-----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, UCi8oUrEkGfpzlxDyJfYi0SM5t8jmwjC4gm3PlBummz3KwWiLGn3+JXpUks3d3CE VMcbwKM7haPDHl18Wdis4Q== 0000891618-99-000647.txt : 19990217 0000891618-99-000647.hdr.sgml : 19990217 ACCESSION NUMBER: 0000891618-99-000647 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990101 FILED AS OF DATE: 19990216 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: SEC FILE NUMBER: 033-96858-01 FILM NUMBER: 99542731 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: SEC FILE NUMBER: 033-96858 FILM NUMBER: 99542732 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 JANUARY 1, 1999 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 January 1, 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 Number: 33-96858-01 Commission File Number: 33-96858 COMMUNICATIONS & POWER COMMUNICATIONS & POWER INDUSTRIES HOLDING 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 (Address, including zip code, and telephone number, number, including including area code, of registrant's principal executive area code, of registrant's principal executive offices) offices) Securities registered pursuant to Section 12(b) Securities registered pursuant to Section 12(b) of the Act: of the Act: NONE NONE Securities registered pursuant to Section 12(g) Securities registered pursuant to Section 12(g) of the Act: of 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: 196,420 SHARES OF COMMON STOCK, $.01 PAR VALUE, AT JANUARY 1, 1999. COMMUNICATIONS & POWER INDUSTRIES, INC.: 1 SHARE OF COMMON STOCK, $.01 PAR VALUE, AT JANUARY 1, 1999. 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 I: FINANCIAL INFORMATION COMMUNICATIONS & POWER INDUSTRIES, INC. Consolidated Condensed Balance Sheets, January 1, 1999 and October 2, 1998..................................2 Consolidated Condensed Statements of Operations, 13-week period ended January 1, 1999 and 13-week period ended January 2, 1998....................................................3 Consolidated Condensed Statements of Cash Flows, 13-week period ended January 1, 1999 and 13-week period ended January 2, 1998....................................................4 Notes to Consolidated Condensed Financial Statements........................................................5 Management's Discussion and Analysis of Financial Condition and Results of Operations......................10 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION Consolidated Condensed Balance Sheets, January 1, 1999 and October 2, 1998..................................6 Consolidated Condensed Statements of Operations, 13-week period ended January 1, 1999 and 13-week period ended January 2, 1998....................................................7 Consolidated Condensed Statements of Cash Flows, 13-week period ended January 1, 1999 and 13-week period ended January 2, 1998....................................................8 Notes to Consolidated Condensed Financial Statements........................................................9 Management's Discussion and Analysis of Financial Condition and Results of Operations......................10 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) CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands-unaudited)
January 1, October 2, 1999 1998 --------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,482 $ 448 Accounts receivable, net 41,632 49,484 Inventories 57,400 52,923 Deferred taxes 6,981 6,981 Other current assets 1,562 1,440 --------- --------- Total current assets 109,057 111,276 Property, plant, and equipment, net 78,027 78,099 Goodwill and other intangibles, net 30,625 25,147 Debt issue costs, net 6,462 6,522 Deferred taxes 8,168 8,168 --------- --------- Total assets $ 232,339 $ 229,212 ========= ========= LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY CURRENT LIABILITIES Revolving credit facility $ 19,000 $ 13,300 Current portion of term loans 6,200 6,200 Current portion of capital leases 684 541 Accounts payable - trade 11,604 13,140 Accrued expenses 18,089 15,612 Product warranty 3,725 3,734 Income taxes payable 9,198 10,259 Advance payments from customers 2,116 2,533 --------- --------- Total current liabilities 70,616 65,319 Senior term loans 22,200 23,750 Senior subordinated notes 100,000 100,000 Obligations under capital leases 2,523 2,548 --------- --------- Total liabilities 195,339 191,617 --------- --------- SENIOR REDEEMABLE PREFERRED STOCK 21,527 20,683 --------- --------- Commitments and contingencies STOCKHOLDERS' EQUITY: Junior Preferred Stock 1 1 Common Stock -- -- Additional paid-in capital 34,108 33,582 Accumulated deficit (17,567) (15,614) Less stockholder loans (1,069) (1,057) --------- --------- Net stockholders' equity 15,473 16,912 --------- --------- Total liabilities, redeemable preferred stock and equity $ 232,339 $ 229,212 ========= =========
See accompanying notes to the unaudited interim consolidated condensed financial statements. -2- 4 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands - unaudited)
13-Week 13-Week period ended period ended January 1, January 2, 1999 1998 ------------ ------------ Sales $ 57,781 $ 57,373 Cost of sales 43,654 42,726 ======== ======== Gross profit 14,127 14,647 -------- -------- Operating costs and expenses: Research and development 2,066 1,804 Marketing 4,594 4,706 General and administrative 3,908 3,326 ======== ======== Total operating costs and expenses 10,568 9,836 -------- -------- Operating income 3,559 4,811 Foreign currency gain/(loss) (158) 160 Interest income/(expense) (4,406) (4,654) -------- -------- Earnings (loss) before taxes (1,005) 317 Income tax expense (benefit) (422) 119 -------- -------- Net earnings (loss) (583) 198 Preferred dividends: Senior Redeemable Preferred Stock 790 689 Junior Preferred Stock 527 459 ======== ======== (Loss)/earnings attributable to common stock $ (1,900) $ (950) ======== ========
