-----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, O8QsZjHzcmGcTYYzM8Uru9YqIF2UUMkoP63aOG6R0b2XXoEiFACGi36Z0fSlxBQ4 udS33No21Au/7QMBTYZ1pw== 0000904900-96-000021.txt : 19961030 0000904900-96-000021.hdr.sgml : 19961030 ACCESSION NUMBER: 0000904900-96-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961029 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: 1934 Act SEC FILE NUMBER: 033-62550-01 FILM NUMBER: 96648964 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 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 September 30, 1996 ------------------------------------------------- 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 October 28, 1996 ----------------------- ---------------- Common Stock 19,093,609 Class A Common Stock 1,384,291
BERG ELECTRONICS CORP. & SUBSIDIARIES INDEX
PART I - FINANCIAL INFORMATION Page ---- Berg Electronics Corp. & Subsidiaries Condensed Consolidated Balance Sheets as of December 31, 1995 and September 30, 1996............................................. 3 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 1995 and 1996.................. 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1996........................... 5 Notes to Condensed Consolidated Financial Statements................. 6 Management's Discussion and Analysis of Financial Condition and Results of Operations................................................ 8 PART II - OTHER INFORMATION.............................................. 11 SIGNATURES............................................................... 12 EXHIBIT 11 - COMPUTATION OF NET EARNINGS (LOSS) PER SHARE................ 13 EXHIBIT 27a - FINANCIAL DATA SCHEDULE.................................... 14
BERG ELECTRONICS CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
December 31, September 30, ------------ ------------- 1995 1996 ------------ ------------ ASSETS (Unaudited) Current assets: Cash and cash equivalents....................... $ 19,601 $ 12,168 Accounts receivable, net........................ 117,665 110,947 Inventories..................................... 78,242 95,835 Prepaid expenses and other...................... 10,697 11,456 ------------ ------------ Total current assets.......................... 226,205 230,406 Property, plant and equipment, net.............. 230,753 235,897 Intangibles and other assets.................... 211,382 207,729 ------------ ------------ Total assets.................................. $ 668,340 $ 674,032 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term obligations..... $ 32,798 $ 25,563 Accounts payable................................ 73,299 57,775 Accrued liabilities............................. 76,306 86,072 ------------ ------------ Total current liabilities..................... 182,403 169,410 Long-term obligations, less current maturities.... 305,373 330,915 Other long-term liabilities....................... 36,224 40,067 Stockholders' equity: Contributed capital............................. 116,886 116,335 Retained earnings............................... 9,930 10,618 Cumulative translation adjustments.............. 17,524 6,687 ------------ ------------ Total stockholders' equity.................... 144,340 133,640 ------------ ------------ Total liabilities and stockholders' equity.... $ 668,340 $ 674,032 ============ ============ 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 Nine Months Ended September 30, September 30, ------------------- ------------------- 1995 1996 1995 1996 -------- -------- -------- -------- Net sales.......................... $170,829 $172,537 $495,475 $530,718 Operating expenses: Cost of goods sold............... 115,531 112,201 327,787 346,537 Selling, general and administrative................. 38,416 38,724 113,101 119,247 Amortization and other........... 3,303 3,240 10,003 9,732 --------- --------- --------- --------- Operating income................... 13,579 18,372 44,584 55,202 Other income (expense): Interest expense................. (8,939) (6,964) (26,237) (21,612) Amortization of deferred financing costs................ (1,558) (708) (4,741) (2,680) Other, net....................... 1,948 (34) 1,407 1,491 --------- --------- --------- --------- Income before income tax provision and extraordinary items............................ 5,030 10,666 15,013 32,401 Income tax provision............... 1,990 4,106 5,718 12,674 --------- --------- --------- --------- Income before extraordinary items............................ 3,040 6,560 9,295 19,727 Extraordinary items - losses on early extinguishment of debt, net of income tax benefit of $12,443.......................... -- -- -- (18,664) --------- --------- --------- --------- Net income......................... 3,040 6,560 9,295 1,063 Preferred stock: Accretion and dividends.......... (3,732) -- (10,910) (5,469) Excess of fair value over book value of redemption and purchase................... -- -- -- (21,866) --------- --------- --------- --------- Net income (loss) applicable to common shares.................... $ (692) $ 6,560 $ (1,615) $(26,272) ========= ========= ========= ========= Net income (loss) per common share before extraordinary items............................ $ (0.05) $ 0.32 $ (0.12) $ (0.40) ========= ========= ========= ========= Net income (loss) per common share............................ $ (0.05) $ 0.32 $ (0.12) $ (1.40) ========= ========= ========= ========= See accompanying notes to the condensed consolidated financial statements
