UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the fiscal year ended March 27, 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
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GIGA-TRONICS INCORPORATED
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(Exact name of registrant as specified in its charter)
California 94-2656341
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(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
4650 Norris Canyon Road, San Ramon, CA 94583
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (925) 328-4650
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No par value
--------------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant calculated on the closing average bid and asked prices as of June 15,
1999 was $6,660,973. For purposes of this determination only, directors and
officers of the Registrant have been assumed to be affiliates. There were a
total of 4,361,902 shares of the Registrant's Common Stock outstanding as of
June 15, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into the
parts indicated:
PART OF FORM 10-K DOCUMENT
----------------- ------------------------------------
PART II Registrant's ANNUAL REPORT TO
Items 5, 6, 7 and 8 SHAREHOLDERS for the fiscal year
ended March 27, 1999.
PART III Registrant's PROXY STATEMENT for
Items 10, 11, 12 and 13 its 1999 annual meeting of
shareholders to be filed no later
than 120 days after the close of the
fiscal year ended March 27, 1999.
2
PART I
The forward-looking statements included in this report, which reflect
management's best judgment based on factors currently known, involve risks and
uncertainties. Actual results could differ materially from those anticipated in
the forward-looking statements included herein as a result of a number of
factors, including but not limited to those discussed under "Certain Factors
Which May Adversely Affect Future Operations Or An Investment In The Company" in
Item 1 below and in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," incorporated by reference on pages 7
through 9 of the Company's 1999 Annual Report to Shareholders.
ITEM 1. BUSINESS
General
Giga-tronics Incorporated (Giga-tronics) includes the operations of
Giga-tronics Instrument division, and its wholly owned subsidiaries, ASCOR, Inc.
(ASCOR), Viking Semiconductor Equipment, Inc. (Viking), Ultracision, Inc.
(Ultracision), and Microsource, Inc. (Microsource).
Giga-tronics designs, manufactures and markets through its Giga-tronics
Instrument division, a broad line of test and measurement equipment used in the
development, test and maintenance of wireless communications products and
systems, flight navigational equipment, electronic defense systems and automatic
testing systems. These products are used primarily in the design, production,
repair and maintenance of commercial telecommunications, radar, and electronic
warfare.
Effective July 23, 1996, Giga-tronics acquired ASCOR. ASCOR, located in
Fremont, California, designs, manufactures, and markets a line of switching and
connecting devices that link together many specific purpose instruments that
comprise a portion of automatic test systems. ASCOR offers a family of switching
and interface test adapters as standard VXI configured products, as well as
complete system integration services to the Automatic Test Equipment market.
Effective June 27, 1997, Giga-tronics completed a merger with Viking by
issuing approximately 420,000 shares of the Company's common stock in exchange
for all of the common stock of Viking. The merger was accounted for using the
pooling-of-interests method of accounting. Viking, which is now located in Santa
Clara, California, manufactures and markets a line of optical inspection
equipment used to manufacture and test semiconductor devices.
Effective December 2, 1997, Giga-tronics completed a merger with
Ultracision by issuing approximately 517,000 shares of the Company's common
stock in exchange for all of the common stock of Ultracision. The merger was
accounted for using the pooling-of-interests method of accounting. Ultracision
is a manufacturer of automation equipment for the test and inspection of silicon
wafers. Ultracision additionally produces a line of probers for the testing and
inspection of silicon devices.
Effective May 18, 1998, Giga-tronics Inc. completed an acquisition of
Microsource. All the outstanding shares of Microsource were exchanged for
$1,500,000 plus contingent future payments based on earnings from Microsource
for the next two years. The acquisition was accounted for using the purchase
method of accounting. Microsource develops and manufactures a broad line of YIG
(Yttrium, Iron, Garnet) tuned oscillators, filters and microwave synthesizers,
which are used by its customers in manufacturing a wide variety of microwave
instruments or devices.
The Company intends to broaden its product lines and expand its market,
both by internal development of new products and through the acquisition of
other business entities. From time to time, the Company considers a variety of
acquisition opportunities.
