<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 29, 1996 Commission File No. 0-27308
AAVID THERMAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 02-0466826
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Kool Path, P.O. Box 400, Laconia, N.H. 03247
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 528-3400
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes_X_ No____
The number of shares of common stock outstanding as of August 13, 1996 was
6,515,215.
<PAGE> 2
AAVID THERMAL TECHNOLOGIES, INC.
INDEX TO FORM 10-Q
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - June 29, 1996 and December 31, 1995.
Consolidated Statements of Income for the quarter and six months ended
June 29, 1996 and July 1, 1995.
Consolidated Statements of Cash Flows for the six months ended June 29,
1996 and July 1, 1995.
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Part II. Other Information
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
AAVID THERMAL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Balance Sheets
(Amounts in thousands, except share data)
<CAPTION>
June 29, December 31,
1996 1995
(Unaudited) (Audited)
----------- ---------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 4,027 $ 4,327
Notes receivable 250 250
Accounts receivable trade, less allowance for
doubtful accounts, $318 and $286,respectively 15,916 15,736
Inventories 5,362 6,376
Deferred income taxes 1,335 1,493
Prepaid and other current assets 678 1,178
------- -------
Total current assets 27,568 29,360
Property, plant and equipment - at cost 31,950 29,042
Less accumulated depreciation 4,913 4,094
Property - net 27,037 24,948
Other assets, net 3,673 2,191
------- -------
Total Assets $58,278 $56,499
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of debt obligations $ 2,816 $ 4,267
Accounts payable, trade 5,169 7,278
Accrued expenses and other current liabilities 10,696 11,514
------- -------
Total current liabilities 18,681 23,059
Debt obligations, net of current portion 11,098 25,247
Deferred income taxes 1,654 1,654
------- -------
Total liabilities 31,433 49,960
Redeemable warrant - 1,106
Stockholders' Equity
Common stock, $0.01 par value; authorized 15,000,000 shares;
6,515,215 and 835,514 shares issued and outstanding 65 8
Convertible preferred stock:
Series A, convertible preferred stock, $0.01 par value; authorized
778,817 shares; 0 and 488,127 shares issued and outstanding - 5
Series B, convertible preferred stock, $0.01 par value; authorized
321,183 shares; 0 and 50,000 shares issued and outstanding - 1
Additional paid-in capital 30,245 6,583
Retained earnings (deficit) (3,427) (1,245)
Cumulative translation adjustment (38) 81
------- -------
Total stockholders' equity 26,845 5,433
Total liabilities and stockholders' equity $58,278 $56,499
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
AAVID THERMAL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Statements of Operations
(Amounts in thousands, except share data)
<CAPTION>
(Unaudited)
Quarter ended Six Months ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 23,023 $ 22,650 $ 49,035 $ 41,666
Cost of goods sold 14,011 15,961 30,669 28,947
---------- ---------- ---------- -----------
Gross profit 9,012 6,689 18,366 12,719
Selling, general and administrative expenses 7,119 4,224 12,860 8,470
Research and development 1,279 491 2,559 1,151
Purchased undeveloped technology charge 3,446 - 3,446 -
---------- ---------- ---------- ----------
Income from operations (2,832) 1,974 (499) 3,098
Interest expense,net (313) (619) (759) (1,156)
Other income (expense), net 10 (119) 92 (93)
---------- ---------- ---------- ----------
Income (loss) before income taxes and extraordinary item (3,135) 1,236 (1,166) 1,849
Income tax (expense) benefit (136) (399) (845) (350)
---------- ---------- ---------- ----------
Income before extraordinary item (3,271) 837 (2,011) 1,499
Extraordinary item, net of tax - - (171) -
---------- ---------- ---------- ----------
Net income $ (3,271) 837 $ (2,182) $ 1,499
Earnings per share available to shareholders:
From operations $ (0.50) $ 0.17 $ (0.34) $ 0.30
Extraordinary item $ - $ - $ (0.03) $ -