BERG ELECTRONICS CORP. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Nine Months Ended September 30, ---------------------- 1995 1996 --------- --------- Cash flows provided by (used in) operating activities: Net income.......................................... $ 9,295 $ 1,063 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Extraordinary item.............................. -- 31,107 Depreciation.................................... 31,608 33,590 Amortization and other non-cash charges......... 14,744 12,411 Change in assets and liabilities: Accounts receivable........................... (27,675) 2,972 Inventories................................... (5,107) (18,871) Prepaid expenses and other.................... 2,877 (3,312) Accounts payable.............................. 11,096 (11,076) Accrued and other liabilities................. 644 6,497 Other, net.................................... 1,176 (16,102) ---------- ---------- Net cash from operating activities.................... 38,658 38,279 ---------- ---------- Cash flows provided by (used in) investing activities: Capital expenditures, net........................... (23,160) (42,849) ---------- ---------- Net cash from investing activities.................. (23,160) (42,849) ---------- ---------- Cash flows provided by (used in) financing activities: Equity proceeds..................................... -- 147,033 Redemption and purchase of preferred stock.......... -- (143,005) Proceeds from issuance of long-term obligations..... -- 381,093 Repayment of long-term obligations.................. (15,283) (362,786) Financing costs..................................... -- (25,208) Proceeds from issuance of common stock.............. -- 54 ---------- ---------- Net cash from financing activities.................... (15,283) (2,819) ---------- ---------- Effect of exchange rate changes on cash............... 486 (44) ---------- ---------- Net change in cash and cash equivalents............... 701 (7,433) Cash and cash equivalents at beginning of the period.. 11,981 19,601 ---------- ---------- Cash and cash equivalents at end of the period........ $ 12,682 $ 12,168 ========== ========== 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 and nine months ended September 30, 1996, are not necessarily indicative of the results that may be expected for a full fiscal year. Statement of Cash Flows ----------------------- Interest paid for the nine months ended September 30, 1995 and 1996, is approximately $23,400 and $20,300, respectively. Income taxes paid for the nine months ended September 30, 1995 and 1996, is approximately $3,100 and $3,700, respectively. 2. INVENTORIES The composition of inventories at September 30, 1996, is as follows:
Raw materials.................................................. $ 35,240 Work-in-process................................................ 26,774 Finished goods................................................. 33,821 -------- Total $ 95,835 ========
The carrying value of inventories valued at LIFO, at September 30, 1996, is approximately $44,900 and its current cost is approximately $37,700. 3. CURRENT EVENTS On February 29, 1996, the Company entered into a new credit facility (the "New Credit Facility") that, among other things, refinanced the Amended and Restated Credit Agreement dated as of May 23, 1994. The refinancing of the Amended Credit Agreement resulted in the write off of $12,755 of deferred financing costs. This write off, net of income tax, is classified with other extraordinary items on the condensed consolidated statements of operations. The New Credit Facility consists of a $350,000 term loan (the "New Term Loan") and a $100,000 Revolving Credit Facility (the "New Revolving Facility"). Mandatory principal payments are due in semi-annual installments with a final installment due on December 31, 2002. Amounts outstanding under the New Revolving Facility are due on December 31, 2002. Borrowings under the Term Loan and the New Revolving Facility bear interest, at the option of the Company, at a rate per annum equal to (i) 0.5% plus the Agent's Alternate Base Rate (as defined in the New Credit Facility) or (ii) 1.50% plus the Eurodollar rate per annum. Interest payment dates vary depending on the interest rate option selected by the Company, but generally, interest is paid quarterly. The commitment fee on the unused portion of the New Revolving Facility is 0.375% per annum on the average daily available balance. The New Credit Facility contains several financial covenants that, among other things, require the Company to maintain certain financial ratios and restrict the Company's ability to incur indebtedness, make capital expenditures and pay dividends. On March 6, 1996, Berg consummated the sale of 7,475,000 common shares in its initial public offering. The Company received net proceeds of approximately $147,033 from the offering. On March 18, 1996, the Company redeemed 50% of the outstanding shares of the Company's Series E Preferred Stock, par value $.01 per share, including accrued and unpaid dividends and a redemption premium thereon for approximately $44,253 (the "Series E Preferred Redemption"). On March 19, 1996, the Company purchased all of the outstanding shares of Series E Preferred Stock not purchased by the Company pursuant to the Series E Preferred Redemption for approximately $47,819. Also on March 19, 1996, the Company redeemed all of the outstanding shares of the Company's Series B Preferred Stock, par value $.01 per share, including accrued and unpaid dividends thereon, for approximately $50,933. The excess, $21,866, of the fair value of the consideration transferred to the holders of the Preferred