-----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, Kz7fn0vKvBTf+/4/5O5WDepn8FVQfApl8ZTBQKW8rGbO3q+AH9kEMZs6X1B22U+d ljEXiPjYxzpivSxI7n1Bvg== 0000904900-98-000007.txt : 19980504 0000904900-98-000007.hdr.sgml : 19980504 ACCESSION NUMBER: 0000904900-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERG ELECTRONICS CORP /DE/ CENTRAL INDEX KEY: 0000904900 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 752451903 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13761 FILM NUMBER: 98608381 BUSINESS ADDRESS: STREET 1: 101 S HANLEY RD CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3147261323 MAIL ADDRESS: STREET 1: 101 S HANLEY RD STREET 2: STE 400 CITY: ST LOUIS STATE: MO ZIP: 63105 FORMER COMPANY: FORMER CONFORMED NAME: BERG ELECTRONICS CORP /DE/ DATE OF NAME CHANGE: 19951120 10-Q 1 10Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 ------------------------------------ - ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- ---------- - ------------- 1-14080 (Commission File Number) Berg Electronics Corp. (Exact name of Registrant as specified in charter) Delaware (State or other jurisdiction of incorporation or organization) 75-2451903 (I.R.S. Employer Identification No.) 101 South Hanley Road St. Louis, MO 63105 (314) 726-1323 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Outstanding at Class April 30, 1998 Common Stock 39,555,076 Class A Common Stock 1,908,554
BERG ELECTRONICS CORP. & SUBSIDIARIES INDEX
PART I - FINANCIAL INFORMATION Page Berg Electronics Corp. & Subsidiaries Condensed Consolidated Balance Sheets as of March 31, 1998 and 4 December 31, 1997 Condensed Consolidated Statements of Operations for the three 5 months ended March 31, 1998 and 1997 Condensed Consolidated Statements of Cash Flows for the three 6 months ended March 31, 1998 and 1997 Notes to Condensed Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and 10 Results of Operations PART II - OTHER INFORMATION 11 SIGNATURES 12
BERG ELECTRONICS CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
March 31, December 31, 1998 1997 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 11,099 $ 11,994 Accounts receivable, net 127,466 118,331 Inventories 105,261 96,022 Prepaid expenses and other 19,871 16,890 Total current assets 263,697 243,237 Property, plant and equipment, net 293,552 285,767 Intangibles and other assets 185,491 175,642 Total assets $ 742,740 $ 704,646 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term $ 26,261 $ 26,786 obligations Accounts payable 56,140 76,779 Accrued liabilities 98,463 96,967 Total current liabilities 180,864 200,532 Long-term obligations, less current 356,304 316,544 maturities Other long-term liabilities 51,255 51,686 Stockholders' equity: Contributed capital 127,318 116,973 Retained earnings 61,934 52,062 Cumulative translation adjustments (34,935) (33,151) Total stockholders' equity 154,317 135,884 Total liabilities and stockholders' $ 742,740 $ 704,646 equity See accompanying notes to the condensed consolidated financial statements.
BERG ELECTRONICS CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
Three Months Ended March 31, 1998 1997 Net sales $190,081 $ 188,511 Operating expenses: Cost of goods sold 121,958 120,619 Selling, general and administrative 41,429 42,024 Amortization and other 4,438 4,276 Operating income 22,256 21,592 Other income (expense): Interest expense (6,209) (6,887) Amortization of deferred financing costs (152) (759) Other, net 28 112 Income before income tax provision 15,923 14,058 Income tax provision 6,051 5,412 Net income $ 9,872 $ 8,646 Net income per common share - basic and $ 0.24 $ diluted 0.21 See accompanying notes to the condensed consolidated financial statements.
