SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[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 30, 1994 Commission File No. 0-4466
COMPUTER PRODUCTS, INC.
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(Exact name of Registrant as specified in its charter)
FLORIDA 59-1205269
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(STATE OR OTHER (I.R.S.
JURISDICTION OF EMPLOYER
INCORPORATION) IDENTIFICATION
NO.)
7900 GLADES ROAD, SUITE 500, 33434-4105
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BOCA RATON, FL (ZIP CODE)
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(Address of principal
executive offices)
(407) 451-1000
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(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
COMMON STOCK PURCHASE RIGHTS
$40.25 MILLION 91/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 1997
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(Title of each class)
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 periods that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO .
--- --
Indicate 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 [X].
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 15, 1995 was approximately $54 million.
As of March 15, 1995, 20,446,902 shares of the Registrant's $.01 par value
common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's annual shareholders' report for the year ended
December 30, 1994 (the "Annual Report") are incorporated by reference into Parts
I and II.
Portions of the Company's proxy statement for the annual meeting of shareholders
to be held April 27, 1995 are incorporated by reference into Part III.
PART I
ITEM 1. BUSINESS
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GENERAL
The Company was incorporated under the laws of the State of Florida in 1968.
Unless the context indicates otherwise, as used herein the term "Company" means
Computer Products, Inc. and its consolidated subsidiaries.
Computer Products, Inc. (the "Company") designs, develops, manufactures and
markets the following lines of electronic products and systems:
(1) power conversion products for electronic equipment used in commercial and
industrial applications requiring a precise and constant voltage level
for proper operation;
(2) industrial automation hardware and software systems and components which
are used in computer-directed process control and data acquisition
applications; and
(3) high performance single-board computers, systems and subsystems for real-
time applications.
PRODUCTS
The following table sets forth the revenues of the Company's product lines
(after elimination of intercompany transactions) during the fiscal years
indicated ($000s):
1994 1993 1992
Power Conversion $117,995 $ 94,501 $ 77,527
Industrial Automation 18,607 13,236 20,032
Computer Systems 18,198 16,053 17,240
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Total $154,800 $123,790 $114,799
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For further information on revenues, particularly with respect to foreign and
intercompany sales, refer to Note 15 of the Consolidated Financial Statements
in the Annual Report, which is incorporated herein by reference.
POWER CONVERSION
The Company is one of the leading suppliers of power supplies, power
converters and distributed power systems to the communications industry.
According to independent industry sources, the Company ranks among the top
ten independent power supply manufacturers in sales volume worldwide.
Product offerings include over 300 standard products, in addition to custom
designed products, distributed through multiple sales channels.
Power Conversion's products include AC-to-DC power supplies and modular DC-
to-DC converters for the data communications, networking, telecommunications,
computer, and instrumentation industries. AC -to-DC power supplies are used
to convert alternating electric current, which is the form in which virtually
all electric current is delivered by utility companies, to a precisely
controlled direct current. Direct current is required to operate virtually
all solid state electronic equipment. DC-to-DC converters are used to
convert a particular direct current voltage into another (higher or lower)
direct current voltage that is required by the electronic device to which it
is connected.
It is the Company's objective to provide the fastest time-to-market for
engineered power solutions and to produce a broad range of high quality
standard products to meet customers' needs. More than 200 products were
released in the past two years. Ranging from 1 to 1500 watts, the Company
currently offers standard power products in over 1,000 configurations and
accommodates a wide variety of customer applications. The products can be
configured as open frames, enclosed or encapsuled. The Company's products
are tested by regulatory agencies for safety and are also tested for
compliance with a variety of international emissions standards.
The Company's BX family of high density converters targeted at the
communications industry is designed to enable flexible distributed power
architectures with a broad range of products.
The Company's Power Conversion activities are carried on principally through
its Power Conversion North America Division, located in Boston, Massachusetts
and Fremont, California; Power Conversion Europe, headquartered in Youghal,
Ireland; Computer Products Asia-Pacific Limited in Hong Kong; and through a
manufacturing subcontractor in Zhongshan, People's Republic of China.
INDUSTRIAL AUTOMATION
Industrial Automation's product line consists of electronic real-time
input/output subsystems, intelligent controllers and software that are
utilized in data acquisition, monitoring, and control of processes in
industrial automation. The Company's products are characterized by their
ability to measure and process data at high speeds and on a continuous
`real-time'' basis. These products are used in a broad range of industries
including utilities, metals, glass, automotive, paper, and food processing as
well as in training simulators and research and development laboratories.
Industrial Automation's products provide the interfaces linking sensors and
actuators to a computer or controller. In general, sensors convert physical
phenomena, such as pressure, temperature, flow and weight, into electrical
signals, while actuators provide the force required to adjust devices
controlling such physical phenomena and other aspects of industrial
processes. Such electrical signals are not standardized and occur in a broad
range of voltages and currents.
The Company has recently focused on modularity and connectivity as strategies
to expand its customer base in this industrial market area. The modularity
engineered into the product provides customers with maximum flexibility to
modify, update and expand process control systems without required
replacement of existing systems. Connectivity further enhances the product
line's ability to communicate with third-party hardware and software products
through industry standard interfaces and networks.
The Company believes that Industrial Automation has bridged the gap between
existing products with minicomputers and microcomputers commonly used in
today's process environment. The introduction of the RTP 2000 product
provides industrial customers with a data acquisition and control solution
utilizing an embedded Intel 486 controller and industry standard software.
The Company has established relationships with several third party software
companies offering bundled hardware and software solutions for the industrial
process market.
Industrial Automation's products, generally available as standard products,
are used in a wide range of plant and laboratory environments. These
products are offered with a large number of options that are designed to
enable them to perform numerous special functions and, when required, meet or
exceed the design specifications for safety-related equipment used in nuclear
power plants. In addition, the Company maintains a special engineering group
to assist customers who require special hardware solutions.
Industrial Automation's products are manufactured in Pompano Beach, Florida.
COMPUTER SYSTEMS
Computer Systems designs and manufactures high performance board-level computers
and computer systems, integrating its products with real-time operating system
software, enclosures and peripherals to form complete systems for real-time
applications.
The products are designed around and incorporate industry standards which permit
easy portability to a variety of applications. The technology relies on popular
and powerful microprocessors from sources such as Motorola and Intel. The
primary product line combines both the worldwide industry standard VMEbus, which
defines physical board size and signal characteristics for the interconnection
of microprocessors, and popular real-time operating system software.
Application requirements for these products usually include environments
requiring specified computer response time with high quality processing
capabilities, particularly in graphical intensive applications.
Computer Systems has recently released the Nitro40TM and Nitro60TM product
family. The Nitro60TM utilizes Motorola's 68060 processor. The Company
believes that the Nitro40TM provides a cost effective software compatible
solution by using the Motorola 68040 processor. The recently announced Malibu
and Laguna products are single board computers that take advantage of the very
high speed processing capability of the MIPs 4000 family of RISC based
microprocessors manufactured by Silicon Graphics. Both CISC and RISC based
single-board computers have powerful networking and peripheral interfaces that
provide the latest features available for VMEbus products.
Computer Systems' customers are primarily original equipment manufacturers
(OEMs). Computer Systems' products are used in diverse applications such as
medical instrumentation, airplane and weapons training simulators, high speed
telecommunications, process control, industrial automation and traffic control
systems. Management believes that the market for real-time products will expand
as powerful new microcomputers become more pervasive in their control of
machinery, factories, medical equipment, communications and transportation
systems.
Computer Systems' products are manufactured at the Computer Systems Division in
Madison, Wisconsin.
MARKETING AND DISTRIBUTION
The Company markets its products domestically and abroad through independent
manufacturers' representatives and distributors and by direct sales. The
business of the Company is not seasonal in nature.
Power Conversion products are sold directly to OEMs, private-label customers and
distributors. In addition, the Company's sales and engineering personnel
supervise and provide technical assistance to independent domestic sales
representatives and to domestic and foreign distributors.
Industrial Automation and Computer Systems products are marketed domestically
through independent sales representative organizations. Substantially all
foreign sales are made through independent foreign distributors and foreign
trading companies. Computer Systems manages some sales on a direct basis.
No single customer accounted for more than 10% of the Company's consolidated
sales during fiscal 1994. The Company does not believe that the loss of any
single customer would have a materially adverse effect on its business.
The Company has derived a significant portion of its sales in recent years from
its international operations. Thus, the Company's future operations and
financial results could be significantly affected by international factors, such
as changes in foreign currency exchange rates or political instability. The
Company's operating strategy and pricing take into account changes in exchange
rates over time. However, the Company's future results of operations may be
significantly affected in the short term by fluctuations in foreign currency
exchange rates. See Note 15 of the Notes to Consolidated Financial Statements,
incorporated herein by reference, for additional information.
The Company is also subject to risks associated with foreign operations
including, but not limited to, the risk of political instability.
MATERIALS AND COMPONENTS
The manufacture of the Company's products requires a wide variety of materials
and components. The Company has multiple external sources for most of the
materials and components used in its production processes, and it manufactures
certain of these components. Although the Company has from time to time
experienced shortages of certain supplies, such shortages have not resulted in
any significant disruptions in production. The Company believes that there are
adequate alternative sources of supply to meet its requirements.
PATENTS
The Company believes that its future success is primarily dependent upon the
technical competence and creative skills of its personnel, rather than upon any
patent or other proprietary rights. However, the Company has protected certain
of its products with patents where appropriate and has defended, and will
continue to defend, its rights under these patents.
BACKLOG
Order backlog from continuing operations at December 30, 1994 was $37.0 million
as compared to $32.3 million at December 31, 1993. Historically, the effects of
changes and cancellations have not been significant to the Company's operations.
The Company expects to ship substantially all of its December 30, 1994 backlog
during fiscal 1995.
COMPETITION
The Company faces intense competition from a significant number of companies.
Many of these competitors have resources, financial or otherwise, substantially
greater than those of the Company. Competitors include both independent
manufacturers of competing products, and manufacturers of overall electronic
systems and devices, who manufacture competing products on an "in-house" or
"captive" basis for use in their own systems or devices. Although a significant
portion of its present overall market is served on a "captive" or "in-house"
basis, the Company believes there is a trend toward the use of independent
manufacturers as a source of these products, as these items become more
technologically advanced and complex.
RESEARCH AND DEVELOPMENT
The Company maintains active research and development departments which are
engaged in the modification and improvement of existing products and the
development of new products. Expenditures for research and development during
the 1994, 1993, and 1992 fiscal years were approximately $10.9 million, $9.4
million, and $9.0 million, respectively. As a percentage of total revenues,
research and development accounted for 7.0%, 7.6%, and 7.8% in 1994, 1993 and
1992, respectively. Although research and development spending as a percentage
of sales has declined in the past three years, the Company may incur higher
engineering expenses going forward for its products to remain competitive and to
introduce new products.
EMPLOYEES
The Company presently employs approximately 1,600 full-time people. The
Company's ability to conduct its present and proposed activities would be
impaired if the Company lost the services of a significant number of its
engineers and technicians and could not readily replace them with comparable
personnel. Although there is demand for qualified technical personnel, the
Company has not, to date, experienced difficulty in attracting and retaining
sufficient engineering and technical personnel to meet its needs.
None of the Company's domestic employees is covered by collective bargaining
agreements. The Company considers its relations with its employees to be
satisfactory.
ENVIRONMENTAL MATTERS
Compliance with Federal, state and local laws and regulations regulating the
discharge of materials into the environment has not had, and, under present
conditions the Company does not anticipate that such laws and regulations will
have, a material effect on the results of operations, capital expenditures or
competitive position of the Company.
ITEM 2. PROPERTIES
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The Company currently occupies approximately 493,000 square feet of office and
manufacturing space worldwide. In addition to the Company's principal executive
offices in Boca Raton, Florida, the Company maintains facilities in Boston,
Massachusetts; Fremont, California; Youghal, Ireland; Hong Kong; Pompano
Beach, Florida; and Madison, Wisconsin. Approximately 80% of the space
utilized by the Company is owned while the remainder is leased. Certain of the
facilities owned by the Company are subject to liens, which are described in
Note 7 to the Consolidated Financial Statements, incorporated herein by
reference.
