-----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, ITlyghn6SrX5Ibm5ZDPDdLAKahciOz+CLfMx0rJKMN8qtjDXzlgaDB6oZ/K2zXCy flWXYFIOBJ4wfT5QNAjvqg== 0000950134-97-000641.txt : 19970225 0000950134-97-000641.hdr.sgml : 19970225 ACCESSION NUMBER: 0000950134-97-000641 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970204 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-62550-01 FILM NUMBER: 97516995 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-K 1 BERG ELECTRONICS CORP. - 12/31/96 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 1-14080 (Commission File Number) BERG ELECTRONICS CORP. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 75-2451903 (I.R.S. Employer Identification No.) 101 SOUTH HANLEY ROAD ST. LOUIS, MISSOURI 63105 (314) 726-1323 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Common Stock, $0.01 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None 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 registrants were required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of January 28, 1997, the aggregate market value of the registrant's voting stock held by non-affiliates was $273.4 million. As of January 28, 1997, the number of outstanding shares of the registrant's Common Stock, par value $.01 per share, was 19,125,238, and the number of outstanding shares of the registrant's Class A Common Stock, par value $.01 per share, was 1,384,291. No established public trading market exists for the Registrant's Class A Common Stock. DOCUMENTS INCORPORATED BY REFERENCE: 1. Portions of Berg Electronics Corp.'s Proxy Statement for the 1997 Annual Meeting of Stockholders are incorporated by reference into Part III hereof. ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS Unless the context otherwise requires, references to the "Company" mean Berg Electronics Corp. and its subsidiaries, including Berg Electronics Group, Inc., a Delaware corporation ("Berg"), taken as a whole. THE COMPANY The Company is a leading global designer, manufacturer and marketer of electronic connectors and cable assembly products for applications primarily in the computer, telecommunications and industrial markets. Electronic connectors are electro-mechanical devices that allow an electronic signal to pass from one device to another. They are used to connect wires, cables, printed circuit boards, flat cable and other electronic components to each other and to related equipment. Connectors are found in virtually every electronic product including computers, printers, disk drives, modems, VCRs, radios, medical instruments, airplanes, appliances, cellular telephones, pagers and automobiles. The Company's connectors and cable assemblies are used to conduct signals (primarily data, video and voice) in a wide range of sophisticated electronic applications including: (i) telecommunications products such as cellular phones, pagers, and transmission and switching equipment; (ii) personal computing equipment and peripherals such as notebook and desk top computers, printers, disk drives and work stations; and (iii) large data processing equipment such as servers, supercomputers, data communications systems, mainframe computers and mini-computers. While the Company's worldwide operations can be grouped into several geographic segments, the Company operates in only one business segment -- electrical and electronic connection, switching and programming devices. Within this business segment, the Company primarily competes in the computer and telecommunications markets, and to a lesser extent, in the industrial and instrumentation markets. The Company believes it is the third largest electronic connector, socket and cable assembly manufacturer in the world (with a market share of approximately 3%), one of the world's top two manufacturers of connectors for the telecommunications market (with a market share of approximately 3%), and one of the world's top three connectors manufacturers for the computer market (with a market share of approximately 5%). The Company is a holding company that owns all of the outstanding capital stock of Berg. The Company and Berg were incorporated in Delaware in November 1992 by an investor group led by Hicks, Muse, Tate & Furst Incorporated ("Hicks, Muse") and Mills & Partners, Inc. to facilitate the acquisition of the Connector Systems Business (the "Predecessor") of the Electronics Division of E.I. du Pont de Nemours and Company ("DuPont") in February 1993 (the "DuPont Acquisition"). Since the consummation of the DuPont Acquisition, the Company has made seven strategic acquisitions. The largest of these was the acquisition in May 1994 of certain assets and related liabilities of the Connector System Business of the AT&T Microelectronics division of AT&T Corp. (now Lucent Technologies Inc.) ("Lucent") for aggregate consideration of $84.5 million (including fees and expenses) (the "Lucent Acquisition") which greatly expanded the Company's telecommunications product line. The other six acquisitions expanded the Company's offerings of cable assemblies primarily used in the computer and telecommunications market, of sockets, of radio frequency and microwave connectors and of other connector products. These six acquisitions were made for consideration aggregating approximately $71.8 million (including fees and expenses). 2 3 MARKETS SERVED BY THE COMPANY The Company's products are designed for use primarily in the telecommunications and computer markets, and to a lesser extent, in the industrial and instrumentation markets. The percentage of net sales derived from each of these markets in 1996 is as follows:
PERCENTAGE OF 1996 MARKET NET SALES PRODUCT APPLICATIONS ------ ---------- -------------------- TELECOMMUNICATIONS............. 50% Mobile communications: Microwave equipment, cellular phones, hand-held radios, modems and pagers Transmission and switching: Telephone switching equipment COMPUTER....................... 41 High-end data processing: Supercomputers, servers, data communications, mainframe computers, mini-computers and related peripherals such as disk drives and tape drives Personal computing: Notebook computers, desk top computers, printers, disk drives and work stations INDUSTRIAL AND INSTRUMENTATION.............. 5 Process control equipment, medical equipment, instrumentation and testing equipment OTHER.......................... 4 Military and aerospace equipment, specialized automotive and consumer electronics
PRODUCTS The electronics industry generally classifies electronic package interconnection into six levels, and products are classified in accordance with the level that they serve. The Company manufactures more than 45,000 products which are grouped into 25 product lines. The Company's products extend to each of the six levels of interconnection. Level 1. Level 1 refers to a direct attachment of a component part to a printed circuit board ("PCB"), which does not involve a connector. The Company assists customers in the design of unique interconnect devices called application specific modules ("ASM's") for a wide range of applications that contain active components such as microprocessor integrated circuits and passive components such as capacitors or sockets. Some passive components and all active components are acquired from vendors. In the process of manufacturing ASM's, the Company attaches the active and passive components directly to the specific- purpose PCB's, which are either produced by the Company or acquired from a vendor. Level 2. Level 2 connectors consist of on board connecting devices, generally known as sockets. Sockets attach to PCBs and facilitate replacement of expensive microprocessor integrated circuits on the PCB. Sockets are always utilized inside of an electronic device or "box" and are required for a wide range of applications. The Company believes that it has one of the industry's broadest offerings in pin grid array sockets which are used to connect microprocessors to the PCB. The Company also has a broad product offering of dual inline memory modules which are used to connect memory chips to the PCB. Level 3. Level 3 connectors are used to connect or "stack" PCBs in either parallel fashion or at 90 degree angles to one another. The typical use for Level 3 PCB connectors is inside a computer or inside a telecommunications processing device. Level 3 PCB connectors are low frequency signal conducting connectors usually associated with data transmission. Historically, the Company's principal product offering has consisted of this type of connector. The Company's broad product offering of Level 3 connectors ranges from its mature product lines, including the widely recognized Fastech(R) (3.17mm spacing between contacts), BergStik(R) (2.54mm), DUBOX(TM) (2.54mm) and 2.54mm interconnection product lines, to newer products which include H.P.C.(TM) (2.54mm), Minitek(TM) (2mm), Metral(R) (2mm), Rib-cage(TM) (1.27mm), Conan(TM) (1mm), BergStak (0.8mm and 0.5mm) and Micropax(TM) (0.64mm). The Company's newer generation Level 3 products allow the Company to satisfy its customer demands for increasingly compact and high density products serving applications such as compact mobile communications and computing devices. The Company 3 4 believes it is the world's second largest supplier of PCB connectors to the computer and telecommunications industries. The Company's marketing and research will continue to focus on improvements in density and miniaturization to meet the emerging PCB connector needs of its customers. Level 4. Level 4 connectors consist of devices that connect a wire or a wiring harness to a PCB, usually inside a box. The product offerings in this category include connectors that are used to terminate discrete wire, planar cable and flexible printed circuits. The Company's Level 4 product offerings include "quickie" insulation displacement connectors for terminating planar cable and Reliflex(R), Duflex(TM) and 0.5mm flat printed circuit connectors for terminating flat printed circuit cable. The Company's history of innovation in Level 4 devices includes its invention of the modular jack now used widely to connect telephone, computer and facsimile equipment. Level 5. Level 5 connectors consist of devices that connect cable to cable or wire to wire, and are either located inside a box or provide an output connector from the box to other equipment. Level 5 connectors are also referred to as rectangular or input/output connectors. Historically, the Company's sales in this category have been generated primarily to meet the special requests of major customers. Examples of such connectors include a flex cable assembly sold to Volkswagen for use in its automatic gear box, and a wide range of radio frequency and coaxial connectors used in the transmission of voice, video and data. The Company's research and development efforts relative to this product line have focused on the next generation of input/output connectors that require smaller and more dense connectors for a wide range of applications, such as universal serial bus ("USB"), very high density connector interface ("VHDCI"), and others such as the Company's new MetaGig product offering. Level 6. Level 6 connectors or cable assemblies consist of an integrated cable terminated with a connector at each end. Level 6 connectors such as the SCSI cables manufactured by the Company connect two pieces of equipment. For instance, the SCSI cable can be used to connect a printer to a personal computer. The Company's sales in 1996 in each category ranked in descending order by dollar amount were: Level 3 (PCB to PCB or "board to board"), Level 4 (wire to board), Level 6 (cable assemblies), Level 5 (wire to wire), Level 1 (ASM's) and Level 2 (sockets). NEW PRODUCT DEVELOPMENT Approximately 35% of the Company's 1996 net sales were generated from products developed by the Company within the past five years. Developing new products requires substantial investments in research and development. The Company targets research and development expenditures specifically to broaden its product line and to expand its technical capabilities in order to meet its customers' anticipated needs. In 1994, 1995 and 1996, the Company's research and development expenditures were $34.8 million, $39.1 million and $42.3 million, respectively. Of the $116.2 million invested in research and development during the last three fiscal years, $71.7 million ($20.8 million, $24.8 million and $26.1 million in 1994, 1995 and 1996, respectively) qualifies for creation and application of new and improved products and processes as defined in SFAS No. 2, "Accounting for Research and Development Costs." The Company had approximately 400 full-time employees in fiscal 1996 engaged in research, development and engineering functions, primarily at its United States, European and Asian research and development centers. In addition, the Company has three application engineers located at Lucent's Bell Laboratories ("Bell Labs"). Through its access to Bell Labs, the Company is not only able to take advantage of the research capabilities of the Bell Labs facility, but is also able to provide support to and work closely with Lucent's engineers in the advancement of Lucent's telecommunications equipment. To fill the needs of its customers, the Company's product engineers work with certain customers' in-house technical staffs in the early stages of product development to design, produce and manufacture special products to meet the specifications of particular applications. The manufacture of special products permits the Company, through its research and development activities, to make technological advances to provide the customer with a design solution to fit such customer's needs, to gain a marketing inroad with the customer 4 5 with respect to the Company's complete product line and, in some cases, to develop products that can be sold to additional customers in the future. The Company presently has significant ongoing projects with a variety of key customers in the computer and telecommunications industries. Examples of the Company's product and market development efforts include the Company's Metral(R) connector, originally developed in conjunction with Lucent and Ericsson Telecom AB of Sweden, which has become the industry standard for a variety of telecommunications and computer applications. Other products developed by the Company which have become industry standards include SPCI, PCMCIA, BergStik(R) and the modular jack. SALES AND MARKETING The Company places a high priority on identifying and responding to its customers' requirements on a timely basis. In order to ensure that the Company is best positioned to respond to these requirements, it has developed a sales and marketing strategy that utilizes global account managers, a highly trained Company-employed direct sales force, independent electronic component distributors and independent manufacturers' representatives. Through its global account managers and direct sales force the Company is able to develop strong ties to leading OEMs, or Original Equipment Manufacturers, who must use connectors to complete the design and manufacture of their products. These ties enable the Company to act as a partner in the design and development of new products and applications for these customers. By becoming a partner in the design and development of new products for its leading customers, the Company believes it can enhance its relationship with these customers, achieve preferred supplier status and be better positioned to anticipate its customers' future needs. In addition, the Company is assigning industry managers to certain emerging high technology companies in order to remain at the forefront of technological development and position itself to supply the connector requirements of these companies. In addition to Company-employed sales staff, independent electronic component distributors and independent manufacturers' representatives, the Company utilizes a number of electronic and digital distribution techniques to ensure easy access to, and ordering of, its products by the Company's customers. Examples of this include automated access to Company product information via facsimile, electronic publication of Company product catalogues and access to Company product catalogues via the World Wide Web on the Internet. This latter utility also allows customers' engineers to electronically modify the Company's connector designs and send them via electronic mail to the Company's engineers for further development. CUSTOMERS In 1996, the Company sold its connectors to over 25,000 customers throughout the world, including substantially all computer and telecommunications OEMs. As a result of the Lucent Acquisition, Lucent became the largest customer of the Company. In connection with the Lucent Acquisition, the Company entered into a five-year supply agreement with Lucent pursuant to which the Company will supply on an exclusive basis all of the requirements for connectors and related products for the business units and facilities of Lucent that were previously supplied by the AT&T Connector Business, representing substantially all of Lucent's North American switching and transmission business. In 1996, sales to Lucent accounted for approximately 18% of the Company's total sales. Consequently, developments adverse to Lucent, or its products, or decreased levels of purchases by Lucent, could have a material adverse effect on the Company's results of operations. Additional major customers of the Company include, among others, IBM, Hewlett Packard, Seagate, Motorola, Northern Telecom, Compaq, Siemans GPT, Alcatel, Quantum/MKE, Philips, Solectron and Ericsson. There has been a trend on the part of OEM customers to reduce the number of qualified suppliers to those companies that have a global presence, can meet ever-increasing demand for quality and delivery standards, offer a broad product portfolio, provide design capability, and have competitive prices. The Company has focused its global resources on adapting to this environment. The Company has concentrated its 5 6 efforts on service and productivity improvements including advanced computer aided design and manufacturing systems, and just-in-time inventory programs to increase product quality and shorten product delivery schedules. The Company's strategy is to provide the broadest selection of connectors in the product areas in which it competes. The Company has achieved a preferred supplier designation from several of its most important OEM customers in its chosen markets. INTERNATIONAL OPERATIONS Approximately 46% of the Company's 1996 sales originated outside of North America, split approximately evenly between the Asia Pacific region and Europe. In Asia, the Company has manufacturing, engineering and sales facilities in Japan, Korea, Taiwan, the People's Republic of China and Singapore, a sales office in Hong Kong, and a 40%-owned manufacturing and sales joint venture in India. In Europe, the Company has manufacturing and engineering facilities in France, The Netherlands, Ireland and Sweden, with sales offices in most major European countries. The Company believes that its global presence is important as it allows the Company to provide consistent, quality products on a timely basis to its multinational customers' locations worldwide. See Note 14 of the Company's consolidated financial statements for geographic segment information. The Company is subject to risks generally associated with international operations, including price and exchange controls, limitations on foreign ownership and other restrictive actions. In addition, fluctuations in currency exchange rates may affect the Company's results of operations. RAW MATERIALS The Company purchases a wide variety of raw materials for the manufacture of its products, including precious metals such as gold and palladium used in plating, copper alloys and brass used for contacts, and plastic resins used in molding connector bodies and inserts. All raw materials are readily available throughout the world and are purchased locally from a variety of suppliers. The Company is not dependent upon any one source for raw materials. Generally, the prices at which the Company purchases precious metals are based upon market prices of such metals at the time of purchase. Precious metals have historically been subject to price fluctuations. From time to time, the Company engages in short-term hedging activities to reduce its exposure to precious metals price fluctuations. Historically, such hedging operations have not been material, and gain and losses from such operations have not been significant. There can be no assurance that such hedging operations will eliminate or substantially reduce such risk. In most cases, the Company is able to pass on to its customers significant price fluctuations in the market prices of precious metals. For the years ended December 31, 1994, 1995 and 1996 the cost of gold and other precious metals accounted for approximately 9%, 7% and 7%, respectively, of the Company's cost of goods sold. MANUFACTURING The Company employs advanced manufacturing processes in order to manufacture quality products for customers throughout the world. The Company's historical emphasis on product development has been carried over to process technology and has resulted in the development of production facilities equipped with state-of-the-art manufacturing equipment including: high speed, selective reel-to-reel precious metal plating equipment, with advanced on-line process controls; proprietary high speed, flexible product assembly equipment; metal stamping equipment; and plastic molding machines. In addition, the Company's manufacturing operations are vertically integrated from the initial connector design stage through manufacturing. Management believes that the vertical integration allows the Company to reduce time to market and be more responsive to customer needs. The Company is committed to the highest quality standards for its products, a standard maintained in part by continuous improvements to its production processes and upgrades to its manufacturing equipment. The Company was the first connector company to have its manufacturing and engineering sites certified by the International Standards Organization ("ISO") according to its 9000 series of quality standards. ISO 9000 series certification constitutes an independent certification that the Company has systems in place to ensure 6 7 that products delivered by the Company will consistently meet customer quality requirements. While all of the Company's new facilities are in the process of becoming ISO 9000 certified, all of the Company's other significant manufacturing and engineering sites are ISO 9000 certified. PATENTS AND TRADEMARKS The Company has more than 1,600 patents and pending patent applications and 200 trademarks worldwide. While the Company considers its patents to be valuable assets, the Company does not believe that its competitive position is dependent on patent protection or that its operations are dependent on any individual patent or group of related patents. However, in some instances, patents and patent protection may serve as a barrier to entry in certain product lines. The Company's policy is to obtain patents on its significant new products and enforce its patent rights. COMPETITION The electronic connector industry is highly fragmented, with over 1,500 connector manufacturers competing worldwide. As a result, the Company generally competes with different suppliers in each of the various categories of the overall market in which the Company operates. The Company is generally among the market share leaders within its targeted markets, where it competes primarily on the basis of quality, reliability, reputation, design capability, customer service, delivery time and price. BACKLOG The Company estimates that its backlog of unfilled orders on December 31, 1996, and December 31, 1995, was approximately $105.1 million and $115.3 million, respectively. The decrease in backlog in 1996 from 1995 is primarily a result of currency declines causing backlog in U.S. dollars to be lower in 1996 than 1995 and customers moving to demand/pull and consignment order patterns reducing open orders at any one point in time. Unfilled orders may be cancelled prior to published lead times; however, such cancellations historically have not been material. Substantially all the backlog as of December 31, 1996 is expected to be filled by June 30, 1997. The backlog outstanding at any point in time is not necessarily indicative of the level of business to be expected in the ensuing period. EMPLOYEES As of December 31, 1996, the Company had approximately 6,000 employees worldwide, including approximately 1,100 temporary employees. Of these employees, approximately 4,900 were engaged in manufacturing, 400 were engaged in research and development and 700 were engaged in sales, marketing and administrative functions. Most of the Company's employees located in the United States are not represented by labor unions, while most of the Company's employees engaged in manufacturing in Europe and Asia belong to work councils or unions. The Company believes that it has a good relationship with its employees, and has never experienced a work stoppage. RECENT DEVELOPMENTS Initial Public Offering On March 6, 1996, the Company consummated its initial public offering of 7,475,000 shares of the Company's common stock, par value $0.01 per share ("Common Stock"). The Company received net proceeds of approximately $147.0 million from the offering (net of underwriting commissions and discounts). On February 29, 1996, the Company effected a 1-for-4.11 reverse stock split such that every 4.11 outstanding shares of the Common Stock and 4.11 outstanding shares of the Company's Class A Common Stock, par value $0.01 per share ("Class A Common Stock"), were combined into one share of Common Stock and one share of Class A Common Stock, respectively. No fractional shares of Common Stock or Class A Common Stock were issued in connection with the reverse stock split; fractional share interests resulting from the reverse stock split were cancelled. 7 8 New Credit Facility On February 29, 1996, the Company entered into a new credit facility (the "New Credit Facility") that, among other things, refinanced the Company's existing credit agreement. The New Credit Facility consists of a $350.0 million term loan and a $100.0 million revolving credit loan. The refinancing of the existing credit agreement resulted in the write off of $12.8 million of deferred financing costs in the year ended December 31, 1996. This write off, net of income tax, is classified with other extraordinary items on the consolidated statement of operations appearing in Item 8 hereof. The Series B Redemption and the Series E Redemption and Tender Offer On March 18, 1996, the Company redeemed 50% of the outstanding shares of the Company's Series E Preferred Stock, par value $0.01 per share (the "Series E Preferred"), including accrued and unpaid dividends and a redemption premium thereon for approximately $44.3 million (the "Series E Preferred Redemption"). On March 19, 1996, the Company purchased all of the outstanding shares of Series E Preferred not purchased by the Company pursuant to the Series E Preferred Redemption for approximately $47.8 million. 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 (the "Series B Preferred"), including accrued and unpaid dividends thereon, for approximately $50.9 million. The excess, $21.9 million, of the fair value of the consideration transferred to the holders of the Series E Preferred and Series B Preferred over the carrying amount of the Series E Preferred and Series B Preferred is reflected as a reduction from net income for the year ended December 31, 1996 to determine net loss applicable to common shares in the consolidated statement of operations appearing in Item 8 hereof. The Debenture Redemption and Tender On April 8, 1996, Berg redeemed $30.0 million aggregate principal amount of its 11 3/8% Guaranteed Senior Subordinated Debentures due 2003 (the "Debentures") in accordance with the terms of the Indenture, dated as of October 29, 1993, among Berg, the Company and Harris Trust and Savings Bank, as trustee, as amended (the "Indenture"), for $34.5 million, plus accrued and unpaid interest to the redemption date and a redemption premium thereon (the "Debenture Redemption"). On April 9, 1996, Berg purchased all of the outstanding Debentures not redeemed by Berg pursuant to the Debenture Redemption for approximately $82.6 million. The redemption and purchase of the Debentures resulted in a write off of $4.9 million of deferred financing costs in the year ended December 31, 1996. This write off, net of income tax, is classified with other extraordinary items in the consolidated statement of operations appearing in Item 8 hereof. Additionally, the redemption and purchase premium and the related fees and expenses of the Debenture Redemption and purchase, totaling $13.5 million, is classified with other extraordinary items, net of tax, in the consolidated statement of operations appearing in Item 8 hereof. 8 9 ITEM 2. PLANTS AND PRINCIPAL PROPERTIES In addition to its principal executive offices in St. Louis, Missouri, the Company operates 24 principal manufacturing and research facilities and other principal properties located in 13 different countries. The Company considers its plants and equipment to be modern and well-maintained. Production facilities for certain of the Company's products are operating at or near capacity.
