-----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, U5C2pULuuX3lxnU2bNiPYGJ+8GO/a0QoOU1UexAU30IJCah6KZEmQJrJkhksmwzH DZjfj5aqAQ8ml4NiZjhueg== 0000891618-97-003515.txt : 19970819 0000891618-97-003515.hdr.sgml : 19970819 ACCESSION NUMBER: 0000891618-97-003515 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970704 FILED AS OF DATE: 19970818 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: 97665656 BUSINESS ADDRESS: STREET 1: 607 HANSEN WY 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: 97665657 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 JULY 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 July 4, 1997 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 Number: 33-96858-01 Commission File Number: 33-96858 COMMUNICATIONS & POWER COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION INDUSTRIES, INC. (Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its 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 the Securities registered pursuant to Section 12(b) of Act: the Act: None None Securities registered pursuant to Section 12(g) of the Securities registered pursuant to Section 12(g) of 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: 199,850 shares of Common Stock, $.01 par value, at July 4, 1997. Communications & Power Industries, Inc.: 1 share of Common Stock, $.01 par value, at July 4, 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, July 4, 1997 (unaudited) and September 27, 1996..................................................................................2 Consolidated Condensed Statements of Operations, 13-week period ended July 4, 1997 (unaudited) and 13-week period ended June 28, 1996 (unaudited).........................3 Consolidated Condensed Statements of Operations, 40-week period ended July 4, 1997 (unaudited) and 39-week period ended June 28, 1996 (unaudited).........................4 Consolidated Condensed Statements of Cash Flows, 40-week period ended July 4, 1997 (unaudited) and 39-week period ended June 28, 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, July 4, 1997 (unaudited) and September 27, 1996..................................................................................7 Consolidated Condensed Statements of Operations, 13-week period ended July 4, 1997 (unaudited) and 13-week period ended June 28, 1996 (unaudited).........................8 Consolidated Condensed Statements of Operations, 40-week period ended July 4, 1997 (unaudited) and 39-week period ended June 28, 1996 (unaudited).........................9 Consolidated Condensed Statements of Cash Flows, 40-week period ended July 4, 1997 (unaudited) and 39-week period ended June 28, 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 .................................................................................14 SIGNATURES..............................................................................................15
-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)
ASSETS ------ July 4, September 27, 1997 1996 --------- --------- Current Assets Cash and cash equivalents $ 2,234 1,753 Accounts receivable, net 47,657 50,380 Inventories 52,471 46,471 Deferred taxes 7,109 7,109 Other current assets 1,153 2,133 --------- --------- Total current assets 110,624 107,846 Property, plant, and equipment, net 81,560 79,873 Goodwill, net 24,410 25,203 Debt issue costs, net 8,395 9,651 Deferred taxes 5,572 5,569 --------- --------- Total assets $ 230,561 228,142 ========= ========= LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY (DEFICIT) ------------------------------------ Current Liabilities Revolving credit facility $ 23,900 17,000 Accounts payable - trade 9,267 10,527 Accrued expenses 19,999 22,371 Product warranty 4,078 4,327 Current portion of term loans 3,950 3,950 Income taxes payable 9,456 10,560 Advance payments from customers 3,583 4,535 --------- --------- Total current liabilities 74,233 73,270 Senior term loans 31,700 35,650 Senior subordinated notes 100,000 100,000 --------- --------- Total liabilities 205,933 208,920 --------- --------- Senior Redeemable Preferred Stock 16,847 14,822 --------- --------- Commitments and contingencies Stockholders' Equity (Deficit): Junior Preferred Stock 1 1 Common Stock - - Additional paid-in capital 31,748 30,521 Accumulated deficit (22,883) (25,080) Less stockholder loans (1,085) (1,042) --------- --------- Net stockholders' equity (deficit) 7,781 4,400 --------- --------- Total liabilities, redeemable preferred stock and equity (deficit) $ 230,561 228,142 ========= =========
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 July 4, June 28, 1997 1996 ------------ ------------ Sales $ 66,198 62,048 Cost of sales 46,754 46,027 --------- ------- Gross Profit 19,444 16,021 --------- ------- Operating costs and expenses: Research and development 1,941 2,281 Marketing 4,783 4,519 General and administrative 3,758 3,616 --------- ------- Total operating costs and expenses 10,482 10,416 --------- ------- Operating income 8,962 5,605 Interest expense 4,753 4,552 --------- ------- Earnings before taxes 4,209 1,053 Income tax expense 463 390 --------- ------- Net earnings (loss) 3,746 663 Preferred dividends: Senior Redeemable Preferred Stock 643 561 Junior Preferred Stock 429 374 --------- ------- Earnings attributable to common stock $ 2,674 (272) ========= =======
