<PAGE>
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 29, 1995 Commission File No. 0-4466
COMPUTER PRODUCTS, INC.
-----------------------
(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
- ---------------------------- ----------
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
----------------------------
(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 [ ].
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 15, 1996 was approximately $210 million.
As of March 15, 1996, 23,020,265 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 29, 1995 (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 May 2, 1996 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 sales of the Company's product lines (after
elimination of intercompany transactions) during the fiscal years indicated
($000s):
<TABLE>
<CAPTION> 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Power Conversion $155,426 $117,995 $ 94,501
Computer Systems 19,026 18,198 16,053
Industrial Automation 16,926 18,607 13,236
--------- --------- ---------
Total $191,378 $154,800 $123,790
========= ========= =========
</TABLE>
For further information on sales, particularly with respect to foreign and
intercompany sales, refer to Note 17 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 that focus on the worldwide communications market including
networking, data communications, telecommunications, and wireless
infrastructure. Computer, industrial and instrumentation markets are also
served. AC-to-DC power supplies are used to convert alternating electric
current (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. Ranging from 3 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 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 in Zhongshan, China.
COMPUTER SYSTEMS
The Computer Systems division designs and manufactures high performance board-
level computers and communication controllers, integrating them with real-time
operating system software, enclosures and peripherals to form complete systems
for communications and other 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, Intel and MIPS. 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 rapid computer response time with high quality processing
capabilities, such as communications.
Computer Systems has recently introduced the Baja product family. The Baja
utilizes a MIPS 4700 processor that takes advantage of the very high speed
processing capability of the MIPS 4000 family of RISC-based microprocessors.
Baja also includes two industry standard PCI Mezzanine Bus Connectors (PMC)
which gives the user the flexibility of adding standard modules such as ATM or
Fast Ethernet to meet their application needs. The Company believes that
Computer Systems' Nitro family of products based on the Motorola 68060 and 68040
CISC processors has been well received by the communications industry. Both
CISC and RISC based single-board computers have powerful networking,
communications and peripheral interfaces that provide the latest features
available for VMEbus products.
Computer Systems' customers are primarily original equipment manufacturers
(OEMs), who use the products for high speed telecommunications applications.
They are also used in other areas such as medical instrumentation, airplane and
weapons training simulators, process control, industrial automation and traffic
control systems. Management believes that the market for VMEbus and real-time
products will expand as communications companies move from proprietary to open
systems in order to speed time to market and enhance upgrade capability.
Computer Systems' products are manufactured in Madison, Wisconsin.
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 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 requiring
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 arrangements 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.
MARKETING AND DISTRIBUTION
The Company's distribution channels consist of distributors, independent
manufacturers' representatives, and a direct sales team. 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. Both Industrial Automation and Computer Systems manage some
sales on a direct basis.
One customer accounted for 11% of the Company's consolidated sales during fiscal
1995. 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 17 of the Notes to Consolidated Financial Statements,
incorporated herein by reference, for additional information.
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. During 1995, the Company experienced
supply shortages of certain components which are expected to persist in 1996.
To compensate for these shortages, the Company acquired additional inventories
of certain components and intends to continue this practice on a selective basis
in 1996. 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 29, 1995 was $52.1 million
as compared to $37.0 million at December 30, 1994. 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 29, 1995 backlog
in the first six months of fiscal 1996.
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 1995, 1994, and 1993 fiscal years were approximately $16.1 million, $10.9
million, and $9.4 million, respectively. As a percentage of total sales,
research and development accounted for 8.4%, 7.0%, and 7.6% in 1995, 1994 and
1993, respectively. Research and development spending has increased in each of
the past three years as the Company invested in new product platforms to service
the communications industry. The Company views continued investment in research
and development as critical to its future growth and competitiveness and is
committed to continuing its efforts in new standard and custom product
development.
EMPLOYEES
The Company presently employs approximately 1,630 full-time people. In
addition, the Company presently has approximately 1,300 temporary employees
and contractors in its China facility. 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 442,000 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 76% 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
-----------------
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
- ---- --- ----------------------------
Joseph M. O'Donnell 49 President and Chief Executive Officer,
Director
Richard J. Thompson 46 Vice President - Finance, Chief Financial Officer,
Secretary, Treasurer
Robert J. Aebli 60 President - Computer Systems Division
Louis R. DeBartelo 55 President - Power Conversion North America
Gary J. Duffy 43 Managing Director - Power Conversion Europe
W.K. Lo 43 Managing Director - Power Conversion Asia-Pacific
Salvatore R. Provanzano 53 President - Industrial Automation Division
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; and as
President and Chief Executive Officer of Go/Dan Industries, a manufacturer of
automotive parts, from June 1990 to September 1992. He is a Director of
Cincinnati Microwave, Inc., a manufacturer of consumer electronics, and a
Director of V-Band Corporation, a manufacturer of computer systems.
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.
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.
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 -Industrial Automation division. 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.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
---------------------------------------------------------------------
The common stock of Computer Products, Inc. is traded on the NASDAQ national
stock market under the symbol CPRD. High and low sales prices of such stock and
the information pertaining to the number of record holders on page 30 of the
Annual Report for the year ended December 29, 1995 is incorporated herein by
reference.