SIZE (SQUARE TYPE OF LOCATION FEET) INTEREST DESCRIPTION OF USE -------- ------- -------- ------------------ NORTH AMERICA Huntingdon County, PA 200,000 Leased Precious metal plating, metal stamping, plastic injection molding and connector assembly Emigsville, PA 190,000 Owned Global supplier of plated wire, strip and terminals for other Company facilities; manufacturing operations include stamping, assembly and precious metal plating Clearfield, PA 146,000 Owned Metal stamping, plastic injection molding and assembly operations Valley Green, PA 112,000 Owned U.S. engineering headquarters and certain administrative functions Juarez, Mexico 100,000 Leased Manufacture of high-labor-content connectors and cable assemblies for North America and Europe Hazelton, PA 65,000 Leased Design and manufacture of cable assemblies Gardena, CA 56,000 Leased Design and manufacture of cable assemblies Fremont, CA 50,000 Leased Design and manufacture of sockets and related interconnections; manufacturing operations include injection molding, connector assembly, mold making and assembly Franklin, IN 46,000 Leased Design and manufacture of radio frequency and microwave connectors, related components and cable assemblies; administrative and marketing support center. New Brunswick, NJ 12,000 Leased Manufacture of customer and standard application integrated circuit socket devices Ridgefield, CT 10,000 Leased Administrative, sales and marketing headquarters for cable assemblies EUROPE Besancon, France 165,000 Owned Metal stamping, plastic injection molding, component assembly and precious metal plating; precious metal plated strip and terminals are supplied to other global manufacturing sites 's-Hertogenbosch, The Netherlands 120,000 Owned European sales, marketing and engineering headquarters; metal stamping, plastic injection molding and assembly of connectors, components and cable assemblies Katrineholm, Sweden 97,000 Leased Metal stamping, plastic injection molding and assembly of connectors Fermoy, Ireland 42,500 Leased Plastic injection molding and assembly of connectors and components London, England 9,600 Leased Regional headquarters and administrative offices
9 10
SIZE (SQUARE TYPE OF LOCATION FEET) INTEREST DESCRIPTION OF USE -------- ------- -------- ------------------ ASIA Chungli, Taiwan 125,000 Owned Metal stamping, automatic injection and insert molding and component and cable assembly; approximately 65,000 sq. ft. of this facility is leased to DuPont Nantong, The People's Republic of China 47,000 Leased Component and cable assembly operations Jurong, Singapore 46,000 Leased Metal stamping, automatic injection and insert molding and component and cable assembly Iwaki City, Japan 39,000 Leased Metal stamping, injection molding and production of electronic connectors, fiber optic connectors and cable assemblies Ichon, Korea 32,000 Owned Metal stamping, injection and insert molding, component and cable assembly Tokyo, Japan 16,000 Leased Design center for Asia Pacific and administrative, sales and marketing headquarters for Japan Ngee Ann City Building, Singapore 15,550 Leased Regional headquarters; sales and administrative offices Maduri, India 11,000 Owned By 40% owned joint venture; metal stamping, Joint Venture molding and assembly
In addition to the facilities listed above, the Company maintains 25 sales and marketing facilities, all of which are leased, including four located in the United States, three in India, two each in Japan and the People's Republic of China and one each in Canada, Germany, Italy, Sweden, Finland, France, Netherlands, Spain, Switzerland, the United Kingdom, Singapore, Hong Kong, Taiwan and Korea. ITEM 3. LEGAL PROCEEDINGS The operations of the Company have from time to time been involved in claims and litigation. The nature of the Company's business is such that it is anticipated that the Company will continue to be involved from time to time in claims and litigation considered to be in the ordinary course of its business. Based on experience with similar claims and litigation, the Company does not anticipate that these matters will have a material adverse effect on the Company. The Company from time to time receives notifications alleging infringements of patents generally held by other connector manufacturers. Disputes over patent infringement are common in the connector industry and typically begin with notices of the type described above. Although the ultimate resolution of the legal action and infringement notices described above cannot be predicted, the Company believes that such resolution, including any ultimate liability, will not have a material adverse effect on the Company. Certain operations of the Company are subject to federal, state, local and foreign environmental laws and regulations, which govern, among other things, the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes. The Company believes that the costs of compliance with such laws and regulations will not have a material adverse effect on the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders in the fourth quarter of 1996. 10 11 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS Effective March 1, 1996, the Company's Common Stock began trading on the New York Stock Exchange under the trading symbol "BEI." There is no established public trading market for the Class A Common Stock. The following table sets forth the high and low closing sales prices per share for the Company's Common Stock for the periods indicated.
MARKET PRICE ------------- PERIOD HIGH LOW ------ ---- --- March 1-March 31, 1996...................................... 26 22 3/8 Second Quarter.............................................. 28 5/8 22 3/8 Third Quarter............................................... 28 20 1/4 Fourth Quarter.............................................. 32 1/2 25 1/8
The Company has not paid any dividends on any class of its common stock since its incorporation in November 1992 and no dividend payments are anticipated in 1997. The Company is restricted by certain agreements related to the New Credit Facility from paying dividends on shares of any class of its common stock, except under certain limited circumstances. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." On December 31, 1996, the approximate number of record holders of each class of the Company's common stock was as follows: Common Stock........................................... 167 Class A Common Stock................................... 10
11 12 ITEM 6. SELECTED FINANCIAL DATA The following tables present selected historical financial data of the Company and the Predecessor for the periods indicated. The historical financial data for the four years ended December 31, 1996, have been derived from the consolidated financial statements of the Company audited by Arthur Andersen LLP. The historical financial data of the Predecessor for the year ended December 31, 1992, represent the assets and results of operations acquired by the Company in the DuPont Acquisition and have been derived from the audited combined financial statements of the Predecessor. Because of purchase accounting adjustments, the indebtedness incurred in connection with the DuPont Acquisition, the cost savings from the elimination of DuPont's overhead, and subsequent additional acquisitions by the Company, the Company believes that the information with respect to the Predecessor is generally not comparable to that of the Company. THE COMPANY
YEARS ENDED DECEMBER 31, ---------------------------------------------------- 1993(6) 1994 1995 1996 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) RESULTS OF OPERATIONS: Net sales........................................... $ 318,424 $ 526,250 $ 667,249 $ 704,669 Cost of goods sold.................................. 195,319 343,858 442,276 455,869 Selling, general and administrative expenses........ 83,947 128,865 154,756 157,682 Amortization of intangible assets................... 5,945 9,603 11,182 12,011 Net periodic postretirement benefits................ 2,200 2,640 2,271 1,272 ---------- ---------- ---------- ---------- Operating income.................................... 31,013 41,284 56,764 77,835 Other income (expense): Interest expense.................................. (18,948) (29,186) (34,609) (28,350) Amortization of deferred financing costs.......... (4,059) (5,859) (6,286) (3,388) Other, net........................................ (597) (346) (738) 1,239 ---------- ---------- ---------- ---------- Income before income taxes and extraordinary items............................................. 7,409 5,893 15,131 47,336 Income tax provision................................ 3,680 2,871 5,802 18,391 ---------- ---------- ---------- ---------- Income before extraordinary items................... 3,729 3,022 9,329 28,945 Extraordinary items(1).............................. (1,900) -- -- (18,664) ---------- ---------- ---------- ---------- Net income.......................................... 1,829 3,022 9,329 10,281 Preferred stock: Accretion and dividends(2)........................ (8,837) (13,287) (14,741) (5,469) Excess of fair value over book value of redemption and purchase(3)................................. -- -- -- (21,866) ---------- ---------- ---------- ---------- Net loss applicable to common shares................ $ (7,008) $ (10,265) $ (5,412) $ (17,054) ========== ========== ========== ========== Net loss per common share(4)........................ $ (0.67) $ (0.79) $ (0.42) $ (0.89) Average common shares outstanding(4)................ 10,487,674 12,997,626 12,989,324 19,245,738 OTHER DATA: EBITDA (excluding PBC)(5)........................... $ 55,589 $ 86,055 $ 112,978 $ 135,355 Net cash from operating activities.................. 57,627 50,933 67,763 69,211 Net cash from investing activities.................. (407,858) (142,154) (56,421) (79,400) Net cash from financing activities.................. 357,282 96,542 (4,478) (226) Depreciation........................................ 16,431 32,528 42,761 44,237 Amortization of intangible assets................... 5,945 9,603 11,182 12,011 BALANCE SHEET DATA: Working capital..................................... $ 37,649 $ 51,807 $ 43,802 $ 41,160 Total assets........................................ 462,918 621,836 668,340 682,007 Long-term obligations (including current maturities)....................................... 246,238 342,679 338,171 358,558 Series B Preferred (liquidation preference)......... 41,616 45,947 49,735 -- Series E Preferred (liquidation preference)......... 56,970 67,233 76,686 -- Total stockholders' equity.......................... 106,890 129,459 144,340 138,892
(footnotes on next page) 12 13 - --------------- (1) Extraordinary item in 1993 represents a $1,900 loss on early extinguishment of debt (net of income tax of $1,100). In 1996, extraordinary item represents an $18,664 loss on early extinguishment of debt (net of income tax of $12,443). (2) Consists of dividends on the Series B Preferred and the Series E Preferred, plus accretion of original issue discount on Series B Preferred. Dividends accrued on the Series B Preferred at the rate of 8.0% per annum per share and were paid in additional shares quarterly. Through the February 1996 dividend payment date, the Company had issued additional shares of Series B Preferred in payment of each such quarterly dividend and paid cash amounts in lieu of issuing fractional shares. Annual accretion of original issue discount on the Series B Preferred was $1,500. Dividends accrued on the Series E Preferred at the rate of 13.375% per annum per share and were paid in additional shares quarterly. Through the February 1996 dividend payment date, the Company had issued additional shares of Series E Preferred in payment of each such quarterly dividend and paid cash amounts in lieu of issuing fractional shares. As part of the recapitalization (described in Recent Developments) all shares of Series B Preferred and Series E Preferred were redeemed. (3) Excess of fair value over book value of redemption and purchase of $21,866 represents consideration transferred to the holders of the Series B Preferred and Series E Preferred in excess of the carrying amount of the Series B Preferred and Series E Preferred and is a reduction from net income to determine net loss applicable to common shares. (4) Per share data is determined by dividing the weighted average number of shares of Common Stock outstanding during the period into net loss applicable to common shares. (5) Earnings before interest, taxes, depreciation and amortization ("EBITDA") includes operating income adjusted to exclude depreciation, amortization of intangible assets and noncash net periodic postretirement benefits charges ("PBC"). The Company believes that EBITDA (excluding PBC) provides additional information for determining its ability to meet future debt service requirements. However, EBITDA (excluding PBC) is not a defined term under GAAP and is not indicative of operating income or cash flow from operations as determined under GAAP. (6) The historical data for 1993 includes the results of operations of the Company from March 1, 1993, through December 31, 1993. The Company had no operations prior to the DuPont Acquisition consummated on March 1, 1993. Net sales and cost of inventory sold of the Predecessor for the period January 1, 1993, through February 26, 1993, were $59,600 and $39,600, respectively. 13 14 THE PREDECESSOR
YEAR ENDED DECEMBER 31, ------------ 1992 (IN THOUSANDS) RESULTS OF OPERATIONS: Net sales................................................... $399,801 Other income................................................ 1,323 -------- Total revenues.................................... 401,124 Cost of goods sold.......................................... 283,329 Selling, general and administrative expenses................ 99,721 Research and development expenses........................... 18,148 Taxes, other than on income................................. 9,068 Exchange losses............................................. 552 -------- Operating loss.............................................. (9,694) Interest expense(1)......................................... 7,506 -------- Loss before income taxes.................................... (17,200) Provision for income taxes(2)............................... 7,042 -------- Net loss.................................................... $(24,242) ======== OTHER DATA: EBITDA(3)................................................... $ 17,735 Depreciation................................................ 27,800 Amortization of intangible assets........................... 400
- --------------- (1) Interest expense in the historical financial information was determined by DuPont based on consolidated indebtedness and allocated to the Predecessor on the basis of the Predecessor's proportionate share of the identifiable operating assets of DuPont. It is not necessarily indicative of the interest expense that would have been incurred if the Predecessor had been operated as a separate entity. (2) Provision for income taxes in the historical financial statements assumes that the Company is a separate taxpayer and reflects the tax strategies and elections employed by DuPont. (3) EBITDA includes operating income (loss) adjusted to exclude other income, depreciation, amortization of intangible assets, business restructuring charges and exchange losses (gains). The Company believes that EBITDA provides additional information for determining its ability to meet future debt service requirements. However, EBITDA is not a defined term under GAAP and is not indicative of operating income or cash flow from operations as determined under GAAP. 14 15 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the audited financial statements and the notes thereto included in Item 8 hereof. OVERVIEW The Company's net sales increases since 1993 have principally reflected increased unit volumes. As new products gain market acceptance and their unit volumes increase, these products have tended to experience downward price pressure. The gross margin effect of this pressure has been historically mitigated or eliminated by increased manufacturing efficiencies and economies of scale associated with higher volume production of such products. In addition, the pricing pressure experienced by the Company with respect to its mature products has also been mitigated by the Company's frequent introduction of higher margin new products. Subsequent to the DuPont Acquisition, the Company has completed seven strategic acquisitions that have broadened its product offerings and enabled the Company to penetrate new markets. Since the DuPont Acquisition, the Company has devoted a significant portion of its operating income to debt service. The Company's net income applicable to common shares has also been reduced as a result of significant noncash preferred stock dividend payment requirements. As a result of the redemption of the Debentures, Series B Preferred and Series E Preferred, the debt service requirements relating to the Debentures and the dividend requirements relating to the Series B Preferred and Series E Preferred have been eliminated. Nevertheless, debt service expense will remain significant. The Company manufactures connectors in various regions of the world and exports and imports these products to and from a large number of countries. Sales and expenses are frequently denominated in local currencies. The Company's net sales and net income may be affected as currency fluctuations affect the Company's product prices and cost structure. The Company, from time to time, engages in hedging operations, such as forward exchange contracts, to reduce its exposure to foreign currency fluctuations. Such hedging operations historically have not been material, and gains and losses from such operations have not been significant. There can be no assurance that such hedging operations will eliminate or substantially reduce such risk. Demand for the Company's products has increased significantly since the DuPont Acquisition in 1993, and production facilities for certain of the Company's products are operating at or near capacity. A significant portion of the Company's planned capital expenditures in 1997 is directed toward expansion of production capacity to meet increased demand. RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1996, COMPARED TO YEAR ENDED DECEMBER 31, 1995 Net sales for the year ended December 31, 1996 were $704.7 million, representing a $37.4 million, or 5.6%, increase over the year ended December 31, 1995. In general, the Company's growth in net sales during the year was attributable to growth in unit volume partially offset by a decline in the average prices of the Company's products. North American sales were $382.0 million for the year ended December 31, 1996, representing a $42.7 million, or 12.6%, increase versus North American sales for the year ended December 31, 1995. This increase was due primarily to a $27.2 million, or 26.6%, increase in telecommunications products sales resulting from stronger demand than in the prior year for backplanes used in switching and transmission equipment, which translated into strong demand for the Berg connectors used in these applications. Sales in Europe were $155.1 million for the year ended December 31, 1996, representing a $4.4 million, or 2.8%, decrease from European sales for the year ended December 31, 1995. This decrease was due primarily to the strengthening of the U.S. dollar against certain European currencies. Sales in Asia Pacific totalled $167.6 million for the year ended December 31, 1996, representing a $0.9 million, or 0.5%, decrease 15 16 from the year ended December 31, 1995. The decrease in the Asia Pacific region was primarily due to the effects of the weak Japanese yen versus the U.S. dollar, offset by 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 4.0% on a combined basis, for the year ended December 31, 1996 compared to the year ended December 31, 1995. Due primarily to increased sales volume, cost of goods sold for the year ended December 31, 1996 increased by $13.6 million, or 3.1%, over cost of goods sold for the year ended December 31, 1995. As a result of cost containment and reduction activities, cost of goods sold as a percentage of sales improved from 66.3% for the year December 31, 1995 to its current level of 64.7% for the year December 31, 1996. Selling, general and administrative expenses for the year ended December 31, 1996 increased by $2.9 million, or 1.9%, over selling, general and administrative expenses for the year ended December 31, 1995 due primarily to sales volume. However, these expenses as a percentage of sales decreased from 23.2% for the year ended December 31, 1995 to 22.4% for the year ended December 31, 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 $11.1 million, to $30.5 million for the year ended December 31, 1996 