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) 40-Week 39-Week period ended period ended July 4, June 28, 1997 1996 ------------ ------------ Sales $185,389 $188,148 Cost of sales 135,316 137,866 -------- -------- Gross Profit 50,073 50,282 -------- -------- Operating costs and expenses: Research and development 5,665 5,981 Marketing 14,871 14,252 General and administrative 9,313 10,163 -------- -------- Total operating costs and expenses 29,849 30,396 -------- -------- Operating income 20,224 19,886 Interest expense 14,245 14,172 -------- -------- Earnings before taxes 5,979 5,714 Income tax expense 658 2,115 -------- -------- Net earnings (loss) 5,321 3,599 Preferred dividends: Senior Redeemable Preferred Stock 1,864 1,568 Junior Preferred Stock 1,243 1,046 -------- -------- Earnings attributable to common stock $ 2,214 $ 985 ======== ======== 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)
40-Week 39-Week period ended period ended July 4, June 28, 1997 1996 ------- ------- OPERATING ACTIVITIES Net cash provided by (used in) operating activities $ 5,677 10,334 ------- ------- INVESTING ACTIVITIES Purchase of property, plant and equipment, net (7,937) (8,422) (Increase) decrease in other non current assets - (73) ------- ------- Net cash used in investing activities (7,937) (8,495) ------- ------- FINANCING ACTIVITIES Net (Repayments)/Proceeds from debt issue costs (193) (280) Net (Repayments)/Proceeds from stockholder loans - 25 Net (Repayments)/Proceeds from revolving credit facility 6,900 (6,800) Net (Repayments)/Proceeds from senior term loans (3,950) - Net (Repayments)/Proceeds from treasury stock (15) - ------- ------- Net cash provided by (used in) financing activities 2,742 (7,055) ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 482 (5,216) Cash and cash equivalents at beginning of period 1,753 8,267 ------- ------- Cash and cash equivalents at end of period $ 2,235 3,051 ======= =======
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 July 4, 1997, CPI paid preferred dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 6,429 additional shares of its Senior Redeemable Preferred Stock and 4,286 shares of its Junior Preferred Stock, respectively. During the three quarters ended July 4, 1997, the Company paid preferred dividends through the issuance of 18,643 shares of its Senior Redeemable Preferred Stock and 12,428 shares of its Junior Preferred Stock. -6- 8 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands - unaudited)
ASSETS July 4, September 27, ------ 1997 1996 --------- --------- Current Assets Cash and cash equivalents $ 2,234 $ 1,753 Accounts receivable, net 47,657 50,380 Inventories 52,471 46,471 Deferred taxes 7,109 7,109 Other current assets 1,153 2,133 --------- --------- Total current assets 110,624 107,846 Property, plant, and equipment, net 81,560 79,873 Goodwill, net 24,410 25,203 Debt issue costs, net 8,395 9,651 Deferred taxes 5,572 5,569 ========= ========= Total assets $ 230,561 $ 228,142 ========= ========= LIABILITIES, REDEEMABLE PREFERRED STOCK, PREFERRED STOCK OF SUBSIDIARY AND EQUITY (DEFICIT) - -------------------------------------------------- Current Liabilities Revolving credit facility $ 23,900 $ 17,000 Accounts payable - trade 9,267 10,527 Accrued expenses 19,999 22,371 Product warranty 4,078 4,327 Current portion of term loans 3,950 3,950 Income taxes payable 9,456 10,560 Advance payments from customers 3,583 4,535 --------- Total current liabilities 74,233 73,270 Senior term loans 31,700 35,650 Senior subordinated notes 100,000 100,000 --------- --------- Total liabilities 205,933 208,920 --------- --------- Senior Redeemable Preferred Stock of Subsidiary 16,847 14,822 --------- --------- Junior Preferred Stock of Subsidiary 12,021 10,779 --------- --------- Commitments and contingencies Stockholders' Equity (Deficit): Common Stock 2 2 Issued - 200,000 shares Less Treasury Stock - - 150 shares Additional paid-in capital 19,726 19,741 Accumulated deficit (22,883) (25,080) Less stockholder loans (1,085) (1,042) --------- --------- Net stockholders' equity (deficit) (4,240) (6,379) --------- --------- Total liabilities, redeemable preferred stock, preferred stock of subsidiary and equity (deficit) $ 230,561 $ 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 ended period ended July 4, June 28, 1997 1996 ---------- --------- Sales $ 66,198 $ 62,048 Cost of sales 46,754 46,027 ---------- --------- Gross Profit 19,444 16,021 ---------- --------- Operating costs and expenses: Research and development 1,941 2,281 Marketing 4,783 4,519 General and administrative 3,758 3,616 ---------- --------- Total operating costs and expenses 10,482 10,416 ---------- --------- Operating income 8,962 5,605 Interest expense 4,753 4,552 ---------- --------- Earnings before taxes 4,209 1,053 Income tax expense 463 390 ---------- --------- Net earnings (loss) 3,746 663 Preferred dividends: Senior Redeemable Preferred Stock 643 561 Junior Preferred Stock 429 374 ---------- --------- Earnings attributable to common stock $ 2,674 $ (272) ========== =========
