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 ---------------- PAGE 2 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
PAGE 3 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 PAGE 4 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. PAGE 5 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. PAGE 6 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): PAGE 7
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) ======== ======== ======== ========
PAGE 8 (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) ========== ============ ========== ===========
PAGE 9 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. PAGE 10 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 PAGE 11 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. PAGE 12 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 PAGE 13 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 PAGE 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. 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)