SECURITIES AND EXCHANGE COMMISSION 		 Washington, D.C. 20549 FORM 10-Q (MARK ONE) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the 	Securities Exchange Act of 1934 	 For the quarterly period ended September 30, 1996 				 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the 	Securities and Exchange Act of 1934 (No Fee Required) 		 Commission File No. 0-12718 			 SUPERTEX, INC. 	(Exact name of Registrant as specified in its Charter) California 94-2328535 (State or other jurisdiction of (IRS Employer Identification #) incorporation or organization) 			 1235 Bordeaux Drive 		 Sunnyvale, California 94089 	 (Address of principal executive offices) Registrant's Telephone Number, Including Area Code: (408) 744-0100 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 		 Yes (X) No ( ) As of October 18, 1996, 12,038,061 shares of the Registrant's common stock were issued and outstanding. 		 Total number of pages: 10 SUPERTEX, INC. QUARTERLY REPORT - FORM 10Q Table of Contents - ----------------- Page No. 							 -------- 		 PART I - FINANCIAL INFORMATION Item 1. Financial Statements 	 Consolidated Statements of Income ................... 3 	 Consolidated Balance Sheets ......................... 4 	 Consolidated Statements of Cash Flows ............... 5 	 Notes to Consolidated Financial Statements .......... 6 Item 2. Management's Discussion and Analysis of Financial 	 Condition and Results of Operations .................. 7 			PART II- OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders .. 8 Item 6. Exhibits and Reports on Form 8-K ..................... 8 PART I - FINANCIAL INFORMATION Item 1. Financial Statements 			 SUPERTEX, INC. 		CONSOLIDATED STATEMENTS OF INCOME 			 (unaudited) 	 (in thousands, except per share amounts) 						 Three-months Ended, Six-months Ended, 						 ------------------ ---------------- 							 September 30, September 30, 							 ------------ ------------ 						 1996 1995 1996 1995 						 ---- ---- ---- ---- Net sales $ 12,920 $ 10,359 $ 25,381 $ 19,516 						 -------- -------- -------- -------- Cost and expenses: Cost of sales 6,584 5,422 12,894 10,103 Research and development 1,223 1,321 2,534 2,604 Selling, general and administrative 1,503 1,431 3,097 2,694 						 -------- -------- -------- -------- Total costs and expenses 9,310 8,174 18,525 15,401 						 -------- -------- -------- -------- Income from operations 3,610 2,185 6,856 4,115 Interest income 352 250 719 541 Other income, net 13 57 13 105 						 -------- -------- -------- -------- Income before provision for income taxes 3,975 2,492 7,588 4,761 Provision for income taxes 1,272 773 2,428 1,476 						 -------- -------- -------- -------- Net income $ 2,703 $ 1,719 $ 5,160 $ 3,285 						 ======== ======== ======== ======== Net income per share $ 0.22 $ 0.14 $ 0.41 $ 0.27 						 ======== ======== ======== ======== Shares used in per share computation 12,499 12,307 12,497 12,275 						 ======== ======== ======== ======== <FN> See accompanying Notes to Consolidated Financial Statements. 			 SUPERTEX, INC. 		 CONSOLIDATED BALANCE SHEETS 		 (in thousands, except share data) 					 Sept. 30, 1996 Mar. 31, 1996 					 -------------- ------------- 						(unaudited) ASSETS Current Assets: Cash and cash equivalents $ 6,424 $ 16,108 Short term investments 18,950 6,281 Trade accounts receivable, net of allowances of $571 and $559 9,067 7,823 Other receivables 257 81 Inventories 7,571 7,254 Deferred income taxes 1,241 1,241 Prepaid expenses 622 174 						 -------- -------- Total current assets 44,133 38,962 Property and equipment, net 8,271 6,466 						 -------- -------- TOTAL ASSETS $ 52,404 $ 45,428 						 ======== ======== LIABILITIES Current liabilities: Trade accounts payable $ 4,189 $ 3,357 Accrued salaries, wages and employee benefits 1,985 1,723 Income taxes payable 651 638 Other accrued liabilities 463 314 Deferred revenue on shipments to distributors 1,003 733 						 -------- -------- Total current liabilities 8,291 6,765 						 -------- -------- 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 12,005,561 and 11,935,671 shares 18,999 18,709 Retained earnings 25,114 19,954 						 -------- -------- Total shareholders' equity 44,113 38,663 						 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 52,404 $ 45,428 						 ======== ======== <FN> See accompanying Notes to Consolidated Financial Statements. 			 SUPERTEX, INC. 	 CONSOLIDATED STATEMENTS OF CASH FLOWS 			 (unaudited) 			 (in thousands) 						 Six Months Ended 						 ---------------- CASH FLOWS FROM OPERATING ACTIVITIES Sept. 30, 1996 Sept. 30, 1995 					 -------------- -------------- Net income $ 5,160 $ 3,285 Non-cash adjustments to net income: Depreciation and amortization 941 670 Provision for doubtful accounts and sales returns 823 140 Provision for excess and obsolete inventories 235 276 Changes in operating assets and liabilities: Accounts and other receivables (2,243) (1,083) Inventories (552) (865) Prepaid expenses (449) (124) Trade accounts payable and accrued expenses 1,243 247 Income taxes payable 13 50 Deferred revenue on shipments to distributors 270 131 						 ------- ------- Total adjustments 281 (558) 						 ------- ------- Net cash provided by operating activities 5,441 2,727 						 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (2,746) (3,156) Purchases of short term investments (28,942) (22,563) Proceeds from maturities of short term investments 16,273 19,019 						 ------- ------- Net cash used in investing activities (15,415) (6,700) 						 ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Stock options exercised 290 78 Repurchase of stock 0 (100) 						 ------- ------- Net cash provided (used) by financing activities 290 (22) 						 ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (9,684) (3,995) CASH AND CASH EQUIVALENTS: Beginning of period 16,108 4,437 						 ------- ------- End of period $ 6,424 $ 442 						 ======= ======= <FN> See accompanying Notes to Consolidated Financial Statements. 			 SUPERTEX, INC. 	 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - ------ In the opinion of management, the unaudited information for the three months and six months ended September 30, 1996, include all adjustments (consisting of normal recurring adjustments) necessary for fair presentation of financial condition and results of operations for those periods in accordance with generally accepted accounting principles. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. These financial statements should be read in conjunction with the audited financial statements of Supertex, Inc. for the fiscal year ended March 31, 1996, which were included in the Annual Report on Form 10-K (File Number 0-12718). Interim results are not necessarily indicative of results for the full fiscal year. Inventories consisted of (in thousands): 					 Sept. 30, 1996 March 31, 1996 					 -------------- -------------- 						(unaudited) Finished goods .............................. $ 1,525 $ 1,366 Work-in-process ............................. 5,033 4,122 Raw materials ............................... 1,013 1,766 						 ------- ------- 						 $ 7,571 $ 7,254 						 ======= ======= During October 1995, the Financial Accounting Standards Board issued Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), which establishes a fair value based method of accounting for stock-based compensation plans. The Company is currently following the requirements of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." The Company plans to adopt SFAS 123 during fiscal 1997 utilizing the disclosure alternative. During March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of" (SFAS 121), which requires the Company to review for impairment of long-lived assets, certain identifiable intangibles and goodwill related to those assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. SFAS 121 will become effective for the Company's 1997 fiscal year. The Company does not expect SFAS 121 to have a material impact on the Company's financial condition or results of operations. PART I - FINANCIAL INFORMATION Item 2 - Management's Discussion and Analysis of Financial 	 Condition and Results of Operations Certain Factors: This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities 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 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 all of its silicon wafers, an integral component of its products, from one supplier although other suppliers are being qualified. 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. Results of Operations Net Sales: Net sales for the second quarter ended September 30, 1996 increased 19% to $12,290,000 from $10,359,000 of the same quarter last year. Six months net sales of $25,381,000 increased 30% from the same period last year of $19,516,000. Continued strength in our customers' markets contributed to this increase in sales. During the six months ended September 30, 1996, approximately 52% of Supertex's shipments were to international customers. Gross Margin: Gross margin for the second quarter and six months ended September 30, 1996 were 49% compared with 48% for the same quarter and six months period of the prior year. A change in the product mix, with resultant lower cost of goods manufactured contributed to this small increase in gross margin. Manufacturing costs have been relatively stable from period to period, with small variations of a few percentage points from one period to another primarily due to product mix changes. Research and Development: As a percentage of net sales, R&D expenses were 9% of net sales for the quarter, and 10% of net sales for the six months ending September 30, 1996. This compares with 13% of net sales for the three months and six months periods of last year. Dollar expenditures remain about the same at $1,223,000 for the three months ($2,534,000 for the six months) ended September 30, 1996 versus $1,321,000 for three months ($2,604,000 for six months) corresponding periods last year despite increases in sales and in number of development projects. The cost controls implemented at the beginning of this fiscal year have been effective. The Company intends to invest heavily at the same dollar rate in its new product and process development efforts. Selling, General and Administrative: Selling, general and administrative