-----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, OWAPS6o75xG/D6Hx5JS8VQXCHe8WjOgy1PEaW0L7saP8OF1P1sOc2RI+Gy+Ozcds X5A21KQxhKa8IoGCZDlROg== 0000808064-95-000008.txt : 19951218 0000808064-95-000008.hdr.sgml : 19951218 ACCESSION NUMBER: 0000808064-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951215 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHARTER POWER SYSTEMS INC CENTRAL INDEX KEY: 0000808064 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 133314599 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09389 FILM NUMBER: 95601951 BUSINESS ADDRESS: STREET 1: 3043 WALTON RD CITY: PLYMOUTH MEETING STATE: PA ZIP: 19462 BUSINESS PHONE: 2158289000 MAIL ADDRESS: STREET 1: 3043 WALTON ROAD CITY: PLYMOUTH MEETING STATE: PA ZIP: 19462 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter ended October 31, l995 Commission File No. 1-9389 CHARTER POWER SYSTEMS, INC. (Exact name of Registrant as specified in its charter) Delaware 13-3314599 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3043 Walton Road Plymouth Meeting, Pennsylvania 19462 (Address of principal executive office) (Zip Code) (610) 828-9000 (Registrant's telephone number, including area code) Indicate by check mark whether the 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_____ Number of shares of the Registrant's Common Stock outstanding on December 11, 1995: 6,250,101 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Page No. Item 1 - Financial Statements Consolidated Balance Sheets - October 31, 1995 and January 31, 1995 3 Consolidated Statements of Income - Three and Nine Months Ended October 31, 1995 and 1994 5 Consolidated Statements of Cash Flows - Nine Months Ended October 31, 1995 and 1994 6 Notes to Consolidated Financial Statements 8 Report of Independent Accountants 12 Item 2 - Management's Discussion and Analysis 13 of Financial Condition and Results of Operations PART II. OTHER INFORMATION 16 SIGNATURES 17 2 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) October 31, January 31, 1995 1995 ---- ---- ASSETS: Current assets: Cash and cash equivalents $ 1,259 $ 1,097 Restricted cash and cash equivalents -- 75 Accounts receivable, less allowance for doubtful accounts of $1,545 and $1,404, respectively 34,600 30,253 Inventories 36,443 26,869 Deferred income taxes 5,510 5,231 Other current assets 1,254 553 ------- ------- Total current assets 79,066 64,078 Property, plant and equipment, net 40,980 40,059 Intangible and other assets, net 5,152 5,314 Goodwill, net 2,637 2,686 ------- ------- Total assets $127,835 $112,137 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Current portion of long-term debt $ 2,517 $ 3,670 Accounts payable 21,186 15,601 Accrued liabilities 15,565 13,994 Other current liabilities 2,257 3,067 ------- ------- Total current liabilities 41,525 36,332 Deferred income taxes 3,741 3,552 Long-term debt 13,624 14,183 Other liabilities 7,475 6,348 ------- ------- Total liabilities 66,365 60,415 ------- ------- The accompanying notes are an integral part of these statements. 3 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (Dollars in thousands) (Unaudited) October 31, January 31, 1995 1995 ---- ---- Commitments and contingencies Stockholders' equity: Common stock, $.01 par value, 10,000,000 shares authorized; 6,017,491 and 5,971,041 shares issued, respectively 60 60 Additional paid-in capital 32,597 32,053 Notes receivable from stockholders (1,656) (1,656) Retained earnings 31,773 21,265 Treasury stock, at cost, 57,400 shares (1,304) -- ------- ------- Total stockholders' equity 61,470 51,722 ------- ------- Total liabilities and stockholders' equity $127,835 $112,137 ======= ======= The accompanying notes are an integral part of these statements. 4 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited) (Unaudited) Three months ended Nine months ended October 31, October 31, 1995 1994 1995 1994 ----- ----- ----- ----- Net sales $61,456 $54,617 $183,614 $144,880 Cost of sales 46,712 41,724 139,754 110,659 ------ ------ ------ ------- Gross profit 14,744 12,893 43,860 34,221 Selling, general and administrative expenses 7,056 6,840 21,503 18,280 Research and development expenses 1,564 1,443 4,604 3,768 ------ ------ ------ ------ Operating income 6,124 4,610 17,753 12,173 Interest expense, net 288 374 813 964 Other expense, net 17 89 272 383 ------ ------ ------ ------ Income before income taxes 5,819 4,147 16,668 10,826 Provision for income taxes 1,923 1,396 5,667 3,897 ------ ------ ------ ------ Net income $ 3,896 $ 2,751 $ 11,001 $ 6,929 ====== ====== ====== ====== Net income per common and common equivalent share $ .60 $ .44 $ 1.71 $ 1.12 ====== ====== ====== ====== Weighted average common and common equivalent shares 6,443 6,262 6,424 6,162 ====== ====== ====== ====== Dividends per share $0.0275 $0.0275 $ 0.0825 $ 0.0825 ====== ====== ======= ====== The accompanying notes are an integral part of these statements. 5 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Nine months ended October 31, 1995 1994 ---- ---- Cash flows provided (used) by operating activities: Net income $11,001 $ 6,929 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 4,750 5,227 Deferred taxes (90) 72 Loss (gain) on disposal of assets 175 (225) Stock option compensation -- 405 Changes in: Accounts receivable (4,279) (11,702) Inventories (9,536) (3,320) Other current assets (425) (301) Accounts payable 5,583 4,166 Accrued liabilities 1,714 2,175 Income taxes payable (271) (867) Other current liabilities (815) (1,677) Other liabilities 1,127 710 Other, net (278) 17 ------ ------ Net cash provided by operating activities 8,656 1,609 ------ ------ Cash flows provided (used) by investing activities: Acquisition of business, net -- (5,966) Acquisition of property, plant and equipment (5,455) (5,491) Proceeds from disposal of property, plant and equipment -- 551 ------ ------ Net cash used by investing activities (5,455) (10,906) ------ ------ Cash flows provided (used) by financing activities: Reduction of long-term debt (3,619) (13,407) Proceeds from new borrowings 1,907 21,414 Financing costs of long-term debt -- (456) Issuance of shares under stock option plan 544 917 Payment of common stock dividends (657) (647) Purchase of treasury stock (1,304) -- ------ ------ The accompanying notes are an integral part of these statements. 