3
Industry Segments
The Company manufactures products used in test, measurement and
handling. The Company conducts its business primarily in four operating
segments; Giga-tronics Instruments, ASCOR, Microsource and the Semiconductor
Equipment Group (Viking and Ultracision).
Products and Markets
Giga-tronics Instruments
The Giga-tronics Instruments segment produces signal sources,
generators and sweepers, and power measurement instruments for use in the
microwave and RF frequency range (10 kHz to 75 GHz). Within each product line
are a number of different models and options allowing customers to select
frequency range and specialized capabilities, features and functions. The
end-user markets for these products can be divided into three broad segments:
commercial telecommunications, radar and electronic warfare. This segment's
instruments are used in the design, production, repair and maintenance and
calibration of other manufacturers' products, from discrete components to
complex systems.
ASCOR
The ASCOR segment produces switch modules, and interface adapters that
operate with a bandwidth from direct current (DC) to 18 GHz. This segment's
switch modules may be incorporated within its customer's automated test
equipment. The end-user markets for these products are primarily related to
electronic warfare, though the VXI architecture may become more accepted by the
telecommunications market.
Microsource
The Microsource segment develops and manufactures a broad line of YIG
(Yttrium, Iron, Garnet) tuned oscillators, filters and microwave synthesizers,
which are used by its customers in manufacturing a wide variety of microwave
instruments or devices.
Semiconductor Equipment Group
The Semiconductor Equipment Group manufactures and markets a line of
optical inspection equipment used in the testing of semiconductor devices.
Products include die attachments, automatic die sorters, tape and reel
equipment, and wafer inspection equipment. Further, the Semiconductor Equipment
Group manufactures automation equipment for the test inspection and robotic
handling of silicon wafers in addition to a line of probers for the testing and
inspection of silicon devices. These products are used by Semiconductor
manufacturers and various other suppliers to the Semiconductor industry.
Sources and Availability of Raw Materials and Components
Substantially all of the components required by the Company to make its
assemblies are available from more than one source. The Company occasionally
uses sole source arrangements to obtain leading-edge technology, favorable
pricing or supply terms. Although extended delays in delivering components could
result in longer product delivery schedules, the Company believes that its
protection against this possibility stems from its practice of dealing with
well-established suppliers and maintaining good relationships with such
suppliers.
4
Patents and Licenses
The Company attempts to obtain patents when appropriate. However, the
Company believes that its competitive position depends primarily on the creative
ability and technical competence of its personnel and the timely introduction of
new products rather than on the ownership or development of patents.
The Company licenses certain instrument operating system software from
third parties. The Company believes, based on industry practice, that any
additional licenses necessary could be obtained on conditions which would not
have a materially adverse financial effect on the Company.
Seasonal Nature of Business
The business of the Company is not seasonal.
Working Capital Practices
The Company does not believe that it has any special practices or
special conditions affecting working capital items that are significant for an
understanding of its business.
Importance of Limited Number of Customers
The Company had been a leading supplier of microwave and radio
frequency (RF) test instruments to various U.S. Government defense agencies, as
well as to their prime contractors. Management anticipates sales to U.S.
Government agencies will remain significant in fiscal 2000, even though the
outlook for defense-related orders continues to be soft. As a result of the
Microsource Inc. acquisition, the Company is more dependent on U.S. Government
defense agencies. This acquisition increased the percentage in fiscal 1999 of
defense-related agency sales from 9% without Microsource Inc. to 24% with their
inclusion. Defense-related agencies accounted for 24%, 12% and 28% of net sales
in fiscal 1999, 1998 and 1997, respectively. Commercial business accounted for
76%, 88% and 72%, of net sales in fiscal 1999, 1998 and 1997, respectively. In
the past several years, sales to the defense industry in general, and direct
sales to the United States and foreign government agencies in particular, have
declined. Giga-tronics believes this softening of product orders, and the
resulting decline in defense sales revenues, is indicative of the world-wide
decline in governmental defense spending. Any further decline in defense orders
as a consequence of the foregoing circumstance, or otherwise, could have a
material adverse effect on the business, operating results, financial condition
and cash flows of Giga-tronics.
