-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Op8wR8fNUUz8b9rsimG6yzOCiCh53wN5xpN2p5ycIAlI+1sd+ub/pSJN1/S43o9Z p+WzzYRHKzIs1LWym6SWJw== 0000891618-97-002395.txt : 19970520 0000891618-97-002395.hdr.sgml : 19970520 ACCESSION NUMBER: 0000891618-97-002395 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970404 FILED AS OF DATE: 19970519 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNICATIONS & POWER INDUSTRIES HOLDING CORP CENTRAL INDEX KEY: 0001000654 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 770407395 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-96858-01 FILM NUMBER: 97611219 BUSINESS ADDRESS: STREET 1: 607 HANSEN WAY CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4154934000 MAIL ADDRESS: STREET 1: 607 HANSEN WAY M/S A2000 STREET 2: P O BOX 51110 CITY: PALO ALTO STATE: CA ZIP: 94303-1110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNICATIONS & POWER INDUSTRIES INC CENTRAL INDEX KEY: 0001000564 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 770405693 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-96858 FILM NUMBER: 97611220 BUSINESS ADDRESS: STREET 1: 607 HANSEN WAY CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4154934000 MAIL ADDRESS: STREET 1: 607 HANSEN WAY M/S A200 STREET 2: P O BOX 51110 CITY: PALO ALTO STATE: CA ZIP: 94303-1110 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED APRIL 4, 1997 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended April 4, 1997 OR [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from __________________ to___________________ Commission File Number: 33-96858-01 Commission File Number: 33-96858 ------------------- ---------------- COMMUNICATIONS & POWER INDUSTRIES HOLDING COMMUNICATIONS & POWER INDUSTRIES, INC. CORPORATION (Exact name of registrant as specified in its (Exact name of registrant as specified in its charter) charter) DELAWARE DELAWARE (State of Incorporation) (State of Incorporation) 77-0407395 77-0405693 (I.R.S. employer identification number) (I.R.S. employer identification number) 607 HANSEN WAY 607 HANSEN WAY PALO ALTO, CALIFORNIA 94303-1110 PALO ALTO, CALIFORNIA 94303-1110 (415) 846-2900 (415) 846-2900 (Address, including zip code, and telephone number, (Address, including zip code, and telephone number, including area code, of registrant's principal including area code, of registrant's principal executive offices) executive offices) Securities registered pursuant to Section 12(b) of Securities registered pursuant to Section 12(b) of the Act: the Act: NONE NONE Securities registered pursuant to Section 12(g) of Securities registered pursuant to Section 12(g) of the Act: the Act: NONE NONE
Indicate by check mark whether each 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 ___. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding for each of the Registrant's classes of Common Stock, as of the latest practicable date: COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION: 200,000 SHARES OF COMMON STOCK, $.01 PAR VALUE, AT MAY 1, 1997. COMMUNICATIONS & POWER INDUSTRIES, INC.: 1 SHARE OF COMMON STOCK, $.01 PAR VALUE, AT MAY 1, 1997. 2 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC. and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) PART 1: FINANCIAL INFORMATION COMMUNICATIONS AND POWER INDUSTRIES, INC. Consolidated Condensed Balance Sheets, April 4, 1997 (unaudited) and September 27, 1996 . . . . . . 2 Consolidated Condensed Statements of Operations, 13-week period ended April 4, 1997 (unaudited) and 13-week period ended March 29, 1996 (unaudited) . . . . . . . . . . . 3 Consolidated Condensed Statements of Operations, 27-week period ended April 4, 1997 (unaudited) and 26-week period ended March 29, 1996 (unaudited) . . . . . . . . . . . 4 Consolidated Condensed Statements of Cash Flows, 27-week period ended April 4, 1997 (unaudited) and 26-week period ended March 29, 1996 (unaudited) . . . . . . . . . . . 5 Notes to Consolidated Condensed Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . 6 Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) . . 12 COMMUNICATIONS AND POWER INDUSTRIES HOLDING CORPORATION Consolidated Condensed Balance Sheets, April 4, 1997 (unaudited) and September 27, 1996 . . . . . . 7 Consolidated Condensed Statements of Operations, 13-week period ended April 4, 1997 (unaudited) and 13-week period ended March 29, 1996 (unaudited) . . . . . . . . . . . 8 Consolidated Condensed Statements of Operations, 27-week period ended April 4, 1997 (unaudited) and 26-week period ended March 29, 1996 (unaudited) . . . . . . . . . . . 9 Consolidated Condensed Statements of Cash Flows, 27-week period ended April 4, 1997 (unaudited) and 26-week period ended March 29, 1996 (unaudited) . . . . . . . . . . . 10 Notes to Consolidated Condensed Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . 11 Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) . . 12 PART II: OTHER INFORMATION Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
