<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended July 4, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ______________
<TABLE>
<CAPTION>
Commission File Number: 33-96858-01 Commission File Number: 33-96858
<S> <C>
COMMUNICATIONS & POWER COMMUNICATIONS & POWER
INDUSTRIES HOLDING CORPORATION INDUSTRIES, INC.
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Delaware Delaware
(State of Incorporation) (State of Incorporation)
77-0407395 77-0405693
(I.R.S. employer identification number) (I.R.S. employer identification number)
607 Hansen Way 607 Hansen Way
Palo Alto, California 94303-1110 Palo Alto, California 94303-1110
(415) 846-2900 (415) 846-2900
(Address, including zip code, and telephone number, (Address, including zip code, and telephone number,
including area code, of registrant's principal including area code, of registrant's principal
executive offices) executive offices)
Securities registered pursuant to Section 12(b) of the Securities registered pursuant to Section 12(b) of
Act: the Act:
None None
Securities registered pursuant to Section 12(g) of the Securities registered pursuant to Section 12(g) of
Act: the Act:
None None
</TABLE>
Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding for each of the Registrant's classes
of Common Stock, as of the latest practicable date: Communications & Power
Industries Holding Corporation: 199,850 shares of Common Stock, $.01 par value,
at July 4, 1997. Communications & Power Industries, Inc.: 1 share of Common
Stock, $.01 par value, at July 4, 1997.
<PAGE> 2
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power
Industries Holding Corporation)
<TABLE>
<CAPTION>
PART 1: FINANCIAL INFORMATION
COMMUNICATIONS AND POWER INDUSTRIES, INC.
<S> <C>
Consolidated Condensed Balance Sheets, July 4, 1997 (unaudited) and
September 27, 1996..................................................................................2
Consolidated Condensed Statements of Operations, 13-week period ended
July 4, 1997 (unaudited) and 13-week period ended June 28, 1996 (unaudited).........................3
Consolidated Condensed Statements of Operations, 40-week period ended
July 4, 1997 (unaudited) and 39-week period ended June 28, 1996 (unaudited).........................4
Consolidated Condensed Statements of Cash Flows, 40-week period ended
July 4, 1997 (unaudited) and 39-week period ended June 28, 1996 (unaudited).........................5
Notes to Consolidated Condensed Financial Statements (unaudited)....................................6
Management's Discussion and Analysis of Financial Condition and Results of Operations
(Unaudited)........................................................................................12
COMMUNICATIONS AND POWER INDUSTRIES HOLDING CORPORATION
Consolidated Condensed Balance Sheets, July 4, 1997 (unaudited) and
September 27, 1996..................................................................................7
Consolidated Condensed Statements of Operations, 13-week period ended
July 4, 1997 (unaudited) and 13-week period ended June 28, 1996 (unaudited).........................8
Consolidated Condensed Statements of Operations, 40-week period ended
July 4, 1997 (unaudited) and 39-week period ended June 28, 1996 (unaudited).........................9
Consolidated Condensed Statements of Cash Flows, 40-week period ended
July 4, 1997 (unaudited) and 39-week period ended June 28, 1996 (unaudited)........................10
Notes to Consolidated Condensed Financial Statements (unaudited)...................................11
Management's Discussion and Analysis of Financial Condition and Results of Operations
(Unaudited)........................................................................................12
PART II: OTHER INFORMATION
Other Information .................................................................................14
SIGNATURES..............................................................................................15
</TABLE>
-1-
<PAGE> 3
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power
Industries Holding Corporation)
INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands - unaudited)
<TABLE>
<CAPTION>
ASSETS
------ July 4, September 27,
1997 1996
--------- ---------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 2,234 1,753
Accounts receivable, net 47,657 50,380
Inventories 52,471 46,471
Deferred taxes 7,109 7,109
Other current assets 1,153 2,133
--------- ---------
Total current assets 110,624 107,846
Property, plant, and equipment, net 81,560 79,873
Goodwill, net 24,410 25,203
Debt issue costs, net 8,395 9,651
Deferred taxes 5,572 5,569
--------- ---------
Total assets $ 230,561 228,142
========= =========
LIABILITIES, REDEEMABLE
PREFERRED STOCK AND EQUITY (DEFICIT)
------------------------------------
Current Liabilities
Revolving credit facility $ 23,900 17,000
Accounts payable - trade 9,267 10,527
Accrued expenses 19,999 22,371
Product warranty 4,078 4,327
Current portion of term loans 3,950 3,950
Income taxes payable 9,456 10,560
Advance payments from customers 3,583 4,535
--------- ---------
Total current liabilities 74,233 73,270
Senior term loans 31,700 35,650
Senior subordinated notes 100,000 100,000
--------- ---------
Total liabilities 205,933 208,920
--------- ---------
Senior Redeemable Preferred Stock 16,847 14,822
--------- ---------
Commitments and contingencies
Stockholders' Equity (Deficit):
Junior Preferred Stock 1 1
Common Stock - -
Additional paid-in capital 31,748 30,521
Accumulated deficit (22,883) (25,080)
Less stockholder loans (1,085) (1,042)
--------- ---------
Net stockholders' equity (deficit) 7,781 4,400
--------- ---------
Total liabilities, redeemable
preferred stock and equity (deficit) $ 230,561 228,142
========= =========
</TABLE>
See accompanying notes to the unaudited interim
condensed consolidated financial statements.