6 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Dollars in thousands) (Unaudited) Nine months ended October 31, 1995 1994 ---- ---- Net cash (used) provided by financing activities (3,129) 7,821 ------ ------ Effect of exchange rate changes on cash 15 (10) ------ ------ Increase(decrease) in cash and cash equivalents 87 (1,486) Cash and cash equivalents at beginning of period 1,172 3,821 ------ ------ Cash and cash equivalents at end of period $ 1,259 $ 2,335 ====== ====== SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid, net $ 1,078 $1,109 Income taxes paid 6,029 4,692 SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Liabilities assumed in acquisition $ -- $3,022 The accompanying notes are an integral part of these statements. 7 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (UNAUDITED) 1. INTERIM STATEMENTS The accompanying interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report to Shareholders for the fiscal year ended January 31, 1995. The consolidated financial statements presented herein are unaudited but, in the opinion of management, include all necessary adjustments (which comprise only normal recurring items) required for a fair presentation of the consolidated financial position as of October 31, 1995, the consolidated statements of income for the three and nine months ended October 31, 1995 and 1994 and consolidated statements of cash flows for the nine months ended October 31, 1995 and 1994. However, interim results of operations necessarily involve more estimates than annual results and are not indicative of results for the full fiscal year. 2. INVENTORIES Inventories consisted of the following: October 31, January 31, 1995 1995 ---- ---- Raw materials $13,670 $ 9,780 Work-in-progress 11,281 7,893 Finished goods 11,492 9,196 ------- ------- $36,443 $26,869 ======= ======= 3. INCOME TAXES A reconciliation of the provision for income taxes from the statutory rate to the effective rate is as follows: Nine months ended October 31, 1995 1994 ---- ---- U.S. statutory income tax 35.0% 35.0% State tax, net of federal income tax benefit 3.4 3.1 Reduction in valuation allowance (3.8) -- Other (0.6) (2.1) ---- ---- 34.0% 36.0% ==== ==== 8 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands) (UNAUDITED) 4. CONTINGENT LIABILITIES With regard to the following contingent liabilities there have been no material changes since January 31, 1995. Because the Company uses lead and other hazardous substances in its manufacturing processes, it is subject to numerous federal, Canadian, Mexican, state and local laws and regulations that are designed to protect the environment and employee health and safety. These laws and regulations include requirements of periodic reporting to governmental agencies regarding the use and disposal of hazardous substances and compliance with rigorous criteria regarding exposure to employees and the disposal of scrap. In the opinion of the Company, the Company complies in all material respects with these laws and regulations. Notwithstanding such compliance, if damage to persons or the environment has been or is caused by hazardous substances used or generated in the conduct of the Company's business, the Company may be held liable for the damage and be required to pay the cost of remedying the same, and the amount of any such liability might be material to the results of operations or financial condition. However, under the terms of the purchase agreement with Allied for the Acquisition of the Company (the "Acquisition Agreement"), Allied is obligated to indemnify the Company for any liabilities of this type resulting from conditions existing at January 28, 1986 that were not disclosed by Allied to the Company in the schedules to the Acquisition Agreement. The Company, along with numerous other parties, has been requested to provide information to the United States Environmental Protection Agency (the "EPA") in connection with investigations of the source and extent of contamination at several lead smelting facilities (the "Third Party Facilities") to which the Company had made scrap lead shipments for reclamation prior to the date of the Acquisition. As of January 16, 1989, the Company, with the concurrence of Allied, entered into an agreement with other potentially responsible parties (PRPs) relating to remediation of a portion of one of the Third Party Facilities, the former NL Industries ("NL"), facility in Pedricktown, New Jersey (the "NL Site"), which agreement provides for their joint funding on a proportionate basis of certain remedial investigation and feasibility study activities with respect to that site. 9 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollars in thousands) (UNAUDITED) 4. CONTINGENT LIABILITIES (continued) In fiscal 1993 in accordance with an EPA order, a group comprised of the Company and 30 other parties commenced work on the cleanup of a portion of the NL Site based on a specified remedial approach which is now completed. Based on currently available information and well defined contribution levels of the other parties, including NL Industries, the Company does not expect to incur costs in excess of the $138 