[ X
]
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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For
the quarterly period ended December 27,
2008.
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[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from __________ to
__________.
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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)
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California
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94-2656341
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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4650
Norris Canyon Road, San Ramon, CA
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94583
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (925)
328-4650
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N/A
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(Former
name, former address and former fiscal year, if changed since last
report)
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Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[ ]
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Smaller
reporting company
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[ X
]
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(Do
not check if a smaller reporting company)
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PART
I - FINANCIAL INFORMATION
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Page No.
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||||||
Item
1.
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Financial
Statements
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3
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4
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5
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6
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Item
2.
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11
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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15
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Item
4T.
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15
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Item
1.
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Legal
Proceedings
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16
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Item
1A.
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Risk
Factors
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16
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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16
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Item
3.
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Defaults
Upon Senior Securities
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16
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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16
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Item
5.
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Other
information
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16
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17
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Item
6.
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Exhibits
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||||||
31.1 Certification
of CEO pursuant to Section 302 of Sarbanes-Oxley Act.
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18
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31.2 Certification
of CFO pursuant to Section 302 of Sarbanes-Oxley Act.
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19
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32.1 Certification
of CEO pursuant to Section 906 of Sarbanes-Oxley Act.
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20
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32.2 Certification
of CFO pursuant to Section 906 of Sarbanes-Oxley Act.
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21
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CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited)
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||||||||
(In
Thousands Except Share Data)
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December
27, 2008
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March
29, 2008
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||||||
Assets
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||||||||
Current
assets
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||||||||
Cash
and cash equivalents
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$ | 2,113 | $ | 1,845 | ||||
Trade
accounts receivable, net of allowance of $156 and
$93, respectively
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2,043 | 2,693 | ||||||
Inventories,
net
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5,012 | 5,008 | ||||||
Prepaid
expenses and other current assets
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337 | 383 | ||||||
Total
current assets
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9,505 | 9,929 | ||||||
Property
and equipment, net
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344 | 400 | ||||||
Other
assets
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16 | 32 | ||||||
Total
assets
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$ | 9,865 | $ | 10,361 | ||||
Liabilities
and shareholders’ equity
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||||||||
Current
liabilities
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||||||||
Accounts
payable
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$ | 647 | $ | 649 | ||||
Accrued
commissions
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172 | 181 | ||||||
Accrued
payroll and benefits
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544 | 526 | ||||||
Accrued
warranty
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187 | 190 | ||||||
Customer
advances
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765 | 646 | ||||||
Reserve
for lease obligations
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183 | 247 | ||||||
Current
portion of capital lease obligation
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16 | -- | ||||||
Other
current liabilities
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363 | 359 | ||||||
Total
current liabilities
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2,877 | 2,798 | ||||||
Long
term obligations
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136 | 171 | ||||||
Total
liabilities
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3,013 | 2,969 | ||||||
Commitments
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||||||||
Shareholders’
equity
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||||||||
Preferred
stock of no par value;
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Authorized
1,000,000 shares; no shares outstanding at December 27, 2008 and
March 29, 2008
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-- | -- | ||||||
Common
stock of no par value;
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||||||||
Authorized
40,000,000 shares; 4,824,021 shares at December 27, 2008
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||||||||
and
4,824,021 at March 29, 2008 issued and outstanding
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13,571 | 13,398 | ||||||
Accumulated
deficit
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(6,719 | ) | (6,006 | ) | ||||
Total
shareholders’ equity
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6,852 | 7,392 | ||||||
Total
liabilities and shareholders’ equity
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$ | 9,865 | $ | 10,361 |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)
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||||||||||||||||
Three
Months Ended
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Nine
Months Ended
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|||||||||||||||
(In
Thousands Except Per Share Data)
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December