-2-
<PAGE> 4
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)
<TABLE>
<CAPTION>
13-Week 13-Week
period ended period ended
July 4, June 28,
1997 1996
------------ ------------
<S> <C> <C>
Sales $ 66,198 62,048
Cost of sales 46,754 46,027
--------- -------
Gross Profit 19,444 16,021
--------- -------
Operating costs and expenses:
Research and development 1,941 2,281
Marketing 4,783 4,519
General and administrative 3,758 3,616
--------- -------
Total operating costs and expenses 10,482 10,416
--------- -------
Operating income 8,962 5,605
Interest expense 4,753 4,552
--------- -------
Earnings before taxes 4,209 1,053
Income tax expense 463 390
--------- -------
Net earnings (loss) 3,746 663
Preferred dividends:
Senior Redeemable Preferred Stock 643 561
Junior Preferred Stock 429 374
--------- -------
Earnings attributable to common stock $ 2,674 (272)
========= =======
</TABLE>
See accompanying notes to the unaudited interim condensed
consolidated financial statements.
-3-
<PAGE> 5
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)
40-Week 39-Week
period ended period ended
July 4, June 28,
1997 1996
------------ ------------
Sales $185,389 $188,148
Cost of sales 135,316 137,866
-------- --------
Gross Profit 50,073 50,282
-------- --------
Operating costs and expenses:
Research and development 5,665 5,981
Marketing 14,871 14,252
General and administrative 9,313 10,163
-------- --------
Total operating costs and expenses 29,849 30,396
-------- --------
Operating income 20,224 19,886
Interest expense 14,245 14,172
-------- --------
Earnings before taxes 5,979 5,714
Income tax expense 658 2,115
-------- --------
Net earnings (loss) 5,321 3,599
Preferred dividends:
Senior Redeemable Preferred Stock 1,864 1,568
Junior Preferred Stock 1,243 1,046
-------- --------
Earnings attributable to common stock $ 2,214 $ 985
======== ========
See accompanying notes to the unaudited interim condensed
consolidated financial statements.
-4-
<PAGE> 6
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power
Industries Holding Corporation)
STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
<TABLE>
<CAPTION>
40-Week 39-Week
period ended period ended
July 4, June 28,
1997 1996
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by (used in) operating activities $ 5,677 10,334
------- -------
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net (7,937) (8,422)
(Increase) decrease in other non current assets - (73)
------- -------
Net cash used in investing activities (7,937) (8,495)
------- -------
FINANCING ACTIVITIES
Net (Repayments)/Proceeds from debt issue costs (193) (280)
Net (Repayments)/Proceeds from stockholder loans - 25
Net (Repayments)/Proceeds from revolving credit facility 6,900 (6,800)
Net (Repayments)/Proceeds from senior term loans (3,950) -
Net (Repayments)/Proceeds from treasury stock (15) -
------- -------
Net cash provided by (used in) financing activities 2,742 (7,055)
------- -------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 482 (5,216)
Cash and cash equivalents at beginning of period 1,753 8,267
------- -------
Cash and cash equivalents at end of period $ 2,235 3,051
======= =======
</TABLE>
See accompanying notes to the unaudited interim
condensed consolidated financial statements.
