-----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, IwJTYxfpH7TP23p6HtpM4rdwX6+JuES82ukRcWD2ND6EYSG8pyfLwYT92FsAptlg sFOQhu2jwOKjAz5lRcBBow== 0000891618-99-003830.txt : 19990817 0000891618-99-003830.hdr.sgml : 19990817 ACCESSION NUMBER: 0000891618-99-003830 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990702 FILED AS OF DATE: 19990816 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: 99692249 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: 99692250 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 PERIOD ENDED JULY 2, 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 July 2, 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 INDUSTRIES HOLDING CORPORATION COMMUNICATIONS & POWER 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 executive including area code, of registrant's principal offices) executive offices) Securities registered pursuant to Section 12(b) of the Act: Securities registered pursuant to Section 12(b) of the Act: NONE NONE Securities registered pursuant to Section 12(g) of the Act: Securities registered pursuant to Section 12(g) 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 JULY 2, 1999. COMMUNICATIONS & POWER INDUSTRIES, INC.: 1 SHARE OF COMMON STOCK, $.01 PAR VALUE, AT JULY 2, 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 1: FINANCIAL INFORMATION COMMUNICATIONS & POWER INDUSTRIES, INC. Consolidated Condensed Balance Sheets, July 2, 1999 and October 2, 1998.............................2 Consolidated Condensed Statements of Operations, 13-week period ended July 2, 1999 and 13-week period ended July 3, 1998...........................................................................3 Consolidated Condensed Statements of Operations, 39-week period ended July 2, 1999 and 39-week period ended July 3, 1998...........................................................................4 Consolidated Condensed Statements of Cash Flows, 39-week period ended July 2, 1999 and 39-week period ended July 3, 1998...........................................................................5 Notes to Consolidated Condensed Financial Statements................................................6 Management's Discussion and Analysis of Financial Condition and Results of Operations..............14 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION Consolidated Condensed Balance Sheets, July 2, 1999 and October 2, 1998.............................8 Consolidated Condensed Statements of Operations, 13-week period ended July 2, 1999 and 13-week period ended July 3, 1998...........................................................................9 Consolidated Condensed Statements of Operations, 39-week period ended July 2, 1999 and 39-week period ended July 3, 1998..........................................................................10 Consolidated Condensed Statements of Cash Flows, 39-week period ended July 2, 1999 and 39-week period ended July 3, 1998..........................................................................11 Notes to Consolidated Condensed Financial Statements...............................................12 Management's Discussion and Analysis of Financial Condition and Results of Operations..............14 PART II: OTHER INFORMATION Other Information .................................................................................18 SIGNATURES..............................................................................................19
3 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands-unaudited)
July 2, October 2, ASSETS 1999 1998 ------ --------- --------- CURRENT ASSETS Cash and cash equivalents $ 7,041 $ 448 Accounts receivable, net 43,685 49,484 Inventories 55,329 52,923 Deferred taxes 6,981 6,981 Other current assets 1,240 1,440 --------- --------- Total current assets 114,276 111,276 Property, plant, and equipment, net 77,184 78,099 Goodwill and other intangibles, net 29,351 25,147 Debt issue costs, net 5,886 6,522 Deferred taxes 8,154 8,168 --------- --------- Total assets $ 234,851 $ 229,212 ========= ========= LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY CURRENT LIABILITIES Revolving credit facility $ 32,500 $ 13,300 Current portion of term loans 6,200 6,200 Current portion of capital leases 774 541 Accounts payable 10,444 13,140 Accrued expenses 22,370 15,612 Product warranty 3,692 3,734 Income taxes payable 8,543 10,259 Advance payments from customers 2,786 2,533 --------- --------- Total current liabilities 87,309 65,319 Senior term loans 18,999 23,750 Senior subordinated notes 100,000 100,000 Obligations under capital leases 2,216 2,548 --------- --------- Total liabilities 208,524 191,617 --------- --------- SENIOR REDEEMABLE PREFERRED STOCK 23,298 20,683 --------- --------- Commitments and contingencies STOCKHOLDERS' EQUITY: Junior Preferred Stock 1 1 Common Stock -- -- Additional paid-in capital 35,220 33,582 Accumulated deficit (31,098) (15,614) Less stockholder loans (1,094) (1,057) --------- --------- Net stockholders' equity 3,029 16,912 --------- --------- Total liabilities, redeemable preferred stock and equity $ 234,851 $ 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 July 2, July 3, 1999 1998 -------- -------- Sales $ 62,292 $ 64,450 Cost of sales 54,034 48,702 -------- -------- Gross profit 8,258 15,748 -------- -------- Operating costs and expenses: Research and development 2,332 1,687 Marketing 4,987 5,065 General and administrative 6,012 3,261 -------- -------- Total operating costs and expenses 13,331 10,013 -------- -------- Operating(loss) income (5,073) 5,735 Foreign currency (loss) gain (203) 69 Interest expense (4,386) (4,399) -------- -------- (Loss) earnings before taxes (9,662) 1,405 Income tax expense 422 527 -------- -------- Net (loss) earnings (10,084) 878 Preferred dividends: Senior Redeemable Preferred Stock 847 738 Junior Preferred Stock 565 492 -------- -------- Loss earnings attributable to common stock $(11,496) $ (352) ======== ========