- 1 - 3 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands - unaudited)
April 4, September 27, ASSETS 1997 1996 --------- ------- CURRENT ASSETS Cash and cash equivalents $ 1,386 1,753 Accounts receivable, net 44,700 50,380 Inventories 51,516 46,471 Deferred taxes 7,109 7,109 Other current assets 2,618 2,133 --------- ------- Total current assets 107,329 107,846 Property, plant, and equipment, net 82,358 79,873 Goodwill, net 24,657 25,203 Debt issue costs, net 8,845 9,651 Deferred taxes 5,565 5,569 Other assets -- -- --------- ------- Total assets $ 228,754 228,142 ========= ======= LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY (DEFICIT) CURRENT LIABILITIES Revolving credit facility $ 26,600 17,000 Accounts payable - trade 11,605 10,527 Accrued expenses 15,328 22,371 Product warranty 4,098 4,327 Current portion of term loans 3,950 3,950 Income taxes payable 9,107 10,560 Advance payments from customers 4,404 4,535 --------- ------- Total current liabilities 75,092 73,270 Senior term loans 32,750 35,650 Senior subordinated notes 100,000 100,000 Deferred taxes -- -- --------- ------- Total liabilities 207,842 208,920 --------- ------- SENIOR REDEEMABLE PREFERRED STOCK 16,151 14,822 --------- ------- Commitments and contingencies STOCKHOLDERS' EQUITY (DEFICIT): Junior Preferred Stock 1 1 Common Stock -- -- Additional paid-in capital 31,335 30,521 Accumulated deficit (25,506) (25,080) Less stockholder loans (1,069) (1,042) --------- ------- Net stockholders' equity (deficit) 4,761 4,400 --------- ------- Total liabilities, redeemable preferred stock and equity (deficit) $ 228,754 228,142 ========= =======
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 2 - 4 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands - unaudited)
13-Week 13-Week period ended period ended April 4, March 29, 1997 1996 ------- ------ Sales $63,869 63,467 Cost of sales 46,096 45,861 ------- ------ Gross Profit 17,773 17,606 ------- ------ Operating costs and expenses: Research and development 1,831 1,919 Marketing 5,250 4,892 General and administrative 2,885 2,801 ------- ------ Total operating costs and expenses 9,966 9,612 ------- ------ Operating income 7,807 7,994 Interest expense 4,722 4,620 ------- ------ Earnings before taxes 3,085 3,374 Income tax expense 195 1,249 ------- ------ Net earnings (loss) 2,890 2,125 Preferred dividends: Senior Redeemable Preferred Stock 621 541 Junior Preferred Stock 414 361 ------- ------ Earnings attributable to common stock $ 1,855 1,223 ======= ======
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 3 - 5 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands - unaudited)
27-Week 26-Week period ended period ended April 4, March 29, 1997 1996 --------- ------- Sales $ 119,191 126,100 Cost of sales 88,562 91,839 --------- ------- Gross Profit 30,629 34,261 --------- ------- Operating costs and expenses: Research and development 3,724 3,700 Marketing 10,088 9,733 General and administrative 5,555 6,547 --------- ------- Total operating costs and expenses 19,367 19,980 --------- ------- Operating income 11,262 14,281 Interest expense 9,492 9,620 --------- ------- Earnings before taxes 1,770 4,661 Income tax expense 195 1,725 --------- ------- Net earnings (loss) 1,575 2,936 Preferred dividends: Senior Redeemable Preferred Stock 1,221 1,008 Junior Preferred Stock 814 672 --------- ------- Earnings attributable to common stock $ (460) 1,256 ========= =======
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 4 - 6 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) STATEMENTS OF CASH FLOWS (in thousands - unaudited)
27-Week 26-Week period period ended ended April 4, March 29, 1997 1996 ------- ------- OPERATING ACTIVITIES Net cash provided by (used in) operating activities $ (347) 4,395 ------- ------- INVESTING ACTIVITIES Purchase of property, plant and equipment, net (6,528) (4,396) (Increase) decrease in other non current assets -- (122) ------- ------- Net cash used in investing activities (6,528) (4,518) ------- ------- FINANCING ACTIVITIES Net (Repayments)/Proceeds from debt issue costs (192) (250) Net (Repayments)/Proceeds from stockholder loans -- 10 Net (Repayments)/Proceeds from revolving creditfacility 9,600 (3,100) Net (Repayments)/Proceeds from senior term loans (2,900) -- ------- ------- Net cash provided by (used in) financing activities 6,508 (3,340) ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (367) (3,463) Cash and cash equivalents at beginning of period 1,753 8,267 ------- ------- Cash and cash equivalents at end of period $ 1,386 4,804 ======= =======
