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 quarterly period ended June 29, 1997 OR - ----- Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 000-28276 SAWTEK INC. (Exact name of registrant as specified in its charter) Florida 59-1864440 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1818 South Highway 441 Apopka, Florida 32703 (Address of principal executive offices) Telephone Number (407) 886-8860 (Registrant's telephone number, including area code) 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 July 15, 1997, there were 20,741,805 shares of the Registrant's Common Stock outstanding, par value $.0005. Sawtek Inc. TABLE OF CONTENTS Part I. Financial Information Page Number - ------------------------------ ----------- Item 1. Financial Statements (unaudited) Consolidated Balance Sheets as of June 30, 1997 and September 30, 1996 .......................... 3 Consolidated Statements of Income (Loss) for the three months and nine months ended June 30, 1997 and 1996......................................... 4 Consolidated Statements of Cash Flows for the nine months ended June 30, 1997 and 1996.............. 5 Notes to Consolidated Financial Statements....... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ... 8 Part II. Other Information - -------------------------- Item 1. Legal Proceedings ............................... 14 Item 2. Changes in Securities ........................... 14 Item 3. Defaults Upon Senior Securities ................. 14 Item 4. Submission of Matters to a Vote of Security Holders ......................................... 14 Item 5. Other Information ................................ 14 Item 6. Exhibits and Reports on Form 8-K ................ 14 Signatures......................................................... 15 Exhibit Index ..................................................... 15 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements SAWTEK INC. CONSOLIDATED BALANCE SHEETS June 30, September 30, 1997 1996 -------- ------------- (unaudited) (dollars in thousands, except per share data) Assets Current assets: Cash and cash equivalents $ 42,378 $ 27,743 Accounts receivable net of allowance for doubtful accounts and returns of $629 at June 30, 1997 and $654 at September 30, 1996 8,231 7,938 Inventories 6,899 6,509 Deferred income taxes 1,249 1,266 Other current assets 590 528 -------- -------- Total current assets 59,347 43,984 Other assets 121 186 Property, plant and equipment, net 39,727 30,424 -------- -------- Total assets $ 99,195 $ 74,594 ======== ======== Liabilities and shareholders' equity Current liabilities: Accounts payable $ 1,739 $ 1,801 Accrued wages and benefits 2,926 3,109 Other accrued liabilities 2,236 1,068 Current maturities of long-term debt 1,251 1,363 Income taxes payable 4,285 844 -------- -------- Total current liabilities 12,437 8,185 Long-term debt, less current maturities 3,144 3,786 Deferred income taxes 5,700 998 Shareholders' equity: Common stock; $.0005 par value; 120,000,000 authorized shares; issued and outstanding shares 20,426,805 at June 30, 1997 and 19,854,102 at September 30, 1996 10 10 Capital surplus 54,402 53,000 Unearned ESOP compensation (1,171) (1,367) Retained earnings 24,673 9,982 -------- -------- Total shareholders' equity 77,914 61,625 -------- -------- Total liabilities and shareholders' equity $ 99,195 $ 74,594 ======== ======== See accompanying notes to consolidated financial statements. 3 SAWTEK INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) - unaudited Three Months Nine Months Ended Ended June 30, June 30, --------------- --------------- 1997 1996 1997 1996 ---- ---- ---- ---- (in thousands, except per share data) Net sales $21,203 $14,926 $59,714 $39,664 Cost of sales 9,213 6,986 26,204 18,590 ------- ------- ------- ------- Gross profit 11,990 7,940 33,510 21,074 Operating expenses: Selling expenses 1,152 1,174 3,548 2,746 General & administrative expenses 1,292 1,509 4,212 4,157 ESOP compensation expense 195 1,846 587 12,925 Research & development expenses 1,088 467 2,681 1,371 ------- ------- ------- ------- Total operating expenses 3,727 4,996 11,028 21,199 ------- ------- ------- ------- Operating income (loss) 8,263 2,944 22,482 (125) Interest expense 41 114 152 339 Other income (557) (240) (1,365) (260) ------- ------- ------- ------- Income (loss) before taxes 8,779 3,070 23,695 (204) Income taxes 3,333 1,699 9,004 4,054 ------- ------- ------- ------- Net income (loss) $ 5,446 $ 1,371 $14,691 ($ 4,258) ======= ======= ======= ======= Net income (loss) per share $ 0.25 $ 0.07 $ 0.69 ($ 0.23) ======= ======= ======= ======= Shares used in computing net income (loss) per share 21,401 20,286 21,372 18,566 ======= ======= ======= ======= See accompanying notes to consolidated financial statements. 