1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the period ended September 25, 1999,
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 (IRS 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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 [ ]
Common stock outstanding as of October 13, 1999: 4,382,671
----------------
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GIGA-TRONICS INCORPORATED
INDEX
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
ITEM 1 Consolidated Financial Statements:
Consolidated Balance Sheets as of September 25, 1999
and March 27, 1999 (unaudited) ...............................................3
Consolidated Statements of Operations, three and six months
ended September 25, 1999 and September 26, 1998 (unaudited)...................4
Consolidated Statements of Cash Flows, six months
ended September 25, 1999 and September 26, 1998 (unaudited)...................5
Notes to Unaudited Consolidated Financial Statements..........................6
ITEM 2 Management's Discussion and Analysis of
Operations and Financial Condition............................................9
PART II - OTHER INFORMATION
ITEM 1
TO 3 Not applicable
ITEM 4 Submission of Matters to a Vote of Security Holders..........................13
ITEM 5 Not applicable
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
Not applicable
SIGNATURES....................................................................................14
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GIGA-TRONICS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except share data)
September 25, March 27,
1999 1999
------------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,170 $ 2,686
Trade accounts receivable, net of allowance
of $389 and $435, respectively 6,820 6,434
Inventories, net 12,476 13,249
Prepaid expenses 1,077 1,108
Deferred income taxes 2,672 2,309
------- -------
Total current assets 26,215 25,786
Property and Equipment:
Building and leasehold improvements 355 311
Machinery and equipment 13,806 13,460
Office furniture and fixtures 1,028 1,060
------- -------
Property and equipment, gross cost 15,189 14,831
Less accumulated depreciation and amortization 9,923 9,179
------- -------
Property and equipment, net cost 5,266 5,652
Patents and licenses 193 349
Goodwill, net 736 1,194
Deferred income taxes 169 169
Other assets 99 109
------- -------
Total assets $32,678 $33,259
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable 2,875 3,022
Accrued commissions 550 369
Accrued payroll and benefits 1,404 1,346
Accrued warranty 533 467
Customer advances 407 1,648
Current portion of capital lease and other long term obligations 114 112
Other current liabilities 951 801
------- -------
Total current liabilities 6,834 7,765
Capital lease and other long term obligations, net 745 784
------- -------
Total liabilities 7,579 8,549
------- -------
Shareholders' Equity
Preferred stock of no par value; -- --
Authorized 1,000,000 shares; no shares outstanding at
September 25, 1999 and March 27, 1999
Common stock of no par value; 11,671 11,621
Authorized 40,000,000 shares; 4,382,671 shares outstanding at
September 25, 1999 and 4,361,902 shares at March 27, 1999
Retained earnings 13,428 13,089
------- -------
Total shareholders' equity 25,099 24,710
------- -------
Total liabilities and shareholders' equity $32,678 $33,259
======= =======
See accompanying notes to unaudited consolidated financial statements
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GIGA-TRONICS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
------------------ ----------------
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1999 1998 1999 1998
Net sales $ 11,834 $ 9,030 $ 23,339 $ 17,707
Cost of sales 7,886 6,196 15,940 11,560
-------- -------- -------- --------
Gross profit 3,948 2,834 7,399 6,147
Product development 1,038 1,530 1,908 2,976
Selling, general and administrative 2,450 2,280 4,745 4,515
Amortization of intangibles 150 140 300 265
-------- -------- -------- --------
Operating expenses 3,638 3,950 6,953 7,756
Operating income (loss) 310 (1,116) 446 (1,609)
Other income 11 34 38 38
Interest income, net 3 6 2 118
-------- -------- -------- --------
Earnings (loss) before income taxes 324 (1,076) 486 (1,453)
Provision for income taxes 97 (323) 147 (436)
-------- -------- -------- --------
Net earnings (loss) $ 227 $ (753) $ 339 $ (1,017)
======== ======== ======== ========
Earnings per common share - basic 0.05 (0.17) 0.08 (0.23)
======== ======== ======== ========
Earnings per common share - diluted 0.05 (0.17) 0.08 (0.23)
======== ======== ======== ========
Weighted average basic common shares
outstanding 4,368 4,331 4,365 4,329
-------- -------- -------- --------
Weighted average diluted common
shares outstanding 4,483 4,331 4,436 4,329
-------- -------- -------- --------
See accompanying notes to unaudited consolidated financial statements.