Backlog of Orders
On March 27, 1999, Giga-tronics had a backlog of approximately
$17,792,000 compared to $6,492,000 at March 28, 1998. Included in the March 27,
1999 backlog is $11,066,000 for Microsource Inc. Orders for the Company's
products include program orders from both the U.S. Government and defense
contractors, with extended delivery dates. Accordingly, the backlog of orders
may vary substantially from quarter to quarter and the backlog entering any
single quarter may not necessarily be indicative of sales for any period.
Backlog includes only those customer orders for which a delivery
schedule has been agreed upon between the Company and the customer and, in the
case of U.S. Government orders, for which funding has been appropriated. The
Company believes that essentially all of the backlog will be shipped within the
next twelve months.
A portion of the year-end backlog consists of U.S. Government
contracts. These contracts contain customary provisions permitting termination
at the convenience of the Government upon payment of a negotiated cancellation
charge. The Company never has experienced a significant contract termination.
5
Competition
Giga-tronics is engaged in a highly competitive field. Competition from
numerous existing companies is intense and potential new entrants could increase
competitive pressures. The Company's instrument, switch, oscillator and
synthesizer products compete with Hewlett Packard, Anritsu, Racal, IFR and Rhode
& Schwarz while the Semiconductor Equipment Groups products compete with various
other competitors. Many of these companies have substantially greater research
and development, manufacturing, marketing, financial, technological, personnel
and managerial resources than Giga-tronics. There can be no assurance that any
products developed by these competitors will not gain greater market acceptance
than any developed by Giga-tronics. Accordingly, Giga-tronics will be required
to continue to devote substantial resources and efforts to marketing and
research and development activities.
There can be no assurance that future technologies, processes or
product developments will not render Giga-tronics' current product offerings
obsolete or that Giga-tronics will be able to develop and introduce new products
or enhancements to existing products which satisfy customer needs in a timely
manner or achieve market acceptance. The failure to do so could adversely affect
Giga-tronics' business.
Sales and Marketing
The Giga-tronics Instruments, ASCOR and Microsource markets their
products direct and through various distributors and representatives to
government and commercial customers, although not necessarily through the same
distributors and representatives. The Semiconductor Equipment Group markets its
equipment direct and through separate distributors and sales representatives to
semiconductor manufacturers.
Product Development
Products of the type manufactured by the Company historically have had
relatively long product life cycles. However, the electronics industry is
subject to rapid technological changes at the component level. The future
success of the Company is dependent on its ability to steadily incorporate
advancements in component technologies into its new products.
Product development expense was approximately $5,313,000, $6,200,000
and $4,581,000 in fiscal 1999, 1998 and 1997, respectively. Activities included
the development of new products and the improvement of existing products. It is
management's intention to maintain expenditures for product development at
levels required to sustain its competitive position. All of the Company's
product development activities are internally funded and expensed as incurred
until technological feasibility is achieved. Giga-tronics expects to continue to
make significant investments in research and development.
Manufacturing
The assembly and testing of Giga-tronics Instrument's Microwave, RF and
power measurement products is done at its San Ramon facility. The assembly and
testing of ASCOR's switching and connecting devices is done at its Fremont
facility. The assembly and testing of Microsource's line of YIG (Yttrium, Iron,
Garnet) tuned oscillators, filters and microwave synthesizers is done at its
Santa Rosa facility. The assembly and testing of the Semiconductor Equipment
Group's products is done at its Santa Clara facility.
Environment
To the best of its knowledge, the Company is in compliance with all
federal, state and local laws and regulations involving the protection of the
environment.
6
Employees
As of March 27, 1999, the Company employed 293 persons. Management
believes that the future success of the Company depends on its ability to
attract and retain skilled personnel. None of the Company's employees is
represented by a labor union, and the Company considers its employee relations
to be satisfactory.
Information about Foreign Operations
The Company sells to its international customers through a network of
foreign technical sales representative organizations. Sales to foreign customers
were approximately $7,665,000, $10,410,000 and $11,896,000 in fiscal 1999, 1998
and 1997, respectively. The Company has no foreign-based operations or material
amounts of identifiable assets in foreign countries. Its gross margins on
foreign and domestic sales are similar.