The Registrant has not paid cash dividends in the past and no change in such
policy is anticipated. Future 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 $25 million seven-year term loan and $20 million revolving credit facility
contain certain restrictive covenants which, among other things, require the
Company to maintain certain financial ratios and limit the purchase, redemption
or retirement of capital stock and other assets. No funds have been drawn on
the revolving credit facility.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The Consolidated Five-Year Financial History on page 13 of the Annual Report for
the fiscal year ended December 29, 1995 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Annual Report for the fiscal year ended December 29,
1995 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The Consolidated Financial Statements including Note 18, Selected Consolidated
Quarterly Data, included in the Annual Report for the fiscal year ended December
29, 1995 are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
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 29, 1995. 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
-------------------------------------------------------------
The following consolidated financial statements of Computer Products, Inc. and
subsidiaries included in the Annual Report for the fiscal year ended December
29, 1995 are incorporated herein by reference in Item 8:
Consolidated Statements of Operations -- Years Ended on the Friday nearest
December 31, 1995, 1994 and 1993
Consolidated Statements of Financial Condition -- as of the Friday nearest
December 31, 1995 and 1994
Consolidated Statements of Cash Flows -- Years Ended on the Friday nearest
December 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity -- Years Ended on the
Friday nearest December 31, 1995, 1994 and 1993
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. - incorporated by reference to Exhibit 10.43 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December 30, 1994.
10.44 Loan agreement between Computer Products, Inc. and First Union National
Bank of Florida dated as of April 4, 1995 - incorporated by reference to
Exhibit 10.44 of Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1995.
10.45 1996 Employee Stock Purchase Plan.
10.46 1990 Performance Equity Plan as amended.
10.47 1990 Outside Directors Stock Option Plan, restated as of January 25,
1996.
10.48 1996 Executive Incentive Plan
10.49 Executive Stock Ownership plan
11 Statement regarding Computation of Per Share Earnings.
13 Annual Report of Computer Products, Inc. for the fiscal year ended December
29, 1995.
21 List of subsidiaries of Registrant.
23 Consent of Independent Certified Public Accountants.
27 Financial data schedule.
(b) Reports on Form 8-K
-------------------
The Registrant did not file any reports on Form 8-K during the thirteen-
week period ended December 29, 1995.
<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, 1996. 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) 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.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 18, 1996.
<PAGE>
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended on the Friday Nearest December 31 ($000s)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE CHARGED CHARGED BALANCE
AT TO TO AT
BEGINNIN COSTS & OTHER DEDUCTIONS END OF
DESCRIPTION OF EXPENSE ACCOUNT DESCRIP AMOUNT PERIOD
PERIOD S S TION
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR 1995:
Reserve deducted from asset to which
it applies:
Allowance for doubtful accounts $ 1,354 $ 199 (2) $ 63 $ 1,490
Inventory 4,523 3,877 (4) 1,515 6,885
Deferred tax asset valuation
allowance 10,453 74 (3) 637 9,890
Other 292 292
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:
SCAL YEAR 1993:
year ended December 28, 1990.
10.31 1991 Long Term Performance Plan - incorporated by reference to Exhibit
SCAL YEAR 1993:
Reserve deducted from asset to which
it applies:
Allowance for doubtful accounts $ 1,031 $ 210 (4) $ 67 $ 1,174
0 11,626 (1) 11,626
Other 292 292
</TABLE>
[FN]
(1) This amount includes $11,553 recorded upon initial adoption of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes".
(2) This amount relates to recoveries.
(3) The reduction relates to utilization of tax loss carryforwards.
(4) The reduction relates to charge-offs.
<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 22, 1996 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 03/22/95
- -------------------
Joseph M. O'Donnell Officer, Director
Richard J. Thompson Vice President-Finance, 03/22/95
- -------------------
Richard J. Thompson Chief Financial and Accounting Officer
Earl Templeton Director 03/22/95
- --------------
Earl Templeton
Edward S. Croft, III Director 03/22/95
- --------------------
Edward S. Croft, III
Stephen A. Ollendorff Director 03/22/95
- ---------------------
Stephen A. Ollendorff
Bert Sager Director 03/22/95
- ----------
Bert Sager
Phillip A. O'Reilly Director 03/22/95
- -------------------
Phillip A. O'Reilly
Lewis Solomon Director 03/22/95
- -------------
Lewis Solomon
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- --------------------------------------------------
10.45 1996 Employee Stock Purchase Plan
10.46 1990 Performance Equity Plan, as amended
10.47 1990 Outside Directors Stock Option Plan,
restated as of January 25, 1996
10.48 1996 Executive Incentive Plan
10.49 Executive Stock Ownership Plan
11 Statement regarding Computation of Per Share
Earnings
13 Annual Report of Computer Products, Inc. for
the fiscal year ended December 29, 1995
21 List of subsidiaries of Registrant
23 Consent of Independent Certified Public Accountants
27 Financial Data Schedule
<PAGE>
COMPUTER PRODUCTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
1.PURPOSE OF PLAN
The purpose of this plan (the "Plan") is to provide eligible employees who
wish to become stockholders of Computer Products, Inc. (the "Company") or
wish to increase their stock holdings in the Company with a method of doing
so which is both convenient and on a basis more favorable than would
otherwise be available. With the expiration of the Computer Products, Inc.