Net income per share $ (0.50) $ 0.17 $ (0.36) $ 0.30
Weighted average common shares and equivalents 6,478,127 4,974,944 5,983,391 4,974,944
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
AAVID THERMAL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Statements of Cash Flows
(Amounts in thousands, except share data)
<CAPTION>
(Unaudited)
Six Months ended
June 29, July 1,
1996 1995
---- ----
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss) $ (2,182) $ 1,499
Cash provided by operating activities:
Depreciation 1,750 1,022
Amortization 328 156
Change in assets and liabilities
Accounts receivable 1,322 (5,588)
Notes receivable - (250)
Inventory 1,014 (1,517)
Other current assets 609 333
Other long term assets 3,197 4
Accounts payable (2,815) 3,120
Accrued expenses and withheld items (3,139) 592
Deferred revenue (233) -
Income taxes 860 234
Total adjustments 2,893 (1,894)
-------- -------
Net cash provided by operating activities 711 (395)
Cash flows provided by (used in) investing activities:
Capital expenditures (3,564) (4,968)
Investments in FDI and Polyflow Joint Venture (4,193) -
Net proceeds from sale of fixed assets 14 -
-------- -------
Total cash (used in) investing activities (7,743) (4,968)
Cash flows provided by (used in) financing activities:
Issuance of common stock 22,608 -
Advances under line of credit,net (5,312) 3,731
Advances under other debt obligations,net (10,461) 1,231
-------- -------
Total cash provided by (used in) financing activities 6,835 4,962
Foreign exchange rate change (103) 68
Net increase (decrease) in cash (300) (333)
Cash, beginning of period 4,327 692
-------- -------
Cash, end of period $ 4,027 $ 359
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
AAVID THERMAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STAEMENTS
JUNE 29, 1996
(1) BASIS OF PRESENTATION
The consolidated financial statements of Aavid Thermal Technologies,
Inc. (the "Company") presented herein, without audit except for balance sheet
information at December 31, 1995, have been prepared pursuant to the rules of
the Securities and Exchange Commission for quarterly reports on Form 10-Q and do
not include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year ended
December 31, 1995, included in the Company's Form 10-K as filed with the
Securities and Exchange Commission on April 1, 1996.
The December 31, 1995 balance sheet includes reclassifications and the
consolidated balance sheet as of June 29, 1996 and the consolidated statements
of income and cash for the quarters and six months ended June 29, 1996 and July
1, 1995 are unaudited but, in the opinion of management, include all adjustments
(consisting of normal, recurring adjustments) necessary for a fair presentation
of certain prior year information to conform with the current presentation
format.
The results of operations for the quarter and six months ended June
29, 1996 are not necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 1996.
(2) PUBLIC OFFERING
On January 29, 1996, the Company completed its initial public offering
of 2,300,000 shares (exclusive of the over-allotment option) of its common stock
at $9.50 per share. The net proceeds from this offering, after deducting all
associated costs, aggregated $18,661,000. In February, 1996, the underwriters of
the public offering exercised their over-allotment option, purchasing 345,000
shares for net consideration of $3,047,000. In conjunction with the public
offering, all of the outstanding preferred stock automatically converted into
2,959,692 shares of common stock. In addition, the authorized number of
preferred shares increased from 1,100,000 to 4,000,000 upon the conversion of
the outstanding preferred stock to common stock and the number of authorized
shares of common stock increased from 15,000,000 to 25,000,000.
(3) STOCK DIVIDEND
The Company distributed a 5.5-for-1 stock split in the form of a stock
dividend effected immediately prior to the initial public offering on January
29, 1996. All share and per-share data has been adjusted to reflect the stock
dividend as though it had occurred at the beginning of the initial period
presented.