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 OPERATIONS (in thousands - unaudited)
39-Week 39-Week period ended period ended July 2, July 3, 1999 1998 --------- --------- Sales $ 187,192 $ 190,625 Cost of sales 148,647 142,181 --------- --------- Gross profit 38,545 48,444 --------- --------- Operating costs and expenses: Research and development 7,092 5,406 Marketing 14,573 14,397 General and administrative 14,231 10,545 --------- --------- Total operating costs and expenses 35,896 30,348 --------- --------- Operating income 2,649 18,096 Foreign currency (loss) gain (644) 24 Interest expense (13,237) (13,520) --------- --------- (Loss) earnings before taxes (11,232) 4,600 Income tax expense -- 1,725 --------- --------- Net (loss) earnings (11,232) 2,875 Preferred dividends: Senior Redeemable Preferred Stock 2,455 2,140 Junior Preferred Stock 1,637 1,426 --------- --------- Loss attributable to common stock $ (15,324) $ (691) ========= =========
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) CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands - unaudited)
39-Week 39-Week period ended period ended July 2, July 3, 1999 1998 -------- -------- OPERATING ACTIVITIES Net cash provided by operating activities $ 7,801 $ 18,592 -------- -------- INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment 13 29 Purchase of property, plant and equipment, net (6,681) (4,388) Product lines acquisitions (8,910) (2,730) -------- -------- Net cash used in investing activities (15,578) (7,089) -------- -------- FINANCING ACTIVITIES Net Proceeds/(Repayments) from revolving credit facility 19,200 (7,100) Net Repayments on senior term loans (4,830) (4,150) Net Proceeds from stockholder loans -- 30 Purchase of treasury stock -- (723) Issuance of treasury stock -- 696 -------- -------- Net cash provided by (used in) financing activities 14,370 (11,247) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 6,593 256 Cash and cash equivalents at beginning of period 448 2,027 -------- -------- Cash and cash equivalents at end of period $ 7,041 $ 2,283 ======== ========
See accompanying notes to the unaudited consolidated condensed financial statements. -5- 7 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 (except as described below), 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. Results for the quarter and the nine months ending July 2, 1999 reflect an aggregate $7.6 million in non-recurring charges, of which $6.0 million was charged to cost of goods sold and $1.6 million was charged to general and administrative expenses. These non-recurring charges were principally related to the Company's Traveling Wave Technology (TWT) Division and changes in estimated costs to complete certain customer contracts and the write-off of certain inventory which the Company believes is not realizable. In addition, certain charges for the discontinuation of a Satcom Division product line are reflected. The TWT business, historically conducted as a separate Palo Alto division, is in the process of being integrated into the Company's Microwave Power Products (MPP) Division, also headquartered in Palo Alto. The non-recurring charges also include a provision for severance expenses in connection with the integration of the TWT Division and estimated settlement costs with a customer. The Company is currently involved in a dispute with a customer involving performance and functionality of a particular type of product that is sold to this customer. The parties are presently negotiating a settlement to resolve this matter. The Company has recorded a reserve for the minimum level of its estimate of the range of exposure. The Company's third quarter performance resulted in its failure to meet certain financial covenants contained in the Company's senior bank credit facility. CPI has obtained a limited waiver of the defaults from 100% of its lenders. This waiver is effective until the earlier of October 1, 1999, or the completion of a more comprehensive restructuring amendment to the credit facility. CPI expects to shortly begin working on the terms of such a restructuring amendment with the lenders' representatives. During the quarter ended July 2, 1999, CPI paid preferred stock dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 8,466 additional shares of its Senior Redeemable Preferred Stock and 5,644 shares of its Junior Preferred Stock, respectively. During the nine months ended July 2, 1999, the Company paid preferred dividends through the issuance of 24,549 shares of its Senior Redeemable Preferred Stock and 16,366 shares of its Junior Preferred Stock. At the beginning of fiscal year 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. -6- 8 COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) Inventories are stated at the lower of average cost or market (net realizable value). The main components of inventories are as follows:
(Dollars in thousands) July 2, October 2, 1999 1998 ------- ------- Raw materials and parts $41,868 $38,327 Work in process 10,796 13,572 Finished goods 2,665 1,024 ------- ------- Total inventories $55,329 $52,923 ======= =======
-7- 9 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands-unaudited)
July 2, October 2, ASSETS 1999 1998 ------ --------- --------- CURRENT ASSETS Cash and cash equivalents $ 7,041 $ 448 Accounts receivable, net 43,685 49,484 Inventories 55,329 52,923 Deferred taxes 6,981 6,981 Other current assets 1,240 1,440 --------- --------- Total current assets 114,276 111,276 Property, plant, and equipment, net 77,184 78,099 Goodwill and other intangibles, net 29,351 25,147 Debt issue costs, net 5,886 6,522 Deferred taxes 8,154 8,168 --------- --------- Total assets $ 234,851 $ 229,212 ========= ========= LIABILITIES, REDEEMABLE PREFERRED STOCK, PREFERRED STOCK OF SUBSIDIARY AND EQUITY CURRENT LIABILITIES Revolving credit facility $ 32,500 $ 13,300 Current Portion of term loans 6,200 6,200 Current Portion of capital leases 774 541 Accounts payable 10,444 13,140 Accrued expenses 22,370 15,612 Product warranty 3,692 3,734 Income taxes payable 8,543 10,259 Advance payments from customers 2,786 2,533 --------- --------- Total current liabilities 87,309 65,319 Senior term loans 18,999 23,750 Senior subordinated notes 100,000 100,000 Obligations under capital leases 2,216 2,548 --------- --------- Total liabilities 208,524 191,617 --------- --------- SENIOR REDEEMABLE PREFERRED STOCK OF SUBSIDIARY 23,298 20,683 --------- --------- JUNIOR PREFERRED STOCK OF SUBSIDIARY 16,038 14,400 --------- --------- STOCKHOLDERS' (DEFICIT) EQUITY: Common Stock 2 2 Additional paid-in capital 19,181 19,181 Accumulated deficit (31,098) (15,614) Less stockholder loans (1,094) (1,057) --------- --------- Net stockholders' (deficit) equity (13,009) 2,512 --------- --------- Total liabilities, redeemable preferred stock, preferred stock of subsidiary and equity $ 234,851 $ 229,212 ========= =========
See accompanying notes to the unaudited consolidated condensed financial statements. -8- 10 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands - unaudited)
13-Week 13-Week period ended period ended July 2, July 3, 1999 1998 -------- -------- Sales $ 62,292 $ 64,450 Cost of sales 54,034 48,702 -------- -------- Gross profit 8,258 15,748 -------- -------- Operating costs and expenses: Research and development 2,332 1,687 Marketing 4,987 5,065 General and administrative 6,012 3,261 -------- -------- Total operating costs and expenses 13,331 10,013 -------- -------- Operating (loss) income (5,073) 5,735 Foreign currency (loss) gain (203) 69 Interest expense (4,386) (4,399) -------- -------- (Loss) earnings before taxes (9,662) 1,405 Income tax expense 422 527 -------- -------- Net (loss) earnings (10,084) 878 Preferred dividends: Senior Redeemable Preferred Stock 847 738 Junior Preferred Stock 565 492 -------- -------- Loss earnings attributable to common stock $(11,496) $ (352) ======== ========
See accompanying notes to the unaudited consolidated condensed financial statements. -9- 11 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands - unaudited)
39-Week 39-Week period ended period ended July 2, July 3, 1999 1998 --------- --------- Sales $ 187,192 $ 190,625 Cost of sales 148,647 142,181 --------- --------- Gross profit 38,545 48,444 --------- --------- Operating costs and expenses: Research and development 7,092 5,406 Marketing 14,573 14,397 General and administrative 14,231 10,545 --------- --------- Total operating costs and expenses 35,896 30,348 --------- --------- Operating income 2,649 18,096 Foreign currency (loss) gain (644) 24 Interest expense (13,237) (13,520) --------- --------- (Loss) earnings before taxes (11,232) 4,600 Income tax expense -- 1,725 --------- --------- Net (loss) earnings (11,232) 2,875 Preferred dividends: Senior Redeemable Preferred Stock 2,455 2,140 Junior Preferred Stock 1,637 1,426 --------- --------- Loss attributable to common stock $ (15,324) $ (691) ========= =========
See accompanying notes to the unaudited consolidated condensed financial statements. -10- 12 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands - unaudited)
39-Week 39-Week period ended period ended July 2, July 3, 1999 1998 -------- -------- OPERATING ACTIVITIES Net cash provided by operating activities $ 7,801 $ 18,592 -------- -------- INVESTING ACTIVITIES Proceeds from sale of property, plant and equipment 13 29 Purchase of property, plant and equipment, net (6,681) (4,388) Product line acquisitions (8,910) (2,730) -------- -------- Net cash used in investing activities (15,578) (7,089) -------- -------- FINANCING ACTIVITIES Net Proceeds from stockholder loans -- 30 Net Proceeds/(Repayments) from revolving credit facility 19,200 (7,100) Net Repayments on senior term loans (4,830) (4,150) Purchase of treasury stock -- (723) Issuance of treasury stock -- 696 -------- -------- Net cash provided by (used in) financing activities 14,370 (11,247) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 6,593 256 Cash and cash equivalents at beginning of period 448 2,027 -------- -------- Cash and cash equivalents at end of period $ 7,041 $ 2,283 ======== ========