See accompanying notes to the unaudited consolidated condensed financial statements. -3- 5 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands - unaudited)
13-Week 13-Week period ended period ended January 1, January 2, 1999 1998 ------------ ------------ OPERATING ACTIVITIES Net cash provided by (used in) operating activities $ 7,713 $ 15,409 -------- -------- INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment -- 5 Purchase of property, plant and equipment, net (1,841) (1,162) Product lines acquisitions (8,961) (2,730) -------- -------- Net cash used in investing activities (10,802) (3,887) -------- -------- FINANCING ACTIVITIES Net (Repayments)/Proceeds from debt issue costs (29) -- Net (Repayments)/Proceeds goodwill and other intangibles, net 2 -- Net (Repayments)/Proceeds from revolving credit facility 5,700 (9,300) Net (Repayments)/Proceeds from senior term loans (1,550) (1,050) -------- -------- Net cash provided by (used in) financing activities 4,123 (10,350) -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS 1,034 1,172 Cash and cash equivalents at beginning of period 448 2,027 -------- -------- Cash and cash equivalents at end of period $ 1,482 $ 3,199 ======== ========
See accompanying notes to the unaudited consolidated condensed financial statements. -4- 6 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) The accompanying unaudited consolidated condensed financial statements of Communications & Power Industries, Inc. ("CPI") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote 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 October 2, 1998 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 present fairly the financial position of CPI, and its results of operations and cash flows, for the interim period presented. The results for the interim periods reported are not necessarily indicative of the results for the full fiscal year 1999. During the quarter ended January 1, 1999, CPI paid preferred stock dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 7,903 additional shares of its Senior Redeemable Preferred Stock and 5,269 shares of its Junior Preferred Stock, respectively. During the quarter ended January 1, 1999, CPI completed the acquisition of the Microwave Components Division ("MCD") of Aydin Corporation for approximately $8.9 million with net assets of approximately $2.4 million. The $6.5 million difference between the purchase price and the fair value of the net assets acquired was allocated to goodwill and other intangibles and will be amortized over estimated useful lives ranging from 1 to 15 years. This acquisition was accounted for as a purchase. -5- 7 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands-unaudited)
January 1, October 2, 1999 1998 --------- ---------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,482 $ 448 Accounts receivable, net 41,632 49,484 Inventories 57,400 52,923 Deferred taxes 6,981 6,981 Other current assets 1,562 1,440 --------- --------- Total current assets 109,057 111,276 Property, plant, and equipment, net 78,027 78,099 Goodwill and other intangibles, net 30,625 25,147 Debt issue costs, net 6,462 6,522 Deferred taxes 8,168 8,168 --------- --------- Total assets $ 232,339 $ 229,212 ========= ========= LIABILITIES, REDEEMABLE PREFERRED STOCK, PREFERRED STOCK OF SUBSIDIARY AND EQUITY CURRENT LIABILITIES Revolving credit facility $ 19,000 $ 13,300 Current Portion of term loans 6,200 6,200 Current Portion of capital leases 684 541 Accounts payable - trade 11,604 13,140 Accrued expenses 18,089 15,612 Product warranty 3,725 3,734 Income taxes payable 9,198 10,259 Advance payments from customers 2,116 2,533 --------- --------- Total current liabilities 70,616 65,319 Senior term loans 22,200 23,750 Senior subordinated notes 100,000 100,000 Obligations under capital leases 2,523 2,548 --------- --------- Total liabilities 195,339 191,617 --------- --------- SENIOR REDEEMABLE PREFERRED STOCK OF SUBSIDIARY 21,527 20,683 --------- --------- JUNIOR PREFERRED STOCK OF SUBSIDIARY 14,926 14,400 --------- --------- STOCKHOLDERS' EQUITY: Common Stock 2 2 Additional paid-in capital 19,181 19,181 Accumulated deficit (17,567) (15,614) Less stockholder loans (1,069) (1,057) --------- --------- Net stockholders' equity 547 2,512 --------- --------- Total liabilities, redeemable preferred stock, preferred stock of subsidiary and equity $ 232,339 $ 229,212 ========= =========
See accompanying notes to the unaudited consolidated condensed financial statements. -6- 8 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands - unaudited)
13-Week 13-Week period ended period ended January 1, January 2, 1999 1998 ------------ ------------ Sales $ 57,781 $ 57,373 Cost of sales 43,654 42,726 -------- -------- Gross profit 14,127 14,647 -------- -------- Operating costs and expenses: Research and development 2,066 1,804 Marketing 4,594 4,706 General and administrative 3,908 3,326 -------- -------- Total operating costs and expenses 10,568 9,836 -------- -------- Operating income 3,559 4,811 Foreign currency gain/(loss) (158) 160 Interest income/(expense) (4,406) (4,654) -------- -------- Earnings (loss) before taxes (1,005) 317 Income tax expense (benefit) (422) 119 -------- -------- Net earnings (loss) (583) 198 Preferred dividends: Senior Redeemable Preferred Stock 790 689 Junior Preferred Stock 527 459 -------- -------- (Loss)/earnings attributable to common stock $ (1,900) $ (950) ======== ========
See accompanying notes to the unaudited consolidated condensed financial statements. -7- 9 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands - unaudited)