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GIGA-TRONICS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
----------------
Sept. 25, Sept. 26,
1999 1998
--------- ---------
Cash flows provided from operations:
Net earnings (loss) $ 339 $(1,017)
Adjustments to reconcile net earnings (loss) to net cash provided by
(used in) operations:
Depreciation and amortization 1,157 1,065
Loss on sale of fixed assets 20 7
Deferred income taxes, net (48) 9
Changes in operating assets and liabilities (515) (1,499)
------- -------
Net cash provided by (used in) operations 953 (1,435)
Cash flows from investing activities
Investment maturities, net -- 5,742
Additions to property and equipment, net (492) (610)
Payment for purchase of Microsource Inc, including transaction costs -- (630)
Advances to Microsource -- (940)
Other assets 10 (27)
------- -------
Net cash (used in) provided by investing activities (482) 3,535
Cash flows from financing activities:
Issuance of common stock 50 42
Payment on line of credit -- (1,500)
Proceeds (payment) on notes payable and long term debt 3 (2,518)
Other long term obligations (40) (65)
------- -------
Net cash used in financing activities 13 (4,041)
Increase (decrease) in cash and cash equivalents 484 (1,941)
------- -------
Beginning cash and cash equivalents 2,686 4,611
Ending cash and cash equivalents $ 3,170 $ 2,670
======= =======
Supplementary disclosure of cash flow information:
(1) No cash was paid for interest in the six month periods ended September
25, 1999 and September 26, 1998.
(2) Cash paid for income taxes in the six month period ended September 25,
1999 was $5,500. Cash paid for taxes in the six month period ended
September 26, 1998 was $5,000.
(3) Non cash investing and financing activities - Goodwill adjustment
related to deferred income taxes acquired from Microsource, Inc. of
$315,000.
See accompanying notes to unaudited consolidated financial statements.
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GIGA-TRONICS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The financial statements included herein have been prepared by the
Company, pursuant to the rules and regulations of the Securities and
Exchange Commission. The results of operations for the interim periods
shown in this report are not necessarily indicative of results to be
expected for the fiscal year. In the opinion of management, the
information contained herein reflects all adjustments necessary to make
the results of operations for the interim periods a fair statement of
such operations. For further information, refer to the financial
statements and footnotes thereto, included in the Annual Report on Form
10-K, filed with the Securities and Exchange Commission for the year
ended March 27, 1999.
(2) Inventories
Inventories consist of the following (in thousands):
Sept. 25, March 27,
1999 1999
--------- ---------
Raw materials $ 6,170 $ 6,386
Work-in-process 5,299 6,124
Finished goods 1,007 739
------- -------
Total inventory $12,476 $13,249
======= =======
(3) Earnings Per Share
Basic earnings per share is calculated by dividing net income or loss by
weighted average common shares outstanding during the period. Diluted
earnings per share reflects the net incremental shares that would be
issued if dilutive outstanding stock options were exercised, using the
treasury stock method. In the case of a net loss, it is assumed that no
incremental shares would be issued because they would be antidilutive.
In addition, certain options are considered antidilutive because the
options' exercise price was above the average market price during the
period. Antidilutive shares are not included in the computation of
diluted earnings per share, in accordance with SFAS No. 128. The shares
used in per share computations for the three and six month periods ended
September 25, 1999 and September 26, 1998 are as follows (in thousands,
except per share data):
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Three Months Ended Six Months Ended
------------------ ----------------
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1999 1998 1999 1998
--------- --------- --------- ---------
Net earnings (loss) $ 227 $ (753) $ 339 $ (1,017)
======== ======== ======== ========
Weighted average:
Common shares outstanding 4,368 4,331 4,365 4,329
Dilutive potential common shares 115 -- 71 --
-------- -------- -------- --------
Common shares assuming dilution 4,483 4,331 4,436 4,329
======== ======== ======== ========
Net earnings per share of common stock 0.05 (0.17) 0.08 (0.23)
======== ======== ======== ========
Net earnings per share of common stock
assuming dilution $ 0.05 $ (0.17) $ 0.08 $ (0.23)
======== ======== ======== ========
Number of stock options not included in
the computation 49 555 78 555
-------- -------- -------- --------
The number of stock options not included in the computation of diluted
EPS for the three and six month periods ended September 25, 1999
reflects stock options where the exercise prices were greater than the
average market price of the common shares and were therefore
antidilutive.