Stock over the carrying amount of the Preferred Stock is reflected as a reduction from net income to determine net income (loss) applicable to common shares in the condensed consolidated statements of operations. On April 8, 1996, Berg redeemed $30,000 aggregate principal amount of its 11 3/8% Guaranteed Senior Subordinated Debentures Due 2003 (the "Debentures"), including accrued and unpaid interest and a redemption premium thereon (the "Debenture Redemption") for approximately $34,487. On April 9, 1996, Berg purchased all of the outstanding Debentures not redeemed by Berg pursuant to the Debenture Redemption for approximately $82,568. The redemption and purchase of the Debentures resulted in a write off of $4,900 of deferred financing costs. This write off, net of income tax, is classified with other extraordinary items on the condensed consolidated statement of operations. Additionally, the redemption and purchase premium and the related fees and expenses of the Debenture Redemption and purchase, totaling $13,452, is classified with other extraordinary items, net of tax, in the condensed consolidated statements of operations. On June 25, 1996, the Company entered into a memorandum of understanding with Ericsson Telecom AB of Sweden (Ericsson) to acquire the connector business of Ericsson. The Company expects to reach a definitive agreement with Ericsson during the fourth quarter of 1996. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS ===================== THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996 Net sales for the three months ended September 30, 1996 were $172.5 million, representing a $1.7 million, or 1.0%, increase from the comparable period in 1995. North American sales represented approximately 54% of consolidated sales and increased $7.9 million, or 9.3%, in the third quarter of 1996 compared to the third quarter of 1995. This increase is due primarily to an approximate $6.9 million, or 26.2%, increase in telecommunications products sales due to stronger demand than in the same period in the prior year for backplanes used in switching and transmission equipment, translating into strong demand for the Berg connectors used in these applications. Sales in Europe represented approximately 22% of consolidated sales and decreased by $1.5 million, or 3.7%, primarily due to unfavorable effects of currency changes between years and in part due to weakness in certain markets as a result of weak economies, particularly in Germany. Sales in Asia Pacific decreased $4.7 million, or 10.2%. The decline in Asia Pacific was due in part to unfavorable effects of currency changes between years and in part to increased price pressures in the Company's major end-user markets (computers and telecommunications), particularly in Japan. Changing currencies adversely impacted sales recorded in Europe and Asia, reducing sales by approximately 4.7% on a combined basis, in the third quarter of 1996 compared to the third quarter of 1995. Cost of goods sold decreased by $3.3 million to 65.0% of sales from 67.6% of sales in the third quarter of 1995, and improved from 65.2% of sales in the second quarter of 1996 primarily as a result of improved product sales mix and the Company's cost reduction activities. Cost of goods sold in the third quarter of 1995 also included non-recurring costs in connection with the combination of Berg's cable assembly manufacturing facilities. Due primarily to increased sales volume, selling, general and administrative expenses increased by $0.3 million, or .8%, over the comparable period in 1995, but as a percentage of sales decreased from 22.5% to 22.4% due in part to cost reduction and containment activities and also to the spreading of the fixed components of such expenses over a higher sales volume. Other expense decreased $.8 million, from $8.5 million in the third quarter of 1995 to $7.7 million in the third quarter of 1996, due primarily to reduced interest expense and deferred financing costs amortization in 1996, based on the New Credit Facility entered into in February 1996 containing lower interest rates and financing costs than the previous credit agreement. Offsetting the improvement in financing costs, changing currencies resulted in currency gains of only $.4 million in the third quarter of 1996, compared to $2.6 million in the third quarter of 1995. NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996 Net sales for the nine months ended September 30, 1996 were $530.7 million, representing a $35.2 million, or 7.1%, increase from the comparable period in 1995. North American sales increased $38.2 million, or 15.3%, in the first nine months of 1996 compared to the comparable period in 1995. This increase is due primarily to a $23.3 million, or 31.1%, increase in telecommunications products sales due to stronger demand than in the same period in the prior year for backplanes, used in switching and transmission equipment, translating into strong demand for the Berg connectors used in these applications. Sales in Europe decreased by $4.2 million, or 3.4%, due primarily to the decline of sales in certain markets as a result of weak economies, particularly in Germany. Sales in Asia Pacific increased $1.2 million, or 1.0%. The improvement in Asia Pacific was primarily due to increased demand in the Company's major end-user markets (computers and telecommunications). Changing currencies adversely impacted sales recorded in Europe and Asia, reducing sales by approximately 4.1% on a combined basis, in the first nine months of 1996 compared to the first nine months