BERG ELECTRONICS CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Three Months Ended March 31, 1998 1997 Cash flows provided by (used in) operating activities: Net income $ $ 9,872 8,646 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 11,286 11,740 Amortization and other non-cash charges 4,590 5,035 Change in assets and liabilities, net of acquisitions: Accounts receivable (6,615) (20,472) Inventories (7,543) (4,393) Prepaid expenses and other (2,060) (2,856) Accounts payable (23,368) 1,817 Accrued and other liabilities (819) 3,952 Other, net (1,009) (183) Net cash from operating activities (15,666) 3,286 Cash flows provided by (used in) investing activities: Acquisitions, net of cash of $2,568 and $0, respectively (13,391) -- Capital expenditures, net (19,991) (11,114) Net cash from investing activities (33,382) (11,114) Cash flows provided by (used in) financing activities: Proceeds from issuance of long-term obligations 63,000 38,500 Repayment of long-term obligations (23,764) (28,159) Equity proceeds 10,886 -- Costs of equity offering (625) -- Proceeds from issuance of common stock 63 8 Net cash from financing activities 49,560 10,349 Effect of exchange rate changes on cash (1,407) (425) Net change in cash and cash equivalents (895) 2,096 Cash and cash equivalents at beginning of the period 11,994 8,999 Cash and cash equivalents at end of the $ $ period 11,099 11,095 See accompanying notes to the condensed consolidated financial statements.
BERG ELECTRONICS CORP. & SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share data) (Unaudited) 1. BASIS OF PRESENTATION Unaudited Interim Condensed Consolidated Financial Statements The unaudited interim condensed consolidated financial statements reflect all adjustments consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of financial position and results of operations. The results for the three months ended March 31, 1998, are not necessarily indicative of the results that may be expected for a full fiscal year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1997. Statement of Cash Flows Interest paid during the three months ended March 31, 1998 and 1997, is approximately $6,300 and $7,000, respectively. Income taxes paid during the three months ended March 31, 1998 and 1997, is approximately $800 and $500, respectively. 2. INVENTORIES The composition of inventories at March 31, 1998, is as follows:
Raw materials $ 33,784 Work-in-process 31,562 Finished goods 39,915 Total $105,261
The carrying value of inventories valued at LIFO, at March 31, 1998, is approximately $49,400, and its current cost is approximately $34,000. 3. EARNINGS PER SHARE In accordance with SFAS No. 128, "Earnings Per Share," the following table reconciles net income and weighted average shares outstanding to the amounts used to calculate basic and diluted earnings per share for each of the quarters ended March 31, 1998 and 1997.
Three Months Ended March 31, 1998 Per Share Net Income Shares Amount Basic Earnings Per Share Income available to common stockholders $ 9,87 $ 0.24 2 41,279,173 Assumed exercise of options (treasury method) - -- - 462,440 Diluted Earnings Per Share Income available to common stockholders $ 9,87 $ 0.24 2 41,741,613
Three Months Ended March 31, 1997 Per Share Net Income Shares Amount Basic Earnings Per Share Income available to common stockholders $ 8,646 $ 0.21 41,019,280 Assumed exercise of options (treasury method) -- -- 531,505 Diluted Earnings Per Share Income available to common stockholders $ 8, $ 0.21 646 41,550,785
Basic earnings per common share was computed by dividing net income by the weighted average shares of common stock outstanding during the period. Diluted earnings per common share for each of the quarters ended March 31, 1998 and 1997 were determined assuming the options issued and outstanding were exercised as of the later of January 1 of the respective year or the grant date. Options to purchase 56,000 shares of Common Stock at $25.56 per share were outstanding during the three months ended March 31, 1998, but were not included in the computation of diluted earnings per share because the exercise price of such options was greater than the average market price of the Common Stock. These options expire in September 2007. 4. COMPREHENSIVE INCOME In June 1997, the Financial Accounting Standards Board (FASB) adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and disclosure of comprehensive income and its components. Effective January 1, 1998, the Company adopted SFAS No. 130. For the periods ended March 31, 1998 and 1997, comprehensive income (loss) was $8,088 and $(3,889), respectively. The Company's other comprehensive income consists solely of cumulative translation adjustments. 5. CURRENT EVENTS On February 6, 1998, the Company completed a secondary offering, on behalf of certain selling stockholders and the Company, to sell 10,325,028 shares of Common Stock at $25 per share. 