In addition to the above locations, the Company has leased sales offices located
in or near London, England; Paris, France; and Munich, Germany. The Company
considers the facilities described in this Item to be generally well-maintained,
adequate for its current needs and capable of supporting a reasonably higher
level of demand for its products.
ITEM 3. LEGAL PROCEEDINGS
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None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
ITEM 4A. EXECUTIVE OFFICERS
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Name Age Position(s) with the Company
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Joseph M. O'Donnell 48 President and Chief Executive Officer,
Director
Richard J. Thompson 45 Vice President - Finance, Chief Financial
Officer, Secretary, Treasurer
Robert J. Aebli 59 President - Computer Systems Division
Louis R. DeBartelo 54 President - Power Conversion North America
Gary J. Duffy 42 Managing Director - Power Conversion
Europe
W.K. Lo 42 Managing Director - Power Conversion Asia-
Pacific
Salvatore R. Provanzano 52 President - Industrial Automation Division
Donald V. Jackson 51 Vice President - Information Systems
Joseph M. O'Donnell has served as President and Chief Executive Officer of the
Company since July 1994. Mr. O'Donnell served as Managing Director of O'Donnell
Associates, a consulting firm, from March 1994 to June 1994 and from October
1992 to September 1993; as Chief Executive Officer of Savin Corporation, an
office products distributor, from October 1993 to February 1994; as President
and Chief Executive Officer of Go/Dan Industries, a manufacturer of automotive
parts, from June 1990 to September 1992; and as Group Vice President of Handy &
Harman, a manufacturer of electronic components, from 1988 to June 1990. He is
a Director of Cincinnati Microwave, a manufacturer of consumer electronics, and
a Director of V-Band Corporation, a manufacturer of computer systems.
Prior to Mr. O'Donnell, John N. Lemasters had served as Chairman of the Board
and Chief Executive Officer of the Company since March 1988 and as President of
the Company from March 1988 to July 1992.
Richard J. Thompson has served as Vice President - Finance, Chief Financial
Officer, Secretary and Treasurer of the Company since June 1990. Prior to
joining the Company, Mr. Thompson served as Group Controller - Technical
Services and Controller - Pan Am/Asia Pacific at Control Data Corporation, a
multi-national computer company. Prior to 1986 Mr. Thompson held a variety of
managerial positions at Schlumberger Limited, an oil field services and
electronics company, including assignments in the Fairchild Semiconductor
subsidiary and oil field services industries as well as corporate staff
responsibilities.
Robert J. Aebli was appointed in November 1993 to the position of President of
Computer Systems. From 1991 to 1993 Mr. Aebli served as Vice President -
Operations of Contraves, Inc., a manufacturer of test and simulation systems,
and from 1987 to 1991, he was a principal of Booz, Allen & Hamilton, an
international management consulting organization, where his primary consulting
work focused on the simulation and training business. From 1985 to 1987 he was
a Senior Vice President with Reflectone, Inc., a company engaged in the design,
development and manufacture of flight training simulators. Prior to 1985, Mr.
Aebli held various senior management positions with The Singer Company,
including President of its Link Simulator Systems Division.
Louis R. DeBartelo was appointed President of the Company's Power Conversion
North America Division in 1993. From 1992 to 1994 he served as President -
Power Conversion National Accounts Division and from 1990 to 1992 as President -
Power Conversion America. Prior to joining the Company, from 1987 to 1989, he
was President and Chief Executive Officer of ZAC Precision, Inc., a manufacturer
of precision parts for the computer industry, and from 1984 to 1987 he was Vice
President and General Manager of the Systems Division of Calcomp, a Lockheed
Corporation subsidiary and supplier of turnkey computer-aided design systems.
Prior to 1984, Mr. DeBartelo held various management positions with Burroughs
Corporation and Memorex Corporation.
Gary J. Duffy has served as Managing Director of the Company's European Power
Conversion Division since 1987, having held manufacturing and general management
positions since joining the Company in 1982. Prior to 1982, Mr. Duffy held
positions in materials and systems management with a European division of
Emerson Electric Corporation.
W.K. Lo has served as Managing Director of the Company's Power Conversion Asia-
Pacific division since 1988. Prior to joining the Company, Mr. Lo held
management positions from 1984 to 1988 with M.C. Packaging (Hong Kong) Limited,
a highly automated manufacturer of packaging containers. Prior to 1984, he held
various managerial positions with a manufacturing division of Union Carbide
Corporation.
Salvatore R. Provanzano was appointed in November 1993 to the position of
President of Industrial Automation. Previously, Mr. Provanzano served as Vice
President - Product Research & Development for QMS, Inc., a manufacturer of
laser and color thermal transfer printers. From 1990 to 1992 he served as
General Manager - Customer Services of Foxboro Company, a manufacturer of
instrumentation and control systems. From 1988 to 1989 he served as Director -
Intelligent Automation Systems of Foxboro Company. Prior to 1988 he was Vice
President and General Manager of the industrial computer division of Gould
Corporation.
Donald V. Jackson has served as Vice President - Information Systems and Chief
Information Officer of the Company since October 1990 and as Director of
Information Systems since November 1989. Mr. Jackson served as Director of
Common Manufacturing Systems at Unisys, a manufacturer of computer mainframes
and data processing equipment, from 1987 to 1989, and as Director, Program
Management Manufacturing Line of Business from 1983 to 1987.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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The common stock market information and the information pertaining to the number
of record holders on page 30 of the Annual Report for the year ended December
30, 1994 is incorporated herein by reference.
The Registrant has not paid cash dividends in the past and no change in such
policy is anticipated. Further dividends, if any, will be determined by the
Board of Directors in light of the circumstances then existing, including the
Company's earnings and financial requirements and general business conditions.
The Company is restricted under certain conditions from paying cash dividends,
repurchasing or redeeming shares of its capital stock, and making certain other
distributions in respect of its capital stock, so long as any of its 91/2%
Convertible Subordinated Debentures are outstanding. Additionally, the
Company's $15 million revolving credit facility similarly restricts these
transactions. However, no funds have been drawn on this line of credit.
ITEM 6. SELECTED FINANCIAL DATA
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The Consolidated Five-Year Comparison of Selected Financial Data on page 13 of
the Annual Report for the fiscal year ended December 30, 1994 is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Annual Report for the fiscal year ended December 30,
1994 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The Consolidated Financial Statements and the quarterly results of operations
included in the Annual Report for the fiscal year ended December 30, 1994 are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
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FINANCIAL DISCLOSURE
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None.
PART III
ITEMS 10, 11, 12 AND 13.
The information called for by that portion of Item 10 which relates to the
Directors of the Company, by Item 11 (Executive Compensation), Item 12 (Security
Ownership of Certain Beneficial Owners and Management) and Item 13 (Certain
Relationships and Related Transactions) is incorporated herein by reference from
the Company's definitive proxy statement for the Annual Meeting of Shareholders
to be filed with the Securities and Exchange Commission not later than 120 days
after the close of the fiscal year ended December 30, 1994. That portion of
Item 10 which relates to Executive Officers of the Company appears as Item 4A of
Part I of this Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8K.
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(a) (1 and 2) List of Financial Statements and Financial Statement Schedule
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The following consolidated financial statements of Computer Products, Inc. and
subsidiaries included in the Annual Report for the fiscal year ended December
30, 1994 are incorporated herein by reference in Item 8:
Consolidated Statements of Operations -- Years Ended on the Friday nearest
December 31, 1994, 1993 and 1992
Consolidated Statements of Financial Condition -- as of the Friday nearest
December 31, 1994, and 1993
Consolidated Statements of Cash Flows -- Years Ended on the Friday nearest
December 31, 1994, 1993 and 1992
Consolidated Statements of Shareholders' Equity -- Years Ended on the
Friday nearest December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
The following consolidated financial statement schedule of Computer Products,
Inc. is included in response to Item 14(a) (2):
Schedule II - Valuation and Qualifying Accounts
Schedules other than that listed above have been omitted because they are either
not required or not applicable, or because the required information has been
included in the consolidated financial statements or notes thereto.
(a) (3) Exhibits
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3.1 Articles of Incorporation of the Company, as amended, on May 15, 1989 -
incorporated by reference to Exhibit 3.1 of Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 1989.
3.2 By-laws of the Company, as amended, effective October 16, 1990 -
incorporated by reference to Exhibit 3.2 of Registrant's Current Report on
Form 8-K, filed with the Commission on November 30, 1990.
4.1 Indenture, dated as of May 15, 1987 between Computer Products, Inc. and
LaSalle National Bank, as Trustee - incorporated by reference to Exhibit
4.1 of Registrant's Annual Report on Form 10-K for the fiscal year ended
January 1, 1988.
4.2 First Supplemental Indenture dated as of January 7, 1991 between Computer
Products, Inc. and LaSalle National Bank, as Trustee - incorporated by
reference to Exhibit 4 of Registrant's Current Report on Form 8-K, filed
with the Commission on January 14, 1991.
4.3 Rights Agreement, dated as of November 9, 1988, by and between Computer
Products, Inc. and The Bank of New York, as amended - incorporated by
reference to Exhibit 4.1 of Registrant's Current Report on Form 8-K filed
with the Commission on June 15, 1990.
10.1 Grant Agreement, dated June 19, 1981, as supplemented, by and among the
Industrial Development Authority of Ireland, Power Products Ltd. and
Computer Products, Inc. - incorporated by reference to Exhibit 10.2 of
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1982.
10.2 Indenture between Industrial Development Authority of Ireland and Power
Products Ltd. - incorporated by reference to Exhibit 10.3 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1982.
10.3 (a) Industrial Revenue Bond dated as of December 17, 1982, by and among
Stevens-Arnold, Inc., the City of Boston Industrial Development Financing
Authority, State Street Bank and Trust Company and the First Bankers, N.A.;
(b) Guaranty Agreement dated December 17, 1982 by and among Computer
Products, Inc., the City of Boston Industrial Development Financing
Authority, State Street Bank and Trust Company and the First Bankers, N.A.;
(c) Loan Agreement dated as of December 17, 1982, between Stevens-Arnold,
Inc. and the City of Boston Industrial Development Financing Authority;
and (d) Mortgage, Security and Trust Agreement dated as of December 17,
1982, among Stevens-Arnold, Inc., the City of Boston Industrial Development
Financing Authority and State Street Bank and Trust Company and the First
Bankers, N.A. - incorporated by reference to Exhibit 10.6 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1982.
10.4 Second Amendment of Guaranty Agreement dated as of June 7, 1988 by and
between Computer Products, Inc. and State Street Bank and Trust Company -
incorporated by reference to Exhibit 10.4 of Registrant's Annual Report on
Form 10-K for the fiscal year ended December 29, 1989.
10.5 Sublease for facilities located in Pompano Beach, Florida - incorporated by
reference to Exhibit 10.5 of Registrant's Annual Report on Form 10-K for
the fiscal year ended January 1, 1988.
10.6 Lease for facilities of Boschert, Incorporated located in Milpitas,
California - incorporated by reference to Exhibit 10.14 of Registrant's
Annual Report on Form 10-K for the fiscal year ended January 3, 1986.
10.7 Letter Amendment to Lease for facilities of Boschert, Incorporated, dated
January 9, 1991 located in Milpitas, California - incorporated by reference
to Exhibit 10.8 of Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1990.
10.8 Sublease for facilities of Boschert, Incorporated located in Milpitas,
California - incorporated by reference to Exhibit 10.8 of Registrant's
Annual Report on Form 10-K for the fiscal year ended January 1, 1988.
10.9 Sublessee Estoppel Certificate to Sublease for facilities of Boschert,
Incorporated, dated February 4, 1991, located in Milpitas, California -
incorporated by reference to Exhibit 10.10 of Registrant's Annual Report on
Form 10-K for the fiscal year ended December 28, 1990.
10.10 Lease for facilities of Boschert, Incorporated, located in Fremont,
California - incorporated by reference to Exhibit 10.9 of Registrant's
Annual Report on Form 10-K for the fiscal year ended January 1, 1988.
10.11 1981 Stock Option Plan, as amended, effective as of October 16, 1990 -
incorporated by reference to Exhibit 10.10 of Registrant's Current Report
on Form 8-K, filed with the Commission on November 30, 1990.