13-Week 13-Week period ended period ended January 1, July 4, 1999 1997 ------------ ------------ OPERATING ACTIVITIES Net cash provided by (used in) operating activities $ 7,713 $ 15,409 -------- -------- INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment -- 5 Purchase of property, plant and equipment, net (1,841) (1,162) Product line acquisitions (8,961) (2,730) -------- -------- Net cash used in investing activities (10,802) (3,887) -------- -------- FINANCING ACTIVITIES Net (Repayments)/Proceeds from debt issue costs (29) -- Net (Repayments)/Proceeds from goodwill and other intangible, net 2 -- Net (Repayments)/Proceeds from revolving credit facility 5,700 (9,300) Net (Repayments)/Proceeds from senior term loans (1,550) (1,050) -------- -------- Net cash provided by (used in) financing activities 4,123 (10,350) -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS 1,034 1,172 Cash and cash equivalents at beginning of period 448 2,027 -------- -------- Cash and cash equivalents at end of period $ 1,482 $ 3,199 ======== ========
See accompanying notes to the unaudited consolidated condensed financial statements. -8- 10 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) The accompanying unaudited 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 footnote 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 Holding's October 2, 1998 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 present fairly the financial position of Holding, and its results of operations and cash flows, for the interim period presented. The results for the interim periods reported are not necessarily indicative of the results for the full fiscal year 1999. During the quarter ended January 1, 1999, CPI paid preferred stock dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 7,903 additional shares of its Senior Redeemable Preferred Stock and 5,269 shares of its Junior Preferred Stock, respectively. During the quarter ended January 1, 1999, CPI completed the acquisition of the Microwave Components Division ("MCD") of Aydin Corporation for approximately $8.9 million with net assets of approximately $2.4 million. The $6.5 million difference between the purchase price and the fair value of the net assets acquired was allocated to goodwill and other intangibles and will be amortized over estimated useful lives ranging from 1 to 15 years. This acquisition was accounted for as a purchase. -9- 11 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 first quarter of Fiscal 1999 were $51.6 million as compared to $62.1 million for the first quarter of Fiscal 1998, a decrease of 16.9% primarily related to the Far East economic conditions and delays in several major programs that continue to hinder growth in the Company's communications and industrial markets. This reduced level of orders was anticipated by the Company and backlog as of the end of the first quarter of Fiscal 1999 declined to $155.0 million, or approximately seven months of sales. 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. Sales for the first quarter of Fiscal 1999 were $57.8 million including $1.4 million of sales from the Company's new operating division that was acquired in October of 1998. This recent acquisition has added a line of high quality, solid state microwave and millimeter wave amplifiers, frequency converters and multiplier amplifiers that are sold into the communications market. Sales for the first quarter of Fiscal 1999 were consistent with sales in the first quarter of Fiscal 1998 of $57.4 million but the mix by end market shifted slightly. Products sold to the radar, medical and electronic countermeasures markets increased by $1.6 million, $1.0 million, $0.7 million, respectively due to the on-going demand for logistic spares, increased business in European x-ray markets and increase production levels of the Company's new transmitter products. Products sold to the communications and industrial markets decreased by $2.3 million and $.5 million, respectively due to the slowdown from Far East customers mentioned above partially offset by new product introductions. Products sold to the scientific market were flat. The communications market remains the Company's largest market with sales of $24.9 million, or 43.1% of total sales, during the first quarter of Fiscal 1999 compared to $27.2 million, or 47.4% of total sales, in the first quarter of Fiscal 1998. The Company's second largest market is the radar market with sales of $18.1 million, or 31.4% of total sales, during the first quarter of Fiscal 1999 compared to $16.5 million, or 28.8% of total sales, during the same period in Fiscal 1998. Gross profit was $14.1 million, or 24.4% of sales, in the first quarter of Fiscal 1999 compared to $14.6 million, or 25.5% of sales, in the first quarter of Fiscal 1998 due primarily to product mix with lower margins realized on the development and initial production of new products as well as higher depreciation costs. Operating costs and expenses were $10.6 million, or 18.6% of sales for the first quarter of Fiscal 1999, as compared to $9.8 million, or 17.1%, for the first quarter of Fiscal 1998. Operating costs and expenses increased between the two time periods primarily due to higher amortization costs of $0.5 million related to the Company's recent acquisition and to higher research and development spending of $0.3 million as the Company continues its focus on releasing new products. -10- 12 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) Earnings before interest, income taxes, depreciation and amortization ("EBITDA")(1) for the first quarter of Fiscal 1999 was approximately $6.8 million, or 11.8% of sales, compared to approximately $7.7 million, or 13.3% of sales, for the first quarter of Fiscal 1998. EBITDA declined by $0.9 million, or 3.3%, due primarily to product mix and higher research and development spending mentioned above. FINANCIAL CONDITION Cash flows