Qualified Stock Purchase Plan that expired on December 31, 1995, the Company
hereby continues to provide a plan whereby employees may acquire shares of
the Company's Common Stock, par value $0.01 per share ("Common Stock"),
directly from the Company on a payroll deduction basis, thus making it easier
for them to acquire such shares and relieving them of the details of a
transaction unfamiliar to most of them. It is felt that employee
participation in ownership of the Company on this basis will thus be to the
mutual benefit of both the employees and the Company. It is intended that
the Plan shall constitute an "employee stock purchase plan" within the
meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code").
2.EMPLOYEES ELIGIBLE TO PARTICIPATE
An employee, except an employee who (a) has been employed less than three
months, (b) whose customary employment is not more than five months per
calendar year, or (c) whose customary employment is 20 hours or less per
week, of the Company or any subsidiary of the Company which adopts the Plan
with the consent of the Company, who is in the employ of the Company or any
participating subsidiary (the "Employing Corporation") is eligible to
participate in the Plan. The term "employee" shall include an officer but
not a non-employee member of the board of directors of the Employing
Corporation.
3.OFFERS
The Compensation and Stock Option Committee (the "Committee") of the
Company's board of directors shall determine the date or dates upon which one
or more offers ("Offer"/"Offers") shall be made under the Plan, and shall
notify each eligible employee at least ten (10) days prior to the effective
date thereof. In order to participate in an Offer, an eligible employee must
sign and forward to the Company, prior to the effective date of the Offer, a
payroll deduction authorization form authorizing regular payroll deductions,
which must be 2% or more of the employee's base salary per pay period but may
not exceed 6% of the employee's base salary per pay period, to be applied
toward the purchase of Common Stock pursuant to the Offer.
4.OPTIONS
On the effective date of an Offer, each eligible employee who has elected to
participate will be granted an option to purchase, through payroll
deductions, as many whole shares of Common Stock, subject to the limitations
hereinafter set forth, as may be purchased, at the option price set forth in
Section 6 hereof, with the compensation deferred by such employee pursuant to
Section 3 hereof during the period commencing on the effective date of the
Offer and expiring on the date which is three (3) months thereafter. Each
option granted pursuant to an Offer shall be automatically exercised on the
date (the "Exercise Date") of the tenth trading day following the date which
is three (3) months from the effective date of the Offer. No interest shall
be paid on any amounts deferred by any employee.
5.PARTICIPATION LIMITATIONS
Notwithstanding anything herein to the contrary, no employee shall be
permitted to purchase any shares under the Plan if the employee, immediately
after the purchase, owns or would own shares (including all shares which may
be purchased under outstanding options under the Plan) possessing 5% or more
of the total combined voting power or value of all classes of shares of
capital stock of the Employing Corporation or of its parent or subsidiary
corporations. For purposes of the foregoing limitation, the rules of Section
424(d) (relating to attribution of stock ownership) of the Code shall apply
in determining share ownership, and stock which the employee may purchase
under outstanding options shall be treated as stock owned by such employee.
Further, if pursuant to the terms of the Plan, an employee would be granted
an option that violates Section 424(b)(8) of the Code, such option shall not
be granted.
6.OPTION PRICE
The option price (the "Option Price") at which shares of Common Stock may be
purchased under the Plan shall be 85% of the fair market value of a share of
Common Stock on the Exercise Date. As used herein, the term "fair market
value" shall mean: (A) if the Common Stock is listed on a national securities
exchange or quoted on The NASDAQ National Market, the closing price of the
Common Stock on the relevant date; (B) if the Common Stock is not listed on a
national securities exchange or quoted on The NASDAQ National Market, but is
traded in the over-the-counter market, the last sales price or, if not
available, the average of the bid and asked prices for the Common Stock on
the relevant date, or the most recent preceding day for which such quotations
are reported by The NASDAQ Stock Market; and (C) if the fair market value of
the Common Stock cannot be determined pursuant to clause (A) or (B) above,
such price as the Committee shall in good faith determine.
7.EXERCISE OF OPTIONS
On the Exercise Date, each participant will be deemed to have exercised his
option to purchase, at the then applicable Option Price, that number of full
shares of Common Stock determined pursuant to Section 4 hereof and the
Company will remit to a custodian designated by the Company all employee
payroll deductions made by the Company during the corresponding payroll
deduction period. Upon receipt of such funds from the Company, the custodian
will purchase from the Company, at the Option Price, as many full shares of
Common Stock as may be purchased with the funds received from each Plan
participant. Any funds not expended in the purchase of whole shares on any
particular Exercise Date will, for each participant, be carried forward and
applied to the purchase of shares on the next subsequent Exercise Date or
refunded to the employee if requested in writing. The custodian for the Plan
shall hold all shares purchased under the Plan and shall maintain a separate
account for each participant, in which Common Stock purchased by such
participant under the Plan shall be held and dividends received will be
reinvested. The custodian shall vote all shares purchased by each
participant under the Plan in the manner designated by the participant, and,
upon the written request of any participant, all or any specified portion of
any shares held by the custodian on behalf of such participant, may be
withdrawn by such participant. Each participant shall receive a statement as
soon as practicable after each Exercise Date reflecting purchases and other
transactions in his account under the Plan through such Exercise Date.