4 SAWTEK INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended June 30, ----------------- 1997 1996 ---- ---- (in thousands) Operating Activities: Net income (loss) $ 14,691 ($ 4,258) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 2,826 1,352 Deferred income taxes 4,719 390 Loss on sale of fixed assets 269 0 ESOP allocation 196 12,925 Compensatory stock options 553 0 Changes in operating assets and liabilities: Increase in assets: Accounts receivable (293) (375) Inventories (390) (3,568) Other current assets (62) (263) Increase (decrease) in liabilities: Accounts payable (62) 1,208 Accrued liabilities 985 1,045 Income taxes payable 3,441 31 ------- -------- Net cash provided by operating activities 26,873 8,487 Investing activities: Purchase of property, plant and equipment (12,388) (21,716) Proceeds from sale of fixed assets 55 0 Reduction in Industrial Revenue Bond assets 0 2,606 -------- -------- Net cash used in investing activities (12,333) (19,110) Financing activities: Proceeds from long-term debt 0 8,200 Principal payments on long-term debt (754) (10,263) Net proceeds from sale of common stock in the initial public offering 0 35,254 Net proceeds from sale of common stock other than in the initial public offering 849 338 Purchase of common stock 0 (121) Redemption of preferred stock 0 (100) Preferred stock dividends paid 0 (27) -------- -------- Net cash provided by financing activities 95 33,281 -------- -------- Increase in cash and cash equivalents 14,635 22,658 Cash and cash equivalents at beginning of period 27,743 2,819 -------- -------- Cash and cash equivalents at end of period $ 42,378 $ 25,477 ======== ======== Interest paid $ 224 $ 404 ======== ======== Income taxes paid $ 873 $ 3,634 ======== ======== See accompanying notes to consolidated financial statements. 5 SAWTEK INC. Notes to Consolidated Financial Statements - June 30, 1997 (unaudited) 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information as set forth in the requirements of Article 10 of Regulation S-X. Accordingly, they do not contain all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the Company's financial condition as of June 30, 1997, and the results of its operations, and its cash flows for the three and nine-month periods ended June 30, 1997 and 1996. These financial statements should be read in conjunction with the Company's audited financial statements as of September 30, 1996, including the notes thereto, and the other information set forth therein included in the Company's most recent annual report on Form 10-K for the year ended September 30, 1996 (File No. 000-28276), which was filed with the Securities and Exchange Commission on November 8, 1996 and the Company's S-3 filing dated June 30, 1997. The following discussion may contain forward looking statements which are subject to the risk factors set forth in "Risks and Uncertainties" in Item 2 of this Form 10-Q. The Company maintains its records on a fiscal year ending on September 30 of each year and all references to a year refer to the year ending on that date. The Company's first, second and third quarters end on the Sunday closest to the last day of the last month of such quarter, which was June 29, 1997, for the second quarter of 1997. However, for convenience, the financial statements are dated as of June 30, 1997. Operating results for the three and nine-month periods ended June 30, 1997 are not necessarily indicative of the operating results that may be expected for the year ending September 30, 1997. 2. Earnings (Loss) Per Share Earnings (loss) per share ("EPS") is computed based on the weighted average number of common shares, common stock options (using the treasury stock method) and all ESOP shares outstanding. In accordance with Securities and Exchange Commission staff accounting bulletins, common and common equivalent shares issued by the Company at prices below the public offering price during the period beginning one year prior to the filing date of the initial public offering on April 29, 1996, have been included in the calculation as if they were outstanding for all periods prior to the offering (using the treasury stock method and the initial public offering price). 3. Inventories - Inventories are composed of the following: June 30, 1997 September 30, 1996 ------------- ------------------ (in thousands) Raw Material...................................... $2,329 $1,976 Work in Process................................... 1,983 2,341 Finished Goods.................................... 2,587 2,192 ------ ------ Total.................................... $6,899 $6,509 ====== ====== 6 4. Property, Plant and Equipment - Property, plant and equipment are composed of the following: June 30, 1997 September 30, 1996 ------------- ------------------ (in thousands) Land and Improvements.............................. $ 671 $ 671 Buildings.......................................... 9,596 9,829 Production and Test Equipment...................... 28,092 21,459 Computer Equipment................................. 2,862 2,734 Furniture and Fixtures............................. 1,613 1,533 Construction in Progress........................... 9,705 4,774 ------- ------- 52,539 41,000 Less Accumulated Depreciation...................... 