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)
40-Week 40-Week period ended period ended July 4, June 28, 1997 1996 ---------- --------- Sales $ 185,389 $ 188,148 Cost of sales 135,316 137,866 ---------- --------- Gross Profit 50,073 50,282 ---------- --------- Operating costs and expenses: Research and development 5,665 5,981 Marketing 14,871 14,252 General and administrative 9,313 10,163 ---------- --------- Total operating costs and expenses 29,849 30,396 ---------- --------- Operating income 20,224 19,886 Interest expense 14,245 14,172 ---------- --------- Earnings before taxes 5,979 5,714 Income tax expense 658 2,115 ---------- --------- Net earnings (loss) 5,321 3,599 Preferred dividends: Senior Redeemable Preferred Stock 1,864 1,568 Junior Preferred Stock 1,243 1,046 ---------- --------- Earnings attributable to common stock $ 2,214 $ 985 ========== =========
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)
40-Week 39-Week period ended period ended July 4 June 28, 1997 1996 ------- ------- OPERATING ACTIVITIES Net cash provided by (used in) operating activities $ 5,677 $10,334 ------- ------- INVESTING ACTIVITIES Purchase of property, plant and equipment, net (7,937) (8,422) (Increase) decrease in other non current assets - (73) ------- ------- Net cash used in investing activities (7,937) (8,495) ------- ------- FINANCING ACTIVITIES Net (Repayments)/Proceeds from debt issue costs (193) (280) Net (Repayments)/Proceeds from stockholder loans - 25 Net (Repayments)/Proceeds from revolving credit facility 6,900 (6,800) Net (Repayments)/Proceeds from senior term loans (3,950) - Net (Repayments)/Proceeds from treasury stock (15) - ------- ------- Net cash provided by (used in) financing activities 2,742 (7,055) ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 482 (5,216) Cash and cash equivalents at beginning of period 1,753 8,267 ======= ======= Cash and cash equivalents at end of period $ 2,235 $ 3,051 ======= =======
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 July 4, 1997, CPI paid preferred dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 6,429 additional shares of its Senior Redeemable Preferred Stock and 4,286 shares of its Junior Preferred Stock, respectively. During the three quarters ended July 4, 1997, CPI paid preferred dividends through the issuance of 18,643 shares of its Senior Redeemable Preferred Stock and 12,428 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 Orders during the third quarter of Fiscal 1997 were $74.1 million as compared to $61.5 for the third quarter of Fiscal 1996, an increase of 20.4%. Orders during the first nine months of Fiscal 1997 were $215.8 million as compared to $198.3 million over the comparable period in the prior fiscal year, a growth rate of 8.8%. 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 July 4, 1997, the Company had an order backlog of $180.9 million, representing over eight months of sales compared to order backlog of $153.4 million as of June 28, 1996. Sales for the third quarter of Fiscal 1997 were $66.2 million compared to $62.0 million for the third quarter of Fiscal 1996, an increase of 6.7%. Compared to the first and second quarters of Fiscal 1997 with revenues of $55.3 million and $63.9 million, respectively, the third quarter reflects the Company's anticipated recovery from shipping delays tied to consolidation efforts that were completed earlier in the year. Although improvements have been made, the Company has continued to experience below expected performance levels on the product lines moved from Salt Lake City, Utah to San Carlos, California primarily due to poor tooling quality and parts shortages by outside vendors that are struggling to meet the higher volume level. Sales for the first nine months of Fiscal 1997 were $185.4 million, a decrease of $2.8 million, or 1.5%, below the comparable period in the prior fiscal year, due to the impact that the relocation of facilities had on the beginning of the 1997 fiscal year. In terms of markets, lower sales for the first nine months of Fiscal 1997 compared to Fiscal 1996 were due to lower sales in the electronic countermeasures and industrial markets of $5.4 million and $2.0 million, respectively, partially offset by higher sales in each of the Company's other markets. Sales were down in electronic countermeasures due to product development delays in a new transmitter application and in the industrial market due to the timing of customer defined delivery schedules. Sales in the communications market were up $2.2 million, or 2.5%, reflecting the impact of new product releases. Radar sales were up $1.7 million, or 3.0%, as a result of strong order receipts for spares and upgrades from both OEM's and government agency end users. Medical and scientific sales increased by $.3 million, or 2.8%, and $.4 million, or 14.8%, respectively. Gross profit increased to $19.4 million, or 29.4% of sales, in the third quarter of Fiscal 1997 from $16.0 million, or 25.8% of sales, in the third quarter of Fiscal 1996 based on higher volume and improvements resulting from consolidation efforts. This third