previously reserved. With regard to the remainder of the NL Site, the EPA is pursuing negotiations with NL and the other PRPs, including the Company, regarding the conduct and funding of the remedial work plan. The EPA has proposed a cost allocation plan, however, the allocation percentages between parties and the basis for allocation of cost are not defined in the plan or elsewhere. Therefore, a reliable range of the potential cost to the Company of this phase of the clean-up cannot currently be determined. Accordingly, the Company has not created any reserve for this potential exposure. The remedial investigation and feasibility study at a second Third Party Facility, the former Tonolli Incorporated facility at Nesquehoning, Pennsylvania (the "Tonolli Site"), was completed in fiscal 1993. The EPA and the PRPs are continuing to evaluate the draft remedial design work plan for the site. Based on the estimated cost of the remedial approach selected by the EPA, the Company believes that the potential cost of remedial action at the Tonolli Site is likely to range between $16,000 and $17,000. The Company's allocable share of this cost has not been finally determined, and will depend on such variables as the financial capability of various other potentially responsible parties to fund their respective allocable shares of the remedial cost. Based on currently available information, however, the Company believes that its most likely exposure with respect to the Tonolli Site will be the approximately $579 previously reserved, the majority of which is expected to be paid over the next three to five years. The Company has responded to requests for information from the EPA with regard to three other Third Party Facilities, one in September 1991, one (the "Chicago Site") in October 1991 and the third (the "ILCO Site") in October 1993. Of the three sites, the Company has been identified as a PRP at the ILCO and Chicago Sites only. 10 of 17 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) 4. CONTINGENT LIABILITIES (continued) Based on currently available information, the Company believes that the potential cost of remediation at the ILCO Site is likely to range between $54,000 and $59,000 (based on the estimated costs of the remedial approach selected by the EPA). The Company's allocable share of this cost has not been finally determined and will depend on such variables as the financial capability of various other PRPs to fund their respective allocable shares of the remedial cost. However, on October 31, 1995 the Company received confirmation from EPA that it is a de minimis PRP at the ILCO Site. Based on currently available information the Company believes that its most likely exposure with respect to the ILCO Site is an immaterial amount which has been previously reserved, most of which is expected to be paid over the next three to five years. Based on currently available information, the Company believes that the potential cost of the remediation at the Chicago site is likely to range between $8,000 and $10,500 (based on the preliminary estimated costs of the remediation approach negotiated with the EPA). Sufficient information is not available to determine the Company's allocable share of this cost. Based on the available preliminary information, however, the Company believes that its exposure with regard to the Chicago Site will be approximately $283, which has been reserved for in the Company's consolidated financial statements, the majority of which is expected to be paid over the next two to five years. Allied has accepted responsibility under the Acquisition Agreement for potential liabilities relating to all Third Party Facilities other than the aforementioned Sites. Based on currently available information, management of the Company believes that the foregoing will not have a material adverse effect on the Company's financial condition or results of operations. 11 of 17 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Charter Power Systems, Inc. We have reviewed the accompanying consolidated balance sheet of Charter Power Systems, Inc. and Subsidiaries as of October 31, 1995, the related consolidated statements of income for the three and nine months ended October 31, 1995 and 1994 and the related consolidated statements of cash flows for the nine months ended October 31, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial state- ments for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of January 31, 1995 and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated March 24, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of January 31, 1995, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. \s\ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania November 21, 1995 12 of 17 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the fiscal 1996 third quarter and nine months ended October 31, 1995 increased $6,839,000 or 13 percent and $ 38,734,000 or 27 percent, respectively, compared to the equivalent periods in fiscal 1995. The combined sales of the Company's International Power Systems, Inc. subsidiary ("IPS") which was formed early in fiscal 1995 to acquire certain assets of ITT PowerSystems Corporation (the "IPS Acquisition") and the switching power supply division of Basler Electric Company ("Basler") purchased as of January 24, 1995 rose 32 percent for the quarter and 94 percent year to date compared to the equivalent periods in fiscal 1995. For the third quarter, sales of standby power products were up 13 percent, and, for the nine months ended October 31, 1995, sales of standby power products increased 20 percent due to higher sales in virtually every standby category. Motive power sales for the quarter were relatively flat due to lower volumes offset