12,812 10,576 ------- ------- Total..................................... $39,727 $30,424 ======= ======= 5. Shareholders' Equity The consolidated changes in shareholders' equity for the nine months ended June 30, 1997 are as follows: (in thousands) Unearned Common Stock Capital ESOP Retained Shares Amount Surplus Compensation Earnings ------ ------ ------- ------------ -------- Balance at October 1, 1996 19,854 $ 10 $53,000 ($1,367) $ 9,982 Net income 14,691 ESOP allocation 196 Compensatory stock options granted 553 Sale of common stock 573 849 ------ ---- ------- ------ ------- Balance at June 30, 1997 20,427 $ 10 $54,402 ($1,171) $24,673 ====== ==== ======= ====== ======= 6. Increase in Authorized Shares On March 17, 1997, the shareholders of the Company voted to amend the Articles of Incorporation to increase the number of authorized shares of Common Stock, par value $.0005 per share, from 40,000,000 shares to 120,000,000 shares. This amendment was adopted pursuant to a recommendation by the Board of Directors to the shareholders of the Corporation and approved by the required majority of the holders of the Company's Common Stock on March 17, 1997, at a special meeting of the shareholders. 7. Recently Issued Accounting Standards In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share," which is effective for financial statements issued for periods ending after December 15, 1997. This pronouncement establishes standards for computing and presenting earnings per share ("EPS") for entities with publicly-held common stock or potential common stock. SFAS 128 simplifies the standards for computing EPS and makes them comparable to international EPS standards. Early application of this statement is not permitted. 7 In February 1997, the FASB issued SFAS Statement No. 129, Disclosure of Information about Capital Structure, which is applicable to all companies. Capital structure disclosures required by Statement 129 include liquidation preferences of preferred stock, information about the pertinent rights and privileges of the outstanding equity securities, and the redemption amounts for all issues of capital stock that are redeemable at fixed or determinable prices on fixed or determinable dates. Statement 129 is effective for financial statements for periods ending after December 15, 1997. In June, 1997, the FASB issued SFAS Statement No. 130, Reporting Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. According to the FASB, the proposal was developed in response to financial statement users' concerns about the increasing number of items that bypass the income statement, such as changes in value of available-for-sale securities and foreign currency translation adjustments, and the effort required to analyze them (even though they are separately disclosed in a statement of shareholders' equity). The standard does not address when transactions are recorded, how they are measured in the financial statements, or whether they should be included in net income or other comprehensive income. The statement is effective for fiscal years beginning after December 15, 1997. In June, 1997, the FASB issued SFAS Statement No. 131, Disclosures About Segments of an Enterprise and Related Information, which significantly changes the way public companies report segment information in annual financial statements and also requires those companies to report selected segment information in interim financial reports to shareholders. Statement No. 131 is effective for periods beginning after December 15, 1997. The Company intends to adopt the provisions of these standards in 1998 and does not expect their application to have a material impact on the financial statements of the Company. Item 2. Management's discussion and analysis of financial condition and results of operations The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto included elsewhere in this Form 10-Q. Except for the historical information contained herein, the discussion in this Form 10-Q contains certain forward-looking statements that involve risks and uncertainties, such as statements of the Company's plans, objectives, expectations and intentions. The cautionary statements made herein should be read as being applicable to all related forward-looking statements wherever they appear. The Company's actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include those discussed in "Risks and Uncertainties," as well as those discussed elsewhere herein. 