10.12 Computer Products, Inc. 1986 Outside Directors' Stock Option Plan,
amended as of February 22, 1988 - incorporated by reference to Exhibit
10.12 of Registrant's Annual Report on Form 10-K for the fiscal year
ended January 1, 1988.
10.13 Employment Agreement, dated August 29, 1990, by and between Computer
Products, Inc. and John N. Lemasters - incorporated by reference to
Exhibit 10.1 of Registrant's Current Report on Form 8-K, filed with the
Commission on November 30, 1990.
10.14 Employment Agreement, dated July 9, 1992, by and between Computer
Products, Inc. and Ronald J. Ritchie - incorporated by reference to
Exhibit 10.14 of Registrant's Annual Report on Form 10-K for the fiscal
year ended January 1, 1993.
10.15 Asset Purchase Agreement, dated as of January 1, 1992, by and among
Computer Products, Inc., HC Holding Corp. and Heurikon Corporation
including exhibits and schedules thereto - incorporated by reference to
Exhibit 2 of Registrant's Current Report on Form 8-K, filed with the
Commission on January 20, 1992.
10.16 Employment Agreement, dated January 3, 1992, by and between Computer
Products, Inc., HC Holding Corp., and Christopher M. Priebe -
incorporated by reference from Exhibit 8.11A of the Asset Purchase
Agreement filed as Exhibit 2 of Registrant's Current Report on Form 8-K,
filed with the Commission on January 20, 1992.
10.17 Non-Competition Agreement, dated January 3, 1992, by and between Computer
Products, Inc., HC Holding Corp. and Christopher M. Priebe - incorporated
by reference from Exhibit 8.11B of the Asset Purchase Agreement filed as
Exhibit 2 of Registrant's Current Report on Form 8-K, filed with the
Commission on January 20, 1992.
10.18 Contract to Purchase between Computer Products, Inc. and Sauk Enterprises
dated December 23, 1991 for the premises located at 8310 Excelsior Drive,
Madison, Wisconsin - incorporated by reference to Registrant's Annual
Report on Form 10-K for the fiscal year ended January 3, 1992.
10.19 Plan Stock Option Agreement dated as of August 29, 1990 by and between
Computer Products, Inc. and John N. Lemasters - incorporated by reference
to Exhibit 10.2 of Registrant's Current Report on Form 8-K, filed with
the Commission on November 30, 1990.
10.20 Amended and Restated Revolving Credit Agreement, dated as of March 23,
1990, by and between Computer Products, Inc. and Continental Bank, N.A. -
incorporated by reference to Exhibit 10.18 of Registrant's Annual Report
on Form 10-K for the fiscal year ended December 28, 1990.
10.21 First Amendment to Amended and Restated Revolving Credit Agreement, dated
as of October 25, 1990, by and between Computer Products, Inc. and
Continental Bank N.A. - incorporated by reference to Exhibit 10.19 of
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 28, 1990.
10.22 Second Amendment to Amended and Restated Revolving Credit Agreement,
dated as of April 11, 1991, by and between Computer Products, Inc. and
Continental Bank N.A. - incorporated by reference to Exhibit 10.21 of
Registrant's Annual Report on Form 10-K for the fiscal year ended January
3, 1992.
10.23 Third Amendment to Amended and Restated Revolving Credit Agreement, dated
as of January 3, 1992, by and between Computer Products, Inc. and
Continental Bank N.A. - incorporated by reference to Exhibit 10.22 of
Registrant's Annual Report on Form 10-K for the fiscal year ended January
3, 1992.
10.24 Fourth Amendment to Amended and Restated Revolving Credit Agreement,
dated as of January 1, 1993, by and between Computer Products, Inc. and
Continental Bank N.A. - incorporated by reference to Exhibit 10.14 of
Registrant's Annual Report on Form 10-K for the fiscal year ended January
1, 1993.
10.25 Lease for facilities of the executive offices located in Boca Raton,
Florida - incorporated by reference to Exhibit 10.23 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 30, 1988.
10.26 1989 Qualified Employee Stock Purchase Plan - incorporated by reference
to Exhibit 10.20 of Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1989.
10.27 Annual Executive Incentive Plan, effective January 1, 1992 - incorporated
by reference to Exhibit 10.25 of Registrant's Annual Report on Form 10-K
for the fiscal year ended January 3, 1992.
10.28 Outside Directors' Retirement Plan, effective October 17, 1989 -
incorporated by reference to Exhibit 10.22 of Registrant's Annual Report
on Form 10-K for the fiscal year ended December 29, 1989.
10.29 1990 Performance Equity Plan - incorporated by reference to Exhibit 10.26
of Registrant's Annual Report on Form 10-K for the fiscal year ended
December 28, 1990.
10.30 1990 Outside Directors' Stock Option Plan - incorporated by reference to
Exhibit 10.27 of Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1990.
10.31 1991 Long Term Performance Plan - incorporated by reference to Exhibit
10.28 of Registrant's Annual Report on Form 10-K for the fiscal year
ended December 28, 1990.
10.32 Manufacturing and Development Agreement dated March 16, 1992, between
Computer Products, Inc. and Analogic Corporation - incorporated by
reference to Exhibit 10.30 of Registrant's Annual Report on Form 10-K for
the fiscal year ended January 3, 1992.
10.33 License Agreement dated March 16, 1992, between Computer Products, Inc.
and Analogic Corporation - incorporated by reference to Exhibit 10.31 of
Registrant's Annual Report on Form 10-K for the fiscal year ended January
3, 1992.
10.34 Asset Purchase Agreement between Computer Products, Inc., Tecnetics
Incorporated, Miller Acquisition Corporation and certain former managers
of Tecnetics Incorporated - incorporated by reference to Exhibit 10.29 of
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
April 3, 1992.
10.35 Manufacturing License and Technical Assistance Agreement between Heurikon
Corporation and Lockheed Sanders, Inc. dated January 31, 1992 -
incorporated by reference to Exhibit 10.34 of Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended July 3, 1992.
10.36 Star MVP Domestic Terms and Conditions of Sale Between Heurikon
Corporation and Lockhead Sanders, Inc. dated March 18, 1992 -
incorporated by reference to Exhibit 10.35 of Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended July 3, 1992.
10.37 DSP32C VME Board License Agreement between Heurikon Corporation and
American Telephone and Telegraph Company dated October 28, 1991 -
incorporated by reference to Exhibit 10.36 of Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended July 3, 1992.
10.38 Software License agreement between Heurikon Corporation and American
Telephone and Telegraph Company dated October 28, 1991 - incorporated by
reference to Exhibit 10.37 of Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended July 3, 1992.
10.39 Fifth Amendment and Restated Revolving Credit Agreement, dated as of
December 31, 1993, by and between Computer Products, Inc. and Continental
Bank, N.A.- incorporated by reference to Exhibit 10.39 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
10.40 Severance and consulting agreement between John N. Lemasters and the
Company - incorporated by reference to Exhibit 10.40 of Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended April 1,
1994.
10.41 Employment Agreement, dated June 29, 1994, by and between Computer
Products, Inc. and Joseph M. O'Donnell - incorporated by reference to
Exhibit 10.41 of Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended July 1, 1994.
10.42 (a) Credit Agreement, dated as of June 28, 1994, by and between Heurikon
Corporation and Firstar Bank Madison, N.A.; (b) Guaranty of Payment,
dated as of June 28, 1994, by and between Computer Products, Inc. and
Firstar Bank Madison, N.A. (c) Term Note, as of June 28, 1994, by and
between Heurikon Corporation and Firstar Bank Madison, N.A.; (d)
Mortgage, Security Agreement, and Fixture Financing Statement, dated as
of June 28, 1994, by and between Heurikon Corporation and Firstar Bank
Madison, N.A. - incorporated by reference to Exhibit 10.42 of
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
July 1, 1994.
10.43 Grant Agreement, dated October 26, 1994, by and among the Industrial
Development Authority of Ireland, Power Products Ltd. and Computer
Products, Inc.
11 Statement regarding Computation of Per Share Earnings.
13 Annual Report of Computer Products, Inc. for the fiscal year ended
December 30, 1994.
21 List of subsidiaries of Registrant.
23 Consent of Independent Certified Public Accountants
(b) Reports on Form 8-K
-------------------
The Registrant did not file any reports on Form 8-K during the thirteen-
week period ended December 30, 1994.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE
To the Board of Directors and Shareholders of
Computer Products, Inc.
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Computer Products, Inc.'s annual
report to shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated January 18, 1995. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14(a)(2) of the accompanying index is the responsibility
of the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
Fort Lauderdale, Florida, ARTHUR ANDERSEN LLP
January 18, 1995.
<PAGE>
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended on the Friday Nearest December 31 ($000s)
<TABLE>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
<CAPTION>
ADDITIONS
BALANCE CHARGED CHARGED BALANCE
AT TO TO AT
BEGINNING OF COSTS & OTHER DEDUCTIONS END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DESCRIP AMOUNT PERIOD
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR 1994:
Reserve deducted from asset to which
it applies:
Allowance for doubtful accounts $ 1,174 $ 251 (4) $ 71 $ 1,354
Inventory 5,462 3,043 (4) 3,982 4,523
Deferred tax asset valuation
allowance 11,626 395 (3) 1,568 10,453
Other 292 292
FISCAL YEAR 1993:
Reserve deducted from asset to which
it applies:
Allowance for doubtful accounts $ 1,031 $ 210 (4) $ 67 $ 1,174
Inventory 6,109 1,166 (4) 1,813 5,462
Deferred tax asset valuation
allowance 0 11,626 (1) 11,626
Other 292 292
FISCAL YEAR 1992:
Reserve deducted from asset to which
it applies:
Allowance for doubtful accounts $ 1,257 $ 292 (4) $ 518 $ 1,031
Inventory 6,506 1,206 (4) 1,603 6,109
Other (2) 422 292
<FN>
(1) This amount includes $11,553 recorded upon initial adoption of Statement of
Financial Accounting Standards No. 109, ``Accounting for Income Taxes.''
(2) Additions and deductions related to other reserves are individually not
significant and, accordingly, are not included in this schedule.
(3) The reduction relates to utilization of tax loss carryforwards.
(4) The reduction relates to charge-offs.
</TABLE>
<PAGE>
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.
COMPUTER PRODUCTS, INC.
(Registrant)
Dated: March 24, 1995 By:Joseph M. O'Donnell
-------------------
Joseph M. O'Donnell
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Joseph M. O'Donnell President and Chief Executive 03/24/95
-------------------
Joseph M. O'Donnell Officer, Director
Richard J. Thompson Vice President-Finance, 03/24/95
-------------------
Richard J. Thompson Chief Financial and Accounting Officer
John N. Lemasters Director 03/24/95
-----------------
John N. Lemasters
Earl Templeton Director 03/24/95
--------------
Earl Templeton
Edward S. Croft, III Director 03/24/95
--------------------
Edward S. Croft, III
Stephen A. Ollendorff Director 03/24/95
---------------------
Stephen A. Ollendorff
Bert Sager Director 03/24/95
----------
Bert Sager
Phillip A. O'Reilly Director 03/24/95
-------------------
Phillip A. O'Reilly
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
--------------------------------------------------
10.43 Grant Agreement, dated October 26, 1994, by and
among the Industrial Development Authority of
Ireland, Power Products Ltd. and Computer
Products, Inc.
11 Statement regarding Computation of Per Share
Earnings.
13 Annual Report of Computer Products, Inc. for
the fiscal year ended December 30, 1994.
21 List of subsidiaries of Registrant.
23 Consent of Independent Certified Public Accountants
EXHIBIT NO. 10.43
GRANT AGREEMENT made the 26th day of October 1994 BETWEEN INDUSTRIAL DEVELOPMENT
AGENCY (IRELAND) having its principle place of business at Wilton Park House,
Wilton Place, Dublin 2 ("IDA") of the first part, POWER PRODUCTS LIMITED having
its principal place of business in Ireland at Youghal, Co Cork ("the Company")
of the second part and COMPUTER PRODUCTS INC. having its principal office at
7900 Glades Road, Suite 500, Boca Raton, FL 33434, USA ("the Promoters") of the
third part.