by higher prices while year to date sales increased 14 percent due to higher volumes and prices. Gross profit increased $1,851,000 or 14 percent for the quarter and $9,639,000 or 28 percent for the nine month period. Gross margin increased to 24.0 percent from 23.6 percent for the third quarter and to 23.9 percent from 23.6 percent for the year to date, primarily as a result of higher sales volumes and continued improvements in operating efficiencies partially offset by higher material costs. The Company has instituted a price increase for the motive power business in the fourth quarter. Selling, general and administrative expenses for the quarter increased 3 percent for the quarter due to amortization of intangible costs resulting from the Basler acquisition, coupled with slightly higher sales expense related to sales volume increases. For the nine-month period, selling, general and administrative expenses increased 18 percent due to the power supply business acquired, higher commission and sales expense due to volume increases in the standby and motive power businesses and costs associated with the Company's program to maximize shareholder value. This program was completed in the first half of fiscal 1996. Page 13 of 17 Research and development expenses increased for the quarter and nine- month period $121,000 or 8 percent and $836,000 or 22 percent, respectively, primarily due to the Basler Acquisition. Interest expense, net, decreased 23 percent for the quarter and 16 percent for the nine-month period due to lower debt balances, offset by slightly higher effective rates. As a result of the above, income before income taxes increased by 40 percent for the quarter and by 54 percent for the nine-month period. Net income for the quarter rose 42 percent to $3,896,000 or $0.60 per share while for the nine-month period, net income rose 59 percent to $11,001,000 or $1.71 per share. The effective tax rate decreased to 34 percent from 36 percent for the comparative nine-month period due to a reduction in the valuation allowance related to the revaluation of the realization of the stock option compensation deferred tax asset resulting from increases in the price of the Company's common stock. LIQUIDITY AND CAPITAL RESOURCES Net cash flows provided by operating activities for the nine-month period increased to $8,656,000 compared to $1,609,000 for the prior year period. This increase was primarily due to higher current year net income and higher payables partially offset by increased invento- ries related to higher sales volumes and less of an increase in receivables versus the prior period. Net cash used by investing activities consisted of $5,455,000 for acquisition of property, plant and equipment, a decrease of $5,451,000 from the prior year period which included the IPS Acquisition and comparable property, plant and equipment acquisitions. Net cash used by financing activities for the nine months ended October 31, 1995 was $3,129,000 compared to net cash provided by financing activities of $7,821,000 in the prior year period. Current year cash used by financing activities included $1,304,000 related to the purchase of treasury stock. The additional borrowings in the prior year period were used primarily for the funding of the afore- mentioned acquisition. Page 14 of 17 The Company's availability under the current loan agreement is expected to be sufficient to meet its ongoing cash needs for working capital requirements, debt service, capital expenditures and possible strategic acquisitions. Capital expenditures in the first nine months of fiscal 1996 were incurred primarily to fund new product development, capacity expansion, a continuing series of cost reduction programs, normal maintenance capital, and regulatory compliance. Fiscal 1996 capital expenditures are expected to be approximately $9,000,000 for similar purposes, excluding strategic acquisitions. Page 15 of 17 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 Employment Agreement dated August 15, 1995 between Stephen Weglarz, Esq. and the Company (filed herewith). 11. Computation of per share earnings (filed herewith). 15. Letter from Coopers & Lybrand L.L.P., independent accountants for the Company regarding unaudited interim financial information (filed herewith). 27. Financial Data Schedule (filed herewith). (b) Reports on Form 8-K: None 16 of 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHARTER POWER SYSTEMS, INC. December 13, 1995 BY: \s\ Alfred Weber _________________________________ Alfred Weber President and Chief Executive Officer December 13, 1995 BY: \s\ Stephen E. Markert, Jr. _________________________________ Stephen E. Markert, Jr. Vice President Finance and Treasurer Principal Financial and Accounting Officer 17 of 17 EXHIBIT INDEX 10.1 Employment Agreement dated August 15, 1995 between Stephen Weglarz, Esq. and the Company. 11. Computation of per share earnings. 15. Letter from Coopers & Lybrand L.L.P., independent accountants for the Company regarding unaudited interim financial information. 27. Financial Data Schedule. EX-10.1 2 EXHIBIT 10.1 C&D CHARTER POWER SYSTEMS, INC. 3043 Walton Road Plymouth Meeting, PA 19462 August 15, 1995 Stephen J. Weglarz, Esq. 753 Martingale Road Schwenksville, PA 19473 Dear Mr. Weglarz: C&D Charter Power Systems, Inc., a Delaware corporation (the "Company"), agrees to employ you, and you agree to accept such employment, under the following terms and conditions: 1. Term of Employment. 1.1 Except for earlier termination as is provided in Section 10 below, your employment under this Agreement shall be for a term (the "Initial Term") commencing on August 1, 1995 (the "Effective Date") and terminating on July 31, 1996. 