provided by operating activities for the first quarter of Fiscal 1999 were $7.7 million, a decrease of $7.7 million from the $15.4 million provided by operating activities during the first quarter of Fiscal 1998. Cash flow decreased $4.4 million due to the timing of receivable collections as days sales outstanding (DSO) increased to 63 days at the end of the first quarter of Fiscal 1999 from 61 days at the end of the first quarter of Fiscal 1998. The timing of accounts payable and accrued expense payments decreased cash from operations by approximately $1.9 million and slightly higher levels of inventory decreased cash by $0.8 million. Investing activities increased to $10.8 million in the first quarter of Fiscal 1999 compared to $3.9 million in the first quarter of Fiscal 1998 due to the acquisition of the Microwave Components Division of Aydin Corporation, which was completed in October 1998. In the first quarter of Fiscal 1998, the Company invested $2.7 million in two small product line acquisitions to add to products that were currently being manufactured in the Company's Beverly, Massachusetts and Palo Alto, California facilities. The current acquisition will be operating in stand-alone, leased facilities in San Jose, California. The Company's current primary source of liquidity, other than funds generated from operations, is the $45.0 million revolving credit facility provided under its senior credit agreement (of which $16.3 million was available as of January 29, 1999). In the first quarter of Fiscal 1999, the Company borrowed $5.7 million to repay $1.6 million of term loans and to complete the acquisition mentioned above. 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. Year 2000 The Company has conducted a comprehensive review of its computer systems and applications to identify systems that could be affected by the "Year 2000" issue and has developed a remediation plan. - --------------------- (1) EBITDA is presented because some investors may use it as a financial indicator of the ability to service or incur indebtedness. EBITDA should not be considered as an alternative to net earnings (loss), as a measure of operating results, cash flows or liquidity. -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) All systems that are considered to be mission critical have been identified and addressed in this plan. The Company has also reviewed its products, process equipment and facilities systems as part of its overall Year 2000 readiness. The Company's focus is first on products and business critical systems and equipment. Evaluation of products is substantially complete as only a few CPI products contain microprocessors or microcode. To date, no significant problems have been found in existing CPI products. Also, CPI is contacting its suppliers to ensure that they have appropriate plans in place to adequately address the century change issue. CPI's goals for the Year 2000 project are to have all business critical process Year 2000 conversions, corrective actions, work arounds and tests completed by October 31, 1999. To date, two of the Company's six Divisions have successfully modified or replaced Enterprise Resource Planning ("ERP") systems. The other four are scheduled to "go-live" on a new ERP system starting in March 1999 and being completed in June 1999. Timely completion of its Year 2000 project is a priority of the Company and the remediation plan, along with the timetable for its completion and budgeted remediation costs, have been approved by the Company's Year 2000 project team, management, and the Board of Directors. Management currently estimates that it will spend approximately $5.0 million primarily through a capital lease program to replace outdated Varian legacy systems. To date, approximately $4.4 million has been incurred. Other remediation efforts include a mix of capital expenditures and operating expense and an estimated $1.5 million is planned for Fiscal 1999. The Company's estimated timetable and budgeted remediation costs are based on assumptions which management believes are reasonable and appropriate. Management is committing and will continue to commit necessary human and financial resources to complete its remediation plans on a timely basis. To date, based on both written and verbal discussions, management has no information that indicates a significant vendor or service provider may be unable to sell goods or provide services to the Company or that any significant customer may be unable to purchase from the Company because of Year 2000 issues. Further, the Company has not received any notifications from regulatory agencies to which it is subject indicating that the Company must achieve compliance by a specific date or significant regulatory action will be taken. The Company presently believes that, with modifications to existing software and conversion to new software, the Year 2000 problem will not pose significant operational problems for the Company's systems as modified and converted. However, if such modifications and conversions are not completed timely, the Year 2000 problem could have a material impact on the operations of the Company. Management is still in the process of developing contingency plans but expects that manual processing procedures to maintain accurate processing of information and data are available. Contingency plans are expected to be completed by June 1999. -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) Forward-Looking Information Except for historical information, this Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: product demand and market acceptance risks; the effect of general economic conditions; the impact of competitive products and pricing; new product development and commercialization; technological difficulties and the ability to