27, 2008
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December
29, 2007
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December
27, 2008
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December
29, 2007
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Net
sales
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$ | 5,099 | $ | 4,953 | $ | 12,276 | $ | 14,232 | ||||||||
Cost
of sales
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2,679 | 2,904 | 7,121 | 8,158 | ||||||||||||
Gross
profit
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2,420 | 2,049 | 5,155 | 6,074 | ||||||||||||
Engineering
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479 | 520 | 1,557 | 1,620 | ||||||||||||
Selling,
general and administrative
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1,590 | 1,454 | 4,391 | 4,094 | ||||||||||||
Restructuring
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-- | -- | -- | 80 | ||||||||||||
Total
operating expenses
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2,069 | 1,974 | 5,948 | 5,794 | ||||||||||||
Operating
income (loss) from continuing
operations
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351 | 75 | (793 | ) | 280 | |||||||||||
Other
expense
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-- | 30 | -- | 30 | ||||||||||||
Interest
(expense) income, net
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(2 | ) | 6 | 7 | 29 | |||||||||||
Income
(loss) from continuing operations before income
taxes
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349 | 51 | (786 | ) | 279 | |||||||||||
Provision
for income taxes
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-- | -- | 2 | 2 | ||||||||||||
Income
(loss) from continuing operations
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349 | 51 | (788 | ) | 277 | |||||||||||
Income
(loss) on discontinued operations, net of income
taxes
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- | (20 | ) | 75 | 34 | |||||||||||
Net
income (loss)
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$ | 349 | $ | 31 | $ | (713 | ) | $ | 311 | |||||||
Basic
and diluted net earnings (loss)
per
share:
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From
continuing operations
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$ | 0.07 | $ | 0.01 | $ | (0.16 | ) | $ | 0.05 | |||||||
On
discontinued operations
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- | (0.00 | ) | 0.01 | 0.01 | |||||||||||
Basic
and diluted net earnings (loss)
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||||||||||||||||
per
share
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$ | 0.07 | $ | 0.01 | $ | (0.15 | ) | $ | 0.06 | |||||||
Shares
used in per share calculation:
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||||||||||||||||
Basic
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4,824 | 4,814 | 4,824 | 4,811 | ||||||||||||
Diluted
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4,824 | 4,913 | 4,824 | 4,884 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
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||||||||
Nine
Months Ended
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(In
Thousands)
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December
27, 2008
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December
29, 2007
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Cash
flows from operations:
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Net
(loss) income
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$ | (713 | ) | $ | 311 | |||
Adjustments
to reconcile net (loss) income to net cash provided by operations:
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Depreciation
and amortization
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122 | 95 | ||||||
Loss
on sale of fixed asset
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-- | 2 | ||||||
Stock
based compensation
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173 | 147 | ||||||
Deferred
rent
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(63 | ) | (111 | ) | ||||
Changes
in operating assets and liabilities
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771 | (297 | ) | |||||
Net
cash provided by operations
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290 | 147 | ||||||
Cash
flows from investing activities:
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||||||||
Purchases
of property and equipment
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(66 | ) | (121 | ) | ||||
Net
cash used in investing activities
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(66 | ) | (121 | ) | ||||
Cash
flows from financing activities:
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||||||||
Proceeds
from capital lease
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44 | -- | ||||||
Proceeds
from issuance of common stock
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-- | 10 | ||||||
Net
cash provided by financing activities
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44 | 10 | ||||||
Increase
in cash and cash equivalents
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268 | 36 | ||||||
Cash
and cash equivalents at beginning of period
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1,845 | 1,804 | ||||||
Cash
and cash equivalents at end of period
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$ | 2,113 | $ | 1,840 |
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See
accompanying notes to unaudited condensed consolidated financial
statements.
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INVENTORIES
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|||||||||
(In
thousands)
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December
27, 2008
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March
29, 2008
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Raw
materials
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$ | 2,719 | $ | 2,767 | |||||
Work-in-progress
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1,479 | 1,501 | |||||||
Finished
goods
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271 | 369 | |||||||
Demonstration
inventories
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543 | 371 | |||||||
Total
inventories
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$ | 5,012 | $ | 5,008 |
Three
Months Ended
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Nine
Months Ended
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|||||||||||||||
(In
thousands except per share data)
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December
27, 2008
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December
29, 2007
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December
27, 2008
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December
29, 2007
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Net
income (loss)
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$ | 349 | $ | 31 | $ | (713 | ) | $ | 311 | |||||||
Weighted
average:
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||||||||||||||||
Common
shares outstanding
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4,824 | 4,814 | 4,824 | 4,811 | ||||||||||||
Potential
common shares
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- | 99 | - | 73 | ||||||||||||
Common
shares assuming dilution
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4,824 | 4,913 | 4,824 | 4,884 | ||||||||||||
Net
income (loss) per share of common stock
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$ | 0.07 | $ | 0.01 | $ | (0.15 | ) | $ | 0.06 | |||||||
Net
income (loss) per share of common stock assuming dilution
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0.07 | 0.01 | (0.15 | ) | 0.06 | |||||||||||
Stock
options not included in computation
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941 | 393 | 941 | 393 |
Three
Months Ended
December
27, 2008
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Dividend
yield
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None
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Expected
volatility
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99.24%