WHEREAS:
--------
(a) The Company which is controlled by the Promoters has been incorporated with
the principal object of establishing and is carrying on at Youghal, Co.
Cork an industrial undertaking for the production of power supplies ("the
Undertaking"), in accordance with proposals furnished to IDA by the
Promoters and has applied to IDA for financial assistance towards the cost
of expanding the Undertaking which is intended to increase employment to
302 persons;
(b) The Company and the Promoters having made all necessary inquiries are
satisfied and represent to IDA that to the best of their belief there will
be available to the Undertaking the raw materials, business and technical
personnel, knowledge and facilities required for its proper commercial
establishment and efficient operation;
(c) The promoters have represented to IDA that in their opinion the Undertaking
will contribute to the regional development of Ireland:
IT IS HEREBY AGREED that in consideration of the Company implementing the said
proposals and carrying on the Undertaking in accordance with this Agreement IDA
agrees to grant to the Company the sum of IRPounds1,340,000 or the aggregate of
IRPounds10,000 for each job created in the Undertaking in excess of 168 jobs
whichever is the lesser ("the grant") on the following terms and conditions.
For the purpose of this Agreement "job" shall mean a full-time permanent
position in the Undertaking created in accordance with Paragraph 1 of the
Schedule.
1. DEVELOPMENT OF THE UNDERTAKING:
-------------------------------
The development of the Undertaking and in particular the provision of employment
shall be substantially in accordance with the particulars given in the said
proposals.
2. CONTROL OF THE COMPANY:
----------------------
The controlling interest in the Company shall be held directly or indirectly by
the Promoters unless otherwise agreed to in writing by IDA.
<PAGE>
3. PROMOTERS INVESTMENT:
---------------------
The Company shall provide or procure finance as specified in the Schedule for
the purposes of the Undertaking.
4. PLANNING PERMISSION AND PREVENTION OF POLLUTION:
------------------------------------------------
The Company shall:
4-1 obtain all relevant permissions prescribed by Local and/or National
authorities and shall comply with all requirements of such permissions and
with all Building Regulations and Statutory requirements (if any) required
for the Undertaking;
4-2 comply with all Statutory requirements and other requirements which IDA
reasonably considers to be necessary in relation to environmental controls
and the prevention of pollution.
5. INSURANCE:
----------
The Company shall:
5-1 keep all the fixed assets insured in accordance with good commercial
practice;
5-2 obtain on commencement of production and in accordance with good commercial
practice Consequential Loss Insurance to adequately indemnify the Company
against losses and costs resulting from fire and explosion; and
5-3 make arrangements to ensure that IDA will be notified of any failure to
renew the insurance specified at Clauses (5-1) and (5-2) hereof and also of
any change in such insurance.
6. RESTORATION OF FIXED ASSETS:
----------------------------
If there should be damage to or loss of fixed assets including buildings under
construction through fire or explosion or any other cause the insurance or other
compensation received by the Company shall be used in accordance with good
commercial practice to restore to the reasonable satisfaction of IDA the
property so damaged or lost.
7. GUARANTEES:
-----------
The Company shall not give a guarantee in respect of any borrowings other than
borrowings for the purposes of the Undertaking without prior written consent of
IDA.
8. NON-DISTRIBUTION OF THE GRANT:
------------------------------
The company shall not distribute by way of dividend on the share capital of the
Company or otherwise any sum received in respect of the grant.
9. ROYALTIES OR SIMILAR PAYMENTS:
------------------------------
The Company may only make royalty or similar payments on the following terms and
conditions:
9-1 that to the extent that the said royalty and/or similar payments exceed 5%
of the Company's net annual sales, such excess shall not be payable except
out of the profits (including accumulated profits) of the Company which
would otherwise be available for dividend; and
<PAGE>
9-2 that in the event of the winding up of the Company the amount of any such
excess accrued or accruing for payment but unpaid shall be subordinated to
the claims of the unsecured creditors, including IDA, of the Company.
PROVIDED ALWAYS that the provisions of this Clause shall not apply to bona fide
third party arms length transactions.
10. PAYMENT OF GRANT:
-----------------
10-1 The grant shall be paid subject to the following terms and conditions and
the Company shall provide evidence satisfactory to IDA:
10-1-1 that the Company has been properly incorporated and that
its Memorandum and Articles of Association empower the Company to
implement this Agreement;
10-1-2 that the Company has title acceptable to IDA to all land
and buildings required for the Undertaking;
10-1-3 that the Company is in compliance with the terms and
conditions of its agreements, if any, with Forfas;
10-1-4 that the necessary arrangements have been made for the
provision of all capital required for the Undertaking as specified
at Paragraph 3 of the Schedule;
10-1-5 that all Planning Permissions as aforesaid have been
obtained and complied with;
10-1-6 that all requirements for the control of the environment
and prevention of pollution as aforesaid have been complied with;
10-1-7 that insurance arrangements as aforesaid have been made;
10-1-8 that the Company has obtained a tax number in the
relevant tax district; that it is up to date in its tax affairs
with the Revenue Commissioners and prior to total payments from the
grant exceeding IRPounds5,000 and to each subsequent payment from
the grant it shall submit an up to date tax clearance certificate
from the Revenue Commissioners;
10-1-9 that the fixed assets have been provided in accordance
with the revised proposals;
10-1-10 that the jobs in the Undertaking in respect of which the
grant is payable are occupied by Irish nationals;
10-1-11 that the Company has complied up to date with all the
provisions of this Agreement.
10-2 Subject to 10-1 and in particular to Paragraph 3-3 of the Schedule the
grant shall be paid to the Company in two moieties. The first moiety shall
be payable when the job has been created (a job shall be deemed to be
created when a contract of employment has been signed and payment has been
made to an employee in respect of work done in the job) and the second
moiety shall be payable when permanent full-time employment in the job for
a twelve-month period has been completed. Claims for payment of the grant
may be submitted monthly and shall be certified by the Company's auditors
in a satisfactory format.
<PAGE>
11. FURNISHING OF INFORMATION:
--------------------------
11-1 The Company shall if reasonably required to do so by IDA submit an
Auditor's Certificate giving such details as IDA may require in relation to
the employment history of the Company and shall permit the officers and
agents of IDA to inspect the fixed assets and to inspect employment and
other records of the Company at all reasonable times during the term of
this Agreement and shall furnish to IDA promptly whenever required to do so
by IDA all such information and documentary evidence as IDA may from time
to time reasonably require to vouch compliance by the Company with any of
the terms and conditions of this Agreement.
11-2 The Company acknowledges the right of IDA to consult with relevant third
parties to obtain any information it may reasonably require relating to the
affairs of the Company and/or the Promoters prior to any payment from the
grant and to withhold grant payments in the event of such information being
unsatisfactory to IDA. The Company and/or the Promoters hereby undertake
to instruct such third parties to furnish any such information to IDA on
request.
11-3 The Company shall submit Annual Audited Accounts satisfactory to IDA
(Electronics/Engineering Division) for the duration of this Agreement
within six months from the end of the relevant financial year.
12. NOTICES:
--------
12-1 The Certificate of an Officer of IDA certifying any decision of IDA taken
or made hereunder shall save in the case of manifest error be conclusive
evidence of any such decision.
12-2 Any notice by IDA to the Company or to the Promoters under this Agreement
shall be sent by registered post to the Registered Office of the Company.
12-3 IDA shall use its best endeavors to send copies of all notices issued by it
on foot of this Agreement to the Company contemporaneously to the Promoters
at their address herein specified, but failure to do so shall not
constitute a breach of this Agreement on its part.
13. CONSENTS:
---------
13-1 Circumstances requiring the consent, approval or permission of any party
hereto shall be interpreted to mean that such consents, approvals or
permissions shall not be unreasonably withheld. This provision shall not
apply to the provisions of Clause 2 hereof.
13-2 Any variation or modification of any of the terms or conditions herein made
at the request of or with the agreement of the Company and with the consent
of IDA shall not in any way determine or prejudice the Promoters' liability
hereunder PROVIDED that the financial amount of the Promoters' said
liability shall not be increased without their express agreement in
writing.
<PAGE>
14. ACHIEVEMENT OF PROJECTED PERFORMANCE:
-------------------------------------
IDA may at any time within five years from the date of payment of the first
moiety of the grant in respect of any job revoke the grant paid in respect of
that job if the job should become vacant and remain vacant for a period in
excess of six calendar months.
15. TERMINATION OF AGREEMENT:
-------------------------
This Agreement shall terminate eight years from the date of the last claim from
the grant.
16. CANCELLATION AND REVOCATION OF GRANT:
-------------------------------------
IDA may stop payment of the grant and/or revoke and cancel or reduce the grant
or so much thereof as shall not then have been actually paid to the Company if
any one or more of the following events should occur:
16-1 if there be any breach of the terms or conditions of Clause 2 hereof;
16-2 if the Company should to a material extent be in breach of any of the terms
and conditions of this Agreement other than those specified in Clause 16-1
hereof and having failed to establish to the reasonable satisfaction of IDA
that such breach was due to force majeure and shall not have rectified such
breach within 30 days after written notice thereof has been served on the
Company;
16-3 if an order is made or an effective resolution is passed for the winding up
of the Company other than a bona-fide winding-up for the purposes of
amalgamation or reconstruction to which IDA has given its prior approval in
writing;
16-4 if a Receiver is appointed over any of the property of the Company or if a
distress or execution is levied or served upon any of the property of the
Company and is not paid off within 30 days;
16-5 if the Company should cease to carry on the Undertaking.
If the grant be revoked the Company and/or the Promoters shall repay to IDA on
demand all sums received in respect of the grant and if the grant be reduced the
Company and/or the Promoters shall repay to IDA on demand all sums received and
deemed to have been received as aforesaid in excess of the amount of the reduced
grant and in either case in default of such repayment such sums shall be
recoverable by IDA from the Company and/or the Promoters as a joint and several
simple contract debt.
17. GOVERNING LAW:
--------------
This Agreement shall be governed by and be construed in accordance with the Laws
of Ireland and the parties hereto expressly and irrevocably submit to the
jurisdiction of the Irish courts and the Promoters' hereby irrevocably appoint
the Company to be its attorney for the purpose of accepting service on its
behalf of any notice, document or legal process with respect to the Promoters'
obligations pursuant to the provisions of Clause 16 or 14 hereof and service of
any such document on such attorney shall be deemed for all purposes to be good
service.
<PAGE>
SCHEDULE
1. PROVISION OF EMPLOYMENT:
------------------------
New jobs in excess of 168 jobs.
Job Description Year 1 Year 2 Year 3
---------------- ------ ------ ------
Manufacturing 70 24 12
Engineering/Design 9 7 5
Sales/Manufacturing 1 2 2
Administration 2 -- --
TOTAL 82 33 19
2. THE PROVISION OF FIXED ASSETS FOR THE UNDERTAKING:
--------------------------------------------------
The Company shall:
2-1 Provide premises suitable for the Undertaking by not later than 31st March
1995;
2-2 Purchase and/or lease as hereinafter provided and have installed in a
proper and workmanlike manner ready for operation in the said factory
buildings all machinery and equipment suitable in all respects required for
the Undertaking by 31 December 1996;
3. PROMOTERS INVESTMENT:
---------------------
The Company shall procure or provide for the purposes of the Undertaking:
3-1 Additional Equity Equivalent of IRPounds1,340,000;
For the purposes of this Agreement "Equity Equivalent" shall mean the total
monies obtained by the Company as follows:
3-1-1 cash received by the Company from the Promoters in consideration
for the issue at par of fully paid-up Ordinary Shares in the
Company; and/or
3-1-2 retained earnings of the Company capitalised at par as fully paid-
up Ordinary Shares in the Company; and/or
3-1-3 retained earnings of the Company transferred to a special non-
distributable reserve account which shall be maintained at the
appropriate level for the duration of this Agreement.
<PAGE>
IN WITNESS whereof the parties hereto have caused their respective Seals to be
affixed hereto the day and year first herein written.