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 5 - 7 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The accompanying unaudited interim condensed consolidated financial statements of Communications & Power Industries, Inc. ("CPI" or "Successor") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted and, accordingly, these financial statements should be read in conjunction with the financial statements and the notes thereto contained in CPI's September 27, 1996 Annual Report on Form 10-K. Management believes that these unaudited interim condensed financial statements contain all adjustments, all of which are of a normal, recurring nature, necessary to a fair statement of the results for the interim period presented. During the quarter ended April 4, 1997, CPI paid preferred dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 6,212 additional shares of its Senior Redeemable Preferred Stock and 4,141 shares of its Junior Preferred Stock, respectively. During the first half ended April 4, 1997, the Company paid preferred dividends through the issuance of 12,214 shares of its Senior Redeemable Preferred Stock and 8,142 shares of its Junior Preferred Stock. - 6 - 8 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands - unaudited)
April 4, September 27, ASSETS 1997 1996 --------- --------- CURRENT ASSETS Cash and cash equivalents $ 1,386 1,753 Accounts receivable, net 44,700 50,380 Inventories 51,516 46,471 Deferred taxes 7,109 7,109 Other current assets 2,618 2,133 --------- --------- Total current assets 107,329 107,846 Property, plant, and equipment, net 82,358 79,873 Goodwill, net 24,657 25,203 Debt issue costs, net 8,845 9,651 Deferred taxes 5,565 5,569 Other assets -- -- --------- --------- Total assets $ 228,754 228,142 ========= ========= LIABILITIES, REDEEMABLE PREFERRED STOCK, PREFERRED STOCK OF SUBSIDIARY AND EQUITY (DEFICIT) CURRENT LIABILITIES Revolving credit facility $ 26,600 17,000 Accounts payable - trade 11,605 10,527 Accrued expenses 15,328 22,371 Product warranty 4,098 4,327 Current portion of term loans 3,950 3,950 Income taxes payable 9,107 10,560 Advance payments from customers 4,404 4,535 --------- --------- Total current liabilities 75,092 73,270 Senior term loans 32,750 35,650 Senior subordinated notes 100,000 100,000 Deferred taxes -- -- --------- --------- Total liabilities 207,842 208,920 --------- --------- SENIOR REDEEMABLE PREFERRED STOCK OF SUBSIDIARY 16,151 14,822 --------- --------- JUNIOR PREFERRED STOCK OF SUBSIDIARY 11,593 10,779 --------- --------- Commitments and contingencies STOCKHOLDERS' EQUITY (DEFICIT): Common Stock 2 2 Additional paid-in capital 19,741 19,741 Accumulated deficit (25,506) (25,080) Less stockholder loans (1,069) (1,042) --------- --------- Net stockholders' equity (deficit) (6,832) (6,379) --------- --------- Total liabilities, redeemable preferred stock, preferred stock of subsidiary and equity (deficit) $ 228,754 228,142 ========= =========
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 7 - 9 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands - unaudited)
13-Week 13-Week period period ended ended April 4, March 29, 1997 1996 ------- ------- Sales $63,869 63,467 Cost of sales 46,096 45,861 ------- ------- Gross Profit 17,773 17,606 ------- ------- Operating costs and expenses: Research and development 1,831 1,919 Marketing 5,250 4,892 General and administrative 2,885 2,801 ------- ------- Total operating costs and expenses 9,966 9,612 ------- ------- Operating income 7,807 7,994 Interest expense 4,722 4,620 ------- ------- Earnings before taxes 3,085 3,374 Income tax expense 195 1,249 ------- ------- Net earnings (loss) 2,890 2,125 Preferred dividends: Senior Redeemable Preferred Stock 621 541 Junior Preferred Stock 414 361 ------- ------- Earnings attributable to common stock $ 1,855 1,223 ======= =======
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 8 - 10 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands - unaudited)