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Risk-free
interest rate
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1.51%
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Expected
term (years)
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3.75
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Three
Months Ended
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||||||||||||||||
(In
thousands)
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December
27, 2008
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December
29, 2007
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||||||||||||||
Net Sales
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Net Income (Loss)
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Net Sales
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Net Income (Loss)
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|||||||||||||
Giga-tronics
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$ | 3,771 | $ | 90 | $ | 3,999 | $ | 45 | ||||||||
Microsource
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1,328 | 259 | 954 | (14 | ) | |||||||||||
Total
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$ | 5,099 | $ | 349 | $ | 4,953 | $ | 31 |
Nine
Months Ended
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||||||||||||||||
(In
thousands)
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December
27, 2008
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December
29, 2007
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||||||||||||||
Net Sales
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Net Income (Loss)
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Net Sales
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Net Income (Loss)
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|||||||||||||
Giga-tronics
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$ | 8,869 | $ | (1,053 | ) | $ | 11,009 | $ | 94 | |||||||
Microsource
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3,407 | 340 | 3,223 | 215 | ||||||||||||
Total
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$ | 12,276 | $ | (713 | ) | $ | 14,232 | $ | 311 |
Three
Months Ended
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Nine
Months Ended
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|||||||||||||||
(In
thousands)
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December
27, 2008
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December
29, 2007
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December
27, 2008
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December
29, 2007
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Balance
at beginning of period
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$ | 184 | $ | 181 | $ | 190 | $ | 207 | ||||||||
Provision,
net
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29 | 10 | 156 | 86 | ||||||||||||
Warranty
costs incurred
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(26 | ) | (19 | ) | (159 | ) | (121 | ) | ||||||||
Balance
at end of period
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$ | 187 | $ | 172 | $ | 187 | $ | 172 |
New
Orders
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||||||||||||
Three
Months Ended
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||||||||||||
(Dollars
in thousands)
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December
27, 2008
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%
change
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December
29, 2007
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Giga-tronics
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$ | 3,052 | (19 | %) | $ | 3,785 | ||||||
Microsource
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6,409 | 472 | % | 1,120 | ||||||||
Total
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$ | 9,461 | 93 | % | $ | 4,905 |
Nine
Months Ended
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||||||||||||
(Dollars
in thousands)
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December
27, 2008
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%
change
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December
29, 2007
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Giga-tronics
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$ | 9,457 | (20 | %) | $ | 11,765 | ||||||
Microsource
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7,317 | 291 | % | 1,871 | ||||||||
Total
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$ | 16,774 | 23 | % | $ | 13,636 |
Backlog
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||||||||||||
(Dollars
in thousands)
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December
27, 2008
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%
Change
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December
29, 2007
|
|||||||||
Backlog
of unfilled orders
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$ | 12,026 | 53 | % | $ | 7,843 | ||||||
Backlog
of unfilled orders shippable within one year
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8,853 | 96 | % | 4,510 | ||||||||
Previous
fiscal year (FY) quarter end backlog reclassified during year as shippable
later than one year
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-- | -- | -- | |||||||||
Net
cancellations during year of previous FY quarter end one- year
backlog
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-- | -- | -- |
Net
Sales
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||||||||||||
Three
Months Ended
|
||||||||||||
(Dollars
in thousands)
|
December
27, 2008
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%
change
|
December
29, 2007
|
|||||||||
Giga-tronics
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$ | 3,771 | (6 | %) | $ | 3,999 | ||||||
Microsource
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1,328 | 39 | % | 954 | ||||||||
Total
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$ | 5,099 | 3 | % | $ | 4,953 |
Nine
Months Ended
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||||||||||||
(Dollars
in thousands)
|
December
27, 2008
|
%
change
|
December
29, 2007
|
|||||||||
Giga-tronics
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$ | 8,869 | (19 | %) | $ | 11,009 | ||||||
Microsource
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3,407 | 6 | % | 3,223 | ||||||||
Total
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$ | 12,276 | (14 | %) | $ | 14,232 |
Cost
of Sales
|
||||||||||||
Three
Months Ended
|
||||||||||||
(Dollars
in thousands)
|
December
27, 2008
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%
change
|
December
29, 2007
|
|||||||||
Cost
of sales
|
$ | 2,679 | (8 | %) | $ | 2,904 |
Nine
Months Ended
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||||||||||||
(Dollars
in thousands)
|
December
27, 2008
|
%
change
|
December
29, 2007
|
|||||||||
Cost
of sales
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$ | 7,121 | (13 | %) | $ | 8,158 |
Operating
Expenses
|
||||||||||||
Three
Months Ended
|
||||||||||||
(Dollars
in thousands)
|
December
27, 2008
|
%
change
|
December
29, 2007
|
|||||||||
Engineering
|
$ | 479 | (8 | %) | $ | 520 | ||||||
Selling,
general and administrative
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1,590 | 9 | % | 1,454 | ||||||||
Total
|
$ | 2,069 | 5 | % | $ | 1,974 |
Nine
Months Ended
|
||||||||||||
(Dollars
in thousands)
|
December
27, 2008
|
%
change
|
December
29, 2007
|
|||||||||
Engineering
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$ | 1,557 | (4 | %) | $ | 1,620 | ||||||
Selling,
general and administrative
|
4,391 | 7 | % | 4,094 | ||||||||
Restructuring
|
- | (100 | %) | 80 | ||||||||
Total
|
$ | 5,948 | 3 | % | $ | 5,794 |
GIGA-TRONICS
INCORPORATED
|
||||
(Registrant)
|
||||
By:
|
||||
Date:
|
February
2, 2009
|
/s/
John R. Regazzi
|
||
John
R. Regazzi
|
||||
President
and Chief Executive Officer
|
||||
(Principal
Executive Officer)
|
||||
Date:
|
February
2, 2009
|
/s/
Patrick J. Lawlor
|
||
Patrick
J. Lawlor
|
||||
Vice
President Finance/
|
||||
Chief
Financial Officer & Secretary
|
||||
(Principal
Accounting Officer)
|