of 1995. Due primarily to increased sales volume, cost of goods sold increased by $18.8 million, or 5.7%, over the comparable period in 1995. As a result of cost containment and reduction activities, cost of goods sold as a percent of sales showed continued improvement in each of the last four consecutive quarters to reach its current level of 65.3%. Due primarily to the increased sales volume, selling, general and administrative expenses increased by $6.1 million, or 5.4%, over the comparable period in 1995, but as a percentage of sales decreased from 22.8% to 22.5% in the first nine months of 1996 due in part to cost reduction and containment activities and also to the spreading of the fixed components of such expenses over a higher sales volume. Other expense decreased $6.8 million, from $29.6 million in the first nine months of 1995 to $22.8 million in the first nine months of 1996 due to reduced interest expense and amortization of financing costs in 1996 based on the New Credit Facility entered into in February 1996 containing lower interest rates and financing costs than the previous credit agreement. Liquidity and Capital Resources - ------------------------------- Net cash provided by operating activities was $38.3 million for the nine months ended September 30, 1996, which compares to $38.7 million provided by operating activities for the comparable period in 1995. This fluctuation is primarily due to increased earnings, offset by the temporary build up of inventory to facilitate the move of the Kansas City operations, which began in May 1996 and continued through the third quarter, to other Company facilities. Net cash used in investing activities was $42.8 million for the nine months ended September 30, 1996, compared to net cash used of $23.2 million for the nine months ended September 30, 1995. The net cash used in investing activities for the first nine months of 1996 includes construction costs of the new Huntingdon County facility, and, for the first nine months of 1995 and 1996, the remainder represents capital expenditures. Cash used by financing activities was $15.3 million for the nine months ended September 30, 1995, compared to $2.8 million for the comparable period in 1996. The use of cash in 1995 represents debt repayments. The use of cash in 1996 represents funds used to (i) repay the Amended Credit Agreement, (ii) redeem and purchase all outstanding Preferred Stock, (iii) redeem and purchase all outstanding Debentures, (iv) pay financing costs related to the aforementioned transactions, and (v) repay debt under the New Credit Facility, offset by proceeds from the Company's New Credit Facility and initial public offering. In addition, the Company has borrowed $9.5 million in total, $5.7 million in 1996, and repaid $0.4 million in 1996, of $13.0 million committed loans related to construction of the Company's new facility in Huntingdon County, Pennsylvania. PART II. OTHER INFORMATION NONE SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BERG ELECTRONICS CORP. Dated: October 28, 1996 By: /s/ JAMES N. MILLS _________________________________ Name : James N. Mills Title: Chairman of the Board and Chief Executive Officer By: /s/ DAVID M. SINDELAR ________________________________ Name : David M. Sindelar Title: Senior Vice President and Chief Financial Officer EX-11 2 EXHIBIT 11 Berg Electronics Corp. COMPUTATION OF NET EARNINGS (LOSS) PER SHARE Primary Earnings (Loss) per Share: - ---------------------------------
Three Months Ended Nine Months Ended September 30, September 30, -------------------------- --------------------------- 1995 1996 1995 1996 ------------ ------------ ------------ ------------- Net income (loss) applicable to common shares...... $ (692,000) $ 6,560,000 $(1,615,000) $(26,272,000) ============ ============ ============ ============= Average number of common shares outstanding........ 12,988,771 20,475,991 12,988,771 18,825,164 Assumed exercise of options (treasury stock method)...... -- 278,575 -- -- ------------ ------------ ------------ ------------- Shares for primary computation........ 12,988,771 20,754,566 12,988,771 18,825,164 ============ ============ ============ ============= Net earnings (loss) per share.......... $ (0.05) $ 0.32 $ (0.12) $ (1.40) ============ ============ ============ =============
Fully Diluted Earnings (Loss) per Share: - ---------------------------------------
Three Months Ended Nine Months Ended September 30, September 30, -------------------------- --------------------------- 1995 1996 1995 1996 ------------ ------------ ------------ ------------- Net income (loss) applicable to common shares...... $ (692,000) $ 6,560,000 $(1,615,000) $(26,272,000) ============ ============ ============ ============= Average number of common shares outstanding........ 12,988,771 20,475,991 12,988,771 18,825,164 Assumed exercise of options (treasury stock method)...... -- 291,575 -- -- ------------ ------------ ------------ ------------- Shares for fully diluted computation........ 12,988,771 20,767,566 12,988,771 18,825,164 ============ ============ ============ ============= Net earnings (loss) per share.......... $ (0.05) $ 0.32 $ (0.12) $ (1.40) ============ ============ ============ =============
EX-27.1 3 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. 9-MOS DEC-31-1996 SEP-30-1996 12,168 0 116,490 5,543 95,835 230,406 355,818 119,921 674,032 169,410 330,915 0 0 0 133,640 674,032 530,718 530,718 346,537 346,537 954 839 24,292 32,401 12,674 19,727 0 (18,664) 0 1,063 (1.40) (1.40)
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