PRESENT when the Seal of
INDUSTRIAL DEVELOPMENT AGENCY (IRELAND)
was affixed hereto:
SEAMUS WALSHE
------------------
AUTHORISED OFFICER
DECLANE MCCANN
------------------
AUTHORISED OFFICER
PRESENT when the Seal of
POWER PRODUCTS LIMITED
was affixed hereto:
RICHARD J. THOMPSON
-------------------
VICE-PRESIDENT
JOSEPH M. O'DONNELL
-------------------
CHAIRMAN
PRESENT when the Seal of
COMPUTER PRODUCTS INC.
was affixed hereto:
RICHARD J. THOMPSON
----------------------
VICE-PRESIDENT-FINANCE
JOSEPH M. O'DONNELL
-------------------
PRESIDENT
<PAGE>
Dated 26th day of October 1994
INDUSTRIAL DEVELOPMENT AGENCY (IRELAND)
- First Part -
POWER PRODUCTS LIMITED
- Second Part -
and
COMPUTER PRODUCTS INC.
- Third Part -
------------------------------------------------
GRANT AGREEMENT
-------------------------------------------------
Industrial Development Agency (Ireland)
Wilton Park House
Wilton Place
Dublin 2
EXHIBIT NO. 11
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS - PRIMARY
FOR THE YEARS ENDED THE FRIDAY NEAREST
DECEMBER 31, 1994, 1993 AND 1992
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Weighted average shares outstanding 20,229 20,097 19,950
Net effect of dilutive stock options -
based on the treasury stock method
using average market price. 700 677 1,053
------ ------ ------
Weighted average number of common
and equivalent shares outstanding 20,929 20,774 21,003
====== ====== ======
</TABLE>
<PAGE>
EXHIBIT NO. 11 (CONTINUED)
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS - FULLY DILUTED
FOR THE YEARS ENDED THE FRIDAY NEAREST
DECEMBER 31, 1994, 1993 AND 1992
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Shares outstanding 20,303 20,141 19,973
Net effect of dilutive stock options -
based on the treasury stock method using
the greater of month end market price or
average market price 1,063 677 1,053
Assumed conversion of convertible
subordinated debentures 7,218 7,329 7,329
------ ------ ------
Totals 28,584 28,147 28,355
====== ====== ======
* * * * *
Income after taxes $6,059 $ 597 $2,002
Add convertible debenture interest and
amortization, net of applicable federal
income taxes 2,260 2,064 2,157
------- ------- -------
$8,319 $2,661 $4,159
======= ======= =======
Per share amounts $ 0.29 $ 0.09 $ 0.15
======= ======= =======
Net income $6,059 $2,867 $2,676
Add convertible debenture interest and
amortization, net of applicable federal
income taxes 2,260 2,064 3,140
------- ------- -------
$8,319 $4,931 $5,816
======= ======= =======
Per share amounts $ 0.29 $ 0.18 $ 0.21
======= ======= =======
<F/N>
This calculation is submitted in accordance with Regulation S-K Item 601(b)(1),
although it is contrary to paragraph 40 of APB Opinion No. 15 because it
produces an antidilutive result.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
1994 OVERVIEW
The Company's 1994 results of operations reflect significantly improved
performance across each of its businesses compared to fiscal 1993, producing
sales growth of 25% and net income at more than double 1993 levels.
The following table summarizes the Company's sales performance by product
category (amounts in 000s):
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Power Conversion $117,995 $ 94,501 $ 77,527
Industrial Automation 18,607 13,236 20,032
Computer Systems 18,198 16,053 17,240
-------- -------- --------
Total $154,800 $123,790 $114,799
========== ========= ========
</TABLE>
The increase in sales was achieved as the Company further established
itself in its served markets as a value added supplier, delivering high
quality products and services to its customers. The Company's focus on
high growth market sectors in the communications and networking industries
positively impacted sales by its Power Conversion and Computer Systems
divisions, as these sectors experienced considerable growth during 1994.
Additionally, sales to the utility sector by Industrial Automation
recovered from the depressed levels seen in 1993.
While volumes increased, gross margin as a percentage of sales declined
from 39.1% in 1993 to 36.9% in 1994. This decrease resulted primarily from
a shift in strategic emphasis towards higher volume Original Equipment
Manufacturer (OEM) business, with inherently lower profit margins, and
significant production start-up costs associated with increased sales of
the Company's high density converter product.
The effect on operating income of the reduction in gross margin
percentage was offset by limited expense growth as a result of the
Company's continuing efforts to manage operating expenses relative to gross
margin levels, and the cost benefits generated as a result of the
restructuring activities announced in the fourth quarter of 1993.
Consequently, total operating expenses (excluding restructuring charges) as
a percentage of sales decreased from 34% in 1993 to 29% in 1994, while
operating income improved to 8.1% of sales from 5.6% (excluding
restructuring) in 1993.
Results of operations for 1993 included a restructuring charge of $3.0
million ($2.2 million after taxes) and a $2.3 million benefit from the
cumulative effect of changes in accounting principles. The Company adopted
Statement of Financial Accounting Standards (SFAS) No. 109, `Accounting
for Income Taxes,''and SFAS No. 112, ``Employers' Accounting for Post
Employment Benefits,''in the first quarter of 1993, which required the
Company to record a non-recurring benefit of $2.3 million, or $0.11 per
share.
1994 COMPARED TO 1993
SALES increased by 25% in 1994 and order backlog increased by 15% from $32.3
million at December 1993 to $37.0 million at December 1994. The growth in sales
resulted from a $23.5 million (25%) increase in Power Conversion sales, a $5.4
million (41%) increase at Industrial Automation, and a $2.1 million (13%)
increase at Computer Systems.
Power Conversion sales increased over 1993 primarily due to two factors:
strong growth in the European business and increased worldwide demand from OEMs
particularly in the communications and networking market sectors. The Company's
European Power Conversion business recorded a 49% increase in sales over 1993
driven by growth in both its OEM and distribution sales channels. On a
worldwide basis, the Company's focus on tailoring its product and service
offerings to match the needs of customers in the communications and networking
sectors proved successful, enabling the Company to participate in the strong
growth seen in those markets during 1994.
In the other geographical areas served, North American sales increased 20%
over 1993 on strong OEM and distributor sales channel performance, while sales
to customers in Asia and the Pacific Rim decreased due to continuing government
economic controls to curb inflation in China, the Company's largest Asian
marketplace.
In 1995, Power Conversion will continue to focus on its selected markets and
will invest significantly in standard product development to expand its range of
product offerings. Management believes that the significant order backlog at the
end of fiscal 1994 is an indicator of continuing sales growth in the coming
year.
Industrial Automation sales increased 41% over 1993 as the nuclear, utility
and process industries recovered from the depressed levels encountered in the
prior year, thereby increasing demand for Industrial Automation products. It is
expected that the business will become less reliant on the cyclical utility and
nuclear market sectors as the business focuses on developing new products and
solutions for industrial applications during 1995.
Computer Systems sales increased by 13% over 1993 on increased demand from
many of its established OEM customers in product applications such as video-on-
demand, machine vision and voice messaging. Several new products were released
during the year including the Nitro60 based on Motorola's new MC 68060
microprocessor; the MIPS-based Laguna VME bus CPU boards; and the Daytona,
Computer Systems' first integrated real-time workstation.
In 1995, Computer Systems will release additional new products directed
towards the communications and graphics market sectors. Computer Systems
recorded strong fourth quarter orders to close 1994; however, revenue for 1995
is expected to be heavily dependent on the effective introduction of these new
products.
GROSS PROFIT for the year increased by $8.7 million on higher sales volume.
However, gross profit as a percentage of sales declined from 39.1% for fiscal
1993 to 36.9% for fiscal 1994, primarily due to changes in mix within Power
Conversion toward higher volume sales to OEM customers with inherently lower
margins, and the impact from production costs associated with increased sales of
the Company's high density converter product. These negative influences on gross
margin exceeded benefits gained from lower production costs, as a result of the
transition of North American Power Conversion manufacturing to overseas
locations during 1994. Margins are expected to come under increasing pressure
during 1995 due to the continuous pricing pressures in all of the Company's
served markets, making it imperative that the Company's cost structure be
continually improved.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES as a percentage of sales
declined steadily during 1994 to 22% compared to 26% in 1993, reflecting cost
containment measures implemented by management to confine growth in expenses in
light of the reduced gross margins. As the Company strives for a more efficient
cost structure, management will continue to press for greater efficiencies in
this area to strengthen the Company's competitive position.
RESEARCH AND DEVELOPMENT EXPENSES increased by 16% over 1993 as the Company
continued to invest in new product development in each of its businesses. The
Company views continued investment in research and development to be critical to
its future growth and competitiveness, and is committed to significantly
increased standard product development and an accelerated level of new standard
and custom product releases in the coming year.
OPERATING EXPENSES as a percentage of sales declined to 29% in 1994 from 34%
a year ago (excluding the $3.0 million pretax restructuring charge). As a
result, despite the decline in gross profit as a percentage of sales, OPERATING
INCOME rose to 8.1% of sales from 5.6% (excluding the restructuring charge) in
1993.
FOREIGN EXCHANGE transaction losses of $60,000 were incurred in 1994 compared
to gains of $317,000 in 1993, primarily as a result of remeasuring certain
assets of the Company's European Power Conversion division into its functional
currency, which was devalued during the first quarter of 1993.
PROVISION FOR INCOME TAXES as a percentage of pretax income was 34% and 40%
in 1994 and 1993, respectively. The effective tax rate for 1994 decreased
primarily as a result of a reduction in the valuation allowance resulting from a
higher than expected utilization of deferred tax assets. For additional
information regarding income taxes, refer to pages 26 and 27 of the Notes to
Consolidated Financial Statements.
1993 COMPARED TO 1992
SALES for fiscal 1993 increased 8% over 1992 to $123.8 million. This growth
resulted from a $17 million (22%) increase in Power Conversion sales, offset by
reductions at Industrial Automation and Computer Systems of $6.8 million (34%)
and $1.2 million (7%), respectively. Order backlog increased 26% from $25.6
million at December 1992 to $32.3 million at December 1993.
Power Conversion sales growth resulted from increased sales to OEM customers
in North America and Europe and improvements in distributor sales in North
America. Market penetration of major OEM customers in the communications,
computer and networking markets increased during the year.
Industrial Automation sales decreased largely due to a capital spending slow-
down in the nuclear, utility and process industries, while Computer Systems
sales decreased as a result of weakness in demand from the division's OEM
customer base.
GROSS PROFIT as a percentage of sales declined from 44.4% in 1992 to 39.1% in
1993. This decrease reflected a shift in mix from higher margin business to
lower margin Power Conversion sales, which increased as a percentage of total
sales from 68% in 1992 to 76% in 1993; a shift in mix within Power Conversion
towards lower margin, high volume OEM customers; and start-up costs of new
products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES decreased $3.1 million (9%) in
1993. Selling, general and administrative expenses as a percentage of sales
decreased from 31% to 26%, reflecting both the higher dollar amount of sales and
reduced expenses. The decline in expenses resulted from cost reduction measures
implemented company-wide and the re-sizing of resources within Industrial
Automation and Computer Systems to respond to the decrease in volumes.
RESEARCH AND DEVELOPMENT EXPENSES increased approximately $500,000 and
amounted to 7.6% of revenue versus 7.8% in 1992 as the Company continued to
invest in new product development.
RESTRUCTURING activities initiated in the fourth quarter of 1993 to eliminate
low-volume, high-cost production lines in North America and expand manufacturing
capacity abroad resulted in a charge of $3.0 million in fiscal 1993. For
additional information regarding the Company's restructuring activities, refer
to page 24 of the Notes to Consolidated Financial Statements.
OTHER EXPENSES decreased $483,000 in 1993. Interest expense decreased
$603,000 as a result of savings generated by the Company's repurchase of $4.0
million of its Convertible Subordinated Debentures in late 1992. Interest
income decreased $563,000 due to a reduction in average cash and equivalents
balances during 1993. Foreign exchange transaction gains of $317,000 were
generated during 1993 from remeasurement of certain assets of the Company's
European division into its functional currency, which was devalued during the
first quarter of 1993.