8.NUMBER OF SHARES TO BE OFFERED
Except as provided in Section 13 hereof, the maximum number of shares that
may be offered under the Plan is 200,000.
9.ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee, which shall consist of not
less than three directors and shall be appointed from time to time by the
Company's board of directors. The Committee may prescribe rules and regulations
from time to time for the administration of the Plan and may decide questions
which may arise with respect to its interpretation or application. The
Committee may, subject to Section 14 hereof, amend or modify the Plan and may
determine the terms and conditions of Offers under the Plan. The Committee may
not, however, make any alterations which would materially and adversely affect
an option previously granted without the consent of the optionee. Furthermore,
the Committee may not reduce the applicable option price per share or make any
change or addition which does not meet the requirements of Section 423(b) of the
Code.
10.WITHDRAWAL FROM PARTICIPATION
A participant may, at any time and for any reason, by giving written notice
of his desire in this regard to the Committee or its designee, elect to withdraw
from any further participation in an Offer, but may not otherwise amend his
payroll deduction authorization form during the period of any Offer. A
withdrawing participant will, on the next succeeding Exercise Date, have his
account credited with the number of full shares of Common Stock which may be
acquired at the Exercise Price with any cash in such participant's account on
such Date. In addition, the amount of any excess cash remaining in the account
of any participant who withdraws from participation in any Offer or who does not
participate in any succeeding Offer shall be distributed to such participant as
promptly as practicable. Except as provided in Section 18 hereof, a withdrawing
participant may recommence participation on the effective date of the next
Offer.
11.RIGHTS NOT TRANSFERABLE
Except for transfers by will or under the laws of descent and distribution,
or unless otherwise permitted by law (including, without limitation, the Code),
no employee shall have the right to sell, assign, transfer, pledge or otherwise
dispose of or encumber either his right to participate in the Plan or his
interest in any options hereunder, and such right and interest shall not be
liable for or subject to the debts, contracts or liabilities of the employee.
Any attempted transfers in violation of this Section 11 shall be void and the
attempted transferor shall, except as may otherwise be required by law, be
deemed to have irrevocably withdrawn from the Plan as of the date thereof.
12.TERMINATION OF EMPLOYMENT
In the event of a participant's retirement, death or other termination of
employment, a certificate representing the number of full shares of Common Stock
then credited to the participant's account, and any amount of excess deferred
funds as of that date, will be issued to the employee or his representative as
promptly as practicable.
13.REORGANIZATION
In the event of reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, offering of rights or
any other change in the structure of Common Stock, the Company's board of
directors may make such adjustments, if any, as it may deem appropriate in the
number, kind and price of shares available for purchase under the Plan, and in
the minimum and maximum number of shares which a participant is entitled to
purchase.
14.APPROVAL OF STOCKHOLDERS
The Plan was adopted by the board of directors of the Company on January 25,
1996, subject to approval by the Company's stockholders. No amendment of the
Plan which would (a) increase the number of shares reserved for issuance under
the Plan (except as provided in Section 13 hereof), (b) materially increase the
benefits to participants, (c) materially modify the requirements for
participation, or (d) cause the options to fail to meet the requirements of
Section 423 of the Code, shall be effective unless it is duly approved by the
Company's stockholders.
15.TERMINATION OF PLAN
The Plan and all rights of employees participating in an Offer will terminate
(a) on the day that participants have exercised options to purchase a number of
shares equal to or greater than the number of shares then subject to the Plan,
and in the latter event options will be exercisable by participants on a pro
rata basis, (b) at any time, at the discretion of the Committee, or (c) on June
30, 1996 if the Plan has not been approved by the Company's stockholders on or
prior to that date. Upon termination of the Plan, shares of the Common Stock
and all cash in the participants' accounts, will be returned to the
participants, without interest, as soon as is administratively feasible.
16.NO RIGHTS AS STOCKHOLDER
The holder of an option shall have no rights, as such, as a stockholder of
the Company prior to the Exercise Date thereof.
17.NO RIGHT TO EMPLOYMENT
Nothing in the Plan or any option shall be deemed to confer upon any employee
any right to continue in the employ of any Employing Corporation or in any way
interfere with the right of any such Employing Corporation to terminate the
employment of any employee at any time, with or without cause.
18.SPECIAL PROVISIONS FOR OFFICERS AND DIRECTORS
Notwithstanding any provisions contained herein to the contrary, any officer
or director, as such terms are defined under Section 16 of the Securities and
Exchange Act of 1934 (the "Exchange Act") and the rules promulgated thereunder,
who withdraws any shares of Common Stock from the Plan shall either (a) agree to
hold such shares for at least six months prior to disposition, or (b) cease any
further purchases of Common Stock under the Plan for a period of at least six
months. In addition, any such officer or director who withdraws from, or elects
not to participate in, any Offer, may not participate again for at least six
months. The provisions of this Section 18 are intended to comply with Rule 16b-
3(d) under the Exchange Act and shall be interpreted in such a manner as to
cause the Plan to comply with the provisions thereof.
19.COMPLIANCE WITH SECTION 423
All eligible employees shall have equal rights and privileges with respect to
the Plan, so that the Plan qualifies as an "employee stock purchase plan" within
the meaning of Section 423 or any successor provision of the Code and related
regulations. Any provision of the Plan which is inconsistent with Section 423
or any successor provision of the Code shall, without further act or amendment
by the Company, be reformed to comply with the requirements of Section 423.