-5-
<PAGE> 7
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power
Industries Holding Corporation)
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The accompanying unaudited interim condensed consolidated financial statements
of Communications & Power Industries, Inc. ("CPI" or "Successor") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally included in annual
financial statements have been condensed or omitted and, accordingly, these
financial statements should be read in conjunction with the financial statements
and the notes thereto contained in CPI's September 27, 1996 Annual Report on
Form 10-K. Management believes that these unaudited interim condensed financial
statements contain all adjustments, all of which are of a normal, recurring
nature, necessary to a fair statement of the results for the interim period
presented.
During the quarter ended July 4, 1997, CPI paid preferred dividends on its
Senior Redeemable Preferred Stock and its Junior Preferred Stock through the
issuance of 6,429 additional shares of its Senior Redeemable Preferred Stock and
4,286 shares of its Junior Preferred Stock, respectively. During the three
quarters ended July 4, 1997, the Company paid preferred dividends through the
issuance of 18,643 shares of its Senior Redeemable Preferred Stock and 12,428
shares of its Junior Preferred Stock.
-6-
<PAGE> 8
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands - unaudited)
<TABLE>
<CAPTION>
ASSETS July 4, September 27,
------ 1997 1996
--------- ---------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 2,234 $ 1,753
Accounts receivable, net 47,657 50,380
Inventories 52,471 46,471
Deferred taxes 7,109 7,109
Other current assets 1,153 2,133
--------- ---------
Total current assets 110,624 107,846
Property, plant, and equipment, net 81,560 79,873
Goodwill, net 24,410 25,203
Debt issue costs, net 8,395 9,651
Deferred taxes 5,572 5,569
========= =========
Total assets $ 230,561 $ 228,142
========= =========
LIABILITIES, REDEEMABLE PREFERRED STOCK,
PREFERRED STOCK OF SUBSIDIARY AND EQUITY (DEFICIT)
- --------------------------------------------------
Current Liabilities
Revolving credit facility $ 23,900 $ 17,000
Accounts payable - trade 9,267 10,527
Accrued expenses 19,999 22,371
Product warranty 4,078 4,327
Current portion of term loans 3,950 3,950
Income taxes payable 9,456 10,560
Advance payments from customers 3,583 4,535
---------
Total current liabilities 74,233 73,270
Senior term loans 31,700 35,650
Senior subordinated notes 100,000 100,000
--------- ---------
Total liabilities 205,933 208,920
--------- ---------
Senior Redeemable Preferred Stock of Subsidiary 16,847 14,822
--------- ---------
Junior Preferred Stock of Subsidiary 12,021 10,779
--------- ---------
Commitments and contingencies
Stockholders' Equity (Deficit):
Common Stock 2 2
Issued - 200,000 shares
Less Treasury Stock - -
150 shares
Additional paid-in capital 19,726 19,741
Accumulated deficit (22,883) (25,080)
Less stockholder loans (1,085) (1,042)
--------- ---------
Net stockholders' equity (deficit) (4,240) (6,379)
--------- ---------
Total liabilities, redeemable preferred stock, preferred
stock of subsidiary and equity (deficit) $ 230,561 $ 228,142
========= =========
</TABLE>
See accompanying notes to the unaudited interim
condensed consolidated financial statements.
-7-
<PAGE> 9
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)
<TABLE>
<CAPTION>
13-Week 13-Week
period ended period ended
July 4, June 28,
1997 1996
---------- ---------
<S> <C> <C>
Sales $ 66,198 $ 62,048
Cost of sales 46,754 46,027
---------- ---------
Gross Profit 19,444 16,021
---------- ---------
Operating costs and expenses:
Research and development 1,941 2,281
Marketing 4,783 4,519
General and administrative 3,758 3,616
---------- ---------
Total operating costs and expenses 10,482 10,416
---------- ---------
Operating income 8,962 5,605
Interest expense 4,753 4,552
---------- ---------
Earnings before taxes 4,209 1,053
Income tax expense 463 390
---------- ---------
Net earnings (loss) 3,746 663
Preferred dividends:
Senior Redeemable Preferred Stock 643 561
Junior Preferred Stock 429 374
---------- ---------
Earnings attributable to common stock $ 2,674 $ (272)
========== =========
</TABLE>
See accompanying notes to the unaudited
interim condensed consolidated financial statements.