(4) REDEEMABLE WARRANT
In connection with the issuance of a Senior Subordinated Note, the
Company granted the issuer a warrant to purchase 90,000 shares of its Series B
Convertible Preferred Stock at an exercise price of $10.27
<PAGE> 7
expiring October 2003 (which upon the closing of the initial public offering
which occurred on January 29, 1996 represented the right to purchase 495,000
shares of Common Stock at a purchase price of $1.87 per share). The warrant
contained provisions which included the right to require the Company to purchase
the warrant for an amount based upon the fair market value of the Company's
stock at the time of exercise. The right to require the Company to purchase the
warrant expired upon consummation of the initial public offering which occurred
on February 2, 1996. The December 31, 1995 balance sheet reflects the accreted
value of the warrant at that date. Accreted value of the warrant was transferred
to paid-in capital upon the expiration of the right to require the Company to
purchase the warrant.
(5) STOCK OPTIONS
<TABLE>
A summary of stock option activity for the quarter and six months
ending June 29, 1996 follows:
<CAPTION>
Number of
Shares Option Price(*)
--------- ---------------
<S> <C> <C>
Outstanding at December 31, 1995 2,108,490 $0.19 -$9.00
Granted during the quarter ending March 30, 1996 55,500 $9.00 -$9.50
Canceled during the quarter ending March 30, 1996 0
---------
Outstanding at March 30,1996 2,163,990 $0.19 -$9.50
Granted during the quarter ending June 29, 1996 33,000 $7.375-$9.875
Canceled during the quarter ending June 29, 1996 15,125
---------
Outstanding at June 29, 1996 2,181,865 $0.19 -$9.875
<FN>
(*) Reflects conversion price after giving effect to stock dividend.
See Note 3.
</TABLE>
(6) EARNINGS PER SHARE CALCULATION
Net income (loss) per share of common stock is computed for each period
based upon the weighted average number of common shares outstanding and dilutive
common stock equivalents. For purposes of this calculation, outstanding options
are considered common stock equivalents (using the treasury stock method).
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 83,
common and common equivalent shares issued during the 12-month period prior to
the date of the initial filing of the Company's Registration Statement have been
included in the calculation, using the treasury stock method, as if they were
outstanding for all periods presented. Fair market value for the purpose of this
calculation was $9.50, the initial public offering price, and the average market
price for the common stock subsequent to the public offering.
(7) FLUENT ACQUISITION
On August 24, 1995, the Company purchased all of the stock of Fluent
Inc. ("Fluent"), a provider of computerized design and simulation software used
to predict fluid flow, heat and mass transfer, chemical reaction, and related
phenomena. The Company acquired Fluent through the issuance of 308,214 shares of
its common stock, a $3,590,000 non-interest bearing note payable in eight equal
quarterly installments, due September, 1997 (which Notes were paid in full in
February, 1996) and a cash payment of $927,000. This acquisition has been
accounted for under the purchase method of accounting.
The following is an unaudited Pro Forma summary of the consolidated
results of operations, assuming the Fluent Acquisition had taken place on
January 1, 1995. In preparing the pro forma data, certain adjustments have been
made to historic operating results, including compensation expense recorded by
Fluent in conjunction with the exercise of previously issued stock options, and
interest expense incurred on funds borrowed to pay a portion of the purchase
price in the Fluent Acquisition, including imputed interest on non-interest
bearing promissory notes issued in the Acquisition.
<PAGE> 8
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 29, 1996 July 1, 1995 June 29, 1996 July 1, 1995
(Actual) (Proforma) Actual Proforma
-------- ---------- ------ --------
<S> <C> <C> <C> <C>
Net sales $23,023,000 $26,387,000 $49,035,000 $49,698,000
Net income (loss) before
extraordinary item (3,271,000) 1,245,000 (2,011,000) 2,847,000
Extraordinary item - - (171,000) -
Net income (3,271,000) 1,245,000 (2,182,000) 2,847,000
Net income per share before
extraordinary item $ (0.50) $ 0.25 $ (0.34) $ 0.57
Extraordinary item income
(expense) per share - - $ (0.03) -
Net income per share $ (0.50) $ 0.25 $ (0.36) $ 0.57
Weighted average common
shares and equivalent 6,478,127 4,974,944 5,983,391 4,974,944
"NOTE: Net income for the quarter and six months ended June 29, 1996 is after a
$3,446,000 charge for the purchase of undeveloped technology in
conjunction with the acquisition of Fluid Dynamics International, Inc."