See accompanying notes to the unaudited consolidated condensed financial statements. -11- 13 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 (except as described below), 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. Results for the quarter and the nine months ending July 2, 1999 reflect an aggregate $7.6 million in non-recurring charges, of which $6.0 million was charged to cost of goods sold and $1.6 million was charged to general and administrative expenses. These non-recurring charges were principally related to the Company's Traveling Wave Technology (TWT) Division and changes in estimated costs to complete certain customer contracts and the write-off of certain inventory which the Company believes is not realizable. In addition, certain charges for the discontinuation of a Satcom Division product line are reflected. The TWT business, historically conducted as a separate Palo Alto division, is in the process of being integrated into the Company's Microwave Power Products (MPP) Division, also headquartered in Palo Alto. The non-recurring charges also include a provision for severance expenses in connection with the integration of the TWT Division and estimated settlement costs with a customer. The Company is currently involved in a dispute with a customer involving performance and functionality of a particular type of product that is sold to this customer. The parties are presently negotiating a settlement to resolve this matter. The Company has recorded a reserve for the minimum level of its estimate of the range of exposure. The Company's third quarter performance resulted in its failure to meet certain financial covenants contained in the Company's senior bank credit facility. CPI has obtained a limited waiver of the defaults from 100% of its lenders. This waiver is effective until the earlier of October 1, 1999, or the completion of a more comprehensive restructuring amendment to the credit facility. CPI expects to shortly begin working on the terms of such a restructuring amendment with the lenders' representatives. During the quarter ended July 2, 1999, CPI paid preferred stock dividends on its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the issuance of 8,466 additional shares of its Senior Redeemable Preferred Stock and 5,644 shares of its Junior Preferred Stock, respectively. During the nine months ended July 2, 1999, the Company paid preferred dividends through the issuance of 24,549 shares of its Senior Redeemable Preferred Stock and 16,366 shares of its Junior Preferred Stock. At the beginning of fiscal year 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. -12- 14 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries Inventories are stated at the lower of average cost or market (net realizable value). The main components of inventories are as follows:
(Dollars in thousands) July 2, October 2, 1999 1998 ------- ------- Raw materials and parts $41,868 $38,327 Work in process 10,796 13,572 Finished goods 2,665 1,024 ------- ------- Total inventories $55,329 $52,923 ======= =======
-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) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Orders during the third quarter of Fiscal 1999 were $65.6 million as compared to $53.4 million for the third quarter of Fiscal 1998, bringing orders for the first nine months of Fiscal 1999 to a level of $180.7 million as compared to $197.2 million during the same time period in Fiscal 1998. This year-to-date decline of $16.5 million, or 8.3%, was primarily due to continued softness from the Company's satellite communications ("satcom") market where orders were down $10.9 million and to order receipt delays from the Company's medical market where orders were down $6.8 million. Order receipts for sole-source medical products have been delayed due to a customer's change from an annual procurement process to a quarterly procurement process but this is not expected to impact shipments. Overall, 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 2, 1999, the Company had order backlog of $156.5 million, representing approximately seven months of sales, compared to order backlog of $168.5 million, or approximately eight months of sales as of July 3, 1998. Sales for the third quarter of Fiscal 1999 were $62.3 million compared to $64.5 million for the same period in Fiscal 1998 and were $187.2 million for the first nine months of Fiscal 1999 compared to $190.6 million during the same time period in Fiscal 1998. The nine month decline of $3.4 million, or 1.8%, is a relatively small decline attributable to the challenging global economic conditions impacting order receipts, but there has been a significant change in product mix. Sales of products to the communications, radar and industrial markets for the first nine months of Fiscal 1999 were down by $7.7 million, $2.5 million and $1.9 million, respectively, compared to the first nine months of Fiscal 1998. The communications market has been unfavorable impacted by softness in demands for satcom products in spite of the Company's recent acquisition (completed in October 1998) of solid state products that added $4.7 million of new sales during the first nine months of Fiscal 1999. The radar market