Certain Factors Which May Adversely Affect Future Operations Or An Investment In
The Company
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. Current softness in the market for the Company's commercial
products has resulted in a leveling of the commercial backlog. If this trend
cannot be reversed in the near term, shipments in the current year could fall
short of plan with a continued decline in earnings. The Company at this time is
engaged in cost reduction activities and improvement in manufacturing
efficiencies which may partially offset any unfavorable impact caused by a
decline in revenues. Also, the Company believes that growth can be realized by
maintaining an effective new product development program, aggressively pursuing
new markets, and vigorously competing for defense business. In addition, the
Company intends to broaden its product lines and expand its markets.
Nevertheless, there is no assurance these efforts will lead to increased sales
in the near term.
During fiscal years 1999, 1998 and 1997, Giga-tronics made four
business acquisitions: Microsource, Ultracision, Viking and ASCOR. Giga-tronics
has acquired these companies with the expectation that the acquisitions would
result in long-term strategic benefits. The realization of the benefits sought
from these acquisitions depends on the ability of Giga-tronics to effectively
utilize the joint product development capabilities, sales and marketing
capabilities, administrative organizations and facilities of these companies.
There can be no assurance that these benefits will be achieved or that the
activities of these companies will be integrated in a coordinated, timely and
efficient manner. The combination of these entities also will require the
dedication of management resources, which will detract such persons' attention
from the day-to-day business of Giga-tronics. There can be no assurance the
integration will be completed without disrupting Giga-tronics businesses. The
inability of Giga-tronics to effectively utilize resources and to achieve
integration in a timely and coordinated fashion could result in a material
adverse effect on Giga-tronics' financial condition, operating results and cash
flows.
Prior to the acquisition of Viking and Ultracision, Giga-tronics had no
experience in the semiconductor manufacturing equipment industry. As a result,
integration of these companies may be difficult. The difficulties may be
increased by addressing possible differences in corporate cultures and
management philosophies. Finally, expenditures related to the development of new
products by these subsidiaries have, and may in the future, impact the financial
results of Giga-tronics. The future success of Giga-tronics may depend on its
ability to steadily incorporate advancements in semiconductor manufacturing
technologies into its new products. The impact of these new subsidiaries on the
operations of Giga-tronics remains uncertain.
The market for electronics equipment is characterized by rapidly
changing technology and evolving industry standards. Giga-tronics believes that
its future success will depend in part upon its ability to develop and
commercialize its existing products and to develop new products and applications
and in part to develop, manufacture and successfully introduce new products and
product lines with improved capabilities and to
7
continue to enhance existing products. There can be no assurance that
Giga-tronics will successfully complete the development of current or future
products or that such products will achieve market acceptance.
The market price of the Common Stock could be subject to significant
fluctuations in response to variations in quarterly operating results,
shortfalls in revenues or earning from levels expected by securities analysts
and other factors such as announcements of technological innovations or new
products by Giga-tronics or by competitors, government regulations or
developments in patent or other proprietary rights. In addition, the Nasdaq
National Market and other stock markets have experienced significant price
fluctuations in recent months. These fluctuations often have seemingly been
unrelated to the operating performance of the specific companies whose stocks
are traded. Broad market fluctuations, as well as general foreign and domestic
economic conditions, may adversely affect the market price of the Common Stock.
Giga-tronics stock at any time has historically traded on thin volume
on Nasdaq. Sales of a significant volume of stock could result in a depression
of Giga-tronics share price.
ITEM 2. PROPERTIES
As of March 27, 1999, Giga-tronics Instrument's executive, marketing,
sales and engineering offices and manufacturing facilities for its microwave and
RF signal generator and power measurement products are located in approximately
47,300 square feet in San Ramon, California, which the Company occupies under a
lease agreement expiring December 31, 2006.
ASCOR's marketing, sales and engineering offices and manufacturing
facilities for its switching and connecting devices are located in approximately
12,160 square feet in Fremont, California, under a lease that expired on January
31, 1999 and the Company is renting this facility on a month to month basis. The
Company will continue to rent this facility on a month to month basis until the
new facilities to be leased by the Company under a lease expiring in 2006 are
completed. These facilities will be approximately 18,600 square feet in Fremont,
California.