</TABLE>
(8) INVENTORIES
<TABLE>
Inventories are valued at the lower of cost or market with cost
determined on the last-in, first-out (LIFO) method for stock inventory items and
on the average cost method for job order work-in-process and finished goods. The
cost of inventories of foreign subsidiaries are valued on the first-in,
first-out basis.
<CAPTION>
($000)
June, 1996 December 31, 1995
(unaudited) (audited)
----------- ---------
<S> <C> <C>
Raw materials $2,503 $2,466
Work-in-process 982 1,168
Finished goods 1,877 2,742
------ ------
$5,362 $6,376
</TABLE>
The excess of current costs over the carrying value using the LIFO
method was approximately $359,000 and $479,000 at June 29, 1996 and December 31,
1995, respectively.
<PAGE> 9
<TABLE>
(9) DEBT OBLIGATIONS
Following is an unaudited summary of outstanding debt obligations:
<CAPTION>
($000)
June 29, December 31,
1996 1995
---- ----
<S> <C> <C>
Equipment term notes payable -interest at
lender's reference rate (which
approximates prime) plus 1.75% $ 3,515 $ 3,330
Construction note payable-interest at
prime rate plus 1.25% 0 860
Revolving credit facility-interest at
lender's reference rate (which
approximates prime) plus 1.75% 1,553 6,865
Term notes-interest at lender's reference
rate (which approximates prime)
plus 1.75% 5,127 5,724
Notes secured by real property 3,459 2,457
Subordinated notes payable-interest at 7% 0 2,965
Senior subordinated note payable-interest
at 12.5% 0 7,000
Other 260 313
------- -------
Total $13,914 $29,514
Less current portion 2,816 4,267
------- -------
Debt obligations, net of current portion $11,098 $25,247
</TABLE>
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
This Report contains certain forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, economic conditions, product
demand and industry capacity, competitive products and pricing, manufacturing
efficiencies, new product development, ability to enforce patents, availability
of raw materials and critical manufacturing equipment, new plant startups and
the regulatory and trade environment, as well as those discussed below and in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Aavid Thermal Technologies, Inc. (the "Company") is a leading provider of
thermal management products that dissipate unwanted heat in electronic and
electrical components and systems, and a leading developer and marketer of
computational fluid dynamics software which enables sophisticated simulation and
analysis of air and other fluid flows, heat and mass transfer, chemical reaction
and related phenomena. The Company's thermal management products, which include
aluminum and copper heat sinks, heat sink/fan combinations, heat pipes, liquid
cooled cold plates, attachment accessories, compliant interface materials and
conductive adhesives, operate by conducting, convecting and radiating away
unwanted heat. The
<PAGE> 10
Company's software is used in a broad range of applications, including design of
automobiles, electronic systems, aerospace components and combustion systems, as
well as process plant engineering.
During the first quarter, the Company completed its initial public offering of
common stock and began trading on the Nasdaq National Market on January 30,
1996. Montgomery Securities and Robertson, Stephens & Company co-managed the
underwriting group.
During the first quarter, the Company also opened a new 50,000 square foot
manufacturing and sales facility in Terrell, Texas, increasing total worldwide
thermal products manufacturing capacity to more than 300,00 square feet.
During the second quarter, the Company acquired, through its wholly owned
subsidiary, Fluent, Inc., Fluid Dynamics International, Inc. ("FDI") a 50%
interest in Polyflow S.A. of Belgium. The Company believes these transactions
make Fluent - a leading provider of computational fluid dynamics (CFD)-based
analysis software.