- 8 -
<PAGE> 10
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)
<TABLE>
<CAPTION>
40-Week 40-Week
period ended period ended
July 4, June 28,
1997 1996
---------- ---------
<S> <C> <C>
Sales $ 185,389 $ 188,148
Cost of sales 135,316 137,866
---------- ---------
Gross Profit 50,073 50,282
---------- ---------
Operating costs and expenses:
Research and development 5,665 5,981
Marketing 14,871 14,252
General and administrative 9,313 10,163
---------- ---------
Total operating costs and expenses 29,849 30,396
---------- ---------
Operating income 20,224 19,886
Interest expense 14,245 14,172
---------- ---------
Earnings before taxes 5,979 5,714
Income tax expense 658 2,115
---------- ---------
Net earnings (loss) 5,321 3,599
Preferred dividends:
Senior Redeemable Preferred Stock 1,864 1,568
Junior Preferred Stock 1,243 1,046
---------- ---------
Earnings attributable to common stock $ 2,214 $ 985
========== =========
</TABLE>
See accompanying notes to the unaudited
interim condensed consolidated financial statements.
- 9 -
<PAGE> 11
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
<TABLE>
<CAPTION>
40-Week 39-Week
period ended period ended
July 4 June 28,
1997 1996
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by (used in) operating activities $ 5,677 $10,334
------- -------
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net (7,937) (8,422)
(Increase) decrease in other non current assets - (73)
------- -------
Net cash used in investing activities (7,937) (8,495)
------- -------
FINANCING ACTIVITIES
Net (Repayments)/Proceeds from debt issue costs (193) (280)
Net (Repayments)/Proceeds from stockholder loans - 25
Net (Repayments)/Proceeds from revolving credit facility 6,900 (6,800)
Net (Repayments)/Proceeds from senior term loans (3,950) -
Net (Repayments)/Proceeds from treasury stock (15) -
------- -------
Net cash provided by (used in) financing activities 2,742 (7,055)
------- -------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 482 (5,216)
Cash and cash equivalents at beginning of period 1,753 8,267
======= =======
Cash and cash equivalents at end of period $ 2,235 $ 3,051
======= =======
</TABLE>
See accompanying notes to the unaudited interim
condensed consolidated financial statements.
-10-
<PAGE> 12
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The accompanying unaudited interim condensed consolidated financial statements
of Communications & Power Industries Holding Corporation ("Holding") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally included in annual
financial statements have been condensed or omitted and, accordingly, these
financial statements should be read in conjunction with the financial statements
and the notes thereto contained in the Holding's September 27, 1996 Annual
Report on Form 10-K. Management believes that these unaudited interim condensed
financial statements contain all adjustments, all of which are of a normal,
recurring nature, necessary to a fair statement of the results for the interim
period presented.
During the quarter ended July 4, 1997, CPI paid preferred dividends on its
Senior Redeemable Preferred Stock and its Junior Preferred Stock through the
issuance of 6,429 additional shares of its Senior Redeemable Preferred Stock and
4,286 shares of its Junior Preferred Stock, respectively. During the three
quarters ended July 4, 1997, CPI paid preferred dividends through the issuance
of 18,643 shares of its Senior Redeemable Preferred Stock and 12,428 shares of
its Junior Preferred Stock.
-11-
<PAGE> 13
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power
Industries Holding Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Orders during the third quarter of Fiscal 1997 were $74.1 million as compared to
$61.5 for the third quarter of Fiscal 1996, an increase of 20.4%. Orders during
the first nine months of Fiscal 1997 were $215.8 million as compared to $198.3
million over the comparable period in the prior fiscal year, a growth rate of
8.8%. However, incoming order levels fluctuate significantly on a quarterly
basis and a particular quarter's order rate may not be indicative of future
order levels. In addition, the Company's sales are highly dependent upon
manufacturing scheduling, performance and shipments and, accordingly, it is not
possible to accurately predict when these orders will be recognized as sales.
As of July 4, 1997, the Company had an order backlog of $180.9 million,
representing over eight months of sales compared to order backlog of $153.4
million as of June 28, 1996.