27-Week 26-Week period period ended ended April 4, March 29, 1997 1996 --------- --------- Sales $ 119,191 126,100 Cost of sales 88,562 91,839 --------- --------- Gross Profit 30,629 34,261 --------- --------- Operating costs and expenses: Research and development 3,724 3,700 Marketing 10,088 9,733 General and administrative 5,555 6,547 --------- --------- Total operating costs and expenses 19,367 19,980 --------- --------- Operating income 11,262 14,281 Interest expense 9,492 9,620 --------- --------- Earnings before taxes 1,770 4,661 Income tax expense 195 1,725 --------- --------- Net earnings (loss) 1,575 2,936 Preferred dividends: Senior Redeemable Preferred Stock 1,221 1,008 Junior Preferred Stock 814 672 --------- --------- Earnings attributable to common stock $ (460) 1,256 ========= =========
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 9 - 11 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries STATEMENTS OF CASH FLOWS (in thousands - unaudited)
27-Week 26-Week period period ended ended April 4, March 29, 1997 1996 ------- ------- OPERATING ACTIVITIES Net cash provided by (used in) operating activities $ (347) 4,395 ------- ------- INVESTING ACTIVITIES Purchase of property, plant and equipment, net (6,528) (4,396) (Increase) decrease in other non current assets -- (122) ------- ------- Net cash used in investing activities (6,528) (4,518) ------- ------- FINANCING ACTIVITIES Net (Repayments)/Proceeds from debt issue costs (192) (250) Net (Repayments)/Proceeds from stockholder loans -- 10 Net (Repayments)/Proceeds from revolving credit facility 9,600 (3,100) Net (Repayments)/Proceeds from senior term loans (2,900) -- ------- ------- Net cash provided by (used in) financing activities 6,508 (3,340) ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (367) (3,463) Cash and cash equivalents at beginning of period 1,753 8,267 ------- ------- Cash and cash equivalents at end of period $ 1,386 4,804 ======= =======
See accompanying notes to the unaudited interim condensed consolidated financial statements. - 10 - 12 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The accompanying unaudited interim condensed consolidated financial statements of Communications & Power Industries Holding Corporation ("Holding") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted and, accordingly, these financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Holding's September 27, 1996 Annual Report on Form 10-K. Management believes that these unaudited interim condensed financial statements contain all adjustments, all of which are of a normal, recurring nature, necessary to a fair statement of the results for the interim period presented. During the quarter ended April 4, 1997, CPI paid preferred dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 6,212 additional shares of its Senior Redeemable Preferred Stock and 4,141 shares of its Junior Preferred Stock, respectively. During the first half ended April 4, 1997, CPI paid preferred dividends through the issuance of 12,214 shares of its Senior Redeemable Preferred Stock and 8,142 shares of its Junior Preferred Stock. - 11 - 13 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Incoming orders during the second quarter of Fiscal 1997 were $75.5 million as compared to $66.7 for the second quarter of Fiscal 1996, an increase of 13.2%. Orders during the first six months of Fiscal 1997 were $141.7 million as compared to $136.8 million over the comparable period in the prior fiscal year, a growth rate of 3.6%. However, incoming order levels fluctuate significantly on a quarterly basis and a particular quarter's order rate may not be indicative of future order levels. In addition, the Company's sales are highly dependent upon manufacturing scheduling, performance and shipments and, accordingly, it is not possible to accurately predict when these orders will be recognized as sales. As of April 4, 1997, the Company had an order backlog of $173.2 million, representing approximately eight months of sales compared to order backlog of $155.6 million as of March 29, 1996. Sales for the second quarter of Fiscal 1997 were $63.9 million, an increase of $.4 million, or .6%, from the second quarter of Fiscal 1996. Sales for the first six months of Fiscal 1997 were $119.2 million, a decrease of $6.9 million, or 5.5% below the comparable period in the prior fiscal year. For Fiscal 1997, sales for the second quarter showed a 15.5% improvement over the first quarter sales of $55.3 million which were affected by the completion of the Company's consolidation efforts. In November 1996, the Company relocated one of its manufacturing plants from a leased facility in Santa Clara to shared facilities in Palo Alto which resulted in shipping delays and, in December 1996, the Company moved the last of its product lines from Salt Lake City, Utah to San Carlos, California which impacted production yields. In terms of markets, the sales decline for the first six months of Fiscal 1997 was reflected in lower sales in the communications, electronic