The number of stock options not included in the computation of diluted
EPS for the three and six month periods ended September 26, 1998
reflects a loss from continuing operations and therefore all options are
antidilutive.
(4) Comprehensive Income
The components of comprehensive income, net of tax, are as follows (in
thousands):
Three Months Ended Six Months Ended
------------------ ----------------
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1999 1998 1999 1998
--------- --------- --------- ---------
Net earnings (loss) $ 227 $ (753) $ 339 $ (1,017)
Change in net unrealized gain on
available-for-sale investments -- 13 -- 18
-------- -------- -------- --------
Total $ 227 $ (740) $ 339 $ (999)
======== ======== ======== ========
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(5) Significant Customers and Industry Segment Information
The Company has five reportable segments: Giga-tronics Instruments
Division, ASCOR Inc., Microsource Inc., the Semiconductor Equipment
Group and Corporate. Giga-tronics Instrument division produces 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. ASCOR Inc., designs, manufactures, and markets a line of
switching devices that link together many specific purpose instruments
that comprise automatic test systems. Microsource Inc. develops and
manufactures a broad line of YIG (Yttrium, Iron, Garnet) tuned
oscillators, filters and microwave synthesizers, which are used in a
wide variety of microwave instruments or devices. The Semiconductor
Equipment group, which includes Viking Semiconductor Equipment, Inc. and
Ultracision, Inc., manufactures and markets optical inspection equipment
used to test semiconductor devices and automation equipment for the test
and inspection of silicon wafers. Corporate handles the financing needs
of each segment and lends funds to each segment as required.
Information on reportable segments is as follows (in thousands):
Three Months Ended
------------------
Sept. 25, 1999 Sept. 26, 1998
-------------- --------------
Pre-tax Pre-tax
Income Income
Revenue (loss) Revenue (loss)
-------- -------- -------- --------
Giga-tronics Instruments $ 4,471 $ 134 $ 4,522 $ (131)
ASCOR 1,586 (128) 1,297 51
Microsource 3,929 59 2,512 (27)
Semiconductor Equipment Group 1,848 16 699 (1,165)
Corporate -- 243 -- 196
-------- -------- -------- --------
Total $ 11,834 $ 324 $ 9,030 $ (1,076)
======== ======== ======== ========
Six Months Ended
----------------
Sept. 25, 1999 Sept. 26, 1998
-------------- --------------
Pre-tax Pre-tax
Income Income
Revenue (loss) Revenue (loss)
---------- ------------ ---------- -----------
Giga-tronics Instruments $ 8,886 $ 222 $ 9,532 $ (161)
ASCOR 3,468 (38) 2,342 (88)
Microsource 7,197 (179) 3,716 (71)
Semiconductor Equipment Group 3,788 (11) 2,117 (1,543)
Corporate --- 492 --- 410
---------- ------------ ---------- -----------
Total $ 23,339 $ 486 $ 17,707 $ (1,453)
========== ============ ========== ===========
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS AND FINANCIAL CONDITION
The forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations, which reflect management's
best judgment based on factors currently known, involve risks and uncertainties.
Actual results could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including but not
limited to those discussed below. Forward-looking information provided by
Giga-tronics pursuant to the safe harbor established by securities legislation
should be evaluated in the context of these factors.
GENERAL
The Company designs, manufactures, and markets microwave and radio frequency
signal generation and power measurement instruments, switching devices, and YIG
tuned oscillators. These products are used in the development, test, and
maintenance of wireless communications products and systems, electronic defense
systems, and automatic testing systems (ATE). The Company also manufactures a
line of inspection and handling devices used in the production of semiconductor
devices.