This Section 19 shall take precedence over all other provisions of the Plan.
20.REQUIRED GOVERNMENTAL APPROVALS
The Plan, and all options granted under and other rights inherent in the
Plan, are subject to stockholder approval as provided in Section 14 above and to
receipt by the Company of all necessary approvals or consents of governmental
agencies having jurisdiction, and, notwithstanding any other provision of the
Plan, all options granted under the Plan and all other rights inherent in the
Plan are subject to termination and/or modification as may be required or
advisable in order to obtain any such necessary approval or consent or, as a
result of consequences attaching to any such required approval or consent, as
may be required or advisable in order to avoid, in the judgment of the Company's
board of directors, adverse impact on the Company's overall wage and salary
policy as applied to all employees of the Company.
21.GENDER
Pronouns shall be deemed to include the masculine and feminine gender and
words used in the singular shall be deemed to include both the singular and the
plural, unless the context indicates otherwise.
<PAGE>
COMPUTER PRODUCTS, INC.
1990 PERFORMANCE EQUITY PLAN
AS AMENDED
SECTION 1. PURPOSE; DEFINITIONS.
1.1. Purpose. The purpose of the Computer Products, Inc. (the "Company")
1990 Performance Equity Plan (the "Plan") is to enable the Company to offer to
its key employees and to key employees of its subsidiaries, long term
performance-based stock and/or other equity interests in the Company, thereby
enhancing its ability to attract, retain and reward such key employees, and to
increase the mutuality of interests between those employees and the stockholders
of the Company. The various types of long-term incentive awards which may be
provided under the Plan will enable the Company to respond to changes in
compensation practices, tax laws, accounting regulations and the size and
diversity of its businesses.
1.2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth herein:
(a) "Agreement" means the agreement between the Company and the Holder
setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Change of Control" means a change of control of the Company pursuant
to Section 10 hereof.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute or statutes thereto.
(e) "Committee" means the Stock Option Committee of the Board or any other
committee of the Board which the Board may designate.
(f) "Common Stock" means the Common Stock of the Company, par value $.01
per share.
(g) "Company" means Computer Products, Inc., a corporation organized under
the laws of the State of Florida, and any successor thereto.
(h) "Deferred Stock" means Stock to be received, under an award made
pursuant to Section 8 hereof, at the end of a specified deferral period.
(i) "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute or statutes thereto.
(k) "Exchange Act Holder" means such officer or director or 10% beneficial
owner of Common Stock subject to Section 16(b) of the Exchange Act.
(l) "Fair Market Value", unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
given date: (i) if the Common Stock (as hereinafter defined) is listed on a
national securities exchange or quoted on the NASDAQ National Market System, the
closing price of the Common Stock on the last preceding day on which the Common
Stock was traded, as reported on the composite tape or by NASDAQ/NMS System
Statistics, as the case may be; (ii) if the Common Stock is not listed on a
national securities exchange or quoted on the NASDAQ National Market System, but
is traded in the over-the-counter market, the average of the bid and asked
prices for the Common Stock on the last preceding day for which such quotations
are reported by NASDAQ; and (iii) if the fair market value of the Common Stock
cannot be determined pursuant to clause (i) or (ii) hereof, such price as the
Committee shall determine.
(m) "Formula Price Per Share" means the highest gross price (before
brokerage commissions, soliciting dealers' fees and similar charges) paid for
any share of Common Stock at any time during the ninety-day period immediately
prior to the Change of Control (whether by way of exchange, conversion,
distribution, liquidation or otherwise) paid or to be paid for any share of
Common Stock in connection with a Change of Control. If the consideration paid
or to be paid in any transaction that results in a Change of Control consists,
in whole or in part, of consideration other than cash, the Board shall take such
action, as in its judgment it deems appropriate, to establish the cash value of
such consideration, but such valuation shall not be less than the value, if any,
attributed to such consideration by any other party to such transaction that
results in a Change of Control.
(n) "Holder" means an eligible employee or prospective employee of the
Company or a Subsidiary who has received an award under the Plan.
(o) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(p) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(q) "Other Stock-Based Award" means an award under Section 9 hereof that
is valued in whole or in part by reference to, or is otherwise based upon,
Common Stock.
(r) "Plan" means this Computer Products, Inc. 1990 Performance Equity
Plan, as hereinafter amended from time to time.
(s) "Restricted Stock" means Common Stock, received under an award made
pursuant to Section 7 hereof, that is subject to restrictions under said Section
7.
(t) "SAR Value" means the excess of the Fair Market Value of one share of
Common Stock over the exercise price per share specified in a related Stock
Option in the case of a Stock Appreciation Right granted in tandem with a Stock
Option and the Stock Appreciation Right price per share in the case of a Stock
Appreciation Right awarded on a free standing basis multiplied by the number of
shares in respect of which the Stock Appreciation Right shall be exercised, on
the date of exercise.
(u) "Stock Appreciation Right" means the right, pursuant to an award
granted under Section 6 hereof, to recover an amount equal to the SAR Value.
(v) "Stock Option" or "Option" means any Non-Qualified Stock Option or
Incentive Stock Option to purchase shares of Stock which is awarded pursuant to
the Plan.