has been impacted slightly by U.S. sanctions against India and the industrial market has been impacted by softness in demands from the semiconductor products. Partially offsetting these declines are increased sales to the electronic countermeasures, scientific and medical markets of $4.4 million, $2.2 million and $2.1 million, respectively. Both electronic countermeasures and scientific sales have been favorably impacted by new product development efforts. Gross profit for the third quarter of Fiscal 1999 was $8.3 million, or 13.3% of sales, compared to $15.7 million, or 24.4% of sales, in the third quarter of Fiscal 1998. Gross profit for the first nine months of Fiscal 1999 was $38.5 million, or 20.6% of sales, compared to $48.4 million, or 25.4% of sales, during the comparable period in Fiscal 1998. This decline of $7.5 million for the third quarter and $9.9 million -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) for the nine months ending July 2, 1999 was primarily due to non-recurring charges of $6.0 million (described below). Absent this charge, gross margins were down in Fiscal 1999 compared to Fiscal 1998 due to slightly lower sales volume and shifts in product mix to more technically challenging products in new applications as well as new product introductions that have higher costs. Operating costs and expenses were $13.3 million, or 21.4% of sales, for the third quarter of Fiscal 1999, as compared to $10.0 million, or 15.5%, for the third quarter of Fiscal 1998. Operating costs and expenses for the first nine months of Fiscal 1999 were $35.9 million, or 19.2% of sales, compared to $30.3 million, or 15.9% of sales, for the first nine months of Fiscal 1998. This increase of $3.3 million for the third quarter and $5.5 million for the nine months ending July 2, 1999 was due to non-recurring charges of $1.6 million (described below), higher research and development spending primarily in the satcom product area as well as higher marketing, administrative and amortization costs related to the Company's recent acquisition. Results for the quarter and the nine months ending July 2, 1999 reflect an aggregate $7.6 million in non-recurring charges principally related to the Company's Traveling Wave Technology (TWT) Division and changes in estimated costs to complete certain customer contracts and the write-off of certain inventory which the Company believes is not realizable. In addition, certain charges for the discontinuation of a Satcom Division product line are reflected. The TWT business, historically conducted as a separate Palo Alto division, is in the process of being integrated into the Company's Microwave Power Products (MPP) Division, also headquartered in Palo Alto. The non-recurring charges also include a provision for severance expenses in connection with the integration of the TWT Division and estimated settlement costs with a customer in connection with a product performance dispute. Earnings before interest, income taxes, depreciation and amortization ("EBITDA")(1) for the third quarter of Fiscal 1999 were a negative $1.8 million, or (2.9%) of sales, compared to $8.8 million, or 13.6% of sales, for the third quarter of Fiscal 1998. EBITDA for the first nine months of Fiscal 1999 was $12.2 million, or 6.5% of sales, compared to $26.6 million, or 13.9% of sales, for the same time period in Fiscal 1998. Excluding the non-recurring charges of $7.6 million, EBITDA for the third quarter was $5.8 million, or 9.3% of sales, and $19.8 million, or 10.6% of sales, for the nine months ending July 2, 1999. This decrease in EBITDA of $3.0 million for the third quarter and $6.8 million for the first nine months of Fiscal 1999 was due primarily to shifts in product mix that, because of a number of new product development contracts, have lower margins, higher research and development spending and higher general and administrative costs associated with unfavorable currency fluctuations, information system replacement efforts and adding a new operating division. - -------- (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. -15- 17 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) FINANCIAL CONDITION Cash flows provided by operating activities for the first nine months of Fiscal 1999 were $7.8 million, a decrease of $10.8 million from the $18.6 million provided by operating activities during the first nine months of Fiscal 1998. Cash flow decreased due primarily to lower earnings and higher levels of accounts payable payments partially offset by a decrease in operating assets, an increase in accrued liabilities and an increase in advanced payments from customers. Investing activities increased to $15.6 million in the first nine months of Fiscal 1999 compared to $7.1 million in the first nine months of Fiscal 1998. This increase of $8.5 million was due to the acquisition of the Microwave Components Division of Aydin Corporation, which was completed in October 1998, and to slightly higher spending on production equipment. 