expenses for the second quarter and six months ended September 30, 1996 were 12% of net sales, compared with 14% of net sales for the same corresponding periods of the prior year. Fixed costs remained fairly constant from year to year in this category, with sales commissions increases in line with increased sales this year. Interest and Other Income: Interest and other income for the second quarter of the current year was $365,000, a 19% increase from $307,000 for the same period last year. For the six months ended September 30, 1996, interest and other income also increased 13% from the corresponding period of the prior year. Increased cash available for short-term investments accounted for this increase. Provision for Income Taxes: The Company's effective tax rate for the six months ended September 30, 1996 was 32%, an increase from 31% for the same period of last fiscal year. Liquidity and Capital Resources: On September 30, 1996, the Company had $25,374,000 in cash, cash equivalents and short term investments, compared with $22,389,000 on March 31, 1996. This increase is mostly due to positive cash flow from operating activities consisting principally of net income and an increase in liability accounts, and partially offset by an increase in receivables. Net cash used in investing activities as of second quarter of fiscal year 1997 is $15,415,000, which consisted mainly of purchases of short-term investments. Net cash provided by financing activities is $290,000 from the proceeds of stock option exercises. The Company anticipates that available funds and cash expected to be generated from operations will be sufficient to meet cash and working capital requirements through the end of fiscal year 1997. Recent Accounting Pronouncements: During October 1995, the Financial Accounting Standards Board issued Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), which establishes a fair value based method of accounting for stock-based compensation plans. The Company is currently following the requirements of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". The Company plans to adopt SFAS 123 during fiscal 1997 utilizing the disclosure alternative. During March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of" (SFAS 121), which requires the Company to review for impairment of long-lived assets, certain identifiable intangibles and goodwill related to those assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. SFAS 121 will become effective for the Company's 1997 fiscal year. The Company does not expect SFAS 121 to have a material impact on the Company's financial condition or results of operations. PART II - OTHER INFORMATION Item 4. - Submission of Matters to a Vote of Security Holders The Company's Annual Shareholders' Meeting was held on August 2, 1996 at 10:00 a.m., at which the following matters were acted upon: 					 Votes Votes Withheld/ Broker 					 ----- --------------- ------ Matter Acted Upon Votes For Against Abstentions Non-Votes ----------------- --------- ------- ----------- --------- 1. Election of Directors Henry C. Pao 11,040,198 0 8,600 0 Yunni Pao 11,040,768 0 8,000 0 Benedict C. K. Choy 11,042,198 0 6,600 0 Frank C. Pao 11,041,598 0 7,200 0 Richard E. Siegel 11,042,198 0 6,600 0 2. Ratification of Coopers and Lybrand LLP as independent accountants for the company for fiscal year ending March 31,1997 			 11,041,888 3,200 3,710 0 Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits 11.1 Statement Regarding Computation of Net Income Per Share 27.1 Financial Data Schedule (b) Reports on Form 8-K. None. 			 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 			 SUPERTEX, INC. 			 (Registrant) Date: October 25, 1996 			 By: /s/ Henry C. Pao 				 --------------------- 				 Dr. Henry C. Pao, President 				 (Principal Executive and 				 Financial Officer) Exhibit 11.1 				 Supertex, Inc. 	 Statement Regarding Computation of Net Income Per Share (unaudited) 			 (in thousands, except per share data) 					 Three Months Ended Six Months Ended 						 September 30, September 30, 					 1996 1995 1996 1995 					 ------ ------ ------ ------ PRIMARY: Weighted Average Shares Outstanding 11,997 11,906 11,981 11,900 Common Stock Equivalents 502 401 516 375 					 ------- ------- ------- ------- Total common and common equivalent shares 12,499 12,307 12,497 12,275 					 ======= ======= ======= ======= Net income $ 2,703 $ 1,719 $ 5,160 $ 3,285 					 ======= ======= ======= ======= Net income per share $ 0.22 $ 0.14 $ 0.41 $ 0.27 					 ======= ======= ======= ======= FULLY DILUTED: Weighted Average Shares Outstanding 11,997 11,906 11,981 11,900 Dilutive employee stock options 523 420 526 396 					 ------- ------- ------- ------- Total common and common equivalent shares 12,520 12,326 12,507 12,296 					 ======= ======= ======= ======= Net income $ 2,703 $ 1,719 $ 5,160 $ 3,285 					 ======= ======= ======= ======= Net income per share $ 0.22 $ 0.14 $ 0.41 $ 0.27 					 ======= ======= ======= ======= <FN> Net income per share in the consolidated financial statements is presented under the primary basis as the effect of dilution under the fully diluted basis is not material.