(w) "Subsidiary" means any present or future subsidiary corporation of the
Company, as such term is defined in Section 425(f) of the Code.
SECTION 2. ADMINISTRATION.
2.1. Committee Membership. The Plan shall be administered by the
Committee, the membership of which shall be at all times constituted so as to
not adversely affect the compliance of the Plan with the requirements of Rule
16b-3 under the Exchange Act or with the requirements of any other applicable
law, rule or regulation.
2.2. Powers of Committee. The Committee shall have full authority to
award, pursuant to the terms of the Plan, to eligible employees and prospective
employees described under Section 4 hereof: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Deferred Stock, and/or (v)
Other Stock-Based Awards. For purposes of illustration and not of limitation,
the Committee shall have the authority (subject to the express provisions of
this Plan):
(a) to select the eligible employees and prospective employees to whom
Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock
and/or Other Stock-Based Awards may from time to time be awarded hereunder;
(b) to determine the Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock, Deferred Stock and/or Other
Stock-Based Awards, or any combination thereof, if any, to be awarded hereunder
to one or more eligible employees;
(c) to determine the number of shares to be covered by each award granted
hereunder;
(d) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any award hereunder (including, but not limited to, share price,
any restrictions or limitations, and any vesting, exchange, surrender,
cancellation, acceleration, termination, exercise or forfeiture provisions, as
the Committee shall determine);
(e) to determine any specified performance goals or such other factors or
criteria which need to be attained for the vesting of an award granted
hereunder;
(f) to determine the terms and conditions under which awards hereunder are
to operate on a tandem basis and/or in conjunction with or apart from other
equity awarded under this Plan and cash awards made by the Company or any
Subsidiary outside of this Plan;
(g) to determine the extent and circumstances under which Common Stock and
other amounts payable with respect to an award hereunder shall be deferred,
which may be either automatic or at the election of the Holder; and
(h) to substitute (A) new Stock Options for previously granted Stock
Options, which previously granted Stock Options have higher option exercise
prices and/or contain other less favorable terms, and (B) new awards of any
other type for previously granted awards of the same or other type, which
previously granted awards are upon less favorable terms.
2.3. Interpretation of Plan. Subject to Section 11 hereof, the Committee
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable, to interpret the terms and provisions of the Plan and any award
issued under the Plan (and to determine the form and substance of all Agreements
relating thereto), and to otherwise supervise the administration of the Plan.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options or any Agreement providing for Incentive
Stock Options shall be interpreted, amended or altered, nor shall any discretion
or authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the Holder(s)
affected, to disqualify any Incentive Stock Option under such Section 422.
Subject to Section 11 hereof, all decisions made by the Committee pursuant to
the provisions of the Plan shall be made in the Committee's sole discretion and
shall be final and binding upon all persons, including the Company, its
Subsidiaries and the Holders.
SECTION 3. COMMON STOCK SUBJECT TO PLAN.
3.1. Number of Shares. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 4,450,000
shares. If any shares of Common Stock that are subject to a Stock Option or
Stock Appreciation Right cease to be subject to such Option or Stock
Appreciation Right, or if any shares that are subject to a Restricted Stock or
Deferred Stock award or Other Stock-Based Award granted hereunder are forfeited
or any such award otherwise terminates without a payment being made to the
Holder in the form of Common Stock, such shares shall again be available for
distribution in connection with future grants and awards under the Plan. The
number of shares of Common Stock deemed to be issued under the Plan upon the
exercise of an Option or Other Stock-Based Award in the nature of a stock
purchase right shall be reduced by the number of shares of Common Stock
surrendered by the Holder in payment of the exercise or purchase price of the
award and withholding taxes thereon.
3.2. Character of Shares. Shares of Common Stock under the Plan may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
3.3. Adjustment Upon Changes in Capitalization, Etc. In the event of any
merger, reorganization, consolidation, recapitalization, dividend (other than a
dividend or its equivalent which is credited to a Holder or a regular cash
dividend), stock split, reverse stock split, or other change in corporate
structure affecting the Common Stock, such substitution or adjustment shall be
made in the aggregate number of shares reserved for issuance under the Plan, in
the number and exercise price of shares subject to outstanding Options, in the
number of shares and Stock Appreciation Right price relating to Stock
Appreciation Rights, and in the number of shares subject to, and related terms
of, other outstanding awards (including but not limited to awards of Restricted
Stock, Deferred Stock and Other Stock-Based Awards) as may be determined to be
appropriate by the Committee in order to prevent dilution or enlargement of each
Holder's rights, provided that the number of shares subject to any award shall
always be a whole number.
SECTION 4. ELIGIBILITY.
4.1. General. Awards under the Plan may be made to (i) officers and other
key employees of the Company or any Subsidiary (including officers and key
employees serving as directors of the Company) who are at the time of the grant
of an award under this Plan regularly employed by the Company or any Subsidiary;
and (ii) prospective employees of the Company or its Subsidiaries. The exercise
of any Stock Option and the vesting of any award hereunder granted to a
prospective employee shall be conditioned upon such person becoming an employee
of the Company or a Subsidiary. The term "prospective employee" shall mean any
person who holds an outstanding offer of regular employment on specific terms
from the Company or a Subsidiary.