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 $10.3 million was available as of July 30, 1999). In the first nine months of Fiscal 1999, the Company borrowed $19.2 million under this facility to repay $4.8 million of term loans and to complete the acquisition mentioned above. The Company's third quarter performance resulted in its failure to meet certain financial covenants contained in the Company's senior bank credit facility. CPI has obtained a limited waiver of the defaults from 100% of its lenders. This waiver is effective until the earlier of October 1, 1999, or the completion of a more comprehensive restructuring amendment to the credit facility. CPI expects to shortly begin working on the terms of such a restructuring amendment with the lenders' representatives. Among other things, CPI expects that the restructuring amendment will reflect the Company's reduced expectations for financial results in upcoming quarters. Market Risk The Company's market risk disclosures set forth in its Annual Report on Form 10-K for the fiscal year ended October 2, 1998 have not changed significantly. 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. 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 -16- 18 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries COMMUNICATIONS & POWER INDUSTRIES, INC., and subsidiaries (A wholly owned subsidiary of Communications & Power Industries Holding Corporation) conversions, corrective actions, work arounds and tests completed by October 31, 1999. To date, four of the Company's six Divisions have successfully modified or replaced Enterprise Resource Planning ("ERP") systems. The other two are scheduled to "go-live" on a new ERP system during the next three months. 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 $5.6 million primarily through a capital lease program to replace outdated Varian legacy systems. To date, approximately $5.2 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 in process but completion of these plans has been delayed until October 31, 1999 to coincide with converting the last Division to Y2K compliant information systems. 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. -17- 19 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. See the discussion above under "Management's Discussion and Analysis of Financial Condition and Results of Operation Financial Condition" for a discussion of the Company's senior bank credit facility. 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: 10.1.6 Sixth 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 July 26, 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 July 2, 1999. -18- 20 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/ William P. Rutledge ------------------------------------------------ William P. Rutledge Chief Executive Officer and President Date: August 12, 1999 By: /s/ Lynn E. Harvey ------------------------------------------------ Lynn E. Harvey Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: August 12, 1999 -19- 21 INDEX TO EXHIBITS
Exhibit Number Description - ------- ------------ 10.1.6 Sixth 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 July 26, 1999. 27.1 Financial Data Schedule (Communications & Power Industries, Inc.) 27.2 Financial Data Schedule (Communications & Power Industries Holding Corporation)
EX-10.1.6 2 SIXTH AMENDMENT TO CREDIT AGREEMENT 1 [Exhibit 10.1.6] AMENDMENT NO. 6 TO CREDIT AGREEMENT AND LIMITED WAIVER This AMENDMENT NO. 6 TO CREDIT AGREEMENT AND LIMITED WAIVER (this "Limited Waiver") is made and entered into as of July 26, 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 amended by Amendment No. 1, dated as of December 31, 1996, Amendment No. 2, dated as of April 1, 1997, Amendment No. 3, dated as of June 27, 1997, Amendment No. 4, dated as of October 6, 1998, and Amendment No. 5, dated as of February 12, 1999, the "Agreement"), among the Obligors, the Agent and the Lenders. RECITALS A. The Borrower has (1) failed to deliver the amended financial statements and Borrowing Base Certificate for the April, 1999 Fiscal Month and the financial statements and Borrowing Base Certificate for the May, 1999 Fiscal Month, in each case required to be delivered under paragraph 2 of Annex D to the Agreement at the times required therein (the "Reporting Default") and (2) informed the Agent and the Lenders that it expects to fail to meet the financial covenants contained in paragraphs 1, 2 and 3 of Annex F of the Agreement for the Fiscal Quarter ending June 30, 1999 (the "Financial Covenant Default"). B. The Borrower has requested that the Lenders waive the Reporting Default and the Financial Covenant Default (collectively, the "Defaults"). NOW, THEREFORE, 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 Limited Waiver. This Limited Waiver shall become effective as of the date hereof ("Effectiveness") upon satisfaction of each of the following conditions: (a) Lenders comprising Requisite Lenders shall have executed a counterpart to this Limited Waiver and shall have delivered the same to the Agent; and 2 (b) each Lender shall have received a fee in immediately available funds equal to the product of (i) 0.125% and (ii) the aggregate amount of such Lender's Commitments, which fee shall be credited against any upfront fee payable to such Lender upon the effectiveness of any amendment to the Agreement in form and substance satisfactory to the Obligors, the Agent and the Lenders pursuant to which the Defaults shall be permanently waived and the Loans, or any terms thereof or covenants relating thereto, will be restructured (the "Restructuring Amendment"). 