1.2 This Agreement shall be automatically renewed for successive terms of one month each, unless either party shall have given to the other party at least 30 days' prior written notice of the termination of this Agreement. If such 30 days' prior written notice is given by either party, (i) the Company shall, without any liability to you, have the right, exercisable at any time after such notice is sent, to elect any other person to the office or offices in which you are then serving and to remove you from such office or offices, but (ii) all other obligations each of you and the Company have to the other, including the Company's obligation to pay your compensation and make available the medical and dental insurance which you are entitled hereunder, August 15, 1995 Page 2 shall continue until the date your employment terminates as specified in such notice. 2. Compensation. 2.1 You shall be compensated for all services rendered by you under this Agreement at the rate of $120,000 per annum (such salary, as it is from time to time adjusted, is herein referred to as the "Base Salary"). Such Base Salary shall be payable in periodic installments twice monthly in accordance with the Company's payroll practices for salaried employees. The Compensation Committee of the Board of Directors shall review such Base Salary prior to April 30, 1996 and each year thereafter during the term of this Agreement, including any renewal term, and shall make such adjustments, if any, as the Compensation Committee shall determine; provided, however, that no adjustment shall reduce the Base Salary below $120,000. 2.2 If your employment hereunder shall be terminated (i) by the Company without Cause (as defined in Section 10.3) therefor having been given to you (other than pursuant to Sections 10.1 or 10.2), or (ii) as a result of the non-renewal of this Agreement by the Company upon expiration of the Initial Term or any renewal term, then for a one year period after the effective date of such termination the Company shall pay you at the rate of your Base Salary in effect at the time of such termination. 3. Duties. 3.1 During the term of your employment hereunder, including any renewal thereof, you agree to serve as the Vice President-Corporate Services and Corporate Counsel or in such other capacity with duties and August 15, 1995 Page 3 responsibilities of a similar nature as those initially undertaken by you hereunder as the President of the Company may from time to time determine. Your duties may be changed at any time and from time to time hereafter, upon mutual agreement, in a manner appropriate to the Company for the times and circumstances for which the change is to be made. You also agree to perform such other services and duties consistent with the office or offices in which you are serving as its responsibilities as may from time to time be prescribed by the Board of Directors, and you also agree to serve, if elected as an officer and/or director of the Company, and/or any of the Company's other direct or indirect subsidiaries, in all cases in conformity to the by-laws of each such corporation. Unless you otherwise agree, you will not be required to relocate from the Company's headquarters in the Plymouth Meeting, Pennsylvania area. 3.2 You shall devote your full employment energies, interest, abilities, time and attention during normal business hours (excluding the vacation periods provided in Section 4.2 below) exclusively to the business and affairs of the Company, its parent corporation and subsidiaries, if any, and shall not engage in any activity which conflicts or interferes with the performance of duties hereunder. 3.3 You agree to cooperate with the Company, including taking such reasonable medical examinations as may be necessary, in the event the Company shall desire or be required (such as pursuant to the terms of any bank loan or any other agreement) to obtain life insurance insuring your life. 3.4 You shall, except as otherwise provided herein, be subject to the Company's rules, practices and policies applicable to the Company's senior executive employees. Without limiting the August 15, 1995 Page 4 generality of the foregoing, you shall, with respect to the Company and its parents, subsidiaries, assets and stockholders, act in a manner consistent with your fiduciary responsibilities as an executive of the Company. 4. Benefits. 4.1 You shall have the benefit of such life and medical insurance, bonus, stock option and other similar plans as the Company may have or may establish from time to time, and in which you would be entitled to participate, by reason of your position with the Company, pursuant to the terms thereof. Also, to the extent you have met the qualifications required, you may participate in the Company's Savings and Retirement plans. The foregoing, however, shall not be construed to require the Company to establish any such plans or to prevent the Company from modifying or terminating any such plans, and no such action or failure thereof shall affect this Agreement. 4.2 You shall be entitled to a vacation of four weeks each year. 4.3 The Company will provide you with an annual physical examination. 5. Working and Other Facilities. During the Initial Term of this Agreement and any renewal term thereof, you shall be furnished with such working facilities and other services as are suitable to your position and adequate for the performance of your duties. 6. Expenses. August 15, 1995 Page 5 The Company will reimburse you for reasonable expenses (consistent with Company policy), including traveling expenses, incurred by you in connection with the business of the Company, upon the presentation by you of appropriate substantiation for such expenses. 7. Restrictive Covenants. 