6. NEW ACCOUNTING PRONOUNCEMENTS In April 1998, the FASB adopted Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities," which requires costs of start-up activities and organization costs to be expensed as incurred. SOP 98-5 is effective for financial statements for fiscal years beginning after December 15, 1998. The Company will adopt SOP 98-5 in fiscal 1999 and does not expect adoption to have a material impact on its Consolidated Financial Statements. In February 1998, the FASB adopted SFAS No. 132, "Employer's Disclosures about Pensions and Other Postretirement Benefits," which establishes reporting requirements related to a business' pensions and other postretirement benefits. SFAS No. 132 is effective for fiscal years beginning after December 15, 1997, and does not apply to interim financial statements in the year of adoption. The Company will adopt SFAS No. 132 for the fiscal year ended December 31, 1998. In June 1997, the FASB adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which establishes reporting requirements related to a business' operating segments, products and services, geographic areas of operations and major customers. SFAS No. 131 is effective for fiscal years beginning after December 15, 1997, and does not apply to interim financial statements in the year of adoption. The Company will adopt SFAS No. 131 for the fiscal year ended December 31, 1998. The Company does not expect SFAS No. 131 to have a significant impact on its Consolidated Financial Statements and the related disclosures. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997 Net sales for the three months ended March 31, 1998 are $190.1 million, representing a $1.6 million, or 0.8%, increase from the comparable period in 1997. In local currencies, net sales increased approximately 6%. North American sales represented approximately 50.2% of consolidated sales and increased $1.7 million, or 1.8%, in the first quarter of 1998 compared to the first quarter of 1997. This increase is due primarily to the strong sales in telecom infrastructure programs which continue to be offset by softness in the high-end computer sector. Growth in North America continues at a modest pace due to the continued shift of certain customer programs to the Company's European and Asian sites and the related migration of customer direct sales from North America to those regions. Sales in Europe represented approximately 30.0% of consolidated sales for the quarter ended March 31, 1998, and increased by $5.2 million, or 10.1%, due in part to program specific design wins in the telecom and computer sectors and in part to a stronger economy in Europe. These increases were partially offset by unfavorable effects of currency changes between years and by program specific softness in cellular handset products. Sales in Asia Pacific made up approximately 19.8% of consolidated sales for the first quarter of 1998 and decreased $5.3 million, or 12.3% versus the same quarter in the previous year, primarily due to the unfavorable effects of currency changes between years, especially in Japan and Korea, in part to softness in the hard disk drive market resulting from inventory overhang and in part to a weaker Korean economy. Changing currencies adversely impacted sales reported in both Europe and Asia, reducing sales by approximately 11% on a combined basis, in the first quarter of 1998 compared to the first quarter of 1997. Cost of goods sold increased to $122.0 million, or 64.2% of sales, in the first quarter of 1998 from $120.6 million, or 64.0% of sales, in the same quarter of 1997, a $1.4 million increase. The increase is due primarily to the growth in total product volume sold and in part to the increased cost of palladium used in the Company's plating process. The increase is partially offset by the favorable impact of the stronger U.S. dollar against currencies in Europe and Asia. Selling, general and administrative expenses for the three months ended March 31, 1998 decreased by $0.6 million, or 1.4%, versus the comparable period in 1997. As a percentage of sales, these costs decreased from 22.3% to 21.8%, due in part to cost containment activities and in part to the favorable impact of the stronger U.S. dollar against currencies in Europe and Asia Pacific, offset by planned incremental spending related to the MEG-ArrayT connector system program. Other expense decreased $1.2 million, from $7.5 million in the first quarter of 1997 to $6.3 million in the first quarter of 1998, due primarily to reduced interest expense and deferred financing costs amortization, based on the Credit Facility entered into in August 1997 containing lower interest rates and financing costs than the previous credit agreement. Liquidity and Capital Resources Net cash used in operating activities was $15.7 million for the three months ended March 31, 1998, which compares to $3.3 million provided by operating activities for the comparable period in 1997. This fluctuation is primarily due to the settlement