3. Limited Waiver. Subject to Effectiveness, the Lenders hereby waive each of the Defaults for a period (the "Waiver Period") beginning on the first date of Effectiveness and ending on the earliest of (i) July 26, 1999, unless the Borrower shall have delivered to each Lender on or prior to such date the financial statements and Borrowing Base Certificate required to be delivered under paragraph 2 of Annex D to the Agreement for the May, 1999 Fiscal Month, (ii) the Non-Compliance Date (as defined below), (iii) the date of effectiveness of the Restructuring Amendment and (iv) October 1, 1999. For purposes hereof, "Non-Compliance Date" shall mean the earlier of (x) the date on which the Borrower delivers to the Agent and each Lender the certification of its Chief Financial Officer for the Borrower's Fiscal Quarter ended June 30, 1999 required by paragraph 3 of Annex D to the Agreement if such certification shows that for the Test Period covered thereby the Interest Coverage Ratio is less than 1.25:1.00 or the Leverage Ratio is more than 7.25:1.00 and (y) the date on which the Borrower defaults in its obligation to deliver to the Agent and each Lender the certification referred to in clause (x) at the time set forth in paragraph 3 of Annex D to the Agreement. 4. Additional Agreements. The following provisions shall apply at all times prior to the effectiveness of the Restructuring Amendment: (a) Interest Rates. (i) The "Applicable Base Rate Margin" shall mean a rate per annum determined as follows: (A) in the case of the Revolving Credit Loan and Term Loan A, 1.25% per annum, (B) in the case of Term Loan B, 1.75% per annum and (C) in the case of Swingline Loans, 0.75% per annum. (ii) The "Applicable Eurodollar Rate Margin" shall mean a rate per annum determined as follows: (A) in the case of the Revolving Credit Loan and Term Loan A, 2.75% per annum and (B) in the case of Term Loan B, 3.25% per annum. (b) Eurodollar Loan Interest Periods. The Borrower may not elect any new Interest Period pursuant to Section 1.8(e)(ii) of the Agreement in respect of any borrowing of a Eurodollar Loan longer than a three month period. (c) Further Restrictions. Without limiting any of the restrictions otherwise contained in the Agreement, no Obligor shall: (i) directly or indirectly, by operation of law or otherwise, enter into a merger, acquisition or joint venture for the purposes described in clause (c) of Section 6.1 of the Agreement; 3 (ii) make any investment in, or make or accrue loans or advances of money or extend credit to, any Person, through the direct or indirect holding of securities or otherwise, or purchase or acquire any stock, obligations or securities of, or make any capital contribution to, any Person for the purposes described in clauses (e) or (g) of the defined term "Permitted Investments" set forth in Annex A to the Agreement; (iii) create, incur, assume or permit to exist any Indebtedness described in clauses (i) or (o) of the defined term "Permitted Indebtedness" set forth in Annex A to the Agreement other than any such Indebtedness existing on or before June 30, 1999; (iv) enter into any transactions described in clauses (c), (f) or (j) of the defined term "Permitted Affiliate Transactions" set forth in Annex A to the Agreement; or (v) make any investments, incur any Indebtedness or otherwise make any payments for the purposes described in clause (b) of Section 6.14 of the Agreement (other than the payments described in sub-clauses (iii)(B) and (iii)(D) of such clause (b)). (d) EBITDA. The Borrower will not permit Consolidated EBITDA for the immediately preceding twelve Fiscal Months, determined as of the last day of each month, to be less than $21,000,000. (e) Financial Reports. At the time of and together with the delivery of the internally prepared Consolidated income statement, statement of cash flows and balance sheet required to be provided by the Borrower under paragraph 2 of Annex D to the Agreement (the "Monthly Financials"), the Borrower will provide to each Lender (i) copies of its internally prepared financial statements of each division of the Borrower in a format consistent with the Monthly Financials, (ii) in lieu of comparisons to the budget for that monthly period and the year to date period, comparisons for such periods of the Monthly Financials to the forecasts and projections delivered to the Agent and the Lenders by the Borrower on July 12, 1999 and (iii) a certification of the Chief Financial Officer of Borrower that Borrower is or is not, as the case may be, in compliance with the terms of Section 4(d) of this Limited Waiver and showing in reasonable detail the calculations used in determining such compliance or non-compliance. (f) Mandatory Prepayment. Notwithstanding anything to the contrary contained in Section 1.8(e)(i) of the Agreement, if at any time the Borrower's aggregate cash balances exceed $1,099,999 (excluding non-US cash balances required in connection with contract advances), the Borrower shall promptly pay, without premium or penalty, cash in excess of $1,000,000 in minimum amounts of $100,000 and integral multiples thereof to the Agent for application (i) first, to outstanding amounts under the Swingline Loan and (ii) second, to outstanding amounts under the Revolving Credit Loan in accordance with Section 1.4(e) of the Agreement. For purposes of this clause (f), prepayments hereunder shall be applied first to outstanding Base Rate Loans and then to outstanding Eurodollar Loans, provided that Borrower shall at all times remain obligated to pay breakage costs pursuant to Section 1.9(e)(ii) of the Agreement. So long as Borrower's aggregate cash balances do not exceed $1,099,999 (excluding non-US cash balances required in connection with contract advances), payments hereunder may be reborrowed from time to time subject to the terms and conditions of the Agreement. -3- 4 5. Miscellaneous. (a) The waiver given hereby is made once only with respect to the specific provisions of the Agreement set forth above and is made only to the extent and for the limited purpose and period described herein. Such waiver is not to be construed as a waiver for any purpose other than as specifically set forth in this Limited Waiver and shall not constitute an agreement or obligation of the Agent or any Lender to grant any other or any future waiver. (b) Upon expiration of the Waiver Period (other than upon the effectiveness of the Restructuring Amendment), each of the Defaults waived hereunder shall, unless cured prior to such time, be reinstated in full as of the date of such expiration. No failure or delay in accordance with this Limited Waiver on the part of the Agent or any Lender in exercising any right, power or privilege under the Agreement in respect of the Defaults shall operate as a waiver of any such right, power or privilege in the event that the Defaults (or any of them) are reinstated. No waiver of the Defaults hereunder shall suspend, waive or effect any other Default or Event of Default under the Agreement. (c) Except as expressly modified by this Limited Waiver, the Agreement shall continue to be and remain in full force and effect in accordance with its terms. (d) This Limited Waiver 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. (e) THIS LIMITED WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (f) This Limited Waiver 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. (g) Each Obligor hereby ratifies, affirms, acknowledges and agrees that the Agreement (as modified herein) and each of the other Loan Documents to which it is a party constitute its valid, binding and enforceable obligations, and each such Obligor further acknowledges that there are no existing claims, counterclaims, defenses or rights of setoff whatsoever with respect to the Agreement (as modified herein) or any of the other Loan Documents. (h) Each Obligor fully, finally, and absolutely and forever releases and discharges the Agent and each Lender and their present and former directors, shareholders, officers, employees, agents, representatives, successors and assigns, and their separate and respective heirs, personal representatives, successors and assigns, from any and all actions, causes of action, claims, debts, damages, demands, liabilities, obligations, and suits, of whatever kind or nature, in law or equity of such Obligor, whether now known or unknown to such Obligor, and whether contingent or matured, (i) in respect of the Loans, the Loan Documents, or the actions or omissions of the Agent and the Lenders in respect of the Loans or the Loan Documents and (ii) arising from events occurring prior to the date of this Limited Waiver. -4- 5 IN WITNESS WHEREOF, the parties hereto have caused this Limited Waiver 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 -5- 6 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 -6- 7 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 -7- 8 DRESDNER BANK AG, New York and Grand Cayman Branches By /s/BEVERLY G. CASON ------------------------------------------- Name: Beverly G. Cason Title: Vice President By /s/JOHN R. MORRISON ------------------------------------------- Name: John R. Morrison Title: Vice President 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/JOSEPH MORONEY ------------------------------------------- Name: Joseph Moroney Title: Authorized Signatory ROYALTON COMPANY By PACIFIC INVESTMENT MANAGEMENT COMPANY, as Investment Adviser By PIMCO Management Inc., a general partner By /s/MOHAN V. PHASALKAR ------------------------------------------- Name: Mohan V. Phansalkar Title: Senior Vice President -8- 9 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/RICHARD FAULKNER ------------------------------------------- Name: Richard Faulkner Title: Vice President -9- EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM CONSOLIDATED CONDENSED 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 JULY 2, 1999. 0001000564 COMMUNICATIONS & POWER INDUSTRIES, INC. 1,000 9-MOS OCT-01-1999 OCT-03-1998 JUL-02-1999 7,041 0 43,685 0 55,329 114,276 77,184 0 234,851 208,524 121,215 23,298 1 0 3,028 234,851 187,192 187,192 148,647 148,647 7,092 0 13,237 (11,232) 0 (11,232) 0 0 0 (11,232) 0 0
EX-27.2 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM CONSOLIDATED CONDENSED 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 JULY 2, 1999. 0001000654 COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION 1,000 9-MOS OCT-01-1999 OCT-03-1998 JUL-02-1999 7,041 0 43,685 0 55,329 114,276 77,184 0 234,851 208,524 121,215 23,298 0 2 (13,011) 234,851 187,192 187,192 148,647 148,647 7,092 0 13,237 (11,232) 0 (11,232) 0 0 0 (11,232) 0 0
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