increase margins; the timing of renewed growth in the Far East; U.S. Government export policies; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. -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: 10.1.5 Fifth Amendment to Credit Agreement among CPI, Holding, the other obligors named therein, the lenders named therein and Bankers Trust Company, as Agent, dated as of February 12, 1999 27.1 Financial Data Schedule (Communications & Power Industries, Inc.) 27.2 Financial Data Schedule (Communications & Power Industries Holding Corporation) (b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter ended January 1, 1999. -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: February 12, 1998 By: /s/ Lynn E. Harvey -------------------------------------------------- Lynn E. Harvey Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: February 12, 1998 -15- 17 EXHIBIT INDEX Exhibit No. Document ---- -------- 10.1.5 Fifth Amendment to Credit Agreement among CPI, Holding, the other obligors named therein, the lenders named therein and Bankers Trust Company, as Agent, dated as of February 12, 1999 27.1 Financial Data Schedule (Communications & Power Industries, Inc.) 27.2 Financial Data Schedule (Communications & Power Industries Holding Corporation) EX-10.1.5 2 FIFTH AMENDMENT TO CREDIT AGREEMENT 1 EXHIBIT 10.1.5 AMENDMENT NO. 5 TO CREDIT AGREEMENT This AMENDMENT No. 5 TO CREDIT AGREEMENT (this "Amendment"), is made and entered into as of February 12, 1999, among COMMUNICATIONS & POWER INDUSTRIES, INC. (the "Borrower"), COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION, CPI SUBSIDIARY HOLDINGS INC., COMMUNICATIONS & POWER INDUSTRIES INTERNATIONAL INC., COMMUNICATIONS & POWER INDUSTRIES ASIA INC., COMMUNICATIONS & POWER INDUSTRIES ITALIA S.R.L., COMMUNICATIONS & POWER INDUSTRIES EUROPE LIMITED, COMMUNICATIONS & POWER INDUSTRIES CANADA INC., COMMUNICATIONS & POWER INDUSTRIES AUSTRALIA PTY LIMITED, CPI SALES CORP. (collectively, the "Obligors"), BANKERS TRUST COMPANY, as agent (the "Agent"), and the various lenders (the "Lenders") from time to time party to the Credit Agreement, dated as of August 11, 1995 (as the same has been amended and modified through the date hereof, the "Agreement"), among the Obligors, the Agent and the Lenders. W I T N E S S E T H: WHEREAS, the Obligors, the Agent and the Lenders desire to amend certain provisions of the Agreement; NOW, THEREFORE, in consideration of the foregoing, the premises and mutual covenants contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the meanings given thereto in the Agreement. 2. Effectiveness of this Amendment. This Amendment shall become effective and the Agreement shall be deemed amended as provided herein as of December 31, 1998 on the first date (the "Effective Date") on which each of the following conditions shall be satisfied or waived: (a) Execution of Amendment. Each Obligor, the Agent and the Required Lenders shall have executed a copy of this Amendment (whether the same or different copies) and shall have delivered the same to the Agent. (b) No Default; Representations and Warranties. The Required Lenders shall be satisfied that, on the Effective Date and after giving effect to this Amendment, (i) there shall exist no Default or Event of Default and (ii) the representations and warranties of each Obligor, each Guarantor and each Pledgor contained in the Loan Documents to which such Person is a party are true and correct in all material respects as of the Effective Date with the same effect as though such representations and warranties had been made on and as of the Effective Date (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects as of such specified date). 2 (c) Amendment Fee. For consenting to the amendments contained in this Amendment, each Lender that executes this Amendment shall have received on the Effective Date a fee in immediately available funds equal to the product of (i) 0.25% and (ii) the aggregate amount of such Lender's Commitments. (d) Other Payments. The Agent and each Lender shall have received all other amounts, if any, amounts owing from the Obligors to such Person through and including the Effective Date. 3. Amendments. As of December 31, 1998: (a) Annex A to the Agreement shall be amended by: (i) deleting the defined terms: "Consolidated Fixed Charges", "Consolidated Net Worth" and "Fixed Charge Coverage Ratio"; (ii) adding the following defined term after the defined term "Currency Agreement": `"Current Maturities of Funded Indebtedness" shall have the meaning provided in ANNEX F.'; and (iii) adding the following defined term after the defined term "Letters of Credit": `"Leverage Ratio" shall have the meaning provided in ANNEX F.'. (b) Annex F to the Agreement shall be deleted in its entirety and Exhibit A to this Amendment shall be substituted therefor. 4. Representations and Warranties. Each Obligor makes, as of the Effective Date, each of the representations and warranties set forth in Section 3 of the Agreement, and such representations and warranties are, by this reference, incorporated herein as if set forth herein in their entirety, provided that references to "Loan Documents" shall, for purposes of this paragraph, be deemed to include this Amendment. 5. Miscellaneous. (a) Except as expressly modified by this Amendment, the Agreement and Schedules and Annexes thereto shall continue to be and remain in full force and effect in accordance with their terms. Any future reference to the Agreement and Schedules and Annexes thereto shall, from and after the Effective Date, be deemed to be a reference to the Agreement and Schedules and Annexes thereto as amended by this Amendment. (b) This Amendment may be executed in any number of counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. (c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CONFLICTS OF LAW RULES. 