the third fiscal quarter primarily because of declining legacy EL driver IC demand and normal seasonal softness in medical ultrasound products; our expectation that LED and telecom driver shipments will recover in the coming quarters; and our continuing to recruit engineering talent. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. They are not guarantees of future performance or events but rather involve a number of risks and uncertainties including, but not limited to, whether our customers experience the demand we anticipate for their products based in part upon their input and our order backlog, whether the designed performance of our devices satisfies our customers' requirements so that they continue to design our devices into their products, whether our devices perform to their design specification, whether competitors introduce devices at lower prices than our devices causing price erosion, whether we are successful in our engineering recruiting and R&D efforts, and whether we encounter production issues in device manufacturing or moving new products from engineering into production, as well as other risk factors detailed in our Form 8-K, 10-K, and 10-Q filings with the Securities and Exchange Commission. Due to these and other risks, our future actual results could differ materially from those discussed above. We undertake no obligation to publicly release updates or revisions to these statements that speak only as of this date.

Conference Call Details

The Company will host a conference call at 2:30 p.m. PDT (5:30 p.m. EDT) on October 21, 2008, following the earnings release. President and CEO, Dr. Henry C. Pao, VP, Marketing, Ahmed Masood and VP, Finance & CFO, Phil Kagel, will present an overview of the second fiscal quarter financial results, discuss current business conditions, and then respond to questions.

The call is available live for any interested party by dialing 800-894-5910 (domestic) or 785-424-1052 (toll, international) before the scheduled start time and using "Supertex" as conference ID. A recorded replay will be available for 31 days immediately following the conference call until 11:59 P.M. EST, November 21, 2008 at 800-753-6121 (domestic) and 402-220-2676 (toll, international).

About Supertex

Supertex, Inc. is a publicly held mixed signal semiconductor manufacturer, focused in high voltage products for use in the telecommunication, networking systems, flat panel display, medical and industrial electronics industries. Supertex product, corporate and financial information is readily available at our website: http://www.supertex.com.

For further information, contact Investor Relations at Supertex, Inc., 1235 Bordeaux Drive, Sunnyvale, California 94089, 408-222-8888 or visit our website at http://www.supertex.com.

Use of Non-GAAP Financial Information

To supplement our financial results presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP net income and diluted non-GAAP net income per share. We present such non-GAAP financial measures in reporting our financial results to provide investors with an additional tool to evaluate our operating results. Because these non-GAAP measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Our management uses each of the above non-GAAP financial measures internally to understand, manage and evaluate our business. Our management believes it is useful for us and for investors to review, as applicable, both GAAP information, which includes employee stock-based compensation expense, and the non-GAAP measures, which exclude this information, in order to assess the performance of our core continuing businesses and for planning and forecasting in future periods. Each of these non-GAAP measures are intended to provide investors with an understanding of our operational results and trends that more readily enable them to analyze our base financial and operating performance and facilitate period-to-period comparisons and analysis of operation trends. Our management believes each of these non-GAAP financial measures is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.

Our GAAP cost of sales and operating expenses include employee stock-based compensation determined in accordance with FAS 123R - Accounting for Stock Based Compensation. Our non-GAAP financial measures reflect adjustments to exclude this employee stock-based compensation. We believe cost of sales excluding share-based compensation, R&D expense excluding share-based compensation, and SG&A expense excluding share-based compensation are useful information for investors because comparative differences in the corresponding GAAP measures for different periods may reflect factors such as a different stock price when equity awards were made and different equity award practices rather than changes in the operation of the business. Stock options are other equity compensation and are a key incentive we offer our employees. We believe they have contributed to the sales earned during the period and will contribute to our future sales generation. Employee stock-based compensation expenses will recur in future periods.


                              SUPERTEX, INC.
                  CONSOLIDATED BALANCE SHEET INFORMATION
                                (unaudited)

                                              September 27,    March 29,
                                                  2008           2008
                                              -------------  -------------
                                                     (in thousands)
ASSETS
Cash and cash equivalents                     $      43,856  $      17,902
Short term investments                                6,981          6,827
Accounts receivable, net                             13,625         13,197
Inventories, net                                     16,428         17,036
Deferred income taxes                                 9,401          9,401
Prepaid expenses and other current assets             1,770          3,647
                                              -------------  -------------
  Total current assets                               92,061         68,010
Long term investments, net                           84,000         96,531
Property, plant and equipment, net                    9,834          9,916
Other assets                                            376            373
Deferred income taxes                                 2,462          2,521
                                              -------------  -------------
TOTAL ASSETS                                  $     188,733  $     177,351
                                              =============  =============

LIABILITIES
Trade accounts payable                        $       3,904  $       3,280
Accrued salaries, wages and employee benefits        11,969         12,146
Other accrued liabilities                             1,538          1,741
Deferred revenue                                      4,544          4,349
Income taxes payable                                     91              -
                                              -------------  -------------
  Total current liabilities                          22,046         21,516
Income taxes payable, noncurrent                      4,407          3,960
                                              -------------  -------------
  Total liabilities                                  26,453         25,476
                                              -------------  -------------


SHAREHOLDERS' EQUITY
Common stock                                         57,715         54,968
Accumulated other comprehensive loss                 (5,400)        (4,069)
Retained earnings                                   109,965        100,976
                                              -------------  -------------
  Total shareholders' equity                        162,280        151,875
                                              -------------  -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $     188,733  $     177,351
                                              =============  =============