7.1 During such time as you shall be employed by the Company, and for a period of one year thereafter, you shall not, without the written consent of the Board of Directors, directly or indirectly become associated with, render services to, invest in, represent, advise or otherwise participate as an officer, employee, director, stockholder, partner, agent of or consultant for, any business which is competitive with the business in which the Company is engaged at the time your employment with the Company ceases (a "Competitive Business"). 7.2 During such time as you shall be employed by the Company, and for a period of one year thereafter or for such longer period as may be required by applicable ethical standards, you shall not, without the written consent of the Board of Directors, represent any client in any matter (an "Adverse Matter") which is adverse to (i) the Company, (ii) any of its subsidiaries or (iii) to the extent arising out of or related to their position with the Company, any officers, directors or employees of the Company or any of its subsidiaries. For purposes of this Agreement, the term "Adverse Matter" includes, but is not limited to, (a) judicial or administrative proceedings and positions taken therein, (b) transactions and other contractual matters and (c) the provision of advisory or other services. August 15, 1995 Page 6 7.3 Nothing herein (i) shall prevent you from investing without limit in the securities of any company listed on a national securities exchange or quoted on the NASDAQ quotation system, provided that your involvement with any such company is solely that of a stockholder, or (ii) is intended to prevent you from being employed during the one-year period following the termination of your employment with the Company referred to herein by any business other than a Competitive Business or by any client other than with respect to an Adverse Matter. Nothing herein shall limit any ethical standard otherwise applicable to you. 7.4 The parties hereto intend that the covenant contained in this Section 7 shall be deemed a series of separate covenants for each state, county and city. If, in any judicial proceeding, a court shall refuse to enforce all the separate covenants deemed included in this Section 7, because, taken together, they cover too extensive a geographic area, the parties intend that those of such covenants (taken in order of the states, counties and cities therein which are least populous), which, if eliminated, would permit the remaining separate covenants to be enforced in such proceeding, shall, for the purpose of such proceeding, be deemed eliminated from the provisions of this Section 7. 8. Confidentiality, Non-Interference, Inventions and Proprietary Information. 8.1 Confidentiality. In the course of your employment by the Company hereunder and prior hereto, you will have and have had access to confidential or proprietary data or information of the Company. You will not at any time divulge or communicate to any person nor shall you direct any Company employee to August 15, 1995 Page 7 divulge or communicate to any person (other than to a person bound by confidentiality obligations similar to those contained herein and other than as necessary in performing your duties hereunder) or use to the detriment of the Company any of such data or information. The provisions of this Section 8.1 shall survive your employment hereunder, whether by the normal expiration thereof or otherwise. The term "confidential or proprietary data or information" as used in this Agreement shall mean information not generally available to the public, including, without limitation, personnel information, financial information, customer lists, supplier lists, product and tooling specifications, trade secrets, product composition and formulae, tools and dies, drawings and schematics, manufacturing processes, knowhow, computer and any other processed or collated data, computer programs, pricing, marketing and advertising data. 8.2 Non-Interference. You agree that you will not at any time after the termination of your employment by the Company, for your own account or for the account of any other person, interfere with the Company's relationship with any of its suppliers, customers or employees; provided that your employment by a competitor of the Company or retainer by a client, if not in violation of your agreements contained in Article 7 above, and your contacting of suppliers and customers in connection therewith, if not in violation of Section 8.1 above or Sections 8.3 or 8.4 below, shall not constitute "interference" hereunder. 8.3 Inventions. It is understood that you may, during your employment, conceive or develop certain inventions, innovations or discoveries related to any business in which the Company may be engaged, either solely or jointly with others. In connection August 15, 1995 Page 8 with the conception or development thereof, you agree to disclose promptly to the Company all such inventions, innovations and discoveries, to assign, and hereby do assign, to the Company all of your right, title and interest in and to said inventions, innovations and discoveries, and to do all things and sign all documents deemed by the Company to be necessary or appropriate to vest in it, its successors and assigns, all of your right, title and interest in and to such inventions, innovations or discoveries, and to procure for it, at the Company's expense, patents, copyrights and/or trademarks covering such inventions, innovations or discoveries in the United States and its possessions and in foreign countries, at the discretion and under the direction of the Company. In the event the Company is unable for any reason to obtain your signature on such documents, you irrevocably appoint the Company and its duly authorized