from $41.6 million for the year ended December 31, 1995 due to reduced interest expense and amortization of financing costs in 1996 as a result of the redemption of the Debentures and as a result of the New Credit Facility. The New Credit Facility, entered into in February 1996, has lower interest rates and financing costs than the previous credit agreement and the Debentures. YEAR ENDED DECEMBER 31, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994 Net sales for the year ended December 31, 1995, were $667.2 million, representing a $140.9 million, or 26.8%, increase over the year ended December 31, 1994. In general, the Company's growth in net sales during such period was attributable to growth in unit volume partially offset by a decline in the average prices of the Company's products. Sales in the North American region were $339.2 million in the year ended December 31, 1995, representing a $72.7 million, or 27.3%, increase versus the comparable period in 1994. Of this increase, approximately $27.1 million was attributable to an 18.6% growth rate recorded by the Company's existing North American business (excluding sales attributable to businesses acquired by the Company subsequent to the DuPont Acquisition). This growth was attributable to strong demand for connector products in the Company's major end-user markets (computers and telecommunications) and increased sales to distributors as a result of the Company's enhanced path-to-market strategy. The balance of the increase in North American sales, approximately $45.6 million, was primarily due to the full period inclusion of the financial results of the Lucent Acquisition and three other smaller businesses in the year ended 1995 versus the partial inclusion of such results (due to the timing of the aforementioned acquisitions) in the comparable period in 1994, partially offset by a $3.4 million decline in cable assembly sales experienced as a result of a production decline during the combination of two cable assembly manufacturing facilities into one. European sales were $159.5 million for the year ended December 31, 1995, representing a $27.5 million, or 20.8%, increase versus the year ended December 31, 1994. This increase was due primarily to further market penetration by the Company's products of the telecommunications market (including mobile communications), improved sales to distributors and the favorable impact of the strengthening European currencies versus the U.S. dollar. The currency fluctuation accounted for $12.2 million of the $27.5 million increase in sales. Sales in the Asia Pacific region totaled $168.5 million for the year ended December 31, 1995, representing a $40.7 million, or 31.8% increase over the year ended December 31, 1994. Of this increase, approximately $35.5 million was attributable to increased sales of certain of the Company's new products for the personal computer and telecommunications markets and the addition of a direct sales force in Japan to complement the Company's distributor in that market. The balance of the increase in Asia Pacific sales, approximately $5.2 million, was due to the favorable impact of the appreciation of certain Asian currencies versus the U.S. dollar. 16 17 Cost of goods sold as a percent of sales increased from 65.3% in the year ended December 31, 1994, to 66.3% in the year ended December 31, 1995. 1995 includes the full impact of inclusion of the cable assembly and socket businesses, most of which were acquired during 1994, which generally have lower gross margins. In addition, the gross margins on cable assembly products were eroded by lower absorption of manufacturing costs during the second, third and fourth quarters as a result of a decline in production during the combination of cable assembly manufacturing facilities in addition to increased costs incurred during the combination. In addition, the Company experienced significant price pressure in the Asia Pacific region in the second half of 1994, and, although prices have stabilized, the lower price level carried into the first half of 1995. Selling, general and administrative expenses were $154.8 million in the year ended December 31, 1995, representing a $25.9 million, or 20.1%, increase versus the comparable 1994 period. This increase was due to (i) the full inclusion of the financial results of the AT&T Connector Business and the other businesses acquired in 1994 in the year ended December 31, 1995, versus the partial inclusion of such results in the year ended December 31, 1994; (ii) the costs of combining cable assembly manufacturing facilities; (iii) legal and settlement costs arising from certain patent litigation; and (iv) the weakening of the U.S. dollar versus certain European and Asian currencies. However, as a percent of sales, selling, general and administrative expenses decreased from 24.5% of sales in the year ended December 31, 1994 to 23.2% in the year ended December 31, 1995, due to the spreading of the fixed component of such expenses over a significantly higher sales volume. Other expense grew $6.2 million, from $35.4 million for the year ended December 31, 1994, to $41.6 million for the year ended December 31, 1995, primarily because of increased interest expense associated with the financing of the Lucent Acquisition. This increase was partially offset by foreign currency translation gains associated with the weaker U.S. dollar. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $69.2 million for the year ended December 31, 1996, which compared to $67.8 million provided by operating activities for the comparable period in 1995. Net cash used in investing activities was $79.4 million for the year ended December 31, 1996, compared to net cash used of $56.4 million for the year ended December 31, 1995. The net cash used in investing activities for the year ended December 31, 1996, consisted of $61.6 million for capital expenditures and $17.8 million for one acquisition, while the net cash used in investing activities during the year ended December 31, 1995 represented capital expenditures of $45.0 million and one acquisition of $11.4 million. Cash used in financing activities was $0.2 million for the year ended December 31, 1996, compared to $4.5 million used in financing activities for the comparable period in 1995. The use of cash in financing activities in 1996 represented debt repayments, net of borrowings and the effects of the initial public offering, the redemption of the Debentures, the Series B Preferred and Series E Preferred. The use of cash in financing activities in 1995 represented debt repayments, net of borrowings. Net cash provided by operating activities was $67.8 million for the year ended December 31, 1995, which compared to $50.9 million provided by operating activities for the comparable period in 1994. Net cash used in investing activities was $56.4 million for the year ended December 31, 1995, compared to net cash used of $142.2 million for the year ended December 31, 1994. The net cash used in investing activities for the year ended December 31, 1995, represented capital expenditures of $45.0 million and one acquisition of $11.4 million, while the net cash used in investing activities during the year ended December 31, 1994, consisted of $84.5 million for the Lucent Acquisition; $28.6 million for three other acquisitions; and $29.0 million for capital expenditures. Cash used in financing activities was $4.5 million for the year ended December 31, 1995, compared to $96.5 million provided by financing activities for the comparable period in 1994. The use of cash in financing activities in 1995 represented debt repayments, net of borrowings incurred to fund the one acquisition consummated in 1995. The source of cash from financing activities in 1994 represented borrowings, net of debt repayments, needed to fund the Lucent Acquisition and the other three acquisitions consummated in 1994. The Company's EBITDA (excluding PBC) was $135.4 million, $113.0 million and $86.1 million in 1996, 1995 and 1994, respectively. EBITDA (excluding PBC) is not a defined term under GAAP and is not an alternative to operating income or cash flow from operations as determined under GAAP. The Company 17 18 believes that EBITDA (excluding PBC) provides additional information for determining its ability to meet future debt service requirements; however, EBITDA (excluding PBC) does not reflect cash available to fund cash requirements. EBITDA (excluding PBC) is also one of the financial measures in the covenants contained in the New Credit Facility. The Company anticipates that cash flow from operations and additional funds available under the New Revolving Credit Facility will be sufficient to meet its foreseeable requirements for working capital, capital expenditures and other cash requirements. The Company anticipates that its primary uses of cash in 1997 will be (i) for capital expenditures for maintenance, replacement and acquisitions of equipment, expansion of capacity, productivity improvements and in connection with product development and (ii) to pay interest on, and to repay principal of, indebtedness under the New Credit Facility. The Company anticipates spending approximately $60.0 million in 1997 for capital expenditures, principally related to capacity expansion, new product development and productivity improvement projects. The Company anticipates that for the foreseeable future its capital spending will be at levels commensurate with its anticipated spending in 1997. The New Credit Facility contains annual limits on the Company's capital expenditures. The Company believes that such limits are sufficient to allow the Company to undertake all anticipated capital projects. The Company will be obligated to make principal and interest payments of approximately $32.5 million under the New Credit Facility in 1997. The Company anticipates that the foregoing principal and interest payments will be made from cash flow from the Company's operations. The Company's obligations under the New Credit Facility bear interest at floating rates. The New Credit Facility requires the Company to enter into additional interest rate hedging arrangements to hedge against interest rate fluctuations. The Company has entered into an agreement which provides a ceiling on the LIBOR Rate (as defined in the New Credit Facility) on $137.0 million of indebtedness until June 30, 1998. The cost of the hedge agreements is amortized over their terms. See Note 7 to the consolidated financial statements in Item 8 for further information. The New Credit Facility restricts the Company from, among other things: (i) incurring additional indebtedness (other than certain permitted indebtedness); (ii) creating liens; (iii) guaranteeing indebtedness; (iv) merging or selling substantially all of its assets; (v) declaring and paying certain dividends; (vi) making certain investments and loans; and (vii) entering into certain transactions with affiliates, in each case with certain exceptions customary for credit facilities such as the New Credit Facility. RECENT ACCOUNTING PRONOUNCEMENTS The Company adopted SFAS No. 123 in 1996. See Note 8 to the consolidated financial statements in Item 8 for further information. 18 19 ITEM 8. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE ---- Berg Electronics Corp. Report of Arthur Andersen LLP, Independent Public Accountants............................................ 20 Consolidated Balance Sheets as of December 31, 1995 and 1996................................................... 21 Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and 1996....................... 22 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1994, 1995 and 1996........... 23 Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996....................... 24 Notes to Consolidated Financial Statements................ 25 Schedule I -- Condensed Financial Information (Parent Company Only).......................................... 37 Schedule II -- Valuation and Qualifying Accounts.......... 41
19 20 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Berg Electronics Corp.: We have audited the accompanying consolidated balance sheets of Berg Electronics Corp. (a Delaware corporation) and subsidiaries as of December 31, 1995 and 1996, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. These consolidated financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Berg Electronics Corp. and subsidiaries as of December 31, 1995 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index to the financial statements are presented for purposes of complying with the Securities and Exchange Commission's rules and are not a part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP St. Louis, Missouri, January 29, 1997 20 21 BERG ELECTRONICS CORP. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ASSETS
AS OF DECEMBER 31, ------------------- 1995 1996 -------- -------- Current assets: Cash and cash equivalents............. $ 19,601 $ 8,999 Accounts receivable, less allowance of $3,043 and $3,703, respectively.... 117,665 104,134 Inventories........................... 78,242 91,823 Prepaid expenses and other............ 10,697 13,935 -------- -------- Total current assets.......... 226,205 218,891 -------- -------- Property, plant and equipment........... 230,753 259,905 Deferred financing costs................ 22,645 14,896 Intangible assets....................... 183,282 174,860 Other assets............................ 5,455 13,455 -------- -------- Total assets.................. $668,340 $682,007 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term obligations........................ $ 32,798 $ 33,912 Accounts payable...................... 73,299 60,822 Accrued payroll and payroll taxes..... 25,105 23,497 Accrued and other liabilities......... 41,988 47,168 Accrued interest...................... 2,521 3,746 Income taxes payable.................. 6,692 8,586 -------- -------- Total current liabilities..... 182,403 177,731 -------- -------- Long-term obligations, less current maturities............................ 305,373 324,646 Other liabilities....................... 36,224 40,738 Stockholders' equity: Series B preferred stock, $.01 par value, $25 liquidation value, 1,989,400 and 0 shares, respectively, issued and outstanding........................ 20 -- Series E preferred stock, $.01 par value, $25 liquidation value, 3,067,454 and 0 shares, respectively, issued and outstanding........................ 31 -- Common stock, par value $.01 per share, 11,575,280 and 19,125,238 shares, respectively, issued and outstanding........................ 116 191 Class A common stock, par value $.01 per share, 1,420,791 and 1,384,291 shares, respectively, issued and outstanding........................ 14 14 Paid in capital......................... 116,705 116,299 Retained earnings....................... 9,930 19,836 Cumulative translation adjustments...... 17,524 2,552 -------- -------- Total stockholders' equity.... 144,340 138,892 -------- -------- Total liabilities and stockholders' equity......... $668,340 $682,007 ======== ========
See accompanying notes to the consolidated financial statements. 21 22 BERG ELECTRONICS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31, --------------------------------------- 1994 1995 1996 ----------- ----------- ----------- Net sales............................... $ 526,250 $ 667,249 $ 704,669 Operating expenses: Cost of goods sold.................... 343,858 442,276 455,869 Selling, general and administrative... 128,865 154,756 157,682 Amortization of intangible assets..... 9,603 11,182 12,011 Net periodic postretirement benefits........................... 2,640 2,271 1,272 ----------- ----------- ----------- Operating income........................ 41,284 56,764 77,835 Other income (expense): Interest expense...................... (29,186) (34,609) (28,350) Amortization of deferred financing costs.............................. (5,859) (6,286) (3,388) Other, net............................ (346) (738) 1,239 ----------- ----------- ----------- Income before income tax provision and extraordinary items................... 5,893 15,131 47,336 Income tax provision.................... 2,871 5,802 18,391 ----------- ----------- ----------- Income before extraordinary items....... 3,022 9,329 28,945 Extraordinary items -- loss on early extinguishment of debt, net of income tax of $12,443........................ -- -- (18,664) ----------- ----------- ----------- Net income.............................. 3,022 9,329 10,281 Preferred stock: Accretion and dividends............... (13,287) (14,741) (5,469) Excess of fair value over book value of redemption and purchase......... -- -- (21,866) ----------- ----------- ----------- Net loss applicable to common shares.... $ (10,265) $ (5,412) $ (17,054) =========== =========== =========== Net income (loss) per common share before extraordinary items............ $ (0.79) $ (0.42) $ 0.08 =========== =========== =========== Net loss per common share............... $ (0.79) $ (0.42) $ (0.89) =========== =========== =========== Average common shares outstanding....... 12,997,626 12,989,324 19,245,738 =========== =========== ===========
See accompanying notes to the consolidated financial statements. 22 23 BERG ELECTRONICS CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
CUMULATIVE PREFERRED COMMON PAID IN RETAINED TRANSLATION STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL --------- ------ --------- -------- ----------- --------- Balance, December 31, 1993.............. $ 40 $129 $ 110,779 $ 579 $ (4,637) $ 106,890 Exercise of stock options............. 1 100 101 Preferred stock dividends............. 5 2,802 2,807 Series B preferred stock accretion.... 1,500 (1,500) -- Change in cumulative translation adjustments........................ 16,639 16,639 Net income............................ 3,022 3,022 ---- ---- --------- ------- -------- --------- Balance, December 31, 1994.............. $ 45 $130 $ 115,181 $ 2,101 $ 12,002 $ 129,459 Exercise of stock options............. 30 30 Preferred stock dividends............. 6 (6) -- Series B preferred stock accretion.... 1,500 (1,500) -- Change in cumulative translation adjustments........................ 5,522 5,522 Net income............................ 9,329 9,329 ---- ---- --------- ------- -------- --------- Balance, December 31, 1995.............. $ 51 $130 $ 116,705 $ 9,930 $ 17,524 $ 144,340 Exercise of stock options............. 223 223 Preferred stock dividends............. 1 (1) -- Series B preferred stock accretion.... 375 (375) -- Preferred stock purchase and redemption......................... (52) (142,953) (143,005) Net proceeds from IPO................. 75 146,958 147,033 Costs of IPO.......................... (5,008) (5,008) Change in cumulative translation adjustments........................ (14,972) (14,972) Net income............................ 10,281 10,281 ---- ---- --------- ------- -------- --------- Balance, December 31, 1996.............. $ -- $205 $ 116,299 $19,836 $ 2,552 $ 138,892 ==== ==== ========= ======= ======== =========
See accompanying notes to the consolidated financial statements. 23 24 BERG ELECTRONICS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, --------------------------------------- 1994 1995 1996 ------------ ------------ --------- Cash flows provided by (used in) operating activities: Net income............................ $ 3,022 $ 9,329 $ 10,281 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Extraordinary items................ -- -- 31,107 Depreciation....................... 32,528 42,761 44,237 Amortization and other non-cash charges.......................... 18,102 19,739 16,671 Change in assets and liabilities, net of acquisitions: Accounts receivable.............. (11,813) (24,226) 8,706 Inventories...................... (3,331) (8,339) (10,982) Prepaid expenses and other....... (8,485) 648 (5,873) Accounts payable................. 6,051 23,242 (7,610) Accrued and other liabilities.... 9,508 4,944 (2,591) Other, net....................... 5,351 (335) (14,735) --------- --------- --------- Net cash from operating activities...... 50,933 67,763 69,211 --------- --------- --------- Cash flows provided by (used in) investing activities: Acquisitions, less cash $94, $0, and $0, respectively................... (113,122) (11,375) (17,844) Capital expenditures, net............. (29,032) (45,046) (61,556) --------- --------- --------- Net cash from investing activities...... (142,154) (56,421) (79,400) --------- --------- --------- Cash flows provided by (used in) financing activities: Proceeds from issuance of long-term obligations........................ 118,250 15,150 405,393 Redemption and purchase of preferred stock.............................. -- -- (143,005) Repayment of long-term obligations.... (21,809) (19,658) (384,662) Net proceeds from IPO................. -- -- 147,033 Financing costs....................... -- -- (25,208) Proceeds from issuance of common stock.............................. 101 30 223 --------- --------- --------- Net cash from financing activities...... 96,542 (4,478) (226) --------- --------- --------- Effect of exchange rate changes on cash.................................. 1,179 756 (187) --------- --------- --------- Net change in cash and cash equivalents........................... 6,500 7,620 (10,602) Cash and cash equivalents at beginning of period............................. 5,481 11,981 19,601 --------- --------- --------- Cash and cash equivalents at end of period................................ $ 11,981 $ 19,601 $ 8,999 ========= ========= =========