Results of Operations
- ---------------------
<TABLE>
Net sales increased by 1.6% to $23.0 million and by 17.7% to $49.0
million for the quarter and six months ended June 29, 1996 respectively, as
compared to the corresponding periods ended July 1, 1995. Sales by
application and product line are broken down as follows:-
<CAPTION>
($000)
Quarters Ended Six Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Thermal Management - $16,889 $22,650 $37,442 $41,666
Software Products 6,134 0 11,593 0
------- ------- ------- -------
Total $23,023 $22,650 $49,035 $41,666
</TABLE>
Thermal management revenues decreased 25% to $16,889,000 and by 10% to
$37,442,000 for the quarter and six months ended June 29, 1996, respectively,
as compared to the corresponding periods ended July 1, 1995.
Thermal management revenues were impacted by a weak market for
electronic products as evidenced by the semiconductor industry's book-to-bill
ratio reaching a ten year low during the quarter. The Company anticipates short
term thermal management revenues will continue to be impacted by continued soft
business conditions during the third quarter of 1996. Over the longer term, the
Company expects growth in unit demand as an increasing number of semiconductor
and integrated circuit devices enter the market that need thermal solutions, and
as the semiconductor industry moves on to new generations of products and
applications.
Software product sales for 1996 represent sales of Fluent which was
acquired during the third quarter of 1995, and Fluid Dynamics International,
Inc. ("FDI") which was acquired in May 1996. Quarterly Software revenue
increased 14% from the prior quarter, and, on a proforma basis, by 12% from a
year ago. Included in Fluent's 1996 revenue for the quarter is $890,000 of
FDI revenues. The Fluent business is historically seasonally strong in the
fourth and first quarters due to the budgeting patterns of Fluent's customers.
10
<PAGE> 11
International (i.e., non-North America) revenues for the Company
represented 23.4% and 23.8% of sales for the quarter and six month periods ended
June 29, 1996 as compared to 9.1% and 7.8% for the corresponding periods ended
July 1, 1995. Both the acquisition of Fluent and increased penetration of the
international market by the thermal management business contributed to the
increased significance of international sales in 1996.
For the Company as a whole, cost of goods sold as a percentage of sales
were 60.9% for the quarter and 62.5% for the six months ended June 29, 1996, as
compared to 70.5% and 69.5% for the corresponding periods ended July 1, 1995.
For the quarter and six month periods ending June 29, 1996, thermal
management cost of goods sold were 74.8% and 73.9% respectively, compared to
corresponding 1995 results of 70.5% and 69.5% respectively. The increase in cost
of goods sold percentage in thermal management products is principally
attributable to increased material costs and the impact of reduced sales volume.
Increased material cost, as a percentage of sales, is attributable to a far more
material intensive product mix, principally the result of large volume shipments
during the 1996 period of fan heat sinks for digital electronic applications
utilizing purchased fans, especially in the first quarter of 1996. The change in
product mix has more than offset reductions in the average price per pound of
aluminum extrusion purchases. While cost reduction measures have brought about a
decline in production overhead during the three month period ended June 29, 1996
from both the first quarter and 1995 levels, the decline in sales volume for the
periods ended June 29, 1996 has resulted in an increase in overhead as a
percentage of sales.
Software product cost of goods sold for the quarter and six month
periods ended June 29, 1996 were 22.4% and 25.7% as compared to pro forma 1995
costs of 34.1% and 27.1%.