of a financing obligation, included in accounts payable at year end, related to a portion of the Company's inventory and in part to the timing of the Company's payments to vendors at year end due to holiday timing at the end of 1997 versus 1996. Net cash used in investing activities was $33.4 million for the three months ended March 31, 1998, compared to net cash used of $11.1 million for the three months ended March 31, 1997. The net cash used in investing activities for the first three months of 1998 in part consists of costs of the acquisition of the operations of the Kinloch Group, Ltd, in Glasgow, Scotland, and in part capital expenditures. Net cash used for investing activities in the first quarter of 1997 represents capital expenditures. The increase in capital expenditures in the first quarter of 1998 versus 1997 was primarily due to the MEG-ArrayT program. Cash provided by financing activities was $49.6 million for the three months ended March 31, 1998, compared to $10.3 million for the comparable period in 1997. The source of cash in 1998 represents $10.3 million net proceeds from the issuance of Common Stock in connection with the secondary offering completed on February 6, 1998, and the remainder represents net borrowings under the Credit Facility. The source of cash in 1997 represents net borrowings under the then-existing credit facility. PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Filed as Part of this Report
Exhib it Description of Exhibit No. 3.1 Certificate of Elimination of Series B Preferred Stock and Series D Preferred Stock of Berg Electronics Corp., dated September 11, 1996.(3) 3.2 (Item intentionally omitted.) 3.3 Certificate of Incorporation of Berg Electronics Corp. f/k/a Berg Electronics Group, Inc.; f/k/a/ Berg Electronics Holdings Corp.; f/k/a Berg CS Holdings, Inc. together with amendments thereto.(1) 3.4 Certificate of Amendment to Certificate of Incorporation, dated February 29, 1996, of Berg Electronics Corp.(2) 3.5 Bylaws of Berg Electronics Corp.(1) 4.1 Certificate of Designations, Preferences and Rights of Series A Junior Preferred Stock of Berg Electronics Corp.(4) 27.0 Financial Data Schedule.*
(1) Filed previously as an exhibit to the Registration Statement of Berg Electronics Corp. on Form S-1, Registration No. 33-98240, and incorporated by reference herein. (2) Filed previously as an exhibit to the Berg Electronics Corp. Form 10-K for the fiscal year ended December 31, 1995, and incorporated by reference herein. (3) Filed previously as an exhibit to the Berg Electronics Corp. Forms 10-Q and 10-QA for the quarter ended March 31, 1997, and incorporated by reference herein. (4) Filed previously as an exhibit to the Berg Electronics Corp. Form 10-K for the fiscal year ended December 31, 1997, and incororated by reference herein. * Filed herewith. (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BERG ELECTRONICS CORP. Dated: May 1, 1998 By: /s/ JOSEPH S. CATANZARO ____________________________________ Name: Joseph S. Catanzaro Title: Chief Accounting Officer EXHIBIT INDEX
Exhib it Description of Exhibit No. 3.1 Certificate of Elimination of Series B Preferred Stock and Series D Preferred Stock of Berg Electronics Corp., dated September 11, 1996.(3) 3.2 (Item intentionally omitted.) 3.3 Certificate of Incorporation of Berg Electronics Corp. f/k/a Berg Electronics Group, Inc.; f/k/a/ Berg Electronics Holdings Corp.; f/k/a Berg CS Holdings, Inc. together with amendments thereto.(1) 3.4 Certificate of Amendment to Certificate of Incorporation, dated February 29, 1996, of Berg Electronics Corp.(2) 3.5 Bylaws of Berg Electronics Corp.(1) 4.1 Certificate of Designations, Preferences and Rights of Series A Junior Preferred Stock of Berg Electronics Corp.(4) 27.0 Financial Data Schedule.* (1) Filed previously as an exhibit to the Registration Statement of Berg Electronics Corp. on Form S-1, Registration No. 33-98240, and incorporated by reference herein. (2) Filed previously as an exhibit to the Berg Electronics Corp. Form 10-K for the fiscal year ended December 31, 1995, and incorporated by reference herein. (3) Filed previously as an exhibit to the Berg Electronics Corp. Forms 10-Q and 10-QA for the quarter ended March 31, 1997, and incorporated by reference herein. (4) Filed previously as an exhibit to the Berg Electronics Corp. Form 10-K for the fiscal year ended December 31, 1997, and incororated by reference herein. * Filed herewith.
EX-27.1 2 FINANCIAL DATA SCHEDULE
5 This Schedule contains summary financial information extracted from the financial statements contained in the body of the accompanying Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000
0000904900 BERG ELECTRONICS CORP. 3-MOS DEC-31-1997 MAR-31-1998 11,099 0 131,399 3,933 105,261 263,697 471,286 177,734 742,740 180,864 382,565 0 0 0 154,317 742,740 190,081 190,081 121,958 121,958 530 276 6,209 15,923 6,051 9,872 0 0 0 9,872 0.24 0.24
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