2 3 (d) This Amendment may be executed by facsimile signature and each such signature shall be treated in all respects as having the same effect as an original signature. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. COMMUNICATIONS & POWER INDUSTRIES, INC. By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Chief Financial Officer, Treasurer and Secretary COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Chief Financial Officer, Treasurer and Secretary CPI SUBSIDIARY HOLDINGS INC. By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Secretary 3 4 COMMUNICATIONS & POWER INDUSTRIES INTERNATIONAL INC. By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Secretary COMMUNICATIONS & POWER INDUSTRIES ASIA INC. By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Treasurer COMMUNICATIONS & POWER INDUSTRIES ITALIA S.R.L. By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: (Per Power of Attorney) COMMUNICATIONS & POWER INDUSTRIES EUROPE LIMITED By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Secretary 4 5 COMMUNICATIONS & POWER INDUSTRIES CANADA INC. By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Vice President COMMUNICATIONS & POWER INDUSTRIES AUSTRALIA PTY LIMITED By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: (Per Power of Attorney) CPI SALES CORP. By /s/LYNN E. HARVEY ----------------------------------------- Name: Lynn E. Harvey Title: Secretary and Treasurer BANKERS TRUST COMPANY, as Lender and as Agent By /s/MARY JO JOLLY ----------------------------------------- Name: Mary Jo Jolly Title: Assistant Vice President 5 6 DRESDNER BANK AG, New York Branch and Grand Cayman Branch By ------------------------------------------- Name: Title: By ------------------------------------------- Name: Title: U.S. BANK NATIONAL ASSOCIATION (f/k/a FIRST BANK NATIONAL ASSOCIATION) By /s/KURT D. EGERTSON ----------------------------------------- Name: Kurt D. Egertson Title: Vice President MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By /s/GILLES MARCHAND ----------------------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory ROYALTON COMPANY By PACIFIC INVESTMENT MANAGEMENT COMPANY, as Investment Adviser By /s/BRADLEY W. PAULSON ----------------------------------------- Name: Bradley W. Paulson Title: Vice President 6 7 SENIOR DEBT PORTFOLIO By BOSTON MANAGEMENT AND RESEARCH, as Investment Adviser By /s/SCOTT H. PAGE ----------------------------------------- Name: Scott H. Page Title: Vice President EATON VANCE SENIOR INCOME TRUST By EATON VANCE MANAGEMENT as Investment Adviser By /s/SCOTT H PAGE ----------------------------------------- Name: Scott H. Page Title: Vice President UNION BANK OF CALIFORNIA, N.A. By /s/STEPHEN R. SWEENEY ----------------------------------------- Name: Stephen R. Sweeney Title: Vice President 7 8 F-8 ANNEX F to Credit Agreement FINANCIAL COVENANTS Each of the following covenants shall be calculated in accordance with GAAP, consistently applied: 1. Borrower will not permit Consolidated EBITDA for any Test Period determined as of the last day of the applicable Fiscal Quarter set forth below to be less than the amount set forth opposite such Fiscal Quarter:
Consolidated Fiscal Quarter EBITDA -------------- ------------ Q1, 1999 $33,000,000 Q2, 1999 $33,000,000 Q3, 1999 $33,000,000 Q4, 1999 $33,000,000 Q1, 2000 $33,000,000 Q2, 2000 $33,000,000 Q3, 2000 $34,000,000 Q4, 2000 $35,000,000 Q1, 2001 $35,000,000 Q2, 2001 $35,000,000 Q3, 2001 $36,000,000 Q4, 2001 $37,000,000 Q1, 2002 $37,000,000 Q2, 2002 $37,000,000 Q3, 2002 $38,000,000 Q4, 2002 $39,000,000
F-1 9 2. Borrower will not permit the Interest Coverage Ratio for any Test Period determined as of the last day of the applicable Fiscal Quarter set forth below to be less than the ratio set forth opposite such Fiscal Quarter:
Fiscal Quarter Ratio -------------- ----- Q1, 1999 2.0:1.0 Q2, 1999 2.0:1.0 Q3, 1999 2.0:1.0 Q4, 1999 2.1:1.0 Q1, 2000 2.1:1.0 Q2, 2000 2.2:1.0 Q3, 2000 2.3:1.0 Q4, 2000 2.4:1.0 Q1, 2001 2.5:1.0 Q2, 2001 2.6:1.0 Q3, 2001 2.7:1.0 Q4, 2001 2.8:1.0 Q1, 2002 2.9.1.0 Q2, 2002 3.0:1.0 Q3, 2002 3.0:1.0 Q4, 2002 3.0:1.0
F-2 10 3. Borrower will not permit the Leverage Ratio for any Test Period determined as of the last day of the applicable Fiscal Quarter set forth below to be less than the ratio set forth opposite such Fiscal Quarter:
Fiscal Quarter Ratio -------------- ----- Q1, 1999 4.7:1.0 Q2, 1999 4.7:1.0 Q3, 1999 4.6:1.0 Q4, 1999 4.5:1.0 Q1, 2000 4.5:1.0 Q2, 2000 4.3:1.0 Q3, 2000 4.1:1.0 Q4, 2000 3.9.1.0 Q1, 2001 3.8:1.0 Q2, 2001 3.6:1.0 Q3, 2001 3.4:1.0 Q4, 2001 3.2:1.0 Q1, 2002 3.0:1.0 Q2, 2002 3.0:1.0 Q3, 2002 3.0:1.0 Q4, 2002 3.0:1.0
F-3 11 4. Borrower will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures, except that during any Fiscal Year (taken as one accounting period) Parent and its Subsidiaries may make Capital Expenditures so long as such Capital Expenditures do not exceed in any such Fiscal Year set forth below the amount set forth opposite such Fiscal Year below:
Fiscal Year Amount ----------- ------ 1998 $12,000,000 1999 $13,000,000 2000 $13,000,000 2001 $13,000,000 2002 $13,000,000