For the Company as a whole, Selling, general and administrative
expenses increased to $7,119,000 for the quarter, and $12,860,000 for the six
months ended June 29, 1996, as compared to $4,224,000 and $8,470,000 for the
corresponding 1995 periods. Thermal management selling, general and
administrative expenses were $4,070,000 or 24.2% of sales for the quarter and
$8,316,000 or 22.3% of sales for the first six months of 1996 for the 1996
periods as compared to 18.6% and 20.3% of sales for the corresponding
1995 periods. The decline in thermal management selling, general and
administrative expenses from 1995 to 1996 is principally attributable to lower
commission expenses associated with lower sales volume.
Research and development expenses increased to $1,279,000 and
$2,559,000 (5.5% and 5.2% of sales, respectively) for the quarter and six
months ended June 29, 1996 compared to $491,000 and $1,151,000 (2.2% and 2.8%
of sales, respectively) for the corresponding respective 1995 periods. For
both 1996 periods, research and development represented 16% of software
product sales and 2% of thermal management sales. The increase in total
research and development from year to year is attributable to the acquisition
of Fluent, partially offset the reduction in thermal management research and
development reflecting reduced development funding of joint venture projects.
The Company incurred a non-cash charge during the quarter ended June
29, 1996 of $3,446,000, which represented the amount of the purchase price of
FDI allocated to technology acquired in this transaction which was not fully
commercially developed and had no alternative future use at the time of
acquisition.
Net interest expense declined to $313,000 for the quarter ended June
29, 1996 from $619,000 for the quarter ended July 1, 1995. For the six months
ended June 29, 1996, interest expense was $759,000 compared to $1,159,000 for
the corresponding previous year period. The reduction in interest expense for
the quarter and year-to-date was the result of the utilization of a substantial
portion of the proceeds from the initial public offering for the reduction of
outstanding indebtedness.
The effective tax rate for the quarter and six months ended June
29, 1996 was adversely impacted by the FDI non-deductible purchased undeveloped
technology charge. Excluding this charge, the effective tax
11
<PAGE> 12
rate was 43.7% for the quarter ended June 29, 1996 compared to 32.3% for the
quarter ended July 1, 1995, and 37.1% for the six month period ended June 29,
1996, compared to 18.9% for the six months ended July 1, 1996. The 1995 six
month effective tax rate benefited from the recognition of a foreign net
operating loss carryforward.
Extraordinary expense for the six months ended June 29, 1996 represents
the write-off of deferred financing costs resulting from the early
extinguishment of debt as a result of the initial public offering.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents declined $300,000 in the six month period
ended June 29, 1996 to $4,027,000.
The Company's trade accounts receivable increased $180,000 (1%) to
$15,916,000 from $15,736,000 at December 31, 1996. This increase is due to the
acquisition of FDI ($1,719,000) which combined with increased non-FDI Fluent
receivables ($971,000) offset lower thermal management receivables ($2,510,000)
attributable to the decline in revenues from the fourth quarter of 1995 to the
second quarter of 1996. Inventories decreased 16% to $5,362,000 at June 29, 1996
from $6,376,000 at December 31, 1995 principally due to reductions in finished
goods. Accrued expenses and other current liabilities fell by $818,000 primarily
from the disbursement of $2,649,000 in conjunction with the buyout of previously
accrued compensation agreements which offset Fluent increases in deferred
revenues ($580,000) and accrued liabilities attributable to FDI ($479,000).
Capital expenditures for the six months ended June 29, 1996 of
$3,564,000 principally represented the purchase of machinery and equipment for
existing facilities and the expansion of the Texas facility. The Company has
announced an agreement to purchase land, a building and equipment from Alumax
Extrusions, Inc. in Franklin, New Hampshire, to be operated as an extrusion
facility.
During the second quarter, the Company disbursed $4,193,000 in
conjunction with the purchase of FDI and a 50% interest in Polyflow.
The Company realized net proceeds of $21,708,000 in conjunction with
the completion of its public offering of stock. The Company used a portion of
the proceeds to repay a 12.5% Senior Subordinated Note with an outstanding
principal amount of $7,000,000, reduce by $8,500,000 the amount outstanding
under the Company's revolving credit facility,and the payment of $2,649,000 for
the buyout of compensation agreements.