THREE AND SIX MONTHS ENDED SEPTEMBER 25, 1999 AND SEPTEMBER 26, 1998
Total orders for the three month period were 67% higher ($6,780,000) than the
comparable period last year. Orders for the Instruments division were 42%
($1,346,000) higher in the second quarter versus the prior year. Orders for
ASCOR were 32% ($1,375,000) higher for the second quarter versus last year.
Orders for Microsource were 563% ($4,476,000) higher than the comparable quarter
last year. The Semiconductor group orders were 23% lower ($417,000) in the three
months ended September 25,1999 versus the same period a year ago. For all of the
segments in aggregate, orders for the six months were 55% higher ($9,974,000)
than the comparable period last year. Backlog at September 25, 1999 was
$22,360,000 compared to $18,968,000 at September 26, 1998.
Net sales for the three and six month period ended September 25, 1999 increased
31% ($2,804,000) and 32% ($5,632,000), respectively, compared with the same
periods last year. Sales for the Semiconductor group increased 164% ($1,149,000)
in the quarter and 79% ($1,671,000) for the six months in comparison to lower
sales in the prior year periods resulting from the decline in orders of the
prior year. Giga-tronics Instruments sales remained essentially flat for the
quarter and declined 7% for the six months ended September 25, 1999 in
comparison to prior year. ASCOR increased sales during the quarter 22%
($289,000) and for the six months increased 48% ($1,126,000) from the respective
periods of a year ago principally due to a slow down in orders of the previous
year. Sales for Microsource increased 56% ($1,417,000) in the quarter and 94%
($3,481,000) for the six months ended September 25, 1999 due to fiscally
stronger Microsource which was able to ship backlog.
Cost of Sales increased 27% ($1,690,000) in the quarter ended September 25, 1999
from the similar period a year ago. For the six months ended September 25, 1999,
cost of sales increased 38% ($4,380,000). These increases are attributable to
higher sales coupled with higher manufacturing material costs and manufacturing
labor for the products shipped. The higher cost of sales for Microsource
products as compared to the Company's other products also contributed to the
increase in cost of sales.
Operating expenses for the three and six month periods decreased 8% ($312,000)
and 10% ($803,000), respectively, compared with the prior year. Product
development expenses for the three and six month periods decreased 32%
($492,000) and 36% ($1,068,000), respectively, compared with the prior year
primarily due to the completion of the new power meter product development at
the Instruments division. Selling, general and administrative expenses increased
8% ($170,000) for the three months ended September 25, 1999 compared to the
prior year. For the six months ended September 25, 1999 selling, general and
administrative expenses increased 5% ($230,000). These increases are primarily
due to higher commission expenses related to higher sales levels.
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Amortization of intangibles increased 7% ($10,000) for the three months and 13%
($35,000) for the six months as compared to the prior year. Amortization
expenses in the current quarter include $10,000 of additional amortization of
intangibles associated with Microsource and additional amortization expenses of
$53,000 associated with Microsource for the six month period ended September 25,
1999 as compared to the prior year.
Interest income for the three and six month periods declined over the prior year
due to lower cash available for investment. During the three month period ended
June 27, 1998, the Company purchased Microsource whereby cash declined as a
result of the extinguishment of Microsource debt.
Earnings before income taxes for the three month and six month periods increased
$1,400,000 and $1,938,000 compared to the same period last year. The change was
primarily due to higher revenues and the reduction in operating expenses.
FINANCIAL CONDITION
The Company maintains a strong financial position, with working capital of
$19,381,000 and a ratio of current assets to current liabilities of 3.8 to 1.0
at September 25, 1999. The Company continues to fund all of its working capital
needs from cash provided by operations. Cash provided from operations, for the
six months ended September 25, 1999, was $953,000.
Cash and cash equivalents increased $484,000. The Company spent $482,000 on new
manufacturing and test equipment and other capital items. The Company will
continue to invest in capital items that support growth and new product
development, raise productivity and improve quality. Historically the Company
has satisfied its cash needs internally for both operating and capital expenses,
and management expects to continue to do so.