quarter improvement helped to offset lower margins experienced in the first and second quarters so that gross profit for the first nine months of Fiscal 1997 improved to 27.0% of sales compared to 26.7% of sales in the first nine months of Fiscal 1996, despite an increase in depreciation expense of $1.2 million, or .6% of sales. As stated above, improvements have been made in sales volume and, therefore, in gross profit performance, but gross margins have continued to be impacted by poor production uniformity in the Company's San Carlos facility. -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) Operating income was $9.0 million, or 13.5% of sales, for the third quarter of Fiscal 1997, as compared to $5.6 million, or 9.0% of sales, for the third quarter of Fiscal 1996. Operating income was $20.2 million, or 10.9% of sales, for the first nine months of Fiscal 1997, as compared to $19.9 million, or 10.6% of sales, for the first nine months of Fiscal 1996. In addition to the improvements resulting from the completion of the Company's consolidation efforts, operating income was positively affected by slightly lower operating costs and expenses primarily related to lower management incentive accruals. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the third quarter of Fiscal 1997 was $11.4 million, or 17.2% of sales, compared to $7.6 million, or 12.2% of sales, for the third quarter of Fiscal 1996. This improvement was, as mentioned above, related to the completion of consolidation efforts that were initially started in the third quarter of Fiscal 1996. EBITDA for the first nine months of Fiscal 1997 was $27.3 million, or 14.7% of sales, compared to $27.3 million (excluding a $1.7 million charge for the write-up of inventory), or 14.5% of sales, for the first nine months of Fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities for the first nine months of Fiscal 1997 was $5.7 million, a decrease of $4.7 million from the $10.3 million provided by operating activities during the first nine months of Fiscal 1996. This decrease in cash flow reflects the impact of strong shipments late in the third quarter of Fiscal 1997 resulting in an increase in receivables. Advanced payments from customers were also $4.1 million less in the first nine months of Fiscal 1997 compared to the nine months of Fiscal 1996 due to the nature of the programs being worked on during the two time periods. Cash flow from investing activities was comprised principally of capital expenditures for property and equipment, which amounted to $7.9 million for the first nine months of Fiscal 1997 as compared to $8.4 million for the first nine months of Fiscal 1996. These investing activities, partially offset by cash provided by operations, required $3.0 million of net proceeds from the Company's senior credit agreement. As of July 4, 1997, the Company had working capital of approximately $36.4 million, an increase of $1.8 million, or 5.2%, from September 27, 1996. The increase in working capital was substantially attributable to higher levels of inventory required to support recent increases in backlog. 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 $5.6 million was available as of August 1, 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. -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) 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. (a) The following exhibits are being filed as part of this report: 27.1 Financial Data Schedule (Communications & Power Industries, Holding Corporation) 27.2 Financial Data Schedule (Communications & Power Industries, INC.) (b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter ended July 4, 1997. -14- 16 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: August 15, 1997 By: /s/ Lynn E. Harvey -------------------------------------- Lynn E. Harvey Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: August 15, 1997 -15- 17 INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBITS ------- --------- 27.1 Financial Data Schedule (Communications & Power Industries Holding Corporation) 27.2 Financial Data Schedule (Communications & Power Industries, Inc.)
EX-27.1 2 FDS (COMM. AND POWER INDUSTRIES HOLDING CORP.)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM CONDENSED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10Q - COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION FOR THE QUARTER ENDED JULY 4, 1997. 0001000654 COMMUNICATIONS & POWER INDUSTRIES HOLDING COPR. 9-MOS OCT-03-1997 SEP-28-1996 JUL-04-1997 2,234 0 47,657 0 52,471 110,624 81,560 0 230,561 74,233 131,700 16,847 0 2 (4,242) 230,561 185,389 185,389 135,316 135,316 5,665 0 14,245 5,979 658 5,321 0 0 0 5,321 0 0
EX-27.2 3 FDS (COMMUNICATIONS AND POWER INDUSTRIES, INC.)
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 AND POWER INDUSTRIES, INC. FOR THE QUARTER ENDING JULY 4, 1997. 0001000564 COMMUNICATIONS & POWER INDUSTRIES, INC. 9-MOS OCT-03-1997 SEP-28-1996 JUL-04-1997 2,234 0 47,657 0 52,471 110,624 81,560 0 230,561 74,233 131,700 16,847 1 0 7,780 230,561 185,389 185,389 135,316 135,316 5,665 0 14,245 5,979 658 5,321 0 0 0 5,321 0 0
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