During the first quarter of 1996, the Company repaid the subordinated
notes issued in conjunction with the Fluent Acquisition and increased borrowings
under its construction loan facility to finance the construction of a
manufacturing facility in Texas. During the second quarter, the Company repaid
the construction loan facility from the proceeds of a $1,150,000 mortgage loan.
At quarter end, the outstanding balance under the Company's $12,000,000
revolving credit facility stood at $1,553,000 as compared to allowable
borrowings of $8,853,000.
Management believes that its current level of cash and cash
equivalents, anticipated cash flow from operations and existing credit
facilities will be adequate to fund its operations for at least the
next 12 months.
12
<PAGE> 13
Part II. Other Information
Item 1. Legal Proceedings
On March 15, 1996, the United States District Court for the District of
New Hampshire granted the Company's motion for summary judgment against
Thermalloy, Inc., and declared invalid Thermalloy's Letters Patent No. 4,884,331
Method of Manufacturing Heat Sink Apparatus. The patent at issue involved heat
sinks for the digital electronics industry. Thermalloy has since filed its
notice of appeal.
Item 6. Exhibits and Report on Form 8-K
a) Exhibit 11 - Computation of Earnings Per Share Mortgage Loan.
b) Aavid Thermal Technologies filed a Current Report on Form 8-K
dated May 31, 1996 to report the acquisition of Fluid
Dynamics International, Inc. ("FDI"), by its wholly
owned subsidiary Fluent, Inc.
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.
AAVID THERMAL TECHNOLOGIES, INC.
Date August 13, 1996
By /s/ Mark D. Brown
Vice President, Treasurer
and Principal Financial Officer
<PAGE> 1
Exhibit 11
AAVID THERMAL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
Computation of Net Income Per Share
(Amounts in thousands, except share data)
<CAPTION>
(Unaudited)
Quarter ended Six Months ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding 6,478,127 3,684,143 6,478,127 3,684,143
Net effect of the assumed exercise of stock
options and warrant
-based on the treasury stock method 0 1,290,801 0 1,290,801
Total 6,478,127 4,974,944 6,478,127 4,974,944
Net income before extraordinary item $(3,271,000) $ 837,000 $(2,011,000) $1,499,000
Extraordinary item - - (171,000) -
Net income $(3,271,000) $ 837,000 $(2,182,000) $1,499,000
Net income per share before extraordinary item $ (0.50) $ 0.17 $ (0.34) $ 0.30
Extraordinary item income (expense) per share $ - $ - $ (0.03) $ -
Net income per share $ (0.50) $ 0.17 $ (0.50) $ 0.30
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTER ENDED JUNE 29, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-29-1996
<CASH> 4,027
<SECURITIES> 0
<RECEIVABLES> 16,484
<ALLOWANCES> 318
<INVENTORY> 5,362
<CURRENT-ASSETS> 27,568
<PP&E> 31,950
<DEPRECIATION> 4,913
<TOTAL-ASSETS> 58,278
<CURRENT-LIABILITIES> 18,681
<BONDS> 11,098
<COMMON> 65
0
0
<OTHER-SE> 26,780
<TOTAL-LIABILITY-AND-EQUITY> 58,278
<SALES> 49,035
<TOTAL-REVENUES> 49,035
<CGS> 30,669
<TOTAL-COSTS> 49,534
<OTHER-EXPENSES> (92)
<LOSS-PROVISION> 41
<INTEREST-EXPENSE> 759
<INCOME-PRETAX> (1,166)
<INCOME-TAX> 845
<INCOME-CONTINUING> (2,011)
<DISCONTINUED> 0
<EXTRAORDINARY> (171)
<CHANGES> 0
<NET-INCOME> (2,182)
<EPS-PRIMARY> (0.36)
<EPS-DILUTED> (0.36)
</TABLE>