See accompanying notes to the consolidated financial statements. 24 25 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1. THE COMPANY The Company is a leading global designer, manufacturer and marketer of electronic connectors and cable assembly products for applications primarily in the computer, telecommunications and industrial markets. Berg Electronics Corp. ("Berg") (formerly Berg Electronics Holdings Corp.), a Delaware corporation, was formed on November 4, 1992, to participate in the DuPont Acquisition (defined below). Berg had no operations prior to the DuPont Acquisition. Berg's year end is December 31. On February 26, 1993, Berg, through its wholly-owned subsidiary Berg Electronics Group, Inc. ("Group") (formerly Berg Electronics, Inc.) and Group's subsidiaries (together with Berg and Group, the "Company"), acquired certain assets and assumed certain liabilities of the Connector Systems Business (the "Business") of the Electronics Division of E.I. duPont de Nemours and Company ("DuPont") for a total consideration of $385,057 (the "DuPont Acquisition"), which included an agreement not to compete, plus fees and expenses relating to the DuPont Acquisition and related financing. The results of operations of the Business have been included in the consolidated financial statements since the date of the DuPont Acquisition. Since the DuPont Acquisition, the Company has made seven strategic acquisitions. The largest of these occurred on May 23, 1994, when the Company acquired certain assets and related liabilities of the Connector System Business ("AT&T Connectors") of the AT&T Microelectronics Division of AT&T Corp. (now Lucent Technologies, Inc.) ("Lucent") for a total consideration of $84,500 (the "Lucent Acquisition") which included fees and expenses relating to the Lucent Acquisition and related financing. During 1996, the Company implemented a recapitalization plan (the "Recapitalization Plan") to, among other things, reduce interest expense and preferred stock dividend requirements and to improve the Company's operating and financial flexibility. The Recapitalization Plan included the redemption and purchase of Series B Preferred (as defined below) and Series E Preferred (as defined below), the redemption and purchase of the Debentures (as defined below), the refinancing of the Amended and Restated Credit Agreement dated as of May 23, 1994, with Chemical Bank, N.A., as Agent, and certain other banks as parties thereto (the "Amended Credit Agreement"), the Reverse Stock Split (defined below) and the initial public offering of 7,475,000 shares of the Company's common stock, par value $0.01 per share (together, the "Recapitalization"). 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements include the accounts of Berg, Group and Group's wholly-owned subsidiaries, except for Group's interest in a joint venture in India which is accounted for under the equity method and is insignificant to the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated. In addition, certain prior year amounts have been reclassified to conform to current year presentation. Revenue Recognition Sales and related cost of goods sold are recognized when goods are shipped to the customer. Inventories Certain U.S. inventories are valued at the lower of cost or market (LCM), with cost being determined using the last-in, first-out (LIFO) method. Other U.S. and non-U.S. inventories are valued at the LCM, with cost being determined using the average cost method. Elements of cost in inventory include raw materials, direct labor and manufacturing overhead. A portion of inventory is financed at its fair market value and is included in inventories at its fair market value. The related financing obligation is included in accounts payable. 25 26 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Property, Plant and Equipment Property, plant and equipment is stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method. The average estimated useful lives utilized in calculating depreciation are as follows: buildings -- 25 years; machinery and equipment -- 5 to 12 years; autos and trucks -- 3 years; office furniture and fixtures -- 2 to 3 years. Foreign Currency Translation Local currencies have been designated as the functional currencies for all subsidiaries. Accordingly, assets and liabilities of foreign subsidiaries are translated at the rates of exchange at the balance sheet date. Income and expense items of these subsidiaries are translated at average monthly rates of exchange. The resultant translation gains or losses are included in the component of stockholders' equity designated cumulative translation adjustments on the Consolidated Balance Sheets. Related Party Transactions Berg and Group have entered into an Amended and Restated Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse, Tate & Furst Incorporated ("Hicks, Muse") (an affiliate of Berg). The Agreement provides that the Company shall pay Hicks, Muse an annual fee, for ten years, of the greater of $700 or one-tenth of one percent (0.1%) of net sales during such year. In addition, the Agreement entitles Hicks, Muse to an acquisition advisory fee equal to 1.5% of the purchase price of any acquisition effected by the Company. Net Income (Loss) per Common Share On February 2, 1996, Berg's stockholders approved a 1-for-4.11 reverse stock split (the "Reverse Stock Split"). Consequently, all share and per share information have been retroactively restated to reflect the Reverse Stock Split. Per share amounts have been calculated using the weighted average number of shares outstanding during each period, adjusted for the impact of common stock equivalents using the treasury stock method when the effect is dilutive. Statements of Cash Flows For purposes of the Consolidated Statements of Cash Flows, Berg considers investments purchased with an original maturity of three months or less to be cash equivalents. Interest and income taxes paid for the year ended December 31, 1994, are approximately $26,900 and $1,100, respectively, for the year ended December 31, 1995, are approximately $36,300 and $3,200, respectively, and for the year ended December 31, 1996, are approximately $27,100 and $3,300, respectively. Fair Value of Financial Instruments The fair market values of the financial instruments included in the consolidated financial statements approximate the carrying values of the financial instruments. 26 27 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. INVENTORIES The composition of inventories is as follows:
AT DECEMBER 31, ------------------ 1995 1996 ------- ------- Raw materials........................... $23,241 $25,398 Work-in-process......................... 24,114 18,998 Finished goods.......................... 30,887 47,427 ------- ------- Total......................... $78,242 $91,823 ======= =======
The carrying value of inventories valued at LIFO, at December 31, 1995 and 1996, is approximately $34,900 and $42,000, respectively, and its current cost is approximately $27,900 and $34,200, respectively. 4. PROPERTY, PLANT AND EQUIPMENT The composition of property, plant and equipment at December 31 is as follows:
1995 1996 -------- -------- Land and buildings...................... $ 82,614 $ 79,655 Machinery and equipment................. 240,671 308,382 -------- -------- 323,285 388,037 Less: Accumulated depreciation.......... (92,532) (128,132) -------- -------- $230,753 $259,905 ======== ========
27 28 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. INTANGIBLE ASSETS Intangible assets are amortized on a straight-line basis over various estimated useful lives. The composition of intangible assets at December 31 is as follows:
AMOUNT ----------------- 1995 1996 LIFE ------- ------- ---- Goodwill................................ $134,387 $134,387 40 Patented technology..................... 39,942 42,618 5-17 Unpatented technology................... 12,076 15,542 3-17 Covenants not to compete................ 5,150 5,150 5 Software................................ 3,400 3,400 5 Other................................... 5,344 5,344 5-20 Supply agreement........................ 6,800 6,800 10 ------- ------- 207,099 213,241 Less: Accumulated amortization.......... (23,817) (38,381) ------- ------- $183,282 $174,860 ======= =======
Goodwill represents purchase price in excess of net tangible and identified intangible assets acquired in acquisitions. The Company generally assesses the recoverability of its intangible assets primarily based on its current and anticipated future undiscounted cash flows. At December 31, 1996, the Company does not believe there has been any impairment of its intangible assets. 6. DEFERRED FINANCING COSTS At December 31, 1996, deferred financing costs consists of aggregate fees and expenses of $19,143 incurred in connection with acquisitions, initial capitalization and the Recapitalization. These fees are included in deferred financing costs and are being amortized over the terms of the related borrowing and/or financial instrument on a straight line basis. 7. LONG-TERM OBLIGATIONS The composition of long-term obligations at December 31 is as follows:
1995 1996 -------- -------- Credit Agreement: Term Loan................................................. $153,708 $332,500 Term Loan B............................................... 59,000 -- Revolving Credit Facility................................. 20,000 16,000 11 3/8% Guaranteed Senior Subordinated Debentures Due 2003.................................................. 100,000 -- Other (Interest rates 1%-5%)................................ 5,463 10,058 -------- -------- $338,171 $358,558 Less: Current maturities.................................... (32,798) (33,912) -------- -------- Total............................................. $305,373 $324,646 ======== ========
28 29 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The schedule of principal payments on long-term obligations at December 31, 1996, is as follows: 1997........................................................ $ 33,912 1998........................................................ 57,435 1999........................................................ 50,894 2000........................................................ 60,806 2001........................................................ 70,484 Thereafter.................................................. 85,027 -------- Total............................................. $358,558 ========
On February 29, 1996, the Company entered into a new credit facility (the "New Credit Facility") that among other things, refinanced the Amended Credit Agreement (the "Refinancing"). 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 in the Consolidated Statement of Operations. The New Credit Facility consists of a $350,000 term loan (the "Term Loan") and a $100,000 Revolving Credit Facility (the "Revolver"). Borrowings under the New Credit Facility are secured by first priority mortgages and liens on substantially all of the material assets of the Company and its domestic subsidiaries and by pledges of a portion of the capital stock of the foreign subsidiaries. As of December 31, 1995 and 1996, the Company had approximately $10,400 and $10,000, of standby letters of credit outstanding under the Revolver. The New Credit Facility contains several financial covenants that, among other things, require the Company to maintain certain financial ratios that restrict the Company's ability to incur indebtedness, make capital expenditures and pay dividends. The commitment fee on the unused portion of the Revolver is 0.375% per annum on the average daily available balance. Mandatory principal payments are due in semi-annual installments with a final installment due on December 31, 2002. Amounts outstanding under the Revolver are due December 31, 2002. Additionally, 50% of Excess Cash Flow (as defined in the New Credit Facility) shall be applied toward prepayment of the borrowings under the New Credit Facility. Borrowings under the Term Loan and Revolver bear interest, at the option of the Company, at a rate per annum equal to (i) .05% 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 payable quarterly. The New Credit Facility requires the Company to enter into interest rate hedging arrangements to hedge against interest rate fluctuations. The Company has entered into an agreement which provides a ceiling of 7.5% through June 1997 and 8.5% from July 1997 through June 1998 on the LIBOR rate on $137,000 of indebtedness until June 30, 1998. The costs of the hedge agreements are amortized over their terms. The 11 3/8% Guaranteed Senior Subordinated Debentures due 2003 (the "Debentures") were issued under an indenture, dated April 28, 1993 ( the "Indenture"). The Debentures represented unsecured general obligations of the Company and were subordinate to all Senior Debt (as defined in the Indenture) of the Company. On April 8, 1996, the Company redeemed $30,000 aggregate principal amount of Debentures (the "Debenture Redemption") for approximately $34,487 including accrued and unpaid interest and a redemption premium thereon, in accordance with the terms of the Indenture dated as of October 29, 1993, as amended. On April 9, 1996, the Company purchased all of the outstanding debentures not redeemed by the Company pursuant to the Debenture Redemption for approximately $82,590. The redemption and purchase of the Debentures resulted in the write off of $4,900 of deferred financing costs. This write off, net of income tax, is classified with other extraordinary items in the Consolidated Statement of Operations. Additionally, the 29 30 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) redemption and purchase premium and the related fees and expenses of the Debenture Redemption and purchase, totaling $13,452, are classified with other extraordinary items, net of income tax, in the Consolidated Statement of Operations. 8. STOCKHOLDERS' EQUITY At December 31, 1996 and 1995, the authorized capital stock of Berg consisted of 60 million shares of common stock, 7 million shares of Class A common stock and 28.5 million shares of preferred stock. On March 6, 1996, the Company 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. The Class A common stock may be converted into shares of common stock at the option of the holder at any time. In addition, shares of the Class A common stock may be converted into common stock at the option of Berg upon the occurrence of a Triggering Event (as defined) or on February 26, 2003. Such conversion is based on a formula set forth in Berg's Certificate of Incorporation. Dividends are payable to holders of the common stock and Class A common stock in amounts as and when declared by Berg's board of directors, subject to legally available funds and certain agreements. The common stock and the Class A common stock are entitled to one vote per share on all matters submitted to a vote of stockholders. Dividends on the Company's Series B Preferred Stock, par value $0.01 per share, ("Series B Preferred") were payable at an annual rate of $2 per annum per share. Dividends were payable quarterly on February 28, May 31, August 31, and November 30. Berg, at its option, could pay quarterly dividends on the Series B Preferred for any or all dividend payments until February 28, 1998, and if the Amended Credit Agreement prohibited the payment of cash dividends, until February 28, 2000, by issuing additional shares of Series B Preferred, having a $25 per share liquidation value. Dividends for the November 1993 and the February, May, August and November 1994 dividend dates were paid by issuing 173,258 additional shares of Series B Preferred in 1994. Dividends for the February, May, August and November 1995 dividend dates were paid by issuing 151,502 additional shares of Series B Preferred in 1995. Dividends on the Series E Preferred Stock, par value $0.01 per share, ("Series E Preferred") were payable at an annual rate of $3.34375 per annum per share prior to May 1, 2005 and $3.6250 per share from and including May 1, 2005 increasing quarterly by $.125 per share provided that in no event shall the dividend rate exceed $5.00 per share. Dividends were payable quarterly on February 1, May 1, August 1, and November 1 (each a "Dividend Payment Date"). Berg, at its option, could pay quarterly dividends on the Series E Preferred for any or all dividend payments prior to May 1, 1998, and if the Amended Credit Agreement prohibited the payment of cash dividends, prior to May 1, 2000, by issuing additional shares of Series E Preferred, which will be valued at $25 per share. Dividends for the November 1993 and February, May, August and November 1994 dividend dates were paid by issuing 410,510 additional shares of Series E Preferred in 1994. Dividends for the February, May, August and November 1995 dividend dates were paid by issuing 378,135 additional shares of Series E Preferred in 1995. On March 18, 1996, the Company redeemed 50% of the outstanding shares of the Series E Preferred 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 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 including accrued and unpaid dividends thereon for approximately $50,933. Berg's qualified and non-qualified stock option plan (the "Option Plan") provides for the granting of up to 511,669 shares of common stock to key officers and employees of Berg. Under the plan, options granted 30 31 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) approximate market value of the common stock at the date of grant. Such options vest ratably over a five-year period commencing on the first anniversary date after the date of grant, and vested options are exercisable at the discretion of the committee appointed to administer the Option Plan. Generally, an option may be exercised only if the holder is an officer or employee of Berg or Group at the time of exercise. Options granted under the Option Plan are not transferable, except by will and the laws of descent and distribution. In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," the Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations in accounting for the Option Plan. Accordingly, no compensation cost has been recognized for the Option Plan. Had compensation cost for the Option Plan been determined based upon the fair value at the grant date for awards under those plans consistent with the methodology prescribed under SFAS No. 123, the Company's net income, net loss applicable to common shares and net loss per common share would approximate the pro forma amounts below:
1995 1996 ------- -------- Net Income...................................... As reported $ 9,329 $ 10,281 Pro forma $ 9,302 $ 10,203 Net loss applicable to common shares............ As reported $(5,412) $(17,054) Pro forma $(5,439) $(17,132) Net loss per common share....................... As reported $ (0.42) $ (0.89) Pro forma $ (0.42) $ (0.89)
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions in 1995 and 1996, respectively: (i) dividend yield of 0% in both years; (ii) expected volatility of 30% in both years; (iii) risk free interest rate ranging from 5.9% to 7.5% and 5.5% to 6.4%; and (iv) expected life of 10 years. The effects of applying SFAS No. 123 in this pro forma disclosure are not indicative of future amounts. SFAS No. 123 does not apply to awards prior to 1995. Additional awards in future years are anticipated. Changes in the status of the Option Plan are summarized below:
WEIGHTED AVERAGE OPTIONS OPTIONS PRICE PER SHARE GRANTED VESTED --------------- ------- ------- December 31, 1993................................. $4.11 271,289 -- Granted......................................... $9.41 60,827 -- Vested.......................................... -- -- 54,257 ------ ------- ------- December 31, 1994................................. $5.09 332,116 54,257 Granted......................................... $19.32 41,363 -- Vested.......................................... -- -- 60,584 Exercised....................................... $4.11 (7,299) (7,299) Lapsed.......................................... $4.11 (25,547) -- ------ ------- ------- December 31, 1995................................. $6.91 340,633 107,542 Granted......................................... $23.86 44,330 -- Vested.......................................... -- -- 79,792 Exercised....................................... $6.01 (20,436) (20,436) Forfeiture...................................... $19.32 (4,866) -- Lapsed.......................................... $4.11 (8,772) (973) ------ ------- ------- December 31, 1996................................. $9.02 350,889 165,925 ====== ======= =======