PROVISION FOR INCOME TAXES as a percentage of pretax income was 40% and 43%
in 1993 and 1992, respectively. The effective tax rate for 1993 decreased due to
a favorable change in the pattern of earnings between domestic and overseas
operations, which are taxed at lower foreign rates.
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES of $2.3 million
includes a benefit of $3.1 million ($0.15 per share) from the adoption of SFAS
No. 109 and a charge of $0.8 million ($0.04 per share), net of income tax
benefits, from the adoption of SFAS No. 112. These amounts represent the impact
of adoption related to fiscal years before 1993. The effect of these changes on
income before income taxes was not material. Prior years financial statements
have not been restated to apply the provisions of these statements.
OTHER
In fiscal 1995, the Company is required to adopt the provisions of Statements
of Financial Accounting Standards (`SFAS'') No. 107, ``Disclosures about Fair
Value of Financial Instruments''and No. 119, ``Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments.'' Adoption of
SFAS No. 107 and No. 119 is not expected to have a material effect on the
Company's financial position or results of operations.
FINANCIAL CONDITION
CASH AND EQUIVALENTS increased $10.1 million over 1993 as a result of higher
net income, working capital efficiencies and the issuance of long-term debt of
$3.6 million, partially reduced by the repurchase of $512,000 of the Company's
convertible subordinated debentures.
ACCOUNTS RECEIVABLE collection performance improved, limiting growth in
receivables during the year to $1.3 million (6%), despite a sales volume
increase of $31 million (25%).
INVENTORIES also yielded working capital efficiencies, increasing at a
slower rate than revenue growth. The limited increase in net inventories of
$1.6 million (8%) over 1993 resulted from effective inventory management
and the benefit of the Company's manufacturing restructuring activities
executed during the year.
PROPERTY, PLANT & EQUIPMENT increased $2.2 million net of changes in
accumulated depreciation. The increase included the purchase of a building for
$922,000 to expand manufacturing capacity in the European Power Conversion
division and additional capital expenditures to support the increased sales
volume.
LIABILITIES increased $5.8 million as a result of acquiring a $3.6 million
mortgage loan, a $857,000 (net of unamortized costs of $222,000) three-year note
for the purchase of the building mentioned above, and higher accounts payable on
increased volume, reduced by the repurchase of $512,000 of the Company's
convertible subordinated debentures. Restructuring reserves decreased by $1.7
million compared to December 1993 as a result of payments for employee severance
and outplacement relating to the Company's restructuring activities described
previously.
SHAREHOLDERS' EQUITY increased $7.2 million (22%) from 1993 principally due
to net income of $6.1 million and a $745,000 increase in foreign currency
translation adjustment, due to the impact of a stronger functional currency on
the translation of the Company's European net assets into U.S. dollars.
CASH FLOWS
NET CASH PROVIDED BY OPERATING ACTIVITIES increased $11.6 million in 1994
versus a decrease of $500,000 in 1993 compared to 1992. The increase in 1994 is
the result of higher net income and improved management of operating assets and
liabilities. The 1993 reduction reflected the Company's investment in working
capital to fund its sales growth. The Company believes its cash flows from
operations and its available line of credit are adequate to fund its anticipated
working capital requirements in 1995.
NET CASH USED IN INVESTING ACTIVITIES increased $2.2 million in 1994 versus a
decrease of $5.2 million in 1993 compared to 1992. The increase in 1994 relates
to the continued upgrading of the Company's worldwide manufacturing
capabilities. The decrease in 1993 reflected cash proceeds of $800,000 from the
sale of the Company's Government Electronics facility and the 1992 acquisition
of the Computer Systems manufacturing facility for $4.1 million.
NET CASH PROVIDED BY FINANCING ACTIVITIES in 1994 of $2.1 million includes
the issuance of the $3.6 million mortgage loan mentioned previously, reduced by
the repurchase of $512,000 of the Company's convertible subordinated debentures
and by scheduled long-term debt payments. Cash used in financing activities in
1993 of $3.1 million consists of the repayment of an 8.5% Senior Subordinated
Note for $2.1 million and regular annual debt payments. In 1992, the Company
repurchased $4.0 million of its convertible subordinated debentures for $3.9
million in cash.
<PAGE>
FIVE-YEAR FINANCIAL HISTORY
For the Years Ended on the Friday Nearest December 31
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Sales $154,800 $123,790 $114,799 $ 83,240 $ 95,737
Income (loss) from
continuing operations 6,059 597 2,002 (4,234) 4,068
Per share 0.29 0.03 0.10 (0.21) 0.20
Net income (loss) 6,059 2,867 2,676 (9,638) 5,293
Per share 0.29 0.14 0.13 (0.49) 0.26
FINANCIAL POSITION
Working capital $ 40,346 $ 31,122 $ 29,524 $ 35,508 $ 50,431
Property, plant & equipment,
net 26,238 24,017 23,949 19,252 18,688
Total assets 114,396 101,436 102,662 105,423 115,360
Total debt 42,571 39,713 42,900 48,309 44,803
Shareholders' equity 39,958 32,802 30,806 28,531 40,206
Total capital 82,529 72,515 73,706 76,840 85,009
FINANCIAL STATISTICS
Selling, general and
administrative expenses $ 33,687 $ 32,030 $ 35,093 $ 24,166 $ 25,630
- as a % of sales 21.8% 25.9% 30.6% 29.0% 26.8%
Research and development
expenses 10,905 9,412 8,959 6,154 5,418
- as a % of sales 7.0% 7.6% 7.8% 7.4% 5.7%
Operating income 12,478 3,900 6,908 (1,461) 7,435
- as a % of sales 8.1% 3.2% 6.0% (1.8%) 7.8%
Long-term debt as a % of
total capital 49% 53% 54% 61% 52%
Total debt as a % of total
capital 52% 55% 58% 63% 53%
Interest coverage ratio 3.44 1.27 1.81 0.14 2.05
OTHER DATA
Capital expenditures $ 5,608 $ 3,411 $ 8,055 $ 1,508 $ 1,216
Provision for depreciation
and amortization $ 5,057 $ 4,817 $ 4,375 $ 3,710 $ 4,120
Common shares outstanding 20,303 20,141 19,973 19,890 20,071
Common shareholders of
record 5,900 7,300 7,500 9,000 8,950
Employees 1,600 1,547 1,470 1,432 1,518
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended on the Friday Nearest December 31
(Amounts in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
SALES $154,800 $123,790 $114,799
COST OF SALES 97,730 75,448 63,839
------- ------- ------
GROSS PROFIT 57,070 48,342 50,960
------- ------- ------
EXPENSES
Selling, general and administrative 33,687 32,030 35,093
Research and development 10,905 9,412 8,959
Restructuring charge 3,000
------- ------- -------
44,592 44,442 44,052
------- ------- -------
OPERATING INCOME 12,478 3,900 6,908
------- ------- -------
OTHER INCOME (EXPENSE)
Interest expense (3,760) (3,735) (4,338)
Interest income 522 519 1,082
Foreign exchange gain (loss) (60) 317 (126)
------- ------- -------
(3,298) (2,899) (3,382)
------- ------- -------
INCOME BEFORE INCOME TAXES 9,180 1,001 3,526
PROVISION FOR INCOME TAXES 3,121 404 1,524
------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES
AND EXTRAORDINARY CREDIT 6,059 597 2,002
Cumulative effect of changes in
accounting principles 2,270
Extraordinary credit - utilization
of net operating loss carryforwards 674
------- ------- -------
NET INCOME $ 6,059 $ 2,867 $ 2,676
======= ======= =======
EARNINGS PER SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES
AND EXTRAORDINARY CREDIT $ 0.29 $ 0.03 $ 0.10
Cumulative effect of changes in
accounting principles 0.11
Extraordinary credit - utilization of
loss net operating carryforwards 0.03
------- ------- -------
NET INCOME $ 0.29 $ 0.14 $ 0.13
======= ======= =======
Common and common equivalent shares
outstanding 20,929 20,774 21,003
<F/N>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
As of the Friday Nearest December 31
(Amounts in Thousands)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 20,211 $ 10,146
Accounts receivable, net 24,669 23,369
Inventories, net 20,047 18,492
Prepaid expenses 2,157 1,432
Deferred income taxes, net 528 1,103
-------- --------
Total current assets 67,612 54,542
-------- --------
PROPERTY, PLANT & EQUIPMENT, NET 26,238 24,017
-------- --------
OTHER ASSETS
Goodwill, net 14,911 16,468
Deferred income taxes, net 3,395 3,671
Other assets 2,240 2,738
-------- --------
Total other assets 20,546 22,877
-------- --------
$114,396 $101,436
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,820 $ 1,192
Accounts payable and accrued liabilities 25,446 22,228
-------- --------
Total current liabilities 27,266 23,420
-------- --------
LONG-TERM LIABILITIES
Long-term debt 7,368 4,626
Lease liabilities 6,421 6,693
Convertible subordinated debentures 33,383 33,895
-------- --------
Total long-term liabilities 47,172 45,214
-------- --------
Total liabilities 74,438 68,634
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock, par value $.01; 1,000,000
shares authorized; none issued
Common stock, par value $.01; 80,000,000
shares authorized; 20,302,654 issued
and outstanding in 1994
(20,140,735 shares in 1993) 203 201
Additional paid-in capital 27,190 26,840
Retained earnings 13,521 7,462
Foreign currency translation adjustment (956) (1,701)
-------- --------
Total shareholders' equity 39,958 32,802
-------- --------
$114,396 $101,436
======== ========
<F/N>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended on the Friday Nearest December 31
(Amounts in Thousands)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 6,059 $ 2,867 $ 2,676
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,057 4,817 4,375
Provision for restructuring 3,000
Cumulative effect of changes in accounting
principles (2,270)
Utilization of net operating losses of
acquired company 433
Provision for inventory losses 3,043 1,166 1,319
Other non-cash charges 375 204 (1,058)
Changes in operating assets and liabilities:
Increase in accounts receivable (1,423) (3,435) (3,089)
Increase in inventories and prepaid expenses (4,964) (3,519) (4,640)
Increase (decrease) in accounts payable and
accrued liabilities 4,551 (1,734) 1,537
------ ------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 12,698 1,096 1,553
------ ------- ----
INVESTING ACTIVITIES:
Purchases of property, plant & equipment (4,686) (3,411) (8,055)
Proceeds from sale of building 800
Increase in other assets (433) (335) (52)
------ ------ ------
NET CASH USED IN INVESTING ACTIVITIES (5,119) (2,946) (8,107)
------ ------- ------
FINANCING ACTIVITIES:
Principal payments on debt and capital leases (1,259) (3,428) (1,065)
Proceeds from exercise of stock options 253 286 162
Issuance of long-term debt 3,600
Repurchase of convertible subordinated
debentures (520) (3,874)
------ ------ ------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 2,074 (3,142) (4,777)
------ ------ ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
EQUIVALENTS 412 (423) (285)
------ ------ ------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 10,065 (5,415) (11,616)
CASH AND EQUIVALENTS, BEGINNING OF YEAR 10,146 15,561 27,177
------ ------ ------
CASH AND EQUIVALENTS, END OF YEAR $20,211 $10,146 $15,561
======= ======= =======
<F/N>
NONCASH INVESTING AND FINANCING ACTIVITIES
In fiscal 1994, the Company incurred long-term debt of $857,000 (net of
unamortized discount of $222,000) for the purchase of a building for
approximately $922,000. Also, goodwill decreased by $795,000 as a result of
utilizing tax loss carryforwards obtained in a prior business combination.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended on the Friday Nearest December 31
(Amounts in Thousands)
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY
COMMON COMMON PAID-IN RETAINED TRANSLATION
SHARES STOCK CAPITAL EARNINGS ADJUSTMENTS
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 1991 19,890 $199 $26,294 $ 1,919 $ 119
Exercise of stock options 83 1 161
Foreign currency
translation adjustment (563)
Net income 2,676
------ ------ -------- ------ ------
BALANCE, DECEMBER 1992 19,973 200 26,455 4,595 (444)
Issuance of stock 38 100
Exercise of stock options 130 1 285
Foreign currency
translation adjustment (1,257)
Net income 2,867
------ ------ --------- ------ ------
BALANCE, DECEMBER 1993 20,141 201 26,840 7,462 (1,701)
Issuance of stock 42 1 98
Exercise of stock options 120 1 252
Foreign currency
translation adjustment 745
Net income 6,059
------ ------ -------- ------ --------
BALANCE, DECEMBER 1994 20,303 $203 $27,190 $13,521 $ (956)
====== ====== ======== ======= ========
<F/N>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of Computer
Products, Inc. (the `Company'') and its subsidiaries. Intercompany accounts and
transactions have been eliminated in consolidation. The Company's fiscal year
ends on the Friday nearest December 31.