officers and agents as your agents and attorneys-in-fact to execute such documents and to do such things with the same legal force and effect as if executed or done by you. 8.4 Return of Property. All written materials, records and documents made by you or coming into your possession during your employment concerning any products, processes or equipment, manufactured, used, developed, investigated or considered by the Company or otherwise concerning the business or affairs of the Company, shall be the sole property of the Company, and upon termination of your employment, or upon request of the Company during your employment, you shall promptly deliver the same to the Company. In addition, upon termination of your employment, or upon request of the Company during your employment, you shall promptly deliver the same to the Company. In addition, upon termination of your employment, or upon request of the Company during your employment, you will deliver August 15, 1995 Page 9 to the Company all other Company property in your possession or under your control, including, but not limited to, financial statements, marketing and sale data, patent applications, drawings and other documents, and all Company credit cards and automobiles. 9. Equitable Relief. With respect to the covenants contained in Articles 7 and 8 of this Agreement, you agree that any remedy at law for any breach of said covenants may be inadequate and that the Company shall be entitled to specific performance or any other mode of injunctive and/or other equitable relief to enforce its rights hereunder or any other relief a court might award. 10. Earlier Termination. Your employment hereunder shall terminate prior to the Initial Term (or any renewal term, in the event of renewal) on the following terms and conditions: 10.1 This Agreement shall terminate automatically on the date of your death. Notwithstanding the foregoing, if you die during the term of this Agreement, the Company shall (i) continue to make payments to your estate of your Base Salary as then in effect pursuant to this Agreement for six (6) months after your death, and (ii) pay your estate any reimbursable expenses which otherwise would have been paid to you to the date of your death. 10.2 This Agreement shall be terminated if you are unable to perform your duties hereunder for a period of any 180 days in any 365 consecutive day period by reason of physical or mental disability. Notwithstanding the foregoing, if this Agreement is terminated pursuant to this Section, the Company shall pay any accrued but unpaid Base Salary through the date of termination and any reimbursable expenses due to you hereunder. For purposes of this Agreement "physical August 15, 1995 Page 10 or mental disability" shall mean your inability, due to health reasons, to discharge properly your duties of employment, supported by the opinion of a physician satisfactory to both you and the Company. If the parties do not agree on a physician mutually satisfactory to both you and the Company within ten days of written demand by one or the other, a physician shall be selected by the president of the Pennsylvania Medical Association, and the physician shall, within 30 days thereafter, make a determination as to whether disability exists and certify the same in writing. Services of the physician shall be paid for by the Company. You shall fully cooperate with the examining physician including submitting yourself to such examinations as may be requested by the physician for the purpose of determining whether you are disabled. 10.3 This Agreement shall terminate immediately upon the Company's sending you written notice terminating your employment hereunder for Cause. The Company may terminate this Agreement for Cause, but only after written notice specifying the Cause of such action shall have been rendered to you by the President of the Company. "Cause" shall mean any of the following: (i) Breach of this Agreement. (ii) Refusal or inability (other than pursuant to Sections 10.1 or 10.2) to perform duties assigned in accordance with the terms of this Agreement or overt and willful disobedience of orders or directives issued to you by the Company and within the scope of your duties to the Company. (iii) Willful misconduct in the performance of your duties, functions and responsibilities. August 15, 1995 Page 11 (iv) Commission of acts which are illegal in connection with the performance of your duties, functions and responsibilities under this Agreement. (v) Commission of acts which would constitute a felony offense during the term of this Agreement. (vi) Violation of Company rules and regulations concerning conflict of interest. (vii) Gross mismanagement of the assets of the Company. (viii) Gross incompetence, gross insubordination or gross neglect in the performance of your duties hereunder or being under the habitual influence of alcohol while on duty or possession, use, manufacture, distribution, dispensation or sale of illegal drugs while on or off duty. (ix) Any act or omission, whether or not included in the foregoing, that a court of competent jurisdiction would determine to constitute cause for termination. If the Company terminates this Agreement for Cause under this Section, the Company shall not be obligated to make any further payments under this Agreement except for amounts due at the time of such termination. Existence of Cause shall be conclusively determined for all purposes hereunder by the President of the Company. Such advice and consultation shall be utilized as such officer regards as appropriate, and August 15, 1995 Page 12 no obligation or duty with respect to any procedure or formality is created by this Agreement. 11. Post-Employment Benefits Coverage. 