4.2. Ineligibility for Awards. No person designated by the Board to serve
on the Committee, effective at such future time so that he qualifies as a
disinterested person, shall be eligible to receive any awards under the Plan
during the period from the date such designation is made to the date such
designation becomes effective. Notwithstanding Section 4.1 hereof, no member of
the Committee, while serving as such, shall be eligible to receive an award
under the Plan.
SECTION 5. STOCK OPTIONS.
5.1. Grant and Exercise. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options.
Any Stock Option granted under the Plan shall contain such terms, not
inconsistent with this Plan, as the Committee may from time to time approve.
The Committee shall have the authority to grant to any Holder hereof Incentive
Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights) and may be granted alone,
in tandem with or in addition to other awards under the Plan. To the extent
that any Stock Option (or portion thereof) does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option. Unless
granted in substitution for another outstanding award, Options shall be granted
for no consideration other than services.
5.2. Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant but shall be not less than 100% of the Fair Market Value of the
Common Stock at the time of grant (110%, in the case of an Incentive Stock
Option granted to a Holder ("10% Stockholder") who, at the time of grant, owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its parent (if any) or subsidiary corporations, as
those terms are defined in Sections 425(e) and (f) of the Code).
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years (five
years, in the case of an Incentive Stock Option granted to a 10% Stockholder)
after the date on which the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee. If the Committee provides, in its discretion, that any Stock Option
is exercisable only in installments, the Committee may waive such installment
exercise provisions at any time at or after the time of grant in whole or in
part, based upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case, Stock Options may
be exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, which shall be in cash or, unless otherwise provided
in the Agreement, in whole shares of Common Stock which are already owned by the
Holder of the Stock Option or, unless otherwise provided in the Stock Option
Agreement, partly in cash and partly in such Common Stock. Cash payments shall
be made by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company; provided, however, that the Company
shall not be required to deliver certificates for shares of Common Stock with
respect to which a Stock Option is exercised until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
Payments in the form of Common Stock (which shall be valued at the Fair Market
Value of a share of Common Stock on the date of exercise) shall be made by
delivery of stock certificates in negotiable form which are effective to
transfer good and valid title thereto to the Company, free of any liens or
encumbrances. Subject to the terms of the Agreement, the Committee may, in its
sole discretion, at the request of the Holder, deliver upon the exercise of a
Non-Qualified Stock Option a combination of shares of Deferred Stock and Common
Stock; provided that, notwithstanding the provisions of Section 8 of the Plan,
such Deferred Stock shall be fully vested and not subject to forfeiture. Except
as otherwise expressly provided in this Plan or in the Agreement, no Stock
Option may be exercised at any time unless the Holder thereof is then an
employee of the Company or of a Subsidiary. The Holder of a Stock Option shall
have none of the rights of a stockholder with respect to the shares subject to
the Stock Option until such shares shall be transferred to the Holder upon the
exercise of the Stock Option.
(e) Buyout and Settlement Provisions. The Committee may at any time offer
to buy out for cash or otherwise settle a Stock Option previously granted, based
upon such terms and conditions as the Committee shall establish and communicate
to the Holder at the time that such offer is made, including a settlement by
exchange of a different award under the Plan for the surrender of the Option.
SECTION 6. STOCK APPRECIATION RIGHTS.
6.1. Grant and Exercise. Stock Appreciation Rights may be granted in
tandem with ("Tandem Stock Appreciation Right") or in conjunction with all or
part of any Stock Option granted under the Plan or may be granted on a
free-standing basis. In the case of a Non-Qualified Stock Option, a Tandem
Stock Appreciation Right may be granted either at or after the time of the grant
of such Non-Qualified Stock Option. In the case of an Incentive Stock Option, a
Tandem Stock Appreciation Right may be granted only at the time of the grant of
such Incentive Stock Option. Unless granted in substitution for another
outstanding award, Stock Appreciation Rights shall be granted for no
consideration other than services.
A Tandem Stock Appreciation Right shall terminate and shall no longer be
exercisable upon the termination or exercise of the related Stock Option, except
that, unless otherwise determined by the Committee, a Tandem Stock Appreciation
Right granted with respect to less than the full number of shares covered by a
related Stock Option shall not be reduced until after the number of shares
remaining under the related Stock Option equals the number of shares covered by
the Tandem Stock Appreciation Right.
A Tandem Stock Appreciation Right may be exercised by a Holder, in accordance
with Section 6.2 hereof, by surrendering the applicable portion of the related
Stock Option. Upon such exercise and surrender, the Holder shall be entitled to
receive such amount in the form of payment determined in the manner prescribed
in Section 6.2 hereof. Stock Options which have been so surrendered, in whole
or in part, shall no longer be exercisable to the extent Tandem Stock
Appreciation Rights have been exercised.
6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to
the following terms and conditions:
(a) Exercisability. Tandem Stock Appreciation Rights shall be exercisable
only at such time or times and to the extent that the Stock Options to which
they relate shall be exercisable in accordance with the provisions of Section 5
hereof and this Section 6, and may be subject to such additional limitations on
exercisability as shall be determined by the Committee and set forth in the
Agreement. Other Stock Appreciation Rights shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee and set forth in the Agreement. Notwithstanding anything to the
contrary contained herein (including the provisions of Section 10.1 hereof), any
Stock Appreciation Right granted to an Exchange Act Holder to be settled wholly
or partially in cash (i) shall not be exercisable during the first six months of
the term of such Stock Appreciation Right, except that this special limitation
shall not apply in the event of death or Disability of such Holder prior to the
expiration of the six-month period, and (ii) shall only be exercisable during
the period beginning on the third business day following the date of release for
publication of the Company of quarterly or annual summary statements of sales
and earnings and ending on the twelfth business day following such date.