To the extent that the amount of Capital Expenditures made by Obligors during any Fiscal Year set forth in the table above is less than the amount applicable to the respective Fiscal Year set forth in the table above (without giving effect to any increase in such amount as provided below), the lesser of (a) such unused amount and (b) 25% of the respective scheduled amount (such lesser amount, the "Rollover Amount") may be carried forward and utilized by Obligors to make additional Capital Expenditures in the immediately succeeding Fiscal Year, provided that no amount once carried forward to the next Fiscal Year may be carried forward to a Fiscal Year thereafter, provided further, that Capital Expenditures made during any Fiscal Year shall be first deemed made in respect of the Rollover Amount and then deemed made in respect of the scheduled amount permitted for such Fiscal Year. As used in this ANNEX F and the Agreement, the following terms shall have the meanings herein specified unless the context otherwise requires: "Acquisition" shall mean from and after December 31, 1998, any acquisition by any Obligor of an equity interest in (whether by purchase of such equity interest or merger, consolidation or other similar transaction), or all or substantially all of the assets of, or any smaller portion that constitutes an operating unit or division or, any Person as permitted pursuant to the Agreement. "Acquisition EBITDA" of a Target for a period shall mean the Consolidated EBITDA of such Target for such period based on historical financial statements for such Target previously delivered to the Lenders, it being understood that Acquisition EBITDA shall not include any income, expenses or other items relating to assets not acquired in the applicable Acquisition. "Capital Expenditures" shall mean, on a Consolidated basis for Parent and its Subsidiaries without duplication, all payments or accruals (including the incurrence of Capital Lease Indebtedness) for any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one year and that are required to be capitalized under GAAP; provided, that the term "Capital Expenditures" shall not include F-4 12 expenditures permitted under Section 5.5(d) for the purchase, replacement or restoration of assets from the proceeds of any insurance or condemnation award. "Consolidated Current Assets" shall mean, at any time, the current assets (other than cash, Cash Equivalents and deferred income taxes to the extent included in current assets) of Parent and its Subsidiaries at such time determined on a Consolidated basis. "Consolidated Current Liabilities" shall mean, at any time, the current liabilities of Parent and its Subsidiaries determined on a Consolidated basis, but excluding deferred income taxes and the current portion of and accrued but unpaid interest on any Indebtedness under the Agreement and any other Funded Indebtedness which would otherwise be included therein. "Consolidated EBITDA" shall mean, without duplication for any period, Consolidated Net Income adjusted by adding (to the extent deducted in computing Consolidated Net Income) or subtracting (to the extent added in computing Consolidated Net Income) thereto the following on a Consolidated basis for such period for Parent and its Subsidiaries: (a) provisions for taxes based on income and foreign withholding taxes for such period, (b) Consolidated Interest Expense and interest income for such period, and (c) the amount of all depreciation expense and amortization expense that was deducted in determining Consolidated Net Income for such period; in each case determined without giving effect (to the extent reflected in Consolidated Net Income for such period) to (i) any extraordinary gains or losses, (ii) gains or losses from sales of assets (other than sales of Inventory in the ordinary course of business), (iii) any write-off of in-process research and development made in connection with the Acquisition, (iv) any write-up of Inventory made in connection with the Acquisition, and (v) any other non-recurring charges (including fees and closing costs in connection with the Acquisition); provided, however, that for purposes of calculating the Leverage Ratio only, Consolidated EBITDA shall include Acquisition EBITDA for the applicable four Fiscal Quarter period of each Target acquired during or after such period to the extent such Acquisition EBITDA has not otherwise been taken into account in the calculation of Consolidated EBITDA. "Consolidated Interest Expense" shall mean, for any period, the sum of (a) the total interest expense (including that attributable to Capital Leases in accordance with GAAP) of Parent and its Subsidiaries determined on a Consolidated basis with respect to all outstanding Indebtedness of Parent and its Subsidiaries, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs or benefits under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, but excluding, however, amortization of deferred financing costs, original issue discount and any interest expense on deferred compensation arrangements to the extent included in total interest expense and (b) the cash dividends, if any, paid by the Parent in respect of its Stock during such period. "Current Maturities of Funded Indebtedness" shall mean at any time and with respect to any item of Funded Indebtedness, the portion of such Funded Indebtedness outstanding at such time which by the terms of such Funded Indebtedness or the terms of any F-5 13 instrument or agreement relating thereto is due on demand or within one year from such time (whether by sinking fund, other required prepayment or final payment at maturity) and is not directly or indirectly renewable, extendible or refundable at the option of the Obligor under an agreement or firm commitment in effect at such time to a date one year or more from such time "Consolidated Net Income" shall mean, for any period, the net income (or loss), after provision for taxes, of Parent and its Subsidiaries on a Consolidated basis for such period taken as a single accounting period but excluding any unrealized losses and gains for such period resulting from mark-to-market of any foreign exchange contracts, currency swap agreements or other similar agreements or arrangements designed to protect against fluctuations in currency values. "Excess Cash Flow" shall mean, for any period an amount equal to the greater of zero or, (a) the sum of, without duplication: (i) Consolidated