Cash and Equivalents
Only highly-liquid investments with original maturities of 90 days or less
are classified as cash and equivalents. These investments are carried at cost,
which approximates market value.
Accounts Receivable
The Company's accounts receivable are primarily due from companies in the
high technology and electronics industries. Collateral generally is not
required. Credit losses are provided for in the financial statements and
consistently have been within management's expectations. The allowance for
doubtful accounts was $1,354,000 and $1,174,000 at December 1994 and 1993,
respectively.
Inventories
Raw material inventories are stated at the lower of cost, on a first-in,
first-out basis, or market. Work in process and finished goods inventories are
stated at accumulated costs, which are not in excess of market, less customer
progress payments, if applicable.
Property, Plant & Equipment
Property is stated at cost and is depreciated using the straight-line method
over the estimated useful lives of the assets, which range from 3 to 30 years.
Major renewals and betterments are capitalized, while maintenance, repairs and
minor renewals are expensed as incurred.
Goodwill
The excess of purchase price over net assets of acquired companies (goodwill)
is capitalized and amortized on a straight-line basis over periods ranging from
20 to 40 years. Related accumulated amortization was $4,210,000 and $3,448,000
at December 1994 and 1993, respectively. On a periodic basis, the Company
estimates the future undiscounted cash flows and operating income of the
businesses to which goodwill relates in order to ensure that the carrying value
of such goodwill has not been impaired.
Foreign Currency Translation
Assets and liabilities of the Company's European subsidiaries are translated
from their functional currency into U.S. dollars using exchange rates in effect
at the balance sheet date. Results of operations are translated using average
exchange rates prevailing throughout the period. The effect of exchange rate
fluctuations on translating foreign currency assets and liabilities into U.S.
dollars is included in shareholders' equity, while gains and losses from foreign
currency transactions are included in income. The functional currency for the
Company's Asian subsidiaries is the U.S. dollar, as their transactions are
substantially denominated in U.S. dollars.
Revenue Recognition
The Company recognizes revenue at the time products are shipped, or as
services are performed.
Income Taxes
On January 2, 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." Under this statement,
deferred tax assets and liabilities reflect the future tax consequences of the
differences between the financial reporting and tax bases of assets and
liabilities using tax rates in effect for the year in which differences are
expected to reverse. In addition, this standard requires the recognition of
future tax benefits, such as net operating loss carryforwards, to the extent
that realization of such benefits is more likely than not.
Prior to 1993, the provision for income taxes included federal, foreign,
state and local income taxes currently payable. Primarily because of the
Company's net operating loss carryforward position, a provision for deferred
taxes was not required in those years.
Earnings Per Share
Earnings per share is calculated based upon the weighted average number of
common shares outstanding during each year, adjusted for dilutive common stock
equivalents as applicable.
Reclassifications
Certain amounts in the 1993 and 1992 financial statements have been
reclassified to be consistent with the method of presentation used in the 1994
financial statements.
2.INVENTORIES
The components of inventories, net of allowances for slow-moving and obsolete
items, are ($000s):
1994 1993
Raw materials $11,016 $10,063
Work in process 3,174 3,705
Finished goods 5,857 4,724
------- -------
Inventories, net $20,047 $18,492
======= =======
3.PROPERTY, PLANT & EQUIPMENT
Property, plant & equipment is comprised of ($000s):
1994 1993
Land $ 1,327 $ 1,323
Buildings 20,715 19,685
Equipment 28,247 25,218
Leasehold improvements 968 1,006
-------- --------
51,257 47,232
Less accumulated depreciation 25,019 23,215
-------- --------
Property, plant & equipment, net $26,238 $24,017
======== ========
Amortization of assets acquired under capital leases is included in
depreciation expense. Depreciation expense was $3,483,000, $3,097,000 and
$2,828,000 in 1994, 1993 and 1992, respectively.
4.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are ($000s):
1994 1993
Accounts payable $10,123 $ 7,533
Accrued liabilities:
Compensation and benefits 7,685 6,361
Restructuring costs 898 2,636
Income taxes payable 1,449 496
Other 5,291 5,202
------- -------
Total $25,446 $22,228
======= =======
At December 1994 and 1993, other accrued liabilities primarily consists of
accruals for commissions, warranty costs, interest, advertising, rent,
accounting and legal fees, and other taxes.
On January 2, 1993, the Company adopted SFAS No. 112, "Employers' Accounting
for Postemployment Benefits." This statement requires employers to recognize
the severance cost benefits of former or inactive employees after employment but
before retirement, as the benefits are earned. The cumulative effect of
adoption was a non-cash charge of $821,000 ($0.04 per share), net of income tax
benefits of $84,000. The effect of this change on 1993 income before taxes was
not material.
5.RESTRUCTURING OF OPERATIONS
In the fourth quarter of 1993, the Company initiated a plan to restructure
its operations to eliminate low volume, high-cost production lines in North
America and consolidate its remaining U.S. Power Conversion activities into one
division. In connection with this plan, the Company recorded a $3.0 million
restructuring charge to operating expenses ($2.2 million or $0.11 per share,
after taxes). The restructuring costs included $1.9 million of estimated
employee-related severance costs and $1.1 million of estimated asset write-downs
and other expenses associated with the consolidation and termination of certain
Power Conversion North America operations.
At the time the restructuring was announced, management estimated that the
restructuring would reduce 1994 operating costs by $1.2 million, a reduction
which was achieved during the year. At the end of fiscal 1994, consistent with
the Company's restructuring plan, 109 employees had been terminated and certain
other employees had been reassigned.
As of December 30, 1994, the Company had $898,000 of accrued restructuring
costs primarily for obligations under employee severance agreements.
6.SHORT-TERM BORROWINGS
The Company has an unused $15 million revolving line of credit under an
agreement with a bank which extends through March 1995. The agreement provides
for interest at .25% over the prime lending rate and a commitment fee of .375%
of the unused balance. The interest rate and commitment fee may vary based upon
formulas contained in the agreement. The agreement is secured by the common
stock of substantially all of the Company's domestic subsidiaries and contains
certain restrictive covenants which are discussed in Note 8. The Company
expects to renew or replace this agreement at expiration.
7.LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt is comprised of the following:
1994 1993
($000s) ($000s)
<S> <C> <C>
Mortgage note due in monthly installments of $79,268
including interest at 7.5% (a) $3,674 $4,306
Non-interest bearing Senior Subordinated Note
due in quarterly cash installments of $50,000 and an
annual installment of $100,000 in common stock
of the Company, through January 3, 1996 400 700
10% mortgage note due in monthly installments of
$7,600, including interest, through April 1, 1995 (a) 469 511
Industrial Revenue Bond due in quarterly installments
of $34,455, plus interest, through September 30, 1994
(a) 103
6.9% mortgage note due in monthly installments of
$27,700 including interest through June 28, 2001
(a)(b) 3,568
Non-interest bearing note, due 1997, net of
unamortized discount of $222,000 based on imputed
interest rate of 10% (a)(c) 857
Other 220 198
------ ------
9,188 5,818
Less: current maturities 1,820 1,192
------ ------
Long-term debt $7,368 $4,626
====== ======
<F/N>
(a) Collateralized by properties with an aggregate net book value of
approximately $14,244,000 at December 1994.
(b) On June 28, 1994, the Company obtained a $3,600,000 seven year
commercial mortgage loan from Firstar Bank Madison, N.A. at a fixed
interest rate of 6.90% for the first three years, repriced thereafter
at 250 basis points over the then prevailing four-year U.S. Treasury
Index. The loan is secured by a first mortgage on the Heurikon
Corporation facility in Wisconsin and by the Company's guaranty. The
loan proceeds were used to provide additional working capital.
(c) On December 30, 1994, the Company purchased a building for
approximately $922,000 from the Industrial Development Authority of
Ireland in exchange for a three year non-interest bearing note. The
note specifies repayment in three yearly installments due on September
30, 1995, 1996 and 1997.
</TABLE>
On February 5, 1993, the Company paid $2.1 million to settle its 8.5% Senior
Subordinated Note.
Maturities of long-term debt are: $1,820,000 in 1995, $1,224,000 in 1996,
$1,261,000 in 1997, $943,000 in 1998, $887,000 in 1999 and $3,275,000
thereafter.
8.CONVERTIBLE SUBORDINATED DEBENTURES
The Company's 9.5% Convertible Subordinated Debentures (the ``Debentures'')
due 1997 were issued pursuant to an underwritten public offering. The
Debentures are subordinated to all existing and future Senior Indebtedness of
the Company (as defined in the indenture), and are convertible into shares of
common stock at a conversion price of $4.625 per share, subject to adjustment as
set forth in the indenture.
In 1992, the Company repurchased $4,000,000 in principal of the Debentures
for a purchase price of $3,874,000. Additionally, in 1994, the Company
repurchased $512,000 in principal of the Debentures for a purchase price of
$520,000. The respective gain and loss on repurchase, net of unamortized
issuance costs, was not material to the Company.
The convertible subordinated debenture and line of credit agreements contain
restrictive covenants which, among other things, require the Company to maintain
a minimum amount of working capital and limit the payment of cash dividends, and
the purchase, redemption or retirement of debentures and capital stock. As of
December 1994, the Company was in compliance with these covenants.
9.LEASE COMMITMENTS
The Company is obligated under noncancellable leases for facilities and
equipment which expire at various dates through 2005 and contain renewal options
at favorable terms. Future minimum annual rental obligations and noncancellable
sublease income are as follows ($000s):
RENTAL SUBLEASE
YEAR OBLIGATIONS INCOME
1995 $ 2,990 $2,116
1996 2,822 2,317
1997 2,738 2,317
1998 2,361 386
1999 2,279
Thereafter 15,939
------- ------
Total $29,129 $7,136
======= ======
Rental expense under operating leases amounted to $2,142,000, $2,184,000 and
$2,290,000 in 1994, 1993 and 1992, respectively. Sublease income was
$1,611,000, $1,570,000 and $1,459,000 for 1994, 1993 and 1992, respectively.
The Company has recorded lease liabilities for certain leased manufacturing
facilities no longer deployed in the Company's operations. Although the
facilities are being subleased, the future lease obligations exceed future
sublease income, thereby creating loss contracts. The aggregate minimum annual
rental obligations and sublease income under these leases have been included in
the lease commitments table presented above.
10. INCOME TAXES
As discussed in Note 1, the Company adopted SFAS No. 109 on a prospective
basis in the first quarter of 1993. The cumulative effect of this change in
accounting principle that relates to years prior to 1993 was to increase net
income by $3,091,000, or $0.15 per share, and reduce goodwill by $2 million for
net operating loss carryforwards of acquired companies. The effect of adopting
this statement on income before income taxes was not material.
Income before taxes for domestic and foreign operations consists of the
following ($000:):
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
U.S. $7,018 $(1,175) $1,030
Foreign 2,162 2,176 2,496
------ ------ ------
Total income before taxes $9,180 $ 1,001 $3,526
====== ======== ======
</TABLE>
The provision for income taxes consists of ($000s):
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Currently payable:
Federal $ 170 $1,048
State 596 $127 234
Foreign 483 206 242
------ ------ ------
Total current 1,249 333 1,524
------ ------ ------
Deferred provision (benefit):
Federal 1,660 (423)
State 212 302
Foreign 192
------ ------ ------
Total deferred 1,872 71
------ ------ ------
Total provision $3,121 $404 $1,524
====== ====== ======
</TABLE>
During 1994 and 1992, the Company utilized tax loss carryforwards obtained in
a prior business combination. The effect of utilizing these carryforwards was to
reduce goodwill by approximately $795,000 and $433,000 in 1994 and 1992,
respectively.