31 32 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The weighted average grant-date fair value of options granted during 1995 and 1996 was $11.07 and $13.31 per share, respectively. Of the options outstanding at December 31, 1996, 216,539 options, 53,525 options, 60,825 options and 20,000 options have exercise prices of $4.11, $9.41, $19.32 and $29.375, respectively, and have weighted average remaining contractual lives of 6 years, 7 years, 9.4 years and 10 years, respectively. The weighted average exercise price of options vested at December 31, 1996, is $5.70 per share. 9. INCOME TAXES The provision for income taxes, excluding the effects of extraordinary items, for the year ended December 31 consisted of the following:
1994 1995 1996 ------- ------ ------- Current: Federal............................................... $ -- $ -- $ 2,385 State................................................. 359 117 421 Foreign............................................... 4,356 3,767 5,904 Deferred: Federal............................................... 1,538 554 5,325 State................................................. -- -- 822 Foreign............................................... (3,382) 1,364 3,534 ------- ------ ------- $ 2,871 $5,802 $18,391 ======= ====== =======
Reconciliation between the statutory income tax rate and effective tax rate is summarized below:
1994 1995 1996 ------- ------ ------- U.S. Federal statutory rate............................. $ 2,004 $5,145 $16,094 State taxes, net of Federal benefit..................... 359 117 215 Foreign taxes in excess of U.S. statutory rate.......... 508 540 1,992 Other................................................... -- -- 90 ------- ------ ------- $ 2,871 $5,802 $18,391 ======= ====== =======
The tax effects of significant temporary differences representing deferred tax assets and liabilities are as follows:
1995 1996 ------- ------- Deferred tax assets: Accrued liabilities not yet deductible.................... $ 5,503 $ 3,386 Postretirement benefits................................... 8,233 9,685 Net operating losses carried forward...................... 14,307 19,384 Foreign tax credits carried forward....................... 3,000 4,000 Other..................................................... 1,746 3,229 ------- ------- 32,789 39,684 ------- ------- Deferred tax liabilities: Amortization.............................................. 25,642 23,258 Contingent bank loans..................................... 2,800 2,800 Depreciation.............................................. 3,616 7,495 LIFO inventory valuation.................................. 2,410 2,410 Other..................................................... 1,641 6,870 ------- ------- 36,109 42,833 ------- ------- Net deferred tax liability.................................. $(3,320) $(3,149) ======= =======
32 33 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company's net operating losses carried forward expire over varying periods ranging from 5 to 15 years. The Company's foreign tax credits carried forward expire in 5 years. Domestic and foreign income (loss) before income tax provision for the years ended December 31 are as follows:
1994 1995 1996 ------ ------- ------- Domestic............................................... $4,405 $ 701 $20,718 Foreign................................................ 1,488 14,430 26,618
10. RETIREMENT BENEFITS Pension coverage for employees of the Company's non-U.S. subsidiaries is provided, to the extent deemed appropriate, through separate plans. Obligations under such plans are systematically provided for by depositing funds with trustees, under insurance policies or by book reserves. The Company has a voluntary 401(k) savings plan designed to enhance the existing retirement program covering eligible domestic employees. The costs of these plans recorded in the consolidated financial statements is approximately $2,500, $3,500 and $4,500 for 1994, 1995 and 1996, respectively. The Company provides postretirement health care and other benefits to qualifying domestic retirees. Most international employees are covered by government sponsored programs and the cost to the Company is not significant. The Company does not fund retiree health care benefits in advance and has the right to modify these plans in the future. Net periodic postretirement benefit cost (NPPBC) for the years ended December 31 includes the following components:
1994 1995 1996 ------ ------ ------ Service cost............................................. $1,521 $1,037 $ 909 Interest cost............................................ 1,192 1,455 951 Amortization of net gain................................. (73) (221) (588) ------ ------ ------ NPPBC.................................................... $2,640 $2,271 $1,272 ====== ====== ======
The plan's status at December 31 is as follows:
1995 1996 ------- ------- Expected postretirement benefit obligation (EPBO)........... $23,281 $29,719 ------- ------- Actuarial present value of benefit obligation: Retirees.................................................. $ 202 $ 515 Fully eligible active participants........................ 3,427 3,649 Other active participants................................. 9,089 9,845 ------- ------- Accumulated postretirement benefit obligation (APBO)........ 12,718 14,009 Plan assets................................................. -- -- ------- ------- Unfunded APBO............................................... 12,718 14,009 Unrecognized net gain....................................... 11,496 11,477 ------- ------- Accrued postretirement benefit cost......................... $24,214 $25,486 ======= =======
The postretirement benefit obligation was determined by application of the terms of the plan, together with relevant actuarial assumptions for active employees. (DuPont retained the obligations for retirees at the DuPont Acquisition). Health care cost trends are projected at annual rates grading from 8.5%, in 1996 down to 5.5% in 2009 and later for the 1995 calculation. Health care cost trends are projected at annual rates grading from 8.0% in 1997 down to 6.0% in 2010 and later for the 1996 calculation. The effect of a 1% annual increase in these assumed cost trend rates would increase the APBO at December 31, 1995 and 1996, by a total of $2,559 and $2,864, respectively, and the service and interest cost components of the NPPBC for the year 33 34 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ended December 31, 1995 and 1996, by a total of $406 and $545, respectively. The assumed discount rate used in determining the APBO was 7.5% and 8.0% in 1995 and 1996, respectively. The assumed rate of increase in compensation levels used was 4.75% in 1995 and 1996. As no assets have been segregated and restricted for payment of postretirement benefits, the expected return on plan assets is $0. The postretirement benefit accrual is included in other long-term liabilities on the Consolidated Balance Sheets. The Company does not provide any other significant postemployment benefits. 11. COMMITMENTS The Company leases certain buildings and transportation and other equipment. Total rental expense under operating leases is $6,700, $6,500 and $5,800 in 1994, 1995 and 1996, respectively. Future minimum lease payments under capital and operating leases for years ending December 31 are:
CAPITAL OPERATING ------- --------- 1997........................................................ $ 2,400 $6,300 1998........................................................ 2,000 5,300 1999........................................................ 1,500 4,300 2000........................................................ 1,000 2,700 2001........................................................ 200 2,500 Thereafter.................................................. 200 1,900 ------- Total minimum lease payments.............................. 7,300 Less amount representing interest......................... (900) ------- Present value of net minimum lease payments............... $ 6,400 =======
From time to time, the Company engages in short-term hedging activities to reduce its exposure to precious metals price fluctuations and foreign currency fluctuations. Such hedging activities are not material, and gains and losses from such operations are not significant. There can be no assurance that these hedging operations will eliminate or substantially reduce the risk. 12. CONTINGENCIES The Company is subject to various lawsuits and claims with respect to such matters as patents, product liabilities, government regulations, and other actions arising in the normal course of business. In the opinion of management, the ultimate liabilities resulting from such lawsuits and claims will not have a material adverse effect on the Company's financial condition and results of operations. In connection with DuPont's acquisition in 1987 of the stock of Optos, Ltd. (renamed Berg Electronics K.K. following the Acquisition), preexisting bank loans of Optos, Ltd. were restructured to provide that loans totaling approximately $4,900 would be payable only out of positive earnings of specific product lines over a ten year period in excess of cumulative losses on such product lines. Due to substantial uncertainties surrounding the profitability of the specified product lines, these loans are deemed contingently payable and therefore are not reflected in the Consolidated Balance Sheets. A deferred tax liability of $2,800 is recorded in the Consolidated Balance Sheets to reflect the potential tax effect if the loans are forgiven. 13. RESEARCH AND DEVELOPMENT Research, development and engineering expenditures for the creation and application of new products and processes were approximately $20,800, $24,800 and $26,100 in 1994, 1995 and 1996, respectively. 34 35 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 14. BUSINESS SEGMENT INFORMATION The Company operates in one business segment -- electrical and electronic connection, switching and programming devices -- which are sold throughout many diverse markets. The Company's operations are worldwide and can be grouped into several geographic segments. Operations outside the United States are conducted through wholly owned subsidiaries of the Company that function within assigned, principally national, markets. The subsidiaries manufacture regionally where required by market conditions and/or customer demands, however substantial intersegment and intrasegment sales occur. Pertinent financial data by major geographic segments is as follows:
INTERCOMPANY OPERATING NET SALES SALES INCOME (LOSS) TOTAL ASSETS --------- ------------ ------------- ------------ North America: 1994..................... $266,522 $ 60,537 $31,200 $ 550,249 1995..................... 339,248 70,447 34,872 573,038 1996..................... 381,967 88,138 44,380 569,266 Europe: 1994..................... $131,982 $ 20,529 $ 6,622 $ 159,756 1995..................... 159,501 25,895 7,562 159,576 1996..................... 155,083 37,166 13,306 167,720 Asia/Pacific: 1994..................... $127,746 $ 37,421 $ 3,462 $ 122,167 1995..................... 168,500 44,559 14,830 146,562 1996..................... 167,619 35,700 20,149 155,357 Eliminations: 1994..................... $ -- $(118,487) $ -- $(210,336) 1995..................... -- (140,901) (500) (210,836) 1996..................... -- (161,004) -- (210,336) Total: 1994..................... $526,250 $ -- $41,284 $ 621,836 1995..................... 667,249 -- 56,764 668,340 1996..................... 704,669 -- 77,835 682,007
As a result of the Lucent Acquisition, Lucent became a significant customer of the Company. In 1994, 1995 and 1996, sales to Lucent were approximately $64,600, $110,500 and $124,700, respectively. The Company entered into a five-year supply agreement with Lucent in connection with the Lucent Acquisition and believes that Lucent will remain an important customer in the foreseeable future. 35 36 BERG ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 15. UNAUDITED QUARTERLY DATA
NET INCOME NET (LOSS) PER NET SALES GROSS PROFIT INCOME (LOSS) SHARE ------------ ------------- ------------- --------------- First Quarter: 1994...................... $ 104,236 $ 40,372 $ 1,700 $ (.12) 1995...................... 160,300 54,484 4,040 .03 1996...................... 180,118 61,914 (13,109) (2.61) Second Quarter: 1994...................... 127,577 46,051 3,159 -- 1995...................... 164,346 57,906 2,215 (.11) 1996...................... 178,063 61,931 7,612 .37 Third Quarter: 1994...................... 146,592 47,376 131 (.25) 1995...................... 170,829 55,298 3,040 (.05) 1996...................... 172,537 60,336 6,560 .32 Fourth Quarter: 1994...................... 147,845 48,593 (1,968) (.42) 1995...................... 171,774 57,285 34 (.29) 1996...................... 173,951 64,619 9,218 .44
36 37 BERG ELECTRONICS CORP. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ASSETS
AS OF DECEMBER 31, -------------------- 1995 1996 -------- -------- Current assets: Cash and cash equivalents................................. $ -- $ -- -------- -------- Total current assets.............................. -- -- -------- -------- Investment in subsidiary.................................... 144,340 138,892 -------- -------- Total assets...................................... $144,340 $138,892 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Due to subsidiary......................................... $ -- $ -- -------- -------- Total current liabilities......................... -- -- -------- -------- Accrued preferred stock dividends........................... -- -- Stockholders' equity: Series B preferred stock, $.01 par value, $25 liquidation value, 1,989,400 and 0 shares, respectively, issued and outstanding............................................ 20 -- Series E preferred stock, $.01 par value, $25 liquidation value, 3,067,454 and 0 shares, respectively, issued and outstanding............................................ 31 -- Common stock, par value $.01 per share, 11,575,280 and 19,125,238 shares, respectively, issued and outstanding............................................ 116 191 Class A common stock, par value $.01 per share, 1,420,791 and 1,384,291 shares, respectively, issued and outstanding............................................ 14 14 Paid in capital............................................. 116,705 116,299 Retained earnings........................................... 9,930 19,836 Cumulative translation adjustments.......................... 17,524 2,552 -------- -------- Total stockholders' equity........................ 144,340 138,892 -------- -------- Total liabilities and stockholders' equity........ $144,340 $138,892 ======== ========
See notes to the consolidated financial statements of Berg Electronics Corp. 37 38 BERG ELECTRONICS CORP. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31, --------------------------------------- 1994 1995 1996 ----------- ----------- ----------- Other income (expense): Equity in earnings of subsidiary.................... $ 3,022 $ 9,329 $ 10,281 ----------- ----------- ----------- Income before income tax provision.................... 3,022 9,329 10,281 Income tax provision.................................. -- -- -- ----------- ----------- ----------- Net income............................................ 3,022 9,329 10,281 Preferred stock: Accretion and dividends............................. (13,287) (14,741) (5,469) Excess of fair value over book value of redemption and purchase..................................... -- -- (21,866) ----------- ----------- ----------- Net loss applicable to common shares.................. $ (10,265) $ (5,412) $ (17,054) =========== =========== =========== Net loss per common share............................. $ (.79) $ (.42) $ (.89) =========== =========== =========== Average common shares outstanding..................... 12,977,626 12,989,324 19,245,738 =========== =========== ===========
See notes to the consolidated financial statements of Berg Electronics Corp. 38 39 BERG ELECTRONICS CORP. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
CUMULATIVE PREFERRED COMMON PAID IN RETAINED TRANSLATION STOCK STOCK CAPITAL EARNINGS ADJUSTMENT TOTAL --------- ------ ----------- -------- ------------ -------- Balance, December 31, 1993...................... $40 $129 $110,779 $ 579 $ (4,637) $106,890 Exercise of stock options..................... 1 100 101 Preferred stock dividends..................... 5 2,802 2,807 Series B preferred stock accretion............ 1,500 (1,500) -- Change in cumulative translation adjustments................................ 16,639 16,639 Net income.................................... 3,022 3,022 --- ---- -------- ------- -------- -------- Balance, December 31, 1994...................... $45 $130 $115,181 $ 2,101 $ 12,002 $129,459 Exercise of stock options..................... 30 30 Preferred stock dividends..................... 6 (6) -- Series B preferred stock accretion............ 1,500 (1,500) -- Change in cumulative translation adjustments................................ 5,522 5,522 Net income.................................... 9,329 9,329 --- ---- -------- ------- -------- -------- Balance, December 31, 1995...................... $51 $130 $116,705 $ 9,930 $ 17,524 $144,340 Exercise of stock options..................... 223 223 Preferred stock dividends..................... 1 (1) -- Series B preferred stock accretion............ 375 (375) -- Preferred stock purchase and redemption....... (52) (142,953) (143,005) Net proceeds from IPO......................... 75 146,958 147,033 Costs of IPO.................................. (5,008) (5,008) Change in cumulative translation adjustments................................ (14,972) (14,972) Net income.................................... 10,281 10,281 --- ---- -------- ------- -------- -------- Balance, December 31, 1996...................... $-- $205 $116,299 $19,836 $ 2,552 $138,892 === ==== ======== ======= ======== ========
See notes to the consolidated financial statements of Berg Electronics Corp. 39 40 BERG ELECTRONICS CORP. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, ---------------------------------- 1994 1995 1996 --------- --------- ---------- Cash flows provided by (used in) operating activities: Net income................................................ $ 3,022 $ 9,329 $ 10,281 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Undistributed earnings of subsidiary................. (3,022) (9,329) (10,281) ------- ------- -------- Net cash from operating activities.......................... -- -- -- ------- ------- -------- Cash flows provided by (used in) investing activities: Cash (contributed to) received from subsidiary............ (117) (30) 757 ------- ------- -------- Net cash from investing activities.......................... (117) (30) 757 ------- ------- -------- Cash flows provided by (used in) financing activities: Proceeds from issuance of common stock.................... 101 30 223 Preferred stock purchase and redemption................... -- -- (143,005) Net proceeds from IPO..................................... -- -- 147,033 Costs of IPO.............................................. -- -- (5,008) ------- ------- -------- Net cash from financing activities.......................... 101 30 (757) ------- ------- -------- Net change in cash and cash equivalents..................... (16) -- -- Cash and cash equivalents at beginning of period............ 16 -- -- ------- ------- -------- Cash and cash equivalents at end of period.................. $ -- $ -- $ -- ======= ======= ========
See notes to the consolidated financial statements of Berg Electronics Corp. 40 41 BERG ELECTRONICS CORP. SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS FOR THE YEAR ENDED DECEMBER 31 (IN THOUSANDS)
ALLOWANCE FOR DOUBTFUL ACCOUNTS-DEDUCTED BALANCE AT CHARGES TO ACCOUNTS BALANCE AT FROM RECEIVABLES IN THE BEGINNING COSTS AND WRITTEN TRANSLATION END OF BALANCE SHEET OF PERIOD ACQUISITIONS EXPENSES OFF ADJUSTMENTS PERIOD - ----------------------- ---------- ------------ ---------- -------- ----------- ---------- 1994......................... $3,478 $ 274 $ (364) $ (824) $ 46 $2,610 ====== ====== ====== ======= ==== ====== 1995......................... $2,610 $ 50 $1,353 $ (983) $ 13 $3,043 ====== ====== ====== ======= ==== ====== 1996......................... $3,043 $ -- $1,883 $(1,170) $(53) $3,703 ====== ====== ====== ======= ==== ======