8 Overview - -------- The Company was incorporated in 1979 to design, develop, manufacture and market a broad range of electronic components based on surface acoustic wave ("SAW") technology used in telecommunications, data communications, video transmission, military and space systems and other markets. The Company's focus has been on the high-end performance spectrum of the market, and its primary products are SAW bandpass filters, resonators, delay lines, oscillators and SAW-based sub-systems. Initially, the Company's products were concentrated in the military and space systems market. The Company has since shifted its attention to commercial markets which accounted for 87% of net sales in the first nine months of 1997. The Company has also experienced significant growth in its international markets over the last five years, with international sales having more than doubled to approximately 47% of net sales for the first nine months of 1997. The Company derives revenue from high-volume commercial production components, military/industrial production components and engineering services and products. Non-recurring engineering ("NRE") revenue is included in net sales and relates to the design and development of custom devices and delivery of prototype parts. In all cases, revenue is recognized when the parts or services have been completed and units, including prototypes, have been shipped. Net sales increased 51% from the first nine months of 1996 to the first nine months of 1997. The growth in net sales is mainly attributable to growth in the wireless communications market to which the Company supplies SAW bandpass filters for cellular telephone base stations and, to a lesser extent, for handheld subscriber telephones. The Company has a broad product line of SAW filters and other components with average selling prices generally in the range of $3 to $300 for many high performance wireless applications. For the nine months ended June 30, 1997, net sales to the Company's top ten customers accounted for approximately 75% of net sales with the top four customers accounting for 47%. The Company expects that sales of its products to a limited number of customers will account for a high percentage of its net sales in the foreseeable future. In 1991, the Company established an Employee Stock Ownership Plan ("ESOP"). At that time, the Company borrowed $4.0 million from its commercial bank and loaned it to the ESOP to finance the purchase of 8,888,880 shares of the Company's Common Stock. These ESOP shares are accounted for in accordance with the American Institute of Certified Public Accountants ("AICPA") Statement of Position ("SOP") 76-3, which uses cost as the basis for valuing shares as they are released and allocated to participants' accounts. In 1994, the Company borrowed an additional $1.7 million and loaned it to the ESOP to enable it to purchase 1,610,600 shares of Common Stock. In 1996, the Company repaid the 1994 loan resulting in the allocation of the related shares to participants' accounts. These shares are accounted for in accordance with the AICPA's SOP 93-6, which uses market value as the basis of valuing shares. The impact of this was a charge to ESOP compensation expense of $12.9 million reflected in the financial results for 1996. Of the $12.9 million, $11.3 million was a one-time, non-cash charge (amounting to $0.59 per share). The Company does not anticipate contributing additional shares of Common Stock beyond those that already have been placed in trust for the ESOP. The remaining balance of $1.2 million will be repaid over the life of the loan. Management does not believe that inflation has had a material impact on operating costs and earnings of the Company. 9 Results of Operations - --------------------- The following table sets forth, for the periods indicated, the percentage relationship of certain items from the Company's statement of operations to total net sales: Three Months Ended Nine Months Ended June 30, June 30, ------------------ ----------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 43.5 46.8 43.9 46.9 ----- ----- ----- ----- Gross profit 56.5 53.2 56.1 53.1 Operating expenses: Selling expenses 5.4 7.9 5.9 6.9 General & administrative expenses 6.1 10.1 7.1 10.5 ESOP compensation expense .9 12.4 1.0 32.6 Research & development expenses 5.1 3.1 4.4 3.5 ----- ----- ----- ----- Total operating expenses 17.5 33.5 18.4 53.5 ----- ----- ----- ----- Operating income (loss) 39.0 19.7 37.7 (.4) Interest expense .2 .7 .3 .8 Other income (2.6) (1.6) (2.3) (.7) ----- ----- ----- ----- Income (loss) before income taxes 41.4 20.6 39.7 (.5) Income taxes 15.7 11.4 15.1 10.2 ----- ----- ----- ----- Net income (loss) 25.7% 9.2% 24.6% (10.7)% ===== ===== ===== ===== 10 Net Sales. Net sales increased 42% from $14.9 million in the quarter ended June 30, 1996 to $21.2 million in the quarter ended June 30, 1997 and increased 51% from $39.7 million in the nine months ended June 30, 1996 to $59.7 million in the nine months ended June 30, 1997. The increase for both the three and nine-month periods was a result of increased product shipments to the wireless communication market, specifically sales of high volume filters for base station applications and telephone handsets based on CDMA technology for the telecommunications industry. International sales decreased from approximately 65.4% and 57.6% of net sales in the three and nine-month periods ended June 30, 1996 to 54.4% and 46.7% of net sales for the three and nine-month periods ended June 30, 1997, respectively. Sales for