Management believes that cash reserves and investments remain adequate to meet
anticipated operating needs. In addition, the Company has an unsecured revolving
line of credit loan for 7 million dollars, none of which has been utilized. It
is also the Company's intention to increase research and development
expenditures for the purpose of broadening its product base. From time to time,
the Company considers a variety of acquisition opportunities to also broaden its
product lines and expand its market. Such acquisition activity could also
increase the Company's operating expenses and require the additional use of
capital resources.
YEAR 2000 (Y2K) ISSUES
The Company is aware of and is addressing the issues associated with the
programming code in existing computer systems as the year 2000 approaches. The
Year 2000 problem is pervasive and complex, as many computer systems,
manufacturing equipment and industrial control systems will be affected in some
way by the rollover of the two-digit year value to 00. Systems that do not
properly recognize such data could generate erroneous information or cause a
system to fail. The Year 2000 issue creates risk for the Company from unforeseen
problems in its own systems and from third parties with which the Company deals
on financial transactions worldwide. Failures of the Company's and/or third
parties' computer systems, manufacturing equipment and industrial control
systems could have a material adverse impact on the Company's ability to conduct
its business.
The Company is in the process of analyzing internal systems as well as all
external systems (such as vendor, customer, banking systems, etc.) upon which
the Company is dependent, to identify and evaluate any potential Year 2000
issues. The Company is committed to achieving Year 2000 compliance; however,
with a significant portion of the problem external and therefore outside the
direct control of the Company, there can be no assurances that the Company will
be fully or even significantly Year 2000 compliant at the critical juncture. In
addition, as full testing of Year 2000 functionality must occur in a simulated
environment, the Company will not be able to test full system Year 2000
interfaces and capabilities prior to the Year 2000.
The Company has completed an inventory of internal systems, hardware, software,
manufacturing equipment and embedded chips in industrial control instruments.
Each of these items was identified as mission critical, mission essential,
mission impaired or mission non-critical. The Company is in the process of
prioritizing and evaluating
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mission critical and mission essential items, identifying fixes and resources as
appropriate, and performing and testing corrective measures. While the Company
believes that its evaluation has been comprehensive, there can be no assurance
that all systems critical to Year 2000 compliance have been identified, or that
the corrective actions identified will be completed on time.
The Company has upgraded 4 of the 5 packaged financial systems it currently uses
to vendor certified Year 2000 compliant versions. The Company is in the process
of evaluating the plans regarding the last financial system that is not Year
2000 compliant.
The Company has completed an inventory of current products and their hardware,
software, and embedded chips. Each of the Company's products was evaluated as to
whether it maintained the date and if the date handling was Year 2000 compliant.
All of the Company's current products, which maintained the date, were found to
be Year 2000 compliant. Several of the Company's non-current products were found
not to be Year 2000 compliant but the Company has determined either a manual
work around or has an upgrade path to resolve the Year 2000 problem for such
non-current products.
Currently, the Company is inventorying key suppliers of goods and services to
the Company, and considering the potential impact on the Company and its
customers of Year 2000 compliance by these suppliers. The Giga-tronics
Instruments division has mailed surveys to more than 600 of its suppliers, and
is in the process of evaluating responses and sending follow-up letters. The
ASCOR subsidiary has mailed surveys to more than 50 of its suppliers, and is in
the process of evaluating responses and sending follow-up letters. The
Microsource subsidiary has mailed surveys to more than 450 of its suppliers, and
is in the process of evaluating responses and sending follow-up letters. The
Semiconductor equipment group has mailed surveys to more than 300 of their
suppliers, and is in the process of evaluating responses and sending follow-up
letters. The Company plans to determine if its suppliers pose a threat to it for
non-compliance. If these suppliers pose a threat, the Company plans to
disqualify the non-complaint suppliers, look for alternative sources and
re-qualify new suppliers to help mediate potential business disruptions. While
the Company believes that it will be able to qualify alternative suppliers as
needed, until all supplier and customer survey responses have been received and
evaluated, the Company can not fully evaluate the extent of potential problems
and the costs associated with corrective actions.