41 42 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS The information contained under the captions "PROPOSAL FOR THE ELECTION OF DIRECTORS" and "EXECUTIVE DIRECTORS" in the 1997 Proxy Statement for the Annual Meeting of Stockholders is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information contained under the caption "EXECUTIVE AND DIRECTOR COMPENSATION" in the 1997 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information contained under the caption "VOTING SECURITIES OUTSTANDING AND SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS" in the 1997 Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information contained under the caption "RELATED PARTY TRANSACTIONS" in the 1997 Proxy Statement is incorporated herein by reference. 42 43 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) DOCUMENTS FILED AS PART OF THIS REPORT (1) and (2) Financial Statements and Financial Statement Schedules See Index to Financial Statements and Schedules at Item 8 of this report. (3) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 3.1 -- [Item intentionally omitted.] 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.(4) 3.5 -- Bylaws of Berg Electronics Corp.(1) 4.1 -- [Item intentionally omitted.] 4.2 -- [Item intentionally omitted.] 4.3 -- [Item intentionally omitted.] 4.4 -- [Item intentionally omitted.] 4.5 -- [Item intentionally omitted.] 4.6 -- [Item intentionally omitted.] 4.7 -- [Item intentionally omitted.] 4.8 -- [Item intentionally omitted.] 4.9 -- [Item intentionally omitted.] 4.10 -- [Item intentionally omitted.] 4.11 -- [Item intentionally omitted.] 4.12 -- [Item intentionally omitted.] 4.13 -- [Item intentionally omitted.] 4.14 -- [Item intentionally omitted.] 4.15 -- [Item intentionally omitted.] 10.1 -- [Item intentionally omitted.] 10.2 -- [Item intentionally omitted.] 10.3 -- [Item intentionally omitted.] 10.4 -- Note Pledge Agreement, dated as of February 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the financial institution parties to the Credit Agreement.(2) 10.5 -- Foreign Subsidiaries Guarantee, dated as of February 26, 1993, by each of the corporations that are signatories thereto in favor of Berg Electronics, Inc.(2) 10.6 -- The Company Pledge Agreement, dated as of February 26, 1993, made by Berg Electronics Holdings Corp. in favor of Chemical Bank, as agent for the lenders parties to the Credit Agreement.(2)
43 44
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 10.7 -- Borrower Pledge Agreement, dated as of February 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the lenders parties to the Credit Agreement.(2) 10.8 -- Supplement No. 1 to Borrower Domestic Pledge Agreement, dated July 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the lenders parties to the Credit Agreement.(2) 10.9 -- Security Agreement, dated as of February 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the banks and other financial institutions parties to the Credit Agreement.(2) 10.10 -- Pledge Agreement, dated as of March 1, 1993, by any between Berg Electronics, Inc. and Chemical Bank, as agent for the lenders named therein with respect to shares of Connector Systems Korea, Ltd.(2) 10.11 -- Open-End Mortgage and Security Agreement, dated as of February 26, 1993, from Berg Electronics, Inc. to Chemical Bank, as Agent.(2) 10.12 -- Registration Rights Agreement, dated as of March 1, 1993, by and among Berg Electronics Holdings Corp. and the parties listed therein.(2) 10.13 -- [Item intentionally omitted.] 10.14 -- [Item intentionally omitted.] 10.15 -- [Item intentionally omitted.] 10.16 -- Amended and Restated Lease Agreement, dated July 26 1993, by and between Ronald S. Marsilio and Harbor Electronics, Inc.(2) 10.17+ -- Berg Electronics, Inc. Pension and Retirement Plan.(2) 10.18+ -- Berg Electronics, Inc. Savings Plan.(2) 10.19+ -- Form of Berg Electronics Holdings Corp. 1993 Stock Option Plan.(2) 10.20 -- [Item intentionally omitted.] 10.21 -- Interest Rate Cap Letter Agreement, dated June 2, 1993, between Berg Electronics, Inc. and Chemical Bank.(2) 10.22 -- [Item intentionally omitted.] 10.23 -- Supply Contract between AT&T Corp. and Berg Electronics, Inc., dated as of May 23, 1994, incorporated by reference as an exhibit to the Asset Purchase Agreement, dated as of May 23, 1994, between Berg Electronics, Inc. and AT&T Corp. (exhibit 10.26 hereto).(3) 10.24 -- [Item intentionally omitted.] 10.25+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among James N. Mills, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.26+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among Robert N. Mills, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.27+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among David M. Sindelar, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.28+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among W. Thomas McGhee, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1)
44 45
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 10.29+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among Timothy L. Conlon, Berg Electronics Corp. and Berg Electronics Group, Inc.(1) 10.30+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among Larry S. Bacon, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.31 -- Amended and Restated Monitoring and Oversight Agreement, dated as of March 6, 1996 by and among Berg Electronics Corp., Berg Electronics Group, Inc. and Hicks, Muse, Tate and Furst Incorporated.(4) 10.32 -- Credit Agreement dated as of February 29, 1996 among Berg Electronics Group, Inc., Berg Electronics Corp., the banks and other financial institutions from time to time parties thereto, and Chemical Bank, as Agent for the Lenders.(4) 10.33 -- Form of Revolving Credit Note, dated March 6, 1996, between Berg Electronics Group, Inc. and Chemical Bank.(4) 10.34 -- Schedule of substantially identical Revolving Credit Notes.(4) 10.35 -- Form of Term Note, dated March 6, 1996, between Berg Electronics Group, Inc. and Chemical Bank.(4) 10.36 -- Schedule of substantially identical Term Notes.(4) 10.37 -- Swing Line Note, dated March 6, 1996, between Berg Electronics Group, Inc. and Chemical Bank.(4) 10.38 -- Underwriting Agreement, dated March 1, 1996, among Berg Electronics Corp., Berg Electronics Group, Inc. and the underwriters named therein.(4) 10.39 -- Domestic Subsidiaries Guarantee, dated as of March 6, 1996, made by each of the corporations that are signatories thereto in favor of Chemical Bank, as agent for the lenders from time to time parties to the Credit Agreement.* 10.40 -- Acknowledgement, Consent and Amendment, dated as of February 29, 1996, to the documents listed on Schedule 1 thereto made by each of the corporations that are signatories thereto in favor of Chemical Bank, as agent for the lenders from time to time parties to the Credit Agreement.* 10.41 -- First Amendment, dated as of December 18, 1996, to the Credit Agreement among Berg Electronics Group, Inc., Berg Electronics Corp., the banks and other financial institutions from time to time parties thereto, and the Chase Manhattan Bank (as successor by merger to Chemical Bank).* 10.42 -- Supplement No. 1 to Note Pledge Agreement, dated as of December 18, 1996, made by Berg Electronics Group, Inc. in favor of the Chase Manhattan Bank (as successor by merger to Chemical Bank).* 11.0 -- Computation of Net Loss Per Share.* 21.1 -- Subsidiaries of Registrant.* 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 Registration Statement of Berg Electronics Holdings Corp. on Form S-1, Registration No. 33-62552, and incorporated by reference herein. (3) Filed previously as an exhibit to the Berg Electronics Holdings Corp. and Berg Electronics, Inc. Form 8-K dated May 23, 1994 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, 1995, and incorporated by reference herein. 45 46 * Filed herewith. + Indicates a management contract or compensatory plan or arrangement. (B) REPORT ON FORM 8-K The Company did not file any report on Form 8-K with the Securities and Exchange Commission during the quarter ended December 31, 1996, nor was it required to do so. 46 47 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. BERG ELECTRONICS CORP. By /s/ JOSEPH S. CATANZARO ----------------------------------- Joseph S. Catanzaro Chief Accounting Officer Date: February 3, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES N. MILLS Chairman of the Board of Directors February 3, 1997 - ----------------------------------------------------- and Chief Executive Officer James N. Mills (Principal Executive Officer of Berg Electronics Corp.) /s/ DAVID M. SINDELAR Senior Vice President and Chief February 3, 1997 - ----------------------------------------------------- Financial Officer (Principal David M. Sindelar Financial Officer of Berg Electronics Corp.) /s/ ROBERT N. MILLS Director February 3, 1997 - ----------------------------------------------------- Robert N. Mills /s/ THOMAS O. HICKS Director February 3, 1997 - ----------------------------------------------------- Thomas O. Hicks /s/ CHARLES W. TATE Director February 3, 1997 - ----------------------------------------------------- Charles W. Tate /s/ KENNETH F. YONTZ Director February 3, 1997 - ----------------------------------------------------- Kenneth F. Yontz /s/ RICHARD W. VIESER Director February 3, 1997 - ----------------------------------------------------- Richard W. Vieser
47 48 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 3.1 -- [Item intentionally omitted.] 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.(4) 3.5 -- Bylaws of Berg Electronics Corp.(1) 4.1 -- [Item intentionally omitted.] 4.2 -- [Item intentionally omitted.] 4.3 -- [Item intentionally omitted.] 4.4 -- [Item intentionally omitted.] 4.5 -- [Item intentionally omitted.] 4.6 -- [Item intentionally omitted.] 4.7 -- [Item intentionally omitted.] 4.8 -- [Item intentionally omitted.] 4.9 -- [Item intentionally omitted.] 4.10 -- [Item intentionally omitted.] 4.11 -- [Item intentionally omitted.] 4.12 -- [Item intentionally omitted.] 4.13 -- [Item intentionally omitted.] 4.14 -- [Item intentionally omitted.] 4.15 -- [Item intentionally omitted.] 10.1 -- [Item intentionally omitted.] 10.2 -- [Item intentionally omitted.] 10.3 -- [Item intentionally omitted.] 10.4 -- Note Pledge Agreement, dated as of February 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the financial institution parties to the Credit Agreement.(2) 10.5 -- Foreign Subsidiaries Guarantee, dated as of February 26, 1993, by each of the corporations that are signatories thereto in favor of Berg Electronics, Inc.(2) 10.6 -- The Company Pledge Agreement, dated as of February 26, 1993, made by Berg Electronics Holdings Corp. in favor of Chemical Bank, as agent for the lenders parties to the Credit Agreement.(2) 10.7 -- Borrower Pledge Agreement, dated as of February 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the lenders parties to the Credit Agreement.(2) 10.8 -- Supplement No. 1 to Borrower Domestic Pledge Agreement, dated July 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the lenders parties to the Credit Agreement.(2) 10.9 -- Security Agreement, dated as of February 26, 1993, made by Berg Electronics, Inc. in favor of Chemical Bank, as agent for the banks and other financial institutions parties to the Credit Agreement.(2)
49
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 10.10 -- Pledge Agreement, dated as of March 1, 1993, by any between Berg Electronics, Inc. and Chemical Bank, as agent for the lenders named therein with respect to shares of Connector Systems Korea, Ltd.(2) 10.11 -- Open-End Mortgage and Security Agreement, dated as of February 26, 1993, from Berg Electronics, Inc. to Chemical Bank, as Agent.(2) 10.12 -- Registration Rights Agreement, dated as of March 1, 1993, by and among Berg Electronics Holdings Corp. and the parties listed therein.(2) 10.13 -- [Item intentionally omitted.] 10.14 -- [Item intentionally omitted.] 10.15 -- [Item intentionally omitted.] 10.16 -- Amended and Restated Lease Agreement, dated July 26 1993, by and between Ronald S. Marsilio and Harbor Electronics, Inc.(2) 10.17+ -- Berg Electronics, Inc. Pension and Retirement Plan.(2) 10.18+ -- Berg Electronics, Inc. Savings Plan.(2) 10.19+ -- Form of Berg Electronics Holdings Corp. 1993 Stock Option Plan.(2) 10.20 -- [Item intentionally omitted.] 10.21 -- Interest Rate Cap Letter Agreement, dated June 2, 1993, between Berg Electronics, Inc. and Chemical Bank.(2) 10.22 -- [Item intentionally omitted.] 10.23 -- Supply Contract between AT&T Corp. and Berg Electronics, Inc., dated as of May 23, 1994, incorporated by reference as an exhibit to the Asset Purchase Agreement, dated as of May 23, 1994, between Berg Electronics, Inc. and AT&T Corp. (exhibit 10.26 hereto).(3) 10.24 -- [Item intentionally omitted.] 10.25+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among James N. Mills, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.26+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among Robert N. Mills, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.27+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among David M. Sindelar, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.28+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among W. Thomas McGhee, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.29+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among Timothy L. Conlon, Berg Electronics Corp. and Berg Electronics Group, Inc.(1)
50
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- 10.30+ -- Amended and Restated Employment Agreement, dated as of February 1, 1996, by and among Larry S. Bacon, Berg Electronics Corp., Berg Electronics Group, Inc. and certain of its subsidiaries.(1) 10.31 -- Amended and Restated Monitoring and Oversight Agreement, dated as of March 6, 1996 by and among Berg Electronics Corp., Berg Electronics Group, Inc. and Hicks, Muse, Tate and Furst Incorporated.(4) 10.32 -- Credit Agreement dated as of February 29, 1996 among Berg Electronics Group, Inc., Berg Electronics Corp., the banks and other financial institutions from time to time parties thereto, and Chemical Bank, as Agent for the Lenders.(4) 10.33 -- Form of Revolving Credit Note, dated March 6, 1996, between Berg Electronics Group, Inc. and Chemical Bank.(4) 10.34 -- Schedule of substantially identical Revolving Credit Notes.(4) 10.35 -- Form of Term Note, dated March 6, 1996, between Berg Electronics Group, Inc. and Chemical Bank.(4) 10.36 -- Schedule of substantially identical Term Notes.(4) 10.37 -- Swing Line Note, dated March 6, 1996, between Berg Electronics Group, Inc. and Chemical Bank.(4) 10.38 -- Underwriting Agreement, dated March 1, 1996, among Berg Electronics Corp., Berg Electronics Group, Inc. and the underwriters named therein.(4) 10.39 -- Domestic Subsidiaries Guarantee, dated as of March 6, 1996, made by each of the corporations that are signatories thereto in favor of Chemical Bank, as agent for the lenders from time to time parties to the Credit Agreement.* 10.40 -- Acknowledgement, Consent and Amendment, dated as of February 29, 1996, to the Agreements listed on Schedule 1 thereto made by each of the corporations that are signatories thereto in favor of Chemical Bank, as agent for the lenders from time to time parties to the Credit Agreement.* 10.41 -- First Amendment, dated as of December 18, 1996, to the Credit Agreement among Berg Electronics Group, Inc., Berg Electronics Corp., the banks and other financial institutions from time to time parties thereto, and the Chase Manhattan Bank (as successor by merger to Chemical Bank).* 10.42 -- Supplement No. 1 to Note Pledge Agreement, dated as of December 18, 1996, made by Berg Electronics Group, Inc. in favor of and the Chase Manhattan Bank (as successor by merger to Chemical Bank).* 11.0 -- Computation of Net Loss Per Share.* 21.1 -- Subsidiaries of Registrant.* 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 Registration Statement of Berg Electronics Holdings Corp. on Form S-1, Registration No. 33-62552, and incorporated by reference herein. (3) Filed previously as an exhibit to the Berg Electronics Holdings Corp. and Berg Electronics, Inc. Form 8-K dated May 23, 1994 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, 1995, and incorporated by reference herein. * Filed herewith. + Indicates a management contract or compensatory plan or arrangement. EX-10.39 2 DOMESTIC SUBSIDIARIES GUARANTEE 1 EXHIBIT 10.39 DOMESTIC SUBSIDIARIES' GUARANTEE DOMESTIC SUBSIDIARIES' GUARANTEE, dated as of March 6, 1996 (this "Guarantee"), made by each of the corporations that are signatories hereto (the "Guarantors"), in favor of CHEMICAL BANK, as agent (in such capacity, the "Agent") for the lenders (the "Lenders") from time to time parties to the Credit Agreement, dated as of Feb. 29, 1996 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Berg Electronics Group, Inc. (the "Borrower"), Berg Electronics Corp., the Lenders and the Agent. WITNESSETH: WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make loans to, and issue or participate in letters of credit for the account of, the Borrower upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrower owns directly or indirectly all of the issued and outstanding stock of each Guarantor. WHEREAS, the Borrower and the Guarantors are engaged in related businesses, and each Guarantor will derive substantial direct and indirect benefit from the making of the loans to, and the issuing of the letters of credit for the account of, the Borrower under the Credit Agreement; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective loans to, and issue letters of credit for the account of, the Borrower under the Credit Agreement that the Guarantors shall have executed and delivered this Guarantee to the Agent for the ratable benefit of the Lenders. NOW, THEREFORE, in consideration of the premises and to induce the Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective loans to, and issue or participate in letters of credit for the account of, the Borrower under the Credit Agreement, the Guarantors hereby agree with the Agent, for the ratable benefit of the Lenders, as follows: 1. Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to such terms in the Credit Agreement. 2 2 2. Guarantee. (a) Subject to the provisions of paragraph 2(b), each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Agent, for the ratable benefit of the Lenders and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. (b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors. (c) Each Guarantor further agrees to pay the reasonable out-of-pocket expenses which may be paid or incurred by the Agent or the Lenders in collecting any or all of the Obligations and/or enforcing any rights under this Guarantee or under the Obligations in accordance with subsection 12.5 of the Credit Agreement. This Guarantee shall remain in full force and effect until the Obligations are paid in full and the Commitments are terminated, notwithstanding that from time to time prior thereto the Borrower may be free from any Obligations. (d) Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing this Guarantee or affecting the rights and remedies of the Agent or any Lender hereunder. (e) No payment or payments made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Agent, the Issuing Lender or the Lenders from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment or payments other than payments made by such Guarantor in respect of the Obligations or payments received or collected from such Guarantor in respect of the Obligations, remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are paid in full and the Commitments are terminated. (f) Each Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to the Agent, the Issuing Lender or the Lenders on account of its liability hereunder, it will notify the Agent in writing that such payment is made under this Guarantee for such purpose. 3. Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder who has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 5 hereof. The provisions of this Section 3 shall in no respect limit the obligations and liabilities 3 3 of any Guarantor to the Agent, the Issuing Lender and the Lenders, and each Guarantor shall remain liable to the Agent, the Issuing Lender and the Lenders for the full amount guaranteed by such Guarantor hereunder. 