military and space systems of approximately 13.2% and 13.6% of net sales in the three and nine-month periods ended June 30, 1996 compare to approximately 12.4% and 12.8% of net sales for the three and nine-month periods ended June 30, 1997, respectively. The percentage decrease was due to the increase in overall net sales, however, the dollar volume of international and military sales actually increased in both the three and nine-month periods ended June 30, 1997 compared to the same periods ended June 30, 1996. Gross Margin. Gross margin increased from 53.2% and 53.1% in the three and nine-month periods ended June 30, 1996 to 56.5% and 56.1% in the three and nine-month periods ended June 30, 1997 primarily due to improved yields, lower manufacturing costs associated with the Costa Rican operation and economies of scale with the increased volume. As the Company shifts its product mix to high volume production, including filters for handsets, it is anticipated that gross margins will decline as these components are more susceptible to downward pricing pressure and have lower overall gross profit margins. Selling Expenses. Selling expenses, as a percentage of net sales, decreased from 7.9% and 6.9% in the three and nine-month periods ended June 30, 1996 to 5.4% and 5.9% for the corresponding periods of 1997. For the nine months ended June 30, 1997, most of the selling expenses remained relatively constant compared to the same period in 1996, with commission expenses paid to outside sales representatives as the only component that increased with the higher sales level. The Company anticipates that selling expenses will increase as new employees are added to support its sales and marketing effort in the future and as commissions are incurred. General and Administrative Expenses. General and administrative expenses decreased from $1.5 million for the quarter ended June 30, 1996 to $1.3 million for the quarter ended June 30, 1997 because the results for the quarter ended June 30, 1996 had certain one-time start-up costs for the Company's Costa Rican operation. General and administrative expenses remained essentially flat at $4.2 million for the nine-month periods ending June 30, 1996 and 1997. ESOP Compensation Expense. ESOP compensation expense decreased from $12.9 million in the first nine months of 1996 to $587,000 in the first nine months of 1997. This decrease of $12.3 million is a result of the Company allocating all of the ESOP shares acquired in 1994 to employees' accounts for services rendered during the first seven months of 1996. For the quarter ended June 30, 1997, the Company recorded a charge of $195,000 for ESOP compensation compared to $1.8 million for the same period in 1996. The 1996 share allocation was accounted for in accordance with SOP 93-6 which uses market value as the basis of valuing shares as they are allocated. The shares were acquired at a cost of $1.03 per share compared to an average market value of $8.03 for the first seven months of 1996. The charge for ESOP shares allocated in 1997 is based on SOP 76-3 which uses the cost of the shares. All remaining ESOP shares are accounted for in accordance with SOP 76-3. 11 Research and Development Expenses. Research and development expenses increased $621,000 in the quarter ended June 30, 1997 compared to the quarter ended June 30, 1996. R&D increased 96% from $1.4 million in the nine months ended June 30, 1996 to $2.7 million in the first nine months of 1997, and increased as a percentage of net sales from 3.5% to 4.4% for the same period. These expenses increased due to additional personnel and expanded research and development efforts. The Company anticipates that research and development expenses will continue to increase in total dollars as personnel and programs are added. A significant portion of the Company's development activities is conducted in connection with the design and development of custom devices, which is paid for by customers and classified as NRE items. The revenue generated from these items is included in net sales and the cost is reflected in cost of sales rather than in research and development expenses. Interest Expense. Interest expense decreased from $339,000 in the first nine months of 1996 to $152,000 in the first nine months of 1997, due to repayment of debt with a portion of the funds from the Company's initial public offering. Other Income. Other income primarily represents interest income and non-operating expenses. Other income increased for the three and nine-month periods as the Company recorded increased interest income on its cash balances. Income Tax Expense. The provision for income taxes as a percentage of income (loss) before income taxes was 38.0% for the three and nine-month periods ended 1997. In the three and nine-month periods ended June 30, 1996, the Company incurred a non-deductible charge for ESOP compensation expense of approximately $1.6 million and $11.2 million, respectively. Had it not been for this charge, the tax provision would have