countermeasures and industrial markets, partially offset by higher sales of product in the radar and scientific markets. Medical sales remained relatively flat compared to the same time period in the prior fiscal year. Communications sales totaled $55.1 million for the first six months of Fiscal 1997 and were down $2.9 million, or 5%, from the six months of Fiscal 1996. However, for Fiscal 1997, second quarter shipments in this market were up $5.5 million, or 22.3%, from the first quarter which reflects the anticipated recovery from shipping delays related to consolidation activities and related to the production ramp-up necessary to meet the demand for new Satcom products. Electronic countermeasure sales were $38.1 million for the first six months, which was a decrease of $4.7 million, or 52.4%, compared to the same time period in Fiscal 1996. This decrease was the result of a gap between the completion of a one major customer program and the phase in of another customer program. Industrial sales were $11.2 million, a decrease of $1.9 million, or 14.4%, compared to prior year which is due to the timing of customer defined delivery schedules. Radar sales were $38.1 million, an increase of $1.9 million, or 5.3%, from prior year due to strong order receipts as OEM consolidations and downsizing has promoted outsource requirements for amplifier and transmitter subsystems which the Company manufactures. Scientific sales increased $.6 million, or 32.9%, due to an anticipated increase in several new development programs. - 12 - 14 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) Gross profit increased to $17.8 million, or 27.8% of sales, in the second quarter of Fiscal 1997 from $17.6 million, or 27.7% of sales, in the second quarter of Fiscal 1996 based on the slight increase in sales volume and despite an increase in depreciation expense of approximately $.5 million. However, comparing the first six months of Fiscal 1997 to Fiscal 1996, gross profit decreased to $30.6 million, or 25.7% of sales, from $34.3 million, or 27.2% of sales, due to the impact of planned consolidation efforts including lower sales volume in the first quarter of Fiscal 1997, higher integration costs related to the last product line moved from Utah, and higher depreciation expense of approximately $.8 million related mainly to facilities upgrades required to complete the moves. Operating costs and expenses increased to $10.0 million, or 15.6% of sales, in the second quarter of Fiscal 1997 from $9.6 million, or 14.4% of sales, in the second quarter of Fiscal 1996 primarily due to an increase in marketing efforts which correspond to the increase in order receipts. Operating costs and expenses for the first six months of Fiscal 1997 were $19.4 million, or 16.8% of sales, which is a decrease from $20.0 million, or 15.8% of sales, for the first six months of Fiscal 1996 due to lower general and administrative costs primarily related to reduced management incentive accruals tied to first half performance. Operating income was $7.8 million, or 12.2% of sales, for the second quarter of Fiscal 1997, as compared to $8.0 million, or 12.6% of sales for the second quarter of Fiscal 1996. Operating income was $11.3 million, or 9.4% of sales for the first six months of Fiscal 1997, as compared to $14.3 million, or 11.3% of sales for the first six months of Fiscal 1996. The $3.0 million decrease in operating income in the first half of Fiscal 1997 was primarily related to the first quarter impact of consolidation efforts described above. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the second quarter of Fiscal 1997 was $10.1 million, or 15.9% of sales, which was consistent with the Company's performance of $10.1 million (excluding the effect of a $.3 million charge during the quarter relating to the write-up of inventory recorded in connection with the Acquisition), or 16.0% of sales, for the second quarter of Fiscal 1996. This represents a significant improvement over the Company's first quarter EBITDA of only $5.7 million, or 10.3% of sales, which was impacted by lower volume and higher move-related production costs. EBITDA for the first six months of Fiscal 1997 was $15.8 million, or 13.3% of sales, compared to $19.7 million (excluding a $1.7 million charge for the write-up of inventory), or 15.6% of sales, for the first six months of Fiscal 1996. Costs associated with the Salt Lake City to San Carlos consolidation, including travel and training expenses, temporary duplication of labor and facility resources and poor manufacturing yields on the moved product lines, negatively impacted EBITDA by approximately $1.9 million in the first half of Fiscal 1997 (the final stages of the move) compared to $.8 million during the first half of Fiscal 1996 (the initial planning stages of the move). Earnings before taxes amounted to $3.1 million and $1.7 million for the 13-week and 27-week periods ended April 4, 1997, respectively, as compared to $3.4 million and $4.7 million for the 13-week and 26-week periods ended March 29, 1996. The decrease of $2.9 million, or 62.0%, for the first six months of Fiscal 1997 was due to the impact of the Company's consolidation efforts described above, including additional depreciation expense of $.9 million, offset partially by lower incentive accruals and lower interest. Interest was $9.5 million in the first half of Fiscal 1997 ($8.5 million of cash interest expense) compared to $9.6 million in the first half of Fiscal 1996 ($8.6 million of cash interest expense). - 13 - 15 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) LIQUIDITY AND CAPITAL RESOURCES Cash used by operating activities for the first six months of Fiscal 1997 was $.3 million, a decrease of $4.7 million from the $4.4 million provided by operating activities during the first six months of Fiscal 1996. Cash used in operations was primarily the result of increases in inventory of $5.0 million, cash tax payments of $1.6 million and lower levels of deferred liabilities due to the timing of cash payments required for payroll, supplemental property taxes and interest. These cash needs were partially offset by lower levels of accounts receivable and higher levels of outstanding accounts payable. Cash flow from investing activities was comprised principally of capital expenditures for property and equipment, which amounted to $6.5 million for the first six months of Fiscal 1997 as compared to $4.4 million for the first half of Fiscal 1996. The $2.1 million increase was primarily attributable to the Company's consolidation efforts. These investing activities, combined with the cash needs of operations, required $6.7 million of net proceeds during the first six months from the Company's senior credit agreement. As of April 4, 1997, the Company had working capital of approximately $32.2 million, a decrease of $2.3 million, or 6.8%, from September 27, 1996. The decrease in working capital was substantially attributable to a higher balance on the Company's revolving credit facility offset partially by lower accrued expenses. The Company's current primary source of liquidity, other than funds generated from operations, is the $35.0 million revolving credit facility provided under its senior credit agreement (of which $5.4 million was available as of May 2, 1997). Management believes that the Company will have adequate capital resources and liquidity (including cash flow from operations and borrowing under its revolving credit facility) to meet its obligations, fund all required capital expenditures and pursue its business strategy for the foreseeable future and, in any event, for the next 12 months. - 14 - 16 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None. ITEM 2: CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. No reports were filed on Form 8-K during the quarter ended April 4, 1997. - 15 - 17 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. COMMUNICATIONS & POWER INDUSTRIES, INC. By: /s/ AL D. WILUNOWSKI -------------------------------------------- Al D. Wilunowski Chief Executive Officer and President Date: May 16, 1997 By: /s/ LYNN E. HARVEY -------------------------------------------- Lynn E. Harvey Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: May 16, 1997 - 16 - 18 EXHIBIT INDEX EXHIBIT NO. Description. - ------- ------------ 27.1 Financial Data Schedule 27.2 Financial Data Schedule EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION FOR THE QUARTER ENDED APRIL 4, 1997. 0001000654 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORP. 1,000 6-MOS OCT-03-1997 SEP-28-1996 APR-04-1997 1,386 0 44,700 0 51,516 107,329 82,358 0 228,754 75,092 132,750 16,151 0 2 (6,830) 228,754 119,191 119,191 88,562 88,562 3,724 0 9,492 1,770 195 1,575 0 0 0 1,575 0 0
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM CONDENSED CONSOLIATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q COMMUNICATIONS & POWER INDUSTRIES, INC. FOR THE QUARTER ENDED APRIL 4, 1997. 0001000564 COMMUNICATIONS & POWER INDUSTRIES, INC. 1,000 6-MOS OCT-03-1997 SEP-28-1996 APR-04-1997 1,386 0 44,700 0 51,516 107,329 82,358 0 228,754 75,092 132,750 16,151 1 0 4,760 228,754 119,191 119,191 88,562 88,562 3,724 0 9,492 1,770 195 1,575 0 0 0 1,575 0 0
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