Supplemental Balance Sheet Data:
  Cash and cash equivalents                   $      43,856  $      17,902
  Short term investments                              6,981          6,827
  Long term investments:
    Available-for-sale auction rate
     securities at par                               89,400        100,600
                                              -------------  -------------
                                                    140,237        125,329
  Net unrealized loss of available-for-sale
   auction rate securities                           (5,400)        (4,069)
                                              -------------  -------------
    Total cash and cash equivalents and
     investments, net                         $     134,837  $     121,260
                                              =============  =============



                              SUPERTEX, INC.
                CONSOLIDATED INCOME STATEMENT INFORMATION
                                (unaudited)

                              Three Months Ended       Six Months Ended
                            ----------------------- -----------------------
                               (in thousands, except per share amounts)
                            September   September   September   September
                             27, 2008    29, 2007    27, 2008    29, 2007
                            ----------- ----------- ----------- -----------
Net sales                   $    23,453 $    22,029 $    46,204 $    42,791
Cost of sales(1)                 10,164       9,020      20,164      17,096
                            ----------- ----------- ----------- -----------
  Gross profit                   13,289      13,009      26,040      25,695
Research and development(1)       3,802       3,858       7,839       7,623
Selling, general and
 administrative(1)                3,900       4,192       7,696       7,838
                            ----------- ----------- ----------- -----------
  Income from operations          5,587       4,959      10,505      10,234
Interest and other income,
 net                                714       1,587       1,689       3,094
                            ----------- ----------- ----------- -----------
  Income before income taxes      6,301       6,546      12,194      13,328
Provision for income taxes        1,752       2,045       3,205       4,354
                            ----------- ----------- ----------- -----------
  Net income                $     4,549 $     4,501 $     8,989 $     8,974
                            =========== =========== =========== ===========
Net income per share:
    Basic                   $      0.35 $      0.33 $      0.70 $      0.65
                            =========== =========== =========== ===========
    Diluted                 $      0.35 $      0.32 $      0.70 $      0.64
                            =========== =========== =========== ===========
Shares used in per share
 computation:
    Basic                        12,841      13,755      12,810      13,767
                            =========== =========== =========== ===========
    Diluted                      12,966      13,987      12,928      13,999
                            =========== =========== =========== ===========


(1)Includes amortization of employee stock-based
    compensation as follows:
     Cost of sales          $       141 $       132 $       245 $       274
     Research and
      development           $       324 $       189 $       619 $       465
     Selling, general and
      administrative        $       211 $       183 $       480 $       421



                              SUPERTEX, INC.
         SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
                                (unaudited)

                           Three Months Ended         Six Months Ended
                        ------------------------  ------------------------
                             (in thousands, except per share amounts)
                         September    September    September    September
                          27, 2008     29, 2007     27, 2008     29, 2007
                        -----------  -----------  -----------  -----------
GAAP net income         $     4,549  $     4,501  $     8,989  $     8,974
                        ===========  ===========  ===========  ===========
Adjustment for
 stock-based
 compensation included
 in:
  Cost of sales                 141          132          245          274
  Research and
   development                  324          189          619          465
  Selling, general and
   administrative               211          183          480          421
                        -----------  -----------  -----------  -----------
    Subtotal                    676          504        1,344        1,160
Tax effect of
 stock-based
 compensation                   (22)         (42)         (44)        (104)
                        -----------  -----------  -----------  -----------
Non-GAAP net income
 excluding
 employee stock-based
 compensation           $     5,203  $     4,963  $    10,289  $    10,030
                        ===========  ===========  ===========  ===========

Non-GAAP net income per
 share:
  Basic                 $      0.41  $      0.36  $      0.80  $      0.73
                        ===========  ===========  ===========  ===========
  Diluted               $      0.40  $      0.35  $      0.80  $      0.72
                        ===========  ===========  ===========  ===========
Shares used in per
 share computation:
  Basic                      12,841       13,755       12,810       13,767
                        ===========  ===========  ===========  ===========
  Diluted                    12,966       13,987       12,928       13,999
                        ===========  ===========  ===========  ===========



                              SUPERTEX, INC.
    SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP INCOME PER SHARE
                                (unaudited)

                                 Three Months Ended     Six Months Ended
                                --------------------  --------------------
                                 (in thousands, except per share amounts)
                                September  September  September  September
                                27, 2008   29, 2007   27, 2008   29, 2007
                                ---------  ---------  ---------  ---------
Shares used in per share
 computation:
   Diluted                         12,966     13,987     12,928     13,999
                                =========  =========  =========  =========

DILUTED:
GAAP net income per share       $    0.35  $    0.32  $    0.70  $    0.64
                                =========  =========  =========  =========
Adjustments to reconcile net
 income to non-GAAP net income
 per share:
Employee stock-based
 compensation effects included
 in:
   Cost of sales                     0.01       0.01       0.02       0.02
   Research and development          0.02       0.01       0.05       0.04
   Selling, general and
    administrative                   0.02       0.01       0.03       0.03
   Provision for income taxes       (0.00)     (0.00)     (0.00)     (0.01)
                                ---------  ---------  ---------  ---------
Non-GAAP net income per share
 excluding employee
 stock-based compensation       $    0.40  $    0.35  $    0.80  $    0.72
                                =========  =========  =========  =========

Contact Information

  • Corporate Headquarters:
    Dr. Henry C. Pao
    President & CEO
    408/222-8888