been approximately 37% for both periods. The Company expects that its effective tax rate will remain at approximately 37% to 38% during 1997. Risks and Uncertainties - ----------------------- General Risks and Uncertainties. Except for historical information contained herein, this Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are subject to risks and uncertainties, including fluctuations in quarterly results, backlog, capacity limitations, order rescheduling or cancellation, limited sources of supply, dependence on continuing demand for wireless communication services, dependence on a limited number of customers, technological change, competition, risks associated with international operations, variation in production yield, change in economic conditions of the various markets the Company serves, as well as the other risks detailed in the Company's Form 10-K filed with the Securities and Exchange Commission on November 8, 1996 and in the Company's Form S-3 filed on June 30, 1997. 12 Liquidity and Capital Resources - ------------------------------- The Company has financed its operations to date through cash generated from operations, bank borrowings, lease financing, the private sale of securities, and its May 1, 1996 initial public offering. The Company requires capital principally for equipment, expansion of its primary facility, financing of accounts receivable and inventory, investment in product development activities and new technologies and for its operations in Costa Rica. For the nine months ended June 30, 1997, the Company generated net cash from operating activities of $26.9 million, consisting primarily of net income of $14.7 million, $2.8 million of depreciation and amortization, $4.7 million in deferred taxes and $4.4 million of increases in other current liabilities. The Company has a revolving credit agreement totaling $15.0 million from SunTrust Bank, Central Florida, N.A. available through January 1998. There were no balances outstanding on this credit line at June 30, 1997. The Company made capital expenditures of approximately $4.0 million during the quarter ended June 30, 1997 and $12.4 million for the nine months ended June 30, 1997. The Company intends to spend approximately $20 million in 1997 on capital equipment and facilities. The Company completed a public offering on July 1, 1997 and raised an additional $9.5 million in cash through the issuance of 300,000 new shares of common stock. The Company believes that its cash position, together with its credit facility and funds expected to be generated from operations, will be sufficient to meet its projected working capital and other cash requirements through the next 12 months. There can be no assurance that events in the future will not require the Company to seek additional capital in the future or, if so required, that it will be available on terms acceptable to the Company, if at all. 13 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings. The Company is not subject to any legal proceedings that, if adversely determined, would cause a material adverse effect on the Company's financial condition, business or results of operations. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit 11.1 - Statement regarding computations of earnings per share. (b) Exhibit 27 - Financial Data Schedule. (c) Reports on Form 8-K. The Company did not file any reports on Form 8-K during the three months ended June 30, 1997. 14 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. Dated: July 18, 1997 SAWTEK INC. (Registrant) /S/ Raymond A. Link Raymond A. Link Vice President Finance, Chief Financial Officer (Principal Financial Officer) EXHIBIT INDEX - ------------- 11.1 Statement regarding computations of earnings per share. 2.7 Financial Data Schedule. 15 SAWTEK INC. EXHIBIT 11.1 STATEMENT REGARDING COMPUTATIONS OF EARNINGS PER SHARE - as reported on Form 10Q Three Months Ended Nine Months Ended June 30, June 30, ------------------ ----------------- 1997 1996 1997 1996 ---- ---- ---- ---- PRIMARY EARNINGS PER SHARE Weighted average number of shares of Common Stock outstanding 20,399 18,756 20,158 16,311 Net effect of dilutive stock options based on the Treasury stock method using the average fair market value in effect for the period 982 1,480 1,185 2,254 ------- ------- ------- ------- Total shares outstanding for Primary EPS 21,381 20,236 21,343 18,565 ======= ======= ======= ======= FULLY DILUTED EARNINGS PER SHARE Weighted average number of shares of Common Stock outstanding 20,399 18,756 20,158 16,311 Net effect of dilutive stock options based on the Treasury stock method using the fair market value at the end of the period 1,002 1,530 1,214 2,255 ------- ------- ------- ------- Total shares outstanding for Fully Diluted EPS 21,401 20,286 21,372 18,566 ======= ======= ======= ======= Net income (loss) applicable to common shareholders $ 5,446 $ 1,371 $14,691 ($ 4,258) Earnings (loss) per share: Primary $ 0.25 $ 0.07 $ 0.69 ($ 0.23) Fully Diluted $ 0.25 $ 0.07 $ 0.69 ($ 0.23)