Sales for the third quarter of Fiscal 1997 were $66.2 million compared to $62.0
million for the third quarter of Fiscal 1996, an increase of 6.7%. Compared to
the first and second quarters of Fiscal 1997 with revenues of $55.3 million and
$63.9 million, respectively, the third quarter reflects the Company's
anticipated recovery from shipping delays tied to consolidation efforts that
were completed earlier in the year. Although improvements have been made, the
Company has continued to experience below expected performance levels on the
product lines moved from Salt Lake City, Utah to San Carlos, California
primarily due to poor tooling quality and parts shortages by outside vendors
that are struggling to meet the higher volume level. Sales for the first nine
months of Fiscal 1997 were $185.4 million, a decrease of $2.8 million, or 1.5%,
below the comparable period in the prior fiscal year, due to the impact that the
relocation of facilities had on the beginning of the 1997 fiscal year.
In terms of markets, lower sales for the first nine months of Fiscal 1997
compared to Fiscal 1996 were due to lower sales in the electronic
countermeasures and industrial markets of $5.4 million and $2.0 million,
respectively, partially offset by higher sales in each of the Company's other
markets. Sales were down in electronic countermeasures due to product
development delays in a new transmitter application and in the industrial market
due to the timing of customer defined delivery schedules. Sales in the
communications market were up $2.2 million, or 2.5%, reflecting the impact of
new product releases. Radar sales were up $1.7 million, or 3.0%, as a result of
strong order receipts for spares and upgrades from both OEM's and government
agency end users. Medical and scientific sales increased by $.3 million, or
2.8%, and $.4 million, or 14.8%, respectively.
Gross profit increased to $19.4 million, or 29.4% of sales, in the third quarter
of Fiscal 1997 from $16.0 million, or 25.8% of sales, in the third quarter of
Fiscal 1996 based on higher volume and improvements resulting from consolidation
efforts. This third quarter improvement helped to offset lower margins
experienced in the first and second quarters so that gross profit for the first
nine months of Fiscal 1997 improved to 27.0% of sales compared to 26.7% of sales
in the first nine months of Fiscal 1996, despite an increase in depreciation
expense of $1.2 million, or .6% of sales. As stated above, improvements have
been made in sales volume and, therefore, in gross profit performance, but gross
margins have continued to be impacted by poor production uniformity in the
Company's San Carlos facility.
-12-
<PAGE> 14
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power
Industries Holding Corporation)
Operating income was $9.0 million, or 13.5% of sales, for the third quarter of
Fiscal 1997, as compared to $5.6 million, or 9.0% of sales, for the third
quarter of Fiscal 1996. Operating income was $20.2 million, or 10.9% of sales,
for the first nine months of Fiscal 1997, as compared to $19.9 million, or 10.6%
of sales, for the first nine months of Fiscal 1996. In addition to the
improvements resulting from the completion of the Company's consolidation
efforts, operating income was positively affected by slightly lower operating
costs and expenses primarily related to lower management incentive accruals.
Earnings before interest, income taxes, depreciation and amortization ("EBITDA")
for the third quarter of Fiscal 1997 was $11.4 million, or 17.2% of sales,
compared to $7.6 million, or 12.2% of sales, for the third quarter of Fiscal
1996. This improvement was, as mentioned above, related to the completion of
consolidation efforts that were initially started in the third quarter of Fiscal
1996. EBITDA for the first nine months of Fiscal 1997 was $27.3 million, or
14.7% of sales, compared to $27.3 million (excluding a $1.7 million charge for
the write-up of inventory), or 14.5% of sales, for the first nine months of
Fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for the first nine months of Fiscal 1997
was $5.7 million, a decrease of $4.7 million from the $10.3 million provided by
operating activities during the first nine months of Fiscal 1996. This decrease
in cash flow reflects the impact of strong shipments late in the third quarter
of Fiscal 1997 resulting in an increase in receivables. Advanced payments from
customers were also $4.1 million less in the first nine months of Fiscal 1997
compared to the nine months of Fiscal 1996 due to the nature of the programs
being worked on during the two time periods.