Net Income for such period; plus (ii) the amount of all non-cash charges (including, without limitation or duplication, depreciation, amortization and non-cash components of interest expense) which reduce Consolidated Net Income for such period; plus (iii) the decrease, if any, in Working Capital from the first day to the last day of such period; plus (iv) the decrease in the principal amount of loans to Parent and employees or officers of the Obligors (to the extent such loans were permitted by the Agreement) from the first day to the last day of such period; plus (v) the decrease in any deferred tax assets and long-term cash assets (not including pension funds) from the first day to the last day of such period; plus (vi) the increase in any deferred tax liabilities and long-term cash liabilities (not including Indebtedness) from the first day to the last day of such period; minus, without duplication (b) the sum of: (i) an amount equal to all Capital Expenditures made during such period that were not financed by Indebtedness (including Capital Lease Indebtedness but excluding Loans hereunder); plus (ii) the amount of all non-cash charges (including, without limitation or duplication, depreciation, amortization and non-cash components of interest expense) which increase Consolidated Net Income for such period; and F-6 14 (iii) the aggregate principal amount of permanent principal payments of Indebtedness for borrowed money of Borrower and its Subsidiaries (other than repayments of Loans, provided that repayments of Loans shall be deducted in determining Excess Cash Flow if such repayments were (A) required pursuant to Section 1.4(d) of the Agreement or (B) made as a voluntary prepayment with internally generated funds (but in the case of a voluntary prepayment of the Revolving Credit Loan, only to the extent accompanied by a voluntary reduction to the Maximum Revolving Credit Commitment)) during such period; plus (iv) the increase, if any, in Working Capital from the first day to the last day of such period; plus (v) the increase in the principal amount of loans to Parent and employees or officers of the Obligors (to the extent such loans were permitted by the Agreement) from the first day to the last day of such period; plus (vi) the increase in any deferred tax assets and long-term cash assets (not including pension funds) from the first day to the last day of such period; plus (vii) the decrease in any deferred tax liabilities and long-term cash liabilities (not including Indebtedness) from the first day to the last day of such period; plus (viii) the aggregate amount of cash dividends or other cash distributions on the capital stock of Borrower paid by Borrower, to the extent permitted by the Agreement, during such period. "Funded Indebtedness" shall mean, with respect to Parent and its Subsidiaries on a Consolidated basis, all Indebtedness of such Obligors (other than Indebtedness in respect of undrawn letters of credit which shall, for purposes of calculating the Leverage Ratio, be excluded from Funded Indebtedness) which by its terms or by the terms of any instrument or agreement related thereto has a final stated maturity which is more than one year from, or is directly renewable or extendible at the option of any such Obligor to a date more than one year from (including an option of any such Obligor under a revolving credit or similar agreement obligating the lender or lenders thereunder to extend credit over a period of one year or more from) the date of the creation thereof, provided that Funded Indebtedness shall include, as at any date of determination, Current Maturities of Funded Indebtedness. "Interest Coverage Ratio" shall mean, for any period, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense for such period. "Leverage Ratio" shall mean, for any period, the ratio of (a) Funded Indebtedness as of the last day of such period to (b) Consolidated EBITDA for such period. "Q1" shall mean, for any Fiscal Year, the first Fiscal Quarter of such Fiscal Year. F-7 15 "Q2" shall mean, for any Fiscal Year, the second Fiscal Quarter of such Fiscal Year. "Q3" shall mean, for any Fiscal Year, the third Fiscal Quarter of such Fiscal Year. "Q4" shall mean, for any Fiscal Year, the fourth Fiscal Quarter of such Fiscal Year. "Target" shall mean the Person an equity interest in (whether by purchase of such equity interest or merger, consolidation or other similar transaction) which is to be acquired, or the Person whose assets are to be acquired, in any Acquisition. "Test Period" shall mean, as of the end of any Fiscal Quarter, the immediately preceding four (4) Fiscal Quarters, including the Fiscal Quarter then ending, taken as one period. "Working Capital" shall mean, as of any date or determination, Consolidated Current Assets less Consolidated Current Liabilities, in each case, as of such date. F-8 EX-27.1 3 FINANCIAL DATA SCHEDULE (CPI, INC.)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q COMMUNICATIONS & POWER INDUSTRIES, INC FOR THE QUARTER ENDED JANUARY 1, 1999. 0001000564 COMMUNICATIONS & POWER INDUSTRIES, INC. 1,000 3-MOS OCT-01-1999 OCT-03-1998 JAN-01-1999 1,482 0 41,632 0 57,400 109,057 78,027 0 232,339 70,616 124,723 21,527 1 0 15,472 232,339 57,781 57,781 43,654 43,654 2,066 0 4,406 (1,005) (422) (583) 0 0 0 (583) 0 0
EX-27.2 4 FINANCIAL DATA SCHEDULE (CPI HOLDING CORPORATION)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION FOR THE QUARTER ENDED JANUARY 1, 1999. 0001000654 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION 1,000 3-MOS OCT-01-1999 OCT-03-1998 JAN-01-1999 1,482 0 41,632 0 57,400 109,057 78,027 0 232,339 70,616 124,723 21,527 0 2 545 232,339 57,781 57,781 43,654 43,654 2,066 0 4,406 (1,005) (422) (583) 0 0 0 (583) 0 0
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