11.1 Your coverage under the benefits program provided by the Company will cease effective on your termination date. You will be entitled to elect continuation of your medical and dental benefits at the same cost the Company pays, pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA). Details with regard to COBRA continuation coverage will be provided to you shortly after your termination date. 11.2 Life Insurance coverage will cease upon your termination date. You may, however, apply to General American Life Insurance Company (or such other insurance company as may provide group life insurance to the Company's employees at the time) for an individual converted life policy, with such application and payment of the first premium required to be accomplished within 31 days after your termination date. Details regarding this conversion option will be provided to you shortly after your termination date. 11.3 Accidental Death and Dismemberment and Long Term Disability coverages cease with your termination date and may not be extended or converted. 12. Termination of Prior Agreements; Modification. This Agreement constitutes the full and complete understanding of the parties, and will, on the Effective Date, supersede all prior agreements and understandings, oral or written, between the parties. This Agreement may not be modified or amended except by an instrument in writing August 15, 1995 Page 13 signed by the party against which enforcement thereof may be sought. 13. Entire Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or written, have been made by either party or anyone acting on behalf of either party, which are not embodied herein and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. 14. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. 15. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach. 16. Notices. All notices hereunder shall be in writing and shall be sent by express mail or by certified or registered mail, postage prepaid, return receipt requested; if to you, to your residence as listed in the Company's records; and if to the Company, to the address set forth above with copies to the President. 17. Assignability; Binding Effect. This Agreement shall not be assigned by you without the written consent of the Board of Directors of the Company. This Agreement shall be binding upon and inure to the benefit of you, your legal representatives, heirs and distributees, and shall be binding upon and inure to the benefit of the Company, its successors and assigns. August 15, 1995 Page 14 18. Governing Law. All questions pertaining to the validity, construction, execution and performance of this Agreement shall be construed and governed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts or choice of law provisions thereof. 19. Headings. The headings of this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. August 15, 1995 Page 15 If this Agreement correctly sets forth our understanding, please sign the duplicate original in the space provided below and return it to the Company, whereupon this shall constitute the employment agreement between you and the Company effective and for the term as stated herein. C&D CHARTER POWER SYSTEMS, INC. By \s\ Alfred Weber Alfred Weber President Agreed as of the date first above written: \s\ Stephen J. Weglarz Stephen J. Weglarz EX-11 3 EXHIBIT 11 CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES EARNINGS PER SHARE COMPUTATIONS (Dollars and shares in thousands) (Unaudited) (Unaudited) Three months ended Nine Months ended October 31, October 31, 1995 1994 1995 1994 ----- ----- ----- ----- NET INCOME $3,896 $2,751 $11,001 $6,929 ===== ===== ====== ===== Weighted average number of common shares outstanding 5,955 5,942 5,967 5,889 Effect of shares issuable under stock option plan 488 320 457 273 ------ ------ ----- ----- WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (PRIMARY) 6,443 6,262 6,424 6,162 ====== ====== ===== ===== NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (PRIMARY) $ .60 $ .44 $ 1.71 $ 1.12 ====== ====== ===== ===== Weighted average number of common shares outstanding 5,955 5,942 5,967 5,889 Effect of shares issuable under stock option plan 488 372 461 315 ------ ------ ------ ------ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (FULLY DILUTED) 6,443 6,314 6,428 6,204 ====== ====== ====== ====== NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (FULLY DILUTED) $ .60 $ .44 $ 1.71 $ 1.12 ====== ====== ===== ===== EX-15 4 EXHIBIT 15 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 re: Charter Power Systems, Inc. and Subsidiaries Registration on Forms S-8 (Registration No. 33-31978, No. 33-71390 and No. 33-86672) We are aware that our report dated November 21, 1995 on our review of interim financial information of Charter Power Systems, Inc. and Subsidiaries for the period ended October 31, 1995 and included in the Company's quarterly report on Form 10-Q for the quarter then ended is incorporated by reference in the registration statements of Charter Power Systems, Inc. and Subsidiaries on Forms S-8 (Registration No. 33-31978, No. 33-71390 and No. 33-86672). Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statement prepared or certified by us within the meaning of Sections 7 and 11 of that Act. \s\ Coopers & Lybrand L.L.P. COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania December 13, 1995 EX-27 5
5 THE SHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF 10/31/95 AND STATEMENT OF INCOME FOR THE PERIOD ENDED 10/31/95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS JAN-31-1996 OCT-31-1995 1259 0 36145 1545 36443 79066 40980 0 127835 41525 13624 60 0 0 61410 127835 183614 183614 139754 139754 26379 0 813 16668 5667 11001 0 0 0 11001 1.71 1.71
-----END PRIVACY-ENHANCED MESSAGE-----