Microsource's marketing, sales and engineering offices and
manufacturing facilities for its YIG tuned oscillators, filters and microwave
synthesizers are located in an approximately 35,000 square foot facility in
Santa Rosa, California, which the Company occupies under a lease expiring May
31, 2003.
The Semiconductor Equipment Group's marketing, sales and engineering
offices and manufacturing facilities for its automation equipment for the
inspection of silicon wafers, prober line and optical inspection equipment used
in the manufacture and test of semiconductor devices are located in an
approximately 20,400 square foot facility in Santa Clara, California, under a
lease expiring on June 30, 2002.
ITEM 3. LEGAL PROCEEDINGS
As of March 27, 1999, the Company has no pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended March 27, 1999. Executive Officers of
the Company are listed on page 16 of this Form 10-K.
8
PART II
The Registrant's Annual Report to Shareholders for the year ended March
27, 1999, is filed as Exhibit 13.0 with the Form 10-K (the "1999 Annual
Report"). The information responsive to Items 5, 6, 7 and 8, which is contained
in the 1999 Annual Report, is specifically incorporated by reference in this
Form 10-K. With the exception of such information, the 1999 Annual Report is not
deemed filed as part of this report.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from the 1999 Annual Report, see "Common
Stock Market Prices" which appears on page 24.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the 1999 Annual Report, see "Selected
Financial Data" which appears beginning on page 23.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Incorporated by reference from the 1999 Annual Report, see
"Management's Discussion and Analysis" which appears on pages 7 to 9.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial instruments that expose the company to market risk are cash
and cash equivalents. The investments are held in recognized financial
instruments, have short term maturities and therefore have limited market risk.
While the Company has sales in foreign countries, all such sales are denominated
in U.S. dollars and therefore the company is not subject to foreign currency
risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following items which appear in the 1999 Annual Report are incorporated by
reference:
Consolidated Balance Sheets................................................ page 10
Consolidated Statements of Operations...................................... page 11
Consolidated Statements of Shareholders' Equity............................ page 12
Consolidated Statements of Cash Flows...................................... page 13
Notes to Consolidated Financial Statements................................. page 14 - 21
Independent Auditors' Report............................................... page 22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
9
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors of the Company is set forth under the
heading "Election of Directors" of the Company's Proxy Statement for the 1999
Annual Meeting of Shareholders, incorporated herein by reference. This Proxy
Statement is to be filed no later than 120 days after the close of the fiscal
year ended March 27, 1999.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding the Company's compensation of its executive
officers is set forth under the heading "Executive Compensation" of the Proxy
Statement, incorporated herein by reference. This Proxy Statement is to be filed
no later than 120 days after the close of the fiscal year ended March 27, 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners
and management is set forth under the heading "Stock Ownership of Certain
Beneficial Owners and Management" of the Proxy Statement, incorporated herein by
reference. This Proxy Statement is to be filed no later than 120 days after the
close of the fiscal year ended March 27, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following financial statements and schedules are filed or
incorporated by reference as a part of this report.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
1999 Annual Report
to Shareholders
Financial Statements (Page No.)
- -------------------- ------------------
Consolidated Balance Sheets - 10
As of March 27, 1999 and
March 28, 1998
Consolidated Statements of Operations - 11
Years Ended March 27, 1999,
March 28, 1998 and March 29, 1997
Consolidated Statements of Shareholders' Equity - 12
Years Ended March 27, 1999,
March 28, 1998 and March 29, 1997
Consolidated Statements of Cash Flows - 13
Years Ended March 27, 1999,
March 28, 1998 and March 29, 1997
Notes to Consolidated Financial Statements 14 - 21
Independent Auditors' Report 22
Form 10-K
(a)(2) Schedules (Page No.)
- ----------------- ----------
Report on Financial Statement Schedule and 14
Consent of Independent Auditors
Schedule II - Valuation and Qualifying 15
Accounts
All other schedules are not submitted because they are not applicable
or not required or because the required information is included in the financial
statements or notes thereto.