Cash flow from investing activities was comprised principally of capital
expenditures for property and equipment, which amounted to $7.9 million for the
first nine months of Fiscal 1997 as compared to $8.4 million for the first nine
months of Fiscal 1996. These investing activities, partially offset by cash
provided by operations, required $3.0 million of net proceeds from the Company's
senior credit agreement.
As of July 4, 1997, the Company had working capital of approximately $36.4
million, an increase of $1.8 million, or 5.2%, from September 27, 1996. The
increase in working capital was substantially attributable to higher levels of
inventory required to support recent increases in backlog.
The Company's current primary source of liquidity, other than funds generated
from operations, is the $35.0 million revolving credit facility provided under
its senior credit agreement (of which $5.6 million was available as of August 1,
1997). Management believes that the Company will have adequate capital resources
and liquidity (including cash flow from operations and borrowing under its
revolving credit facility) to meet its obligations, fund all required capital
expenditures and pursue its business strategy for the foreseeable future and, in
any event, for the next 12 months.
-13-
<PAGE> 15
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power
Industries Holding Corporation)
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2: CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are being filed as part of this report:
27.1 Financial Data Schedule (Communications & Power Industries,
Holding Corporation)
27.2 Financial Data Schedule (Communications & Power Industries,
INC.)
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended July 4, 1997.
-14-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMUNICATIONS & POWER INDUSTRIES, INC.
By: /s/ Al D. Wilunowski
--------------------------------------
Al D. Wilunowski
Chief Executive Officer and President
Date: August 15, 1997
By: /s/ Lynn E. Harvey
--------------------------------------
Lynn E. Harvey
Chief Financial Officer, Treasurer and
Secretary (Principal Financial and
Accounting Officer)
Date: August 15, 1997
-15-
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------- ---------
<S> <C>
27.1 Financial Data Schedule (Communications & Power Industries
Holding Corporation)
27.2 Financial Data Schedule (Communications & Power Industries,
Inc.)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
CONDENSED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10Q - COMMUNICATIONS & POWER INDUSTRIES
HOLDING CORPORATION FOR THE QUARTER ENDED JULY 4, 1997.
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<CIK> 0001000654
<NAME> COMMUNICATIONS & POWER INDUSTRIES HOLDING COPR.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-03-1997
<PERIOD-START> SEP-28-1996
<PERIOD-END> JUL-04-1997
<CASH> 2,234
<SECURITIES> 0
<RECEIVABLES> 47,657
<ALLOWANCES> 0
<INVENTORY> 52,471
<CURRENT-ASSETS> 110,624
<PP&E> 81,560
<DEPRECIATION> 0
<TOTAL-ASSETS> 230,561
<CURRENT-LIABILITIES> 74,233
<BONDS> 131,700
16,847
0
<COMMON> 2
<OTHER-SE> (4,242)
<TOTAL-LIABILITY-AND-EQUITY> 230,561
<SALES> 185,389
<TOTAL-REVENUES> 185,389
<CGS> 135,316
<TOTAL-COSTS> 135,316
<OTHER-EXPENSES> 5,665
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,245
<INCOME-PRETAX> 5,979
<INCOME-TAX> 658
<INCOME-CONTINUING> 5,321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,321
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q COMMUNICATIONS AND
POWER INDUSTRIES, INC. FOR THE QUARTER ENDING JULY 4, 1997.
</LEGEND>
<CIK> 0001000564
<NAME> COMMUNICATIONS & POWER INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-03-1997
<PERIOD-START> SEP-28-1996
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<CASH> 2,234
<SECURITIES> 0
<RECEIVABLES> 47,657
<ALLOWANCES> 0
<INVENTORY> 52,471
<CURRENT-ASSETS> 110,624
<PP&E> 81,560
<DEPRECIATION> 0
<TOTAL-ASSETS> 230,561
<CURRENT-LIABILITIES> 74,233
<BONDS> 131,700
16,847
1
<COMMON> 0
<OTHER-SE> 7,780
<TOTAL-LIABILITY-AND-EQUITY> 230,561
<SALES> 185,389
<TOTAL-REVENUES> 185,389
<CGS> 135,316
<TOTAL-COSTS> 135,316
<OTHER-EXPENSES> 5,665
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,245
<INCOME-PRETAX> 5,979
<INCOME-TAX> 658
<INCOME-CONTINUING> 5,321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,321
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