Income taxes have not been provided on the undistributed earnings of the
Company's foreign subsidiaries, which approximated $15.9 million as of December
1994, as the Company does not intend to repatriate such earnings.
Differences between the United States federal statutory income tax rate and
the Company's effective income tax rate are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Provision computed at U.S. federal
statutory rate 34.0% 34.0% 34.0%
Foreign tax effects (2.8) (23.3) (6.6)
Adjustments to beginning of year deferred
tax assets 9.1
Amortization of goodwill 0.7 8.5 7.9
Change in the valuation allowance (8.4) 7.3
Effect of state income taxes 6.5 (0.4) 6.6
Effect of AMT taxes 1.2
Other 2.8 5.2 1.3
------ ------ ------
Effective tax rate 34.0% 40.4% 43.2%
====== ====== ======
</TABLE>
Significant components of the Company's deferred tax assets and liabilities as
of December 1994 and 1993 are as follows ($000s):
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Acquired net operating loss carryforwards (expiring
1998 through 2000) $ 2,496 $ 3,683
Lease liabilities 2,659 2,764
Inventory reserves 2,094 2,612
Net operating loss carryforwards (expiring 2003 through
2008) 2,648 2,259
Tax credit carryforwards (expiring 1996 through 2001) 1,899 1,830
Restructuring costs 484 1,598
Other accrued liabilities 2,172 1,408
Other (76) 246
------- -------
Total deferred tax assets 14,376 16,400
Valuation allowance (10,453) (11,626)
------- -------
Deferred income taxes, net $ 3,923 $ 4,774
======== ========
</TABLE>
The valuation allowance at December 30, 1994 includes approximately $1.3
million associated with acquired net operating loss carryforwards, which, if
subsequently recognized, will reduce goodwill. During the year ended December
1994, the valuation allowance decreased by $1.2 million mainly due to the
utilization of tax loss carryforwards. In assessing the likelihood of
utilization of existing deferred tax assets, management has considered the
historical results of operations and the current operating environment.
Management believes, more likely than not, that future taxable income will be
sufficient to utilize deferred tax assets of $3.9 million.
The Company made income tax payments of approximately $534,000, $206,000, and
$168,000 during 1994, 1993, and 1992, respectively.
11.CONTINGENCIES
In prior years, the Company received capital grants from the Industrial
Development Authority (IDA) of Ireland in connection with the establishment of
its Irish manufacturing facilities. The grants reduced the costs of the
facility and equipment and operating expenses. On October 26, 1994, the Company
entered into a Grant Agreement with the IDA whereby the IDA agreed to grant to
the Company the sum of approximately $2.0 million in consideration of the
Company providing employment for a given number of Irish citizens, over a three
year period. The grant will reduce operating expenses incurred in connection
with the expansion of the Company's operations in Ireland. As of December 1994,
the Company had received approximately $500,000 of the $2.0 million grant. In
the event of noncompliance with certain terms and conditions, the Company may be
required to repay approximately $1.3 million of the grants, which expire on
various dates through fiscal 2002. Management believes that non compliance with
the agreements is unlikely.
12.STOCK OPTION PLANS
The Company maintains a qualified stock option plan, a qualified employee
stock purchase plan and certain non-qualified plans, including a key employee
option plan, two plans for outside directors and a Performance Equity Plan
("PEP") for certain officers and key employees. The employee stock purchase
plan provides for the grant of options to employees at an exercise price equal
to the lower of 85% of the common stock market value at the date of grant or at
various exercise dates throughout the year.
Under such plans, a maximum of 6,350,000 option shares have been authorized,
of which 1,214,610 are available to be granted. These options may be exercised
at various times as determined at the time of grant. The PEP options may become
exercisable after the price of the Company's common stock achieves certain
levels for specified periods of time or upon the passage of designated time
periods. As of December 1994, 2,077,270 of these options were exercisable. The
exercise price per share under all plans ranges from $1.63 to $4.63. The
following table is a summary of these option plans:
OPTIONS
OUTSTANDING
Balance, DECEMBER 1991 3,379,736
Granted 746,196
Exercised (82,775)
Forfeited (228,492)
----------
Balance, DECEMBER 1992 3,814,665
Granted 306,960
Exercised (130,146)
Forfeited (327,912)
----------
Balance, DECEMBER 1993 3,663,567
Granted 682,115
Exercised (120,378)
Forfeited (574,866)
----------
Balance, DECEMBER 1994 3,650,438
==========
13.EMPLOYEES' THRIFT AND SAVINGS PLAN
The Company's Section 401(k) Qualified Plan permits substantially all United
States employees to invest up to 15% of their base compensation (as defined) on
a pretax basis in common stock of the Company, growth equity securities or fixed
income securities. The Company may, at the discretion of the Board of
Directors, make a contribution to the Plan. The Board of Directors authorized
contributions of $218,000, $250,000 and $167,000, respectively, for 1994, 1993
and 1992.
14.SUPPLEMENTAL INFORMATION
The Company incurred advertising costs of approximately $925,000, $999,000 and
$1,177,000 in 1994, 1993 and 1992, respectively. Amortization expense of
intangible assets aggregated approximately $1,575,000, $1,720,000 and $1,547,000
in 1994, 1993 and 1992, respectively. Interest paid was approximately
$3,877,000, $3,688,000 and $4,343,000 in 1994, 1993 and 1992, respectively.
15.FOREIGN OPERATIONS
The Company operates in a single industry of designing, manufacturing,
marketing, and servicing electronic systems and components. Sales and marketing
operations outside the United States are conducted principally through sales
representatives and distributors in Canada, Europe and the Pacific Rim. Sales
are primarily in U.S. dollars and certain European currencies and consist of
products manufactured domestically and in the Company's facilities in the
Republic of Ireland and Hong Kong. Intercompany sales are in U.S. dollars and
are based on cost plus a reasonable profit but less than pricing to unaffiliated
customers.
A summary of the Company's operations by geographic area is presented below
($000s):
<TABLE>
<CAPTION>
EUROPE ASIA-
UNITED & PACIFIC OTHER ELIMI- CONSO-
STATES OTHER RIM (A) NATIONS LIDATED
<S> <C> <C> <C> <C> <C> <C>
1994
Sales:
Unaffiliated
customers $117,300 $34,794 $2,706 $154,800
Intercompany 3,897 2,225 50,701 $(56,823)
-------- -------- ------- ------- -------- --------
Total $121,197 $37,019 $53,407 $(56,823) $154,800
Income (loss) ========
before income
taxes $ 12,686 $ 2,169 $ 1,799 $(7,437) $ (37) $ 9,180
Identifiable
assets $ 55,720 $17,112 $23,784 $18,062 $ (282) $114,396
========
1993
Sales:
Unaffiliated
customers $96,327 $23,434 $ 4,029 $123,790
Intercompany 3,360 182 38,356 $(41,898)
-------- -------- ------- ------- -------- --------
Total $99,687 $23,616 $42,385 $(41,898) $123,790
Income (loss) ========
before income
taxes $ 4,646 $ 2,462 $1,312 $(7,561) $ 142 $ 1,001
Identifiable
assets $60,504 $11,814 $18,693 $10,669 $ (244) $101,436
========
1992
Sales:
Unaffiliated
customers $91,946 $18,855 $ 3,998 $114,799
Intercompany 4,822 689 37,081 $(42,592)
-------- -------- ------- ------- -------- --------
Total $96,768 $19,544 $41,079 $(42,592) $114,799
Income (loss) ========
before income
taxes $ 8,047 $ 1,974 $ 2,270 $(8,080) $ (685) $ 3,526
Identifiable
assets $61,342 $12,840 $17,305 $11,561 $ (386) $102,662
========
<F/N>
(a)Other included in the table above represents interest, corporate general and
administrative expenses, and certain assets not allocable to other geographic
segments.
</TABLE>
<PAGE>
16.SELECTED CONSOLIDATED QUARTERLY DATA (UNAUDITED)
(Amounts in Thousands Except Per Share Data and Stock Prices)
<TABLE>
<CAPTION>
INCOME (LOSS) NET INCOME
AFTER TAXES (LOSS) STOCK PRICE
--------------- ------------ -----------
GROSS PER PER
SALES PROFIT DOLLARS SHARE DOLLARS SHARE HIGH LOW
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994
First Quarter $37,664 $13,757 $1,215 $0.06 $1,215 $0.06 $2.94 $2.25
Second Quarter 38,393 14,392 1,513 0.07 1,513 0.07 3.19 2.13
Third Quarter 36,941 13,787 1,458 0.07 1,458 0.07 3.63 2.69
Fourth Quarter 41,802 15,133 1,874 0.09 1,874 0.09 3.63 2.88
1993
First Quarter $28,661 $11,539 $ 511 $0.02 $2,781 $0.13 $3.93 $2.69
Second Quarter 30,709 12,310 649 0.03 649 0.03 3.25 2.06
Third Quarter 30,522 11,699 552 0.03 552 0.03 3.00 2.13
Fourth Quarter 33,898 12,794 (1,115) (0.06) (1,115) (0.06) 3.00 2.31
</TABLE>
As previously described in these Notes, the Company recorded a benefit from
changes in accounting principles in the first quarter of 1993 of $2,270,000 and
a restructuring charge of $3,000,000 in the fourth quarter of 1993.
As of December 30, 1994, there were approximately 5,900 shareholders
comprised of record holders and individual participants in security position
listings.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COMPUTER PRODUCTS, INC. :
We have audited the accompanying consolidated statements of financial
condition of Computer Products, Inc. (a Florida corporation) and subsidiaries as
of December 30, 1994 and December 31, 1993, and the related consolidated
statements of operations, shareholders' equity and cash flows for the three
fiscal years ended December 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 Computer Products, Inc. and
subsidiaries as of December 30, 1994 and December 31, 1993, and the results of
their operations and their cash flows for the three fiscal years ended December
30, 1994 in conformity with generally accepted accounting principles.
As explained in Notes 4 and 10 to the consolidated financial statements,
effective January 2, 1993, the Company adopted Statements of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" and No. 109, "Accounting for Income Taxes."
Fort Lauderdale, Florida, ARTHUR ANDERSEN LLP
January 18, 1995.
EXHIBIT 21 -- SUBSIDIARIES OF REGISTRANT
Subsidiaries of the Company, all of which are wholly-owned and are included in
the consolidated financial statements, are as follows:
Name State or Country of Incorporation
---- ----------------------------------
Boschert Incorporated California
Computer Products Asia-Pacific Limited Hong Kong
Computer Products France SARL France
Computer Products GmbH Germany
Computer Products Power Conversion Limited England
Heurikon Corporation Wisconsin
Power Products (Ireland), Ltd. Cayman Islands, B.W.I.
Power Products, Ltd. Cayman Islands, B.W.I.
RTP, Corp Florida
RTP Foreign Sales Corporation U.S. Virgin Islands
Stevens-Arnold, Inc. Massachusetts
Wealth Scene Limited Hong Kong
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of
our reports (and to all references to our firm) included in or made a part of
this Form 10-K and our reports included in and incorporated by reference into
the Company's previously filed Form S-3 Registration Statement File Nos. 33-
70326 and 33-49176 and Form S-8 Registration Statement File No. 33-42516.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
March 24, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1994
<PERIOD-END> DEC-30-1994
<CASH> 20,211
<SECURITIES> 0
<RECEIVABLES> 26,023
<ALLOWANCES> 1,354
<INVENTORY> 20,047
<CURRENT-ASSETS> 67,612
<PP&E> 51,257
<DEPRECIATION> 25,019
<TOTAL-ASSETS> 114,396
<CURRENT-LIABILITIES> 27,266
<BONDS> 40,751
<COMMON> 203
0
0
<OTHER-SE> 39,755
<TOTAL-LIABILITY-AND-EQUITY> 114,396
<SALES> 154,800
<TOTAL-REVENUES> 154,800
<CGS> 97,730
<TOTAL-COSTS> 97,730
<OTHER-EXPENSES> 44,592
<LOSS-PROVISION> 571
<INTEREST-EXPENSE> 3,760
<INCOME-PRETAX> 9,180
<INCOME-TAX> 3,121
<INCOME-CONTINUING> 6,059
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,059
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