4. Right of Set-off. Upon the occurrence of any Event of Default, each Guarantor hereby irrevocably authorizes each Lender and the Issuing Lender at any time and from time to time without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or the Issuing Lender or any branch or agency thereof to or for the credit or the account of such Guarantor, or any part thereof in such amounts as such Lender or the Issuing Lender may elect, against and on account of the obligations and liabilities of such Guarantor to such Lender or the Issuing Lender hereunder and claims of every nature and description of such Lender or the Issuing Lender against such Guarantor, in any currency, whether arising hereunder, under the Credit Agreement, any Note, any Loan Document or otherwise, as such Lender or the Issuing Lender may elect, whether or not the Agent, the Issuing Lender or the Lenders have made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Agent, the Issuing Lender and the Lenders agree promptly to notify such Guarantor after any such set-off and the application made by the Agent, the Issuing Lender or the Lenders, as the case may be; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Agent, the Issuing Lender and the Lenders under this Section 4 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Agent, the Issuing Lender or the Lenders may have. 5. No Subrogation. Notwithstanding any payment or payments made by any of the Guarantors hereunder or any set-off or application of funds of any of the Guarantors by any Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the Agent, the Issuing Lender or the Lenders against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Agent, the Issuing Lender or the Lenders for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Agent, the Issuing Lender and the Lenders by the Borrower on account of the Obligations are paid in full and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Agent, the Issuing Lender and the Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Agent may determine. 4 4 6. Modification of Obligations. Each Guarantor consents that, without the necessity of any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations made by the Agent, the Issuing Lender or the Lenders may be rescinded by the Agent, the Issuing Lender or the Lenders and the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Agent, the Issuing Lender or the Lenders, and the Credit Agreement, any Notes and the other Loan Documents, including, without limitation, any Letter of Credit Application, or any collateral security document or other guarantee or document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Agent, the Issuing Lender or the Lenders may deem advisable from time to time, and, to the extent permitted by applicable law, any collateral security or guarantee or right of offset at any time held by the Agent, the Issuing Lender or the Lenders for the payment of the Obligations may be sold, exchanged, waived, surrendered or released, all without the necessity of any reservation of rights against any Guarantor which will remain bound hereunder notwithstanding any such renewal, extension, modification, acceleration, compromise, amendment, supplement, termination, sale, exchange, waiver, surrender or release. The Agent, the Issuing Lender and the Lenders shall not have any obligation to protect, secure, perfect or insure any collateral security document or property subject thereto at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against any of the Guarantors, the Agent, the Issuing Lender or the Lenders may, but shall be under no obligation to, make a similar demand on any other party or any other Guarantor or guarantor, and any failure by the Agent, the Issuing Lender or the Lenders to make any such demand or to collect any payments from the Borrower or any such other Guarantor or guarantor shall not relieve any of the Guarantors in respect of which a demand or collection is not made of their several obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Agent, the Issuing Lender or the Lenders against any of the Guarantors. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 7. Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Agent, the Issuing Lender or the Lenders upon this Guarantee or acceptance of this Guarantee, the Obligations, and any of them, shall conclusively be deemed to have been created, contracted, continued or incurred in reliance upon this Guarantee; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Agent, the Issuing Lender or the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Guarantee. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any of the Guarantors with respect to the Obligations. This Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to the validity, regularity or enforceability of the Credit Agreement, any Note or any other Loan Document, including, without limitation, any Letter of Credit Application or any collateral security or guarantee therefor or right of offset with respect thereto at any time or from time 5 5 to time held by the Agent, the Issuing Lender or the Lenders and without regard to any defense, set-off or counterclaim which may at any time be available to or be asserted by the Borrower against the Agent, the Issuing Lender, the Lenders or any other Person, or by any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for any of the Obligations (other than payment in money or money's worth and termination of the Commitments), or of such Guarantor under this Guarantee, in bankruptcy or in any other instance and the obligations and liabilities of such Guarantor hereunder shall not be conditioned or contingent upon the pursuit by the Agent, the Issuing Lender or the Lenders or any other Person at any time of any right or remedy against the Borrower or against any other Person which may be or become liable in respect of any Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon each Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Agent and the Lenders, and their respective successors, endorsees, transferees and assigns, until all the Obligations and the obligations of each Guarantor under this Guarantee shall have been satisfied by payment in full and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Obligations. 8. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Agent, the Issuing Lender or the Lenders upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 9. Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Agent without set-off or counterclaim in Dollars at the office of the Agent located at 270 Park Avenue, New York, New York 10017. 10. Representations and Warranties. Each Guarantor hereby represents and warrants that: (a) it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; (b) it has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee; (c) this Guarantee constitutes a legal, valid and binding obligation of such Guarantor enforceable in accordance with its terms, except as affected enforceability may be limited by 6 6 bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally (whether enforcement is sought by proceedings in equity or at law); (d) the execution, delivery and performance of this Guarantee will not violate any provision of any material Requirement of Law or material Contractual Obligation of such Guarantor and will not result in the creation or imposition of any Lien on any of the material properties or revenues of such Guarantor pursuant to any Requirement of Law or Contractual Obligation of the Guarantor, except as set forth in the Credit Agreement; (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority and no consent of any other Person (including, without limitation, any stockholder or creditor of such Guarantor), is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee, except as set forth in the Credit Agreement; and (f) no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of such Guarantor, threatened by or against such Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) which could reasonably be expected to have a Material Adverse Effect, except as set forth in the Credit Agreement. Each Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by such Guarantor on the date of each borrowing by, or issuance of a Letter of Credit for the account of, the Borrower under the Credit Agreement on and as of such date of borrowing or issuance as though made hereunder on and as of such date, except to the extent they related to a specified date in which case they shall be true and correct as of such date. 11. Authority of Agent. Each Guarantor acknowledges that the rights and responsibilities of the Agent under this Guarantee with respect to any action taken by the Agent or the exercise or non-exercise by the Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Guarantee shall, as between the Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Agent and such Guarantor, the Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and no Guarantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority. 12. Notices. All notices, requests and demands to or upon the Agent, any Lender or any Guarantor to be effective shall be in writing (or by telex, fax or similar electronic transfer confirmed in writing) and shall be deemed to have been duly given or made (a) in the case of mail, two days after deposit in the postal system, first class postage pre-paid or (b) in the case of telex or facsimile notices, when received, addressed as follows: 7 7 (a) if to the Agent or any Lender, at its address or transmission number for notices provided in subsection 12.2 of the Credit Agreement; and (b) if to any Guarantor, at its address or transmission number for notices set forth under its signature below. The Agent, each Lender and each Guarantor may change its address and transmission numbers for notices by notice in the manner provided in this Section 12. 13. Counterparts. This Guarantee may be executed by one or more of the Guarantors on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the counterparts of this Guarantee signed by all the Guarantors shall be lodged with the Agent. 14. Severability. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. Integration. This Guarantee represents the agreement of each Guarantor with respect to the subject matter hereof and there are no promises or representations by the Agent or any Lender relative to the subject matter hereof not reflected herein. 16. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by each Guarantor and the Required Lenders. (b) Neither the Agent nor any Lender shall by any act (except by a written instrument pursuant to paragraph 16(a) hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Agent or such Lender would otherwise have on any future occasion. (c) The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 17. Section Headings. The section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 8 8 18. Successors and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Agent and the Lenders and their successors and assigns. 19. Governing Law. This Guarantee shall be governed by, and construed and interpreted in accordance with, the law of the State of New York. 20. Submission To Jurisdiction; Waivers. Each Guarantor hereby irrevocably and unconditionally. (a) submits for itself and its property in any legal action or proceeding relating to this Guarantee and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same: (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Guarantor at its addresses set forth on the signature pages hereto or at such other address of which the Agent shall have been notified pursuant to Section 12; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. 21. Acknowledgements. Each Guarantor hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of the Guarantee and the other Loan Documents: (b) neither the Agent nor any Lender has any fiduciary relationship with or duty to the Guarantors arising out of or in connection with this guarantee or any of the other Loan Documents, and the relationship between Agent and Lenders, on one hand, 9 9 and the Guarantors, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture exists among the Lenders or among the Guarantors and the Lenders. 22. WAIVERS OF JURY TRIAL. THE GUARANTORS AND THE AGENT (ON ITS OWN BEHALF AND ON BEHALF OF THE LENDERS) HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 10 10 IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and year first above written. BERG TECHNOLOGY, INC. BERG HOLDINGS U.S., INC. CONNECTOR SYSTEMS (U.S.) INC. HARBOR ELECTRONICS, INC. SOCKET EXPRESS, INC. SPECIALTY CONNECTOR COMPANY BERG EMPLOYMENT COMPANY By: /s/ ELLEN LIPSITZ ------------------------------ Name: Ellen L. Lipsitz Title: Vice President and Assistant Secretary Address for Notices: c/o Mills & Partners 101 South Hanley Suite 400 St. Louis, Missouri 63105 Attention: David Sindelar Fax: (314) 746-2386 With Copies of Notices to: Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court Suite 1600 Dallas, Texas 75201 Attention: Thomas O. Hicks John R. Muse Jack D. Furst Lawrence D. Stuart, Jr. Fax: (214) 740-7313 11 11 Hicks, Muse, Tate & Furst Incorporated 1325 Avenue of the Americas, 25th Floor New York, New York 10019 Attention: Charles W. Tate Fax: (212) 424-1450 EX-10.40 3 ACKOWLEDGEMENT CONSENT & AMENDMENT 1 EXHIBIT 10.40 ACKNOWLEDGEMENT, CONSENT AND AMENDMENT ACKNOWLEDGEMENT, CONSENT AND AMENDMENT, dated as of February 29, 1996 (this "Amendment"), to the documents listed on Schedule 1 hereto (the "Documents") made by each of the corporations that are signatories hereto (each a "Grantor"), in favor of CHEMICAL BANK, a New York banking corporation, as agent (in such capacity, the "Agent") for the lenders (the "Lenders") from time to time parties to the Credit Agreement referred to below. W I T N E S S E T H WHEREAS, Berg Electronics Group, Inc. (f/k/a Berg Electronics, Inc.) (the "Borrower"), Berg Electronics Corp. (f/k/a Berg C.S. Holdings, Inc.) ("Holdings"), the Lenders and the Agent entered into the Credit Agreement dated as of February 26, 1993 (as previously amended, and as the same may be further amended, supplemented or otherwise modified from time to time, the "Original Credit Agreement"); and WHEREAS, to secure and guarantee the obligations of the Borrower under the Original Credit Agreement, each Grantor entered into Documents to which it is a party; and WHEREAS, the Original Credit Agreement was amended and restated on May 23, 1994 (the "Amended and Restated Credit Agreement"); and WHEREAS, the Amended and Restated Credit Agreement is being refinanced by a new Credit Agreement dated as of the date hereof, (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among the Borrower, Holdings, the Agent and the Lenders; and WHEREAS, it is a condition precedent to the making of the Loans under the Credit Agreement that each Grantor execute and deliver this Amendment to confirm that the security interests granted under the Documents secure the Obligations of the Borrower under the Credit Agreement; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other valuable consideration, the receipt of which is hereby acknowledged, each Grantor and the Agent hereby agree as follows: SECTION 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined. 2 2 SECTION 2. Amendment of Documents. All references to the terms "Notes" and "Loans" in the Documents shall be amended to be references to Notes and Loans, respectively, as defined in the Credit Agreement. Each Grantor further agrees that the term "Lenders" in the Documents includes any lenders from time to time parties to the Credit Agreement, that the term "Obligations" means Obligations as defined in the Credit Agreement, and that the Documents shall be amended accordingly. SECTION 3. Representations and Warranties. Each Grantor represents and warrants that upon the execution and delivery of this Amendment, the Documents, as acknowledged, consented to, and amended hereby, shall constitute a valid and continuing lien on and, to the extent provided therein, perfected security interest in, the collateral referred to in the Documents, as acknowledged, consented to, and amended hereby, in favor of the Agent for the ratable benefit of the Lenders. SECTION 4. Acknowledgement and Consent. Each Grantor hereby: (a) acknowledges and consents to the execution, delivery and performance of (i) the Credit Agreement, as amended, supplemented or otherwise modified from time to time, and (ii) all of the documents and transactions contemplated thereby; (b) agrees that such execution, delivery and performance shall not in any way affect such Grantor's obligations under any Loan Document (as defined in the Credit Agreement) to which such Grantor is a party, which obligations on the date hereof remain absolute and unconditional and are not subject to any defense, set-off or counterclaim; and (c) grants to the Agent, for the ratable benefit of the Lenders, and pursuant to the terms and conditions of the Documents a lien on and security interest in all collateral described in the Documents as security for the Obligations (as defined in the Credit Agreement). SECTION 5. Miscellaneous. (a) Each amendment contained herein shall not constitute an amendment of any provision of the Documents for any purpose except as expressly set forth herein. (b) This Amendment may be executed in any number of separate counterparts, and all of said counterparts taken together shall constitute one and the same instrument. (c) This Amendment shall become effective when executed by each Grantor and the Agent. (d) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 3 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized offices as of the date first written above. BERG TECHNOLOGY, INC. BY: /s/ KELLY E. WETZLER ------------------------ Name: KELLY E. WETZLER Title: Assistant Secretary BERG HOLDINGS U.S., INC. BY: /s/ KELLY E. WETZLER ------------------------ Name: KELLY E. WETZLER Title: Assistant Secretary CONNECTOR SYSTEMS (U.S.) INC. BY: /s/ KELLY E. WETZLER ------------------------ Name: KELLY E. WETZLER Title: Assistant Secretary HARBOR ELECTRONICS, INC. BY: /s/ KELLY E. WETZLER ------------------------ Name: KELLY E. WETZLER Title: Assistant Secretary SOCKET EXPRESS, INC. BY: /s/ KELLY E. WETZLER ------------------------ Name: KELLY E. WETZLER Title: Assistant Secretary ELECTRONICS CORP. BY: /s/ KELLY E. WETZLER ------------------------ Name: KELLY E. WETZLER Title: Assistant Secretary 4 4 BERG ELECTRONICS GROUP, INC. By: /s/ KELLY E. WETZLER --------------------------- Name: KELLY E. WETZLER Title: Assistant Secretary SPECIALTY CONNECTOR COMPANY By: /s/ KELLY E. WETZLER --------------------------- Name: KELLY E. WETZLER Title: Assistant Secretary BERG EMPLOYMENT COMPANY By: /s/ KELLY E. WETZLER --------------------------- Name: KELLY E. WETZLER Title: Assistant Secretary 5 5 Schedule 1 to Acknowledgement, Consent and Amendment DOCUMENTS The Borrower Security Agreement dated as of February 26, 1993 by Berg Electronics, Inc. in favor of Chemical Bank, as Agent The Holdings Pledge Agreement dated as of February 26, 1993 by Berg CS Holdings, Inc. in favor of Chemical Bank, as Agent The Borrower Domestic Pledge Agreement dated as of February 26, 1993 by Berg Electronics, Inc., and Berg Employment Company in favor of Chemical Bank, as Agent The Intermediate Holdings Pledge Agreement dated as of February 26, 1993 by Berg Holdings U.S., Inc. in favor of Chemical Bank, as Agent The Note Pledge and Assignment Agreement dated as of February 26, 1993 by Berg Electronics, Inc. in favor of Chemical Bank, as Agent The Open-End Mortgage and Security Agreement dated as of February 26, 1993 by Berg Electronics, Inc. in favor of Chemical Bank, as Agent The [DuPont] Assignment dated as of February 26, 1993 by Berg Electronics, Inc. in favor of Chemical Bank, as Agent The Foreign Subsidiaries Guarantee dated as of February 26, 1993 by Berg Electronics Distributor, B.V., Connector Systems Technology, N.V., Berg Electronics Manufacturing, B.V., Berg Electronics (France) S.A., Berg Electronics Singapore Pte Ltd., Berg Electronics Japan, K.K., Connector Systems, B.V., Berg Connector Systems, S.L., Berg Electronics Gmbm, Berg Electronics S.r.l., Connector Systems Limited and Berg Electronics Hong Kong Limited in favor of Berg Electronics, Inc. The Patent Security Agreement dated as of February 26, 1993 by Berg Technology, Inc., Harbor Electronics, Inc., and Socket Express, Inc. in favor of Chemical Bank, as Agent The Trademark Security Agreement dated as of February 26, 1993 by Berg Technology, Inc. and Harbor Electronics, Inc. in favor of Chemical Bank, as Agent The Domestic Subsidiary Security Agreement dated as of February 26, 1993 by Berg Technology, Inc., Harbor Electronics, Inc., Socket Express, Inc., Specialty Connector Company, and Berg Employment Company in favor of Chemical Bank, as Agent The AT&T Assignment dated as of May 23, 1994 by Berg Electronics, Inc., in favor of Chemical Bank, as Agent The Assignment and Assumption Agreement dated as of March 1, 1994 among Mold-Con, Inc., Tre-Tec Engineering Corporation, Contex Electronics, Inc., Harbor Electronics, Inc. and Berg Electronics, Inc. The Borrower Trademark Security Agreement dated as of May 23, 1994 by Berg Electronics, Inc. in favor of Chemical Bank, as Agent The Borrower Patent Security Agreement dated as of May 23, 1994 by Berg Electronics, Inc. in favor of Chemical Bank, as Agent 6 6 The Foreign Pledge Agreements - Pledge Agreement dated as of March 1, 1993 between Berg Electronics, Inc. and Chemical Bank, as Agent, of Connector Systems, Korea Ltd. shares. [Korea] -Pledge