Except for those portions thereof incorporated by reference in this
Form 10-K, the 1999 Annual Report and the Proxy Statement are not to be deemed
filed as part of this report.
11
(a)(3) Exhibits
Reference is made to the Exhibit Index which is found on page 17 of
this Form 10-K Report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 27,
1999.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GIGA-TRONICS INCORPORATED
By /s/ GEORGE H. BRUNS, JR.
----------------------------
George H. Bruns, Jr.
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ GEORGE H. BRUNS, JR. Chairman of the Board 6/16/99
- ------------------------------------- and Chief Executive Officer --------------------
George H. Bruns, Jr. (Principal Executive Officer) (Date)
/s/ MARK H. COSMEZ II Vice President, Finance 6/16/99
- ------------------------------------- and Chief Financial Officer --------------------
Mark H. Cosmez II (Principal Accounting Officer) (Date)
/s/ JAMES A. COLE Director 6/18/99
- ------------------------------------- --------------------
James A. Cole (Date)
/s/ ROBERT C. WILSON Director 6/18/99
- ------------------------------------- --------------------
Robert C. Wilson (Date)
/s/ WILLIAM E. WILSON Director 6/17/99
- ------------------------------------- --------------------
William E. Wilson (Date)
13
Exhibit 23.0
REPORT ON FINANCIAL STATEMENT SCHEDULE AND CONSENT OF
INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Giga-tronics Incorporated
The audits referred to in our report dated May 4, 1999 included the
related financial statement schedule as of March 27, 1999 and for the years
ended March 27, 1999, March 28, 1998, and March 29, 1997, incorporated herein.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
We consent to incorporation by reference in the registration statements
(Nos. 333-34719, 333-39403, and 333-48889) on Form S-8 and (No. 333-50091) on
Form S-3 of Giga-tronics Incorporated of our reports included herein or
incorporated herein by reference.
/s/
------------------------
KPMG LLP
Mountain View, California
June 17, 1999
14
GIGA-TRONICS INCORPORATED
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
- -----------------------------------------------------------------------------------------------------------------
Balance at Charged to Balance
Beginning of Cost and Deductions At End
Description Period Expenses (Recoveries) of Period
- -----------------------------------------------------------------------------------------------------------------
Year ended March 27, 1999
Allowances deducted from assets:
Accounts receivable:
For doubtful accounts(1) $292,644 $152,581 $ 10,612 $434,613
---------------------------------------------------------------------
Total $292,644 $152,581 $ 10,612 $434,613
=====================================================================
Year ended March 28, 1998
Accounts receivable:
For doubtful accounts(1) $323,983 $ 39,800 $ 71,139 $292,644
---------------------------------------------------------------------
Total $323,983 $ 39,800 $ 71,139 $292,644
=====================================================================
Year ended March 29, 1997
Accounts receivable:
For doubtful accounts(1) $293,827 $ 23,451 $ (6,705) $323,983
---------------------------------------------------------------------
Total $293,827 $ 23,451 $ (6,705) $323,983
=====================================================================
(1) Allowance for accounts receivable collection exposure.
15
GIGA-TRONICS INCORPORATED
EXECUTIVE OFFICERS
Name Age Position
- ---- --- --------
George H. Bruns, Jr. 80 Chief Executive Officer since January, 1995, Chairman of the Board and a Director of the
Company. One of the founders of the Company in 1980 and has been a Director since inception.
Mr. Bruns is General Partner of The Bruns Company, a private venture investment and
management consulting firm. Mr. Bruns is Director of Testronics, Inc. of McKinney, Texas.
Mark H. Cosmez II 48 Vice President, Finance/Chief Financial Officer, Giga-tronics from October 1997. Before
joining the company, Mr. Cosmez was the Chief Financial Officer for Pacific Bell Public
Communications. Prior to 1997, he was the Vice President of Finance and Chief Financial
Officer for International Microcomputer Software Inc. (IMSI), a NASDAQ traded software
company. From 1994 to 1995, he was the corporate controller for The Software Toolworks Inc.