To date, the Company has not incurred significant costs associated with Year
2000 compliance. The Company estimates the cost to complete its current
compliance program will not be significant. Of these costs, less than $50,000 is
associated with the upgrade of packaged software systems used by the Company's
subsidiaries. These are systems that would not otherwise have been replaced or
upgraded at this time. The Company may incur significant additional costs
depending largely on the response from the Company's suppliers and the extent to
which supplier re-qualification is needed. Cost estimates will also be evaluated
as the status of the overall compliance program is updated. Currently, the
Company has no other contingency plan for Year 2000 compliance. There can be no
assurance that actual costs will not be materially higher than currently
anticipated. Most of these costs are not likely to be incremental costs to the
Company, but rather will represent the re-deployment of existing information
technology resources. The Company is unable to determine what effect the failure
of systems because of Year 2000 issues by the Company or its suppliers or
customers will have, but any significant failures could have an adverse material
effect on the Company's results of operations and financial condition.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
With the addition of Microsource, Inc. the Company's defense-related orders have
become more important. If the defense market should soften, shipments in the
current year could fall short of plan with a concurrent decline in earnings.
While in the past year, softness in the market for the Company's commercial
products has resulted in a leveling of the commercial backlog, the Company's
past quarter experienced an increase in commercial orders. It should be noted,
that while all of these orders are shipable within the next 12 months, a major
portion of these orders are not scheduled for shipment in the third quarter and
we therefore do not anticipate any significant increase in revenue for that
period.
As part of its business strategy, the Company intends to broaden its product
lines and expand its markets, in part through the acquisition of other business
entities. The Company acquired Viking Semiconductor Equipment, Inc.
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and Ultracision, Inc. in fiscal 1998 in transactions accounted for as a
pooling-of-interests and Microsource, Inc. in fiscal 1999 in a transaction
accounted for as a purchase. The Company is subject to various risks in
connection with these and any future acquisitions. Such risks include, among
other things, the difficulty of assimilating the operations and personnel of the
acquired companies, the potential disruption of the Company's business, the
inability of the Company's management to maximize the financial and strategic
position of the Company by the successful incorporation of acquired technology
and rights into the Company's product offerings, the maintenance of uniform
standards, controls, procedures and policies, and the potential loss of key
employees of acquired companies. No assurance can be given that any acquisition
by the Company will or will not occur, that if an acquisition does occur, that
it will not materially and adversely affect the Company or that any such
acquisition will be successful in enhancing the Company's business. The Company
currently contemplates that future acquisitions may involve the issuance of
additional shares of the Company's common stock. Any such issuance may result in
dilution to all shareholders of the Company, and sales of such shares in
significant volume by the shareholders of acquired companies may depress the
price of the Company's common stock.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this Annual Report to Stockholders contain
forward-looking statements that involve risks and uncertainties. The actual
results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, those discussed herein and in the Company's 1999 Report
10-K under "Item 1. Business" as filed with the Securities and Exchange
Commission. PART II, Item 4
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(A.) Annual Meeting of stockholders was held on August 12, 1999.
(1) The vote for the nominated Directors was as follows:
Nominee In Favor Withheld
------- -------- --------
George H. Bruns, Jr. 3,689,322 26,035
James A. Cole 3,680,322 35,035
Robert C. Wilson 3,664,422 50,935
William E. Wilson 3,684,422 30,935
(2) (a) Other matters voted upon at the meeting were as follows:
Ratification of the selection of KPMG Peat Marwick LLP as
independent public accountants for the fiscal year 2000 was
approved as follows:
No. of Votes Percent of
on Proposal Votes Cast
------------- -----------
For 3,688,255 99.27%
Against 16,881 0.45%
Abstain 10,221 0.28%
Quorum 3,715,357 100.0%
Non-voted Shares = 646,545
Outstanding shares on Record Date = 4,361,902
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SIGNATURES
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.
GIGA-TRONICS INCORPORATED
(Registrant)
Date: 10/19/99 /s/ MARK H. COSMEZ II
---------------- ---------------------------------------
Mark H. Cosmez II
Vice President, Finance and
Chief Financial Officer
(Principal Accounting Officer)