Agreement dated as of March 1, 1993 between Berg Holdings U.S. Inc. and Chemical Bank, as Agent, of Connector Systems B.V. shares [Netherlands] - Pledge Agreement dated as of March 1, 1993 between Connector Systems B.V. and Berg Electronics, Inc. of Berg Electronics Distributor B.V. and Berg Electronics Manufacturing B.V. shares [Netherlands] - Pledge Agreement dated as of February 26, 1993 between Berg Holdings U.S. Inc. and Chemical Bank, as Agent, of Connector Systems Technology N.V. shares [Netherlands] - Pledge Agreement dated as of March 20, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Berg Connector Systems S.L. shares [Spain] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Berg Connector Systems, S.L. shares [France] - Pledge Agreement dated as of April 1, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Berg Connector Systems Gmbh shares [Germany] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of CBOS Electronics AB shares [Sweden] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Bergtronics Oy shares [Finland] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Berg Electronics S.A. shares [Switzerland] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Berg Electronics S.r.l. shares [Italy] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Connector Systems Limited shares [England] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Berg Electronics Canada, Inc. shares [Canada] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S. and Chemical Bank, as Agent, of Berg Electronics Hong Kong Limited shares [Hong Kong] - Pledge Agreement dated as of February 26, 1993 between Berg Holding U.S., Inc. and Chemical Bank, as Agent, of Berg Electronics Singapore PTE Ltd. shares [Singapore] - Pledge Agreement dated as of February 26, 1993 between Connector Systems U.S. Inc. and Chemical Bank, as Agent, of Berg Electronics Taiwan Ltd. shares [Taiwan] EX-10.41 4 FIRST AMENDMENT DATED 12/18/96 1 EXHIBIT 10.41 FIRST AMENDMENT FIRST AMENDMENT, dated as of December 18, 1996 (this "Amendment"), to the Credit Agreement, dated as of February 29, 1996, (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among BERG ELECTRONICS GROUP, INC., a Delaware corporation (the "Borrower"), BERG ELECTRONICS CORP., a Delaware corporation and the parent of the Borrower ("Holdings"), the several banks and other institutions from time to time parties to the Credit Agreement (the "Lenders") and THE CHASE MANHATTAN BANK, a New York banking corporation (as successor by merger to Chemical Bank), as agent to the lenders thereunder (in such capacity, the "Agent"). WITNESSETH: WHEREAS, the Borrower and Holdings have requested the Lenders to amend certain provisions of the Credit Agreement as set forth herein in connection with the Borrower's planned acquisition of the captive connectors business of Ericsson Telecom AB, a Swedish corporation, for total consideration not to exceed the equivalent of US$18,000,000; and WHEREAS, the Lenders are willing to amend the Credit Agreement on and subject to the terms and conditions hereof; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties hereto, the parties agree as follows: SECTION 1. Definitions. As used in this Amendment, terms defined in the preamble hereof and the recitals hereto are used herein as so defined, terms defined in the Credit Agreement are used herein as therein defined and the following term shall have the following meaning: "First Amendment Effective Date": as defined in Section 4 hereof. SECTION 2. Amendment of Subsection 8.9 (Limitation on Investments, Loans and Advances). Subsection 8.9 of the Credit Agreement is hereby amended by adding to the end of subclause (i) thereof the following new proviso": ; provided further, that the Borrower need not comply with clause (ii) of the first proviso above in connection with the acquisition of the captive connectors business of Ericsson Telecom AB by Berg Electronics, AB a wholly owned Swedish 2 2 Foreign Subsidiary of the Borrower for total consideration not to exceed the equivalent of US$18,000,000." SECTION 3. Representations and Warranties. To induce the Agent and the Lenders to enter into this Amendment and agree to the amendment herein, the Credit Parties hereby represent and warrant to the Agent and each Lender that after giving effect to the amendment contained herein, each Credit Party hereby confirms, reaffirms and restates the representations and warranties set forth in Section 5 of the Credit Agreement as if made on and as of the First Amendment Effective Date, except as they may specifically relate to an earlier date; provided that such representations and warranties shall and hereby are amended so that all references to the Agreement therein shall be deemed a reference to (i) the Credit Agreement, (ii) this Amendment and (iii) the Credit Agreement as amended by this Amendment. SECTION 4. Conditions Precedent. This Amendment shall become effective as of the date that each of the conditions precedent set forth below shall have been fulfilled to the satisfaction of the Required Lenders (the "First Amendment Effective Date"), provided that the First Amendment Effective Date may not occur later than January 31, 1997 (a) Amendment. The Agent shall have received this Amendment, executed and delivered by a duly authorized officer of each of the Borrower, Holdings and the Required Lenders. (b) No Default or Event of Default. On and as of the First Amendment Effective Date and after giving effect to this Amendment and the transactions contemplated hereby, no Default or Event of Default shall have occurred and be continuing. (c) Representations and Warranties. The representations and warranties made by the Borrower in the Credit Agreement and herein after giving effect to this Amendment and the transactions contemplated hereby shall be true and correct in all material respects on and as of the First Amendment Effective Date as if made on such date, except where such representations and warranties relate to an earlier date in which case such representations and warranties shall be true and correct as of such earlier date. (d) Certificate. The Agent shall have received a Certificate of a Responsible Officer of the Borrower, dated the First Amendment Effective Date, certifying the matters referred in paragraphs (b) and (c) above. (e) Acknowledgment, Consent and Amendment. The agent shall have received from each of Holdings, the Borrower, US Techco, Intermediate Holdings, Connector Systems (U.S.) Inc., Harbor and Socket with respect to each Loan Document to which it is a party a duly executed Acknowledgment, Consent, and Amendment, substantially in the form of Exhibit A hereto. 3 3 (f) Pledged Note. The Agent shall have received (i) a Subsidiary Note made by Berg Electronics, AB as collateral under the Borrower Note Pledge Agreement and (ii) a Supplement thereunder in form and substance reasonably satisfactory to the agent thereto. SECTION 5. Continuing Effect of Credit Agreement. This Amendment shall not constitute an amendment or waiver of any provision of the Credit Agreement not expressly referred to herein and shall not be construed as an amendment, waiver or consent to any action on the part of any Credit Party that would require an amendment, waiver or consent of the Agent or the Lenders except as expressly stated herein. Except as expressly amended and waived hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. SECTION 6. Expenses. The Borrower agrees to pay or reimburse the Agent for all of its reasonable out-of-pocket costs and expenses incurred in connection with (a) the negotiation, preparation, execution and delivery of this Amendment and any other documents prepared in connection herewith, and consummation of the transactions contemplated hereby and thereby, including the fees and expenses of Simpson Thacher & Bartlett, counsel to the Agent, and (b) the enforcement or preservation of any rights under this Amendment and any other such documents. SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. SECTION 8. Counterparts. This Amendment may be executed in any number of counterparts by the parties hereto, each of which counterparts when so executed shall be an original, but all counterparts taken together shall constitute one and the same instrument. 4 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be dully executed and delivered by their respective duly authorized officers as of the day and year first above written. BERG ELECTRONICS GROUP, INC. By: /s/ JOSEPH S. CATANZARO --------------------------------------- Name: Joseph S. Catanzaro Title: Vice President BERG ELECTRONICS CORP. By: /s/ JOSEPH S. CATANZARO --------------------------------------- Name: Joseph S. Catanzaro Title: Vice President THE CHASE MANHATTAN BANK, as Agent and as a Lender, and as Swing Line Lender and as Issuing Lender By: /s/ TRADBY J. STONE --------------------------------------- Name: Tradby J. Stone Title: Credit Executive ARAB BANKING CORPORATION (B.S.C.) By:/s/ STEPHEN A. PLAUCHE --------------------------------------- Name: Stephen A. Plauche Title: Vice President 5 5 BANK OF MONTREAL By: /s/ LEON H. SINCLAIR --------------------------------------- Name: Leon H. Sinclair Title: Director BANK OF TOKYO-MITSUBISHI By: /s/ VICTOR P. BULZACCHELLI --------------------------------------- Name: V. Bulzacchelli Title: Vice president and Manager THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, New York Branch By: /s/ FRANK H. MADDEN, JR. --------------------------------------- Name: Frank H. Madden, Jr. Title: Vice President BANQUE PARIBAS By: /s/ DEANNA C. WALKER --------------------------------------- Name: Deanna C. Walker Title: Assistant Vice President By: /s/ KENNETH E. MOORE, JR. --------------------------------------- Name: Kenneth E. Moore, Jr. Title: Vice President MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By: /s/ GILLES MARCHAND --------------------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory 6 6 MERRILL LYNCH PRIME RATE PORTFOLIO By: Merrill Lynch Asset Management, L.P. as Investment Advisor By: /s/ GILLES MARCHAND --------------------------------------- Name: Gilles Marchand, CFA Title: Authorized Signatory THE BANK OF NEW YORK By: /s/ JOHN C. LOMBERT --------------------------------------- Name: John C. Lombert Title: Vice President CREDIT LYONNAIS, CAYMAN ISLAND BRANCH By: /s/ SANDRA E. HORWITZ --------------------------------------- Name: Sandra E. Horwitz Title: Authorized Signature 7 7 GIROCREDIT By: /s/ ANCA TRIFAN --------------------------------------- Name: Anca Trifan Title: Vice President VAN KAMPEN AMERICA CAPITAL PRIME RATE INCOME TRUST By: /s/ JEFFREY W. MAILLET --------------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President and Director IMPERIAL BANK By: /s/ RAY VEAD --------------------------------------- Name: Ray Vead Title: MITSUBISHI TRUST & BANKING CORP. By: /s/ PATRICIA LORET DE MOLA --------------------------------------- Name: Patricia Loret de Mola Title: Senior Vice President 8 8 NBD BANK By:/s/ DAVE R. DEMELI --------------------------------------- Name: Dave R. DeMeli Title: Vice President NATIONAL CITY BANK By:/s/ LISA BETH LISI --------------------------------------- Name: Lisa Beth Lisi Title: Account Officer SUMITOMO BANK, LTD. By:/s/ HIROYUKI IWAMI --------------------------------------- Name: Hiroyuki Iwami Title: Joint General Manager ABN AMRO Bark N.V. Houston Agency By: ABN AMRO North America, Inc., as Agent By:/s/ LAURIE C. TUZO --------------------------------------- Name: Laurie C. Tuzo Title: Vice President & Director By:/s/ LILA JORDAN --------------------------------------- Name: Lila Jordon Title: Vice President & Director BANQUE FRANCAISE DU COMMERCE EXTERIEUR By:/s/ G. KEVIN OAKLEY --------------------------------------- Name: G. Kevin Oakley Title: Assistant Vice President By:/s/ BRIAN J. CUMBERLAND --------------------------------------- Name: Brian J. Cumberland Title: Assistant Treasurer 9 9 CAPTIVA FINANCE LTD. By: /s/ DAVID RILEY --------------------------------------- Name: David Riley Title: Director COMERICA BANK BRS By: /s/ BURT R. SHURLY III --------------------------------------- Name: Burt R. Shurly III Title: Vice President CREDIT AGRICOLE By: /s/ DAVID BOUHL --------------------------------------- Name: David Bouhl, F.V.P. Title: Head of Corporate Banking - Chicago DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCH By: /s/ THOMAS J. NADRAMIA --------------------------------------- Name: Thomas J. Nadramia Title: Vice President By: /s/ JOHN W. SWEENEY --------------------------------------- Name: John W. Sweeney Title: Assistant Vice President FUJI BANK LTD. By: /s/ PETER L. CHINNICI --------------------------------------- Name: Peter L. Chinnici Title: Joint General Manager EX-10.42 5 SUPPLEMENT NO. 1 TO NOTE PLEDGE AGREEMENT 1 EXHIBIT 10.42 SUPPLEMENT NO. 1 TO NOTE PLEDGE AGREEMENT THIS AGREEMENT SUPPLEMENTS THE NOTE PLEDGE AGREEMENT BETWEEN THE PARTIES HERETO DATED AS OF FEBRUARY 26, 1993. SUPPLEMENT NO. 1 TO NOTE PLEDGE AGREEMENT Supplement No. 1 (this "Supplement"), dated as of December 18, 1996, to the Note Pledge and Assignment Agreement dated as of February 26, 1993 (the "Note Pledge Agreement") made by BERG ELECTRONICS GROUP, INC. (f/k/a Berg Electronics Inc.), a Delaware corporation (the "Borrower"), in favor of THE CHASE MANHATTAN BANK, a New York banking corporation (as successor by merger to Chemical Bank), as agent (in such capacity, the "Agent") for the banks and other financial institutions (the "Lenders") parties to the Credit Agreement, dated as of February 29, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Berg Electronics Corp., the Lenders and the Agent. WITNESSETH: WHEREAS, the Borrower and the Agent are parties to the Note Pledge Agreement pursuant to which the Borrower has assigned, transferred and pledged all the Subsidiary Notes and the Subsidiary Security Agreements (both as defined in the Note Pledge Agreement) to the Agent for the benefit of the Lenders; WHEREAS, the Borrower is the legal and beneficial owner of a Subsidiary Note made by Berg Connectors Sweden AB, a Swedish corporation, listed on Schedule I hereto: and WHEREAS, it is a condition precedent to the effectiveness of the First Amendment to the Credit Agreement that the Borrower shall have executed and delivered this Supplement to the Agent; NOW THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Note Pledge Agreement and the Credit Agreement. 2. Supplement to Note Pledge Agreement. From and after the date hereof, the Note Pledge Agreement is hereby supplemented by adding the Subsidiary Note listed on Schedule I hereto to the Pledged Notes listed on Schedule I to the Note Pledge Agreement and to the definition of Pledged Notes in the Note Pledge Agreement. 2 2 3. Pledge, Grant of Security Interest. The Borrower hereby delivers to the Agent, for the ratable benefit of the Lenders, all the Subsidiary Notes listed on Schedule I hereto and hereby grants to the Agent, for the ratable benefit of the Lenders, a first lien on and security interest in such Subsidiary Notes, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. Such grant shall be governed by the terms and conditions of the Note Pledge Agreement. 4. Representations and Warranties. The representations and warranties contained in Section 5 of the Note Agreement are made by the Borrower, after giving effect to this Supplement, as of the date hereof and as of each other date hereafter contemplated by such Section 5. 5. Limited Effect. Except as expressly modified hereby, the Note Pledge Agreement remains in full force and effect. 6. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. 7. Counterparts. This Supplement may be executed by the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 3 3 IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly executed and delivered by its properly and duly authorized officer as of the day and year first written above. BERG ELECTRONICS GROUP, INC. By: /s/ JOSEPH S. CATANZARO --------------------------- Name: Joseph S. Catanzaro Title: Vice President 4 ACKNOWLEDGEMENT AND CONSENT The maker of the Subsidiary Note referred to in the foregoing Supplement hereby acknowledges receipt of a copy thereof, agrees to the assignment to the Agent of its Subsidiary Note and hereby represents and warrants to the extent set forth therein that its Subsidiary Note is a valid and binding obligation enforceable against it in accordance with its terms. BERG CONNECTORS SWEDEN AB By: /s/ JOSEPH S. CATANZARO -------------------------- Name: Joseph S. Catanzaro Title: Vice President Address for Notices: 101 South Hanley Road St. Louis, Missouri 63105 Telecopy: (314) 746-2240 Attention: Joseph S. Catanzaro 5 SCHEDULE I DESCRIPTION OF PLEDGED NOTES
Note Holder Note Issuer Amount of Note - ----------- ----------- -------------- Berg Berg Connectors Electronics Group, Inc. Sweden AB $17,512,623.68
EX-11 6 COMPUTATION OF NET EARNINGS 1 EXHIBIT 11.0 BERG ELECTRONICS CORP. COMPUTATION OF NET LOSS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------------- 1994(1) 1995(1) 1996(1) ------------ ----------- ------------ Primary Loss per Share: Net loss applicable to common shares.............. $(10,265,000) $(5,412,000) $(17,054,000) ============ =========== ============ Average number of common shares outstanding....... 12,997,626 12,989,324 19,245,738 Assumed exercise of options (treasury stock method)(2)..................................... -- -- -- ------------ ----------- ------------ Shares for primary computation.................... 12,997,636 12,989,324 19,245,738 ============ =========== ============ Net loss per share................................ $ (0.79) $ (0.42) $ (0.89) ============ =========== ============ Fully Diluted Loss per Share: Net loss applicable to common shares.............. $(10,265,000) $(5,412,000) $(17,054,000) ============ =========== ============ Average number of common shares outstanding....... 12,997,626 12,989,324 19,245,738 Assumed exercise of options (treasury stock method)(2)..................................... -- -- -- ------------ ----------- ------------ Shares for primary computation.................... 12,997,626 12,989,324 19,245,738 ============ =========== ============ Net loss per share................................ $ (0.79) $ (0.42) $ (0.89) ============ =========== ============
- --------------- (1) Per share data reflects adjustments related to the 1-for-4.11 reverse stock split in February 1996. (2) As there is a net loss for each of the years ended December 31, 1994, 1995 and 1996, options are anti-dilutive and, thus, excluded from the above calculations. EX-21.1 7 SUBSIDIARIES OF REGISTRANT 1 EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT 1. Berg Technology, Inc., a Nevada corporation 2. Berg Holdings U.S., Inc., a Delaware corporation 3. Berg Electronics Korea Ltd., a Korean corporation 4. Berg Electronics, B.V., a Netherlands corporation 5. Berg Electronics Manufacturing B.V., a Netherlands corporation 6. Berg Electronics Distributor B.V., a Netherlands corporation 7. Berg Connector Systems, S.L., a Spanish corporation 8. Berg Connector Systems GmbH, a German corporation 9. Bergtronics, O.y., a Finnish corporation 10. Berg Electronics, S.r.L., an Italian corporation 11. Berg Electronics Canada, Inc., a Canadian corporation 12. Berg Electronics Hong Kong Limited, a Hong Kong corporation 13. Berg Electronics Singapore PTE Ltd., a Singapore corporation 14. Berg Electronics S.A., a French corporation 15. CBOS Electronics, AB, a Swedish corporation 16. Berg Electronics S.A., a Swiss corporation 17. Connector Systems Limited, a United Kingdom corporation 18. Connector Systems (U.S.), Inc., a Delaware corporation 19. Berg Electronics Taiwan Ltd., a Taiwanese corporation 20. Berg Electronics, Japan K.K., a Japanese corporation 21. Berg Electronics Engineering K.K., a Japanese corporation 22. Connector Systems Technology, N.V., an Antilles corporation 23. TVS Berg Ltd., an Indian corporation (a 40% owned joint venture) 24. Harbor Electronics, Inc., a Delaware corporation 25. Socket Express, Inc., a New Jersey corporation 26. Berg Electronics Group, Inc., a Delaware corporation 27. Specialty Connector Company, a Delaware corporation 28. Berg Employment Company, a Delaware corporation 29. Berg Connectors Sweden AB, a Swedish corporation 30. Berg Electronics China Ltd., a Hong Kong corporation 31. Berg Electronics Nantong, Ltd., a People's Republic of China corporation 32. Berg Electronics Ireland B.V., a Netherlands corporation 33. Berg (UK) Limited, a United Kingdom corporation EX-27 8 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000904900 BERG ELECTRONICS CORPORATION 1,000 12-MOS DEC-31-1996 DEC-31-1996 8,999 0 107,837 3,703 91,823 218,891 338,037 128,132 682,007 177,731 324,646 0 0 0 138,892 682,007 704,669 704,669 455,869 455,869 1,239 1,883 31,738 47,336 18,391 28,945 0 (18,664) 0 10,281 (0.89) (0.89)
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