James R. Koehn 58 President, Giga-tronics Instrument division as of May 1998. From January 1995 to April 1998,
Mr. Koehn previously served as President of Marconi Instruments, Inc. of Fort Worth, Texas.
Prior to December 1994 he was a Vice President at Tektronix.
Jeffrey T. Lum 53 President, ASCOR, Inc. since November 1987. Founded the Company in 1987 and has been
President since inception. Before founding ASCOR, Mr. Lum was Vice President and founder of
Autek Systems Corporation.
Daniel S. Markowitz 48 President, Ultracision, Inc. and Viking Semiconductor Equipment, Inc. since April 1999.
Assistant to the Chairman of Giga-tronics, Inc. from September 1998 to March 1999. Vice
President, Automation Products, Ultracision, Inc. from February 1996 to August 1998. Mr.
Markowitz was the General Manager of Mar Engineering from September 1993 to January 1996.
Robert A. Smith 58 President, Microsource, Inc. from October 12, 1998. Before joining the Company, Mr. Smith
was the Executive Vice President of Haskel International, Inc. and the President of IPG from
1995 to 1998. From 1994 to 1995 he was the President and CEO of Industrial Tools, Inc.
16
GIGA-TRONICS INCORPORATED
INDEX TO EXHIBITS
2.1 Agreement and Plan of Reorganization, dated as of May 20, 1996 by and
among Giga-tronics Incorporated, ASCOR Acquisition Corp. and ASCOR,
Inc., previously filed on May 30, 1996, as Exhibit 2.1 to Form 10-K for
the fiscal year ended March 30, 1996.
2.2 Letter of Agreement between Giga-tronics Incorporated and ASCOR, Inc.,
dated May 20, 1996, as previously filed on May 30, 1996, as Exhibit 2.2
to Form 10-K for the fiscal year ended March 30, 1996.
2.3 Agreement and Plan of Reorganization, dated as of June 6, 1997, by and
among Giga-tronics Incorporated, GTV Acquisition Corp. and Viking
Semiconductor Equipment, Inc., as previously filed on June 13, 1997, as
Exhibit 2.3 to Form 10-K for the fiscal year ended March 29, 1997.
2.4 Agreement and Plan of Reorganization, dated as of December 2, 1997, by
and among Giga-tronics Incorporated, Giga Acquisition Corp. and
Ultracision, Inc. as previously filed on December 16, 1997, as Exhibit
2.1 to Form 8-K, and incorporated herein by reference.
2.5 Agreement and Plan of Reorganization as amended, dated as of December
22, 1997, by and among Giga-tronics Incorporated, Giga Micro Corp., and
Microsource Inc., as previously filed on June 1, 1998, as Exhibit 2.1
to Form 8-K and incorporated herein by reference.
3.1* Articles of Incorporation of Registrant, as amended.
3.2 By-laws of Registrant, as amended, previously filed on June 23, 1998 as
Exhibit 3.2 to Form 10-K for the fiscal year ended March 28, 1998, and
incorporated herein by reference.
10.1 1990 Restated Stock Option Plan and form of Incentive Stock Option
Agreement, previously filed on December 3, 1997 as Exhibit 19.1 to Form
S-8 and incorporated herein by reference.
10.2* Standard form Indemnification Agreement for Directors and Officers.
10.3 Lease between Giga-tronics Incorporated and Calfront Associates for
4650 Norris Canyon Road, San Ramon, CA, dated December 6, 1993,
previously filed as an exhibit to Form 10-K for the fiscal year ended
March 26, 1994.
10.4 Employee Stock Purchase Plan, previously filed on August 29, 1997, as
Exhibit 99.1 to Form S-8, and incorporated herein by reference.
10.5 Form of Incentive Stock Option Agreements for Ultracision, Inc., as
Amended by the Assumed Option Agreement, as previously filed on March
30, 1998 as Exhibit 99.3 to Form S-8 and incorporated herein by
reference.
13.0* 1999 Annual Report to Shareholders.
23.0 Report on Financial Statement Schedule and Consent of Independent
Auditors. (See page 14 of this Annual Report on Form 10-K.)
27.0* Financial Data Schedule.
* Attached as exhibits to this Form 10-K.
17