(b) Receipt of SAR Value. Upon the exercise of a Stock Appreciation
Right, a Holder shall be entitled to receive up to, but not more than, an amount
in cash and/or shares of Common Stock equal to the SAR Value with the Committee
having the right to determine the form of payment.
(c) Shares Affected Under Plan. Upon the exercise of a Tandem Stock
Appreciation Right, the Stock Option or part thereof to which such Tandem Stock
Appreciation Right is related shall be deemed to have been exercised for the
purpose of the limitation set forth in Section 3 hereof on the number of shares
of Common Stock to be issued under the Plan, but only to the extent of the
number of shares, if any, issued under the Tandem Stock Appreciation Right at
the time of exercise based upon the SAR Value.
(d) Limited Stock Appreciation Rights. The Committee may grant "Limited
Stock Appreciation Rights" i.e., Stock Appreciation Rights that become
exercisable upon the occurrence of one or more of the events which trigger a
Change of Control as defined in Section 10 hereof, and shall be settled in an
amount equal to the Formula Price Per Share, subject to such other terms and
conditions as the Committee may specify; provided, however, if any Limited Stock
Appreciation Right is granted to an Exchange Act Holder such Limited Stock
Appreciation Right (i) shall only be exercisable within sixty (60) days after
the event triggering the Change of Control; and (ii) may not be exercised during
the first six months after the date of grant of such Limited Stock Appreciation
Right (except in the event of death or Disability of such Holder prior to the
expiration of the six-month period; and (iii) shall only be exercisable in the
event that the date of the Change of Control was outside the control of such
Holder; and (iv) shall only be settled in cash in an amount equal to the Formula
Price Per Share.
SECTION 7. RESTRICTED STOCK.
7.1. Grant. Shares of Restricted Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be awarded, the number of shares to be awarded, the time
or times within which such awards may be subject to forfeiture (the "Restriction
Period"), the vesting schedule and rights to acceleration thereof, and all other
terms and conditions of the awards. Unless granted in substitution for another
outstanding award, Restricted Stock shall be granted for no consideration other
than services.
7.2. Terms and Conditions. Each Restricted Stock award shall be subject
to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be represented by a
stock certificate or certificates registered in the name of the Holder to whom
such Restricted Stock shall have been awarded. During the Restriction Period,
certificates representing the Restricted Stock and any securities constituting
Retained Distributions (as hereinafter defined) shall bear a restrictive legend
to the effect that ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions that
shall be forfeited or that shall not become vested in accordance with the Plan
and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The Holder will
have the right to vote such Restricted Stock, to receive and retain all regular
cash dividends and other cash equivalent distributions as the Board may in its
sole discretion designate, pay or distribute on such Restricted Stock and to
exercise all other rights, powers and privileges of a Holder of Common Stock
with respect to such Restricted Stock, with the exceptions that (A) the Holder
will not be entitled to delivery of the stock certificate or certificates
representing such Restricted Stock until the Restriction Period shall have
expired and unless all other vesting requirements with respect thereto shall
have been fulfilled; (B) the Company will retain custody of the stock
certificate or certificates representing the Restricted Stock during the
Restriction Period; (C) other than regular cash dividends and other cash
equivalent distributions as the Board may in its sole discretion designate, pay
or distribute, the Company will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted Stock (and such
Retained Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if ever,
as the Restricted Stock with respect to which such Retained Distributions shall
have been made, paid or declared shall have become vested and with respect to
which the Restriction Period shall have expired; and (D) a breach by the Holder
of any of the restrictions, terms or conditions contained in this Plan or the
Agreement or otherwise established by the Committee with respect to any
Restricted Stock or Retained Distributions will cause a forfeiture of such
Restricted Stock and any Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction Period
with respect to each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (A) such Restricted Stock shall
become vested in accordance with the terms of the Agreement, and (B) any
Retained Distributions with respect to such Restricted Stock shall become vested
to the extent that the Restricted Stock related thereto shall have become
vested. Any such Restricted Stock and Retained Distributions that do not vest
shall be forfeited to the Company and the Holder shall not thereafter have any
rights with respect to such Restricted Stock and Retained Distributions that
shall have been so forfeited.
SECTION 8. DEFERRED STOCK.
8.1. Grant. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of Deferred
Stock shall be awarded, the number of shares of Deferred Stock to be awarded,
the duration of the period (the "Deferral Period") during which, and the
conditions under which, receipt of the shares will be deferred, and all the
other terms and conditions of the awards. Unless granted in substitution for an
outstanding award or upon exercise of an Option, Deferred Stock shall be issued
for no consideration other than services.
8.2. Terms and Conditions. Each Deferred Stock award shall be subject to
the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or the
additional Deferral Period referred to in Section 8.2(d) hereof ("Additional
Deferral Period", where applicable), share certificates shall be delivered to
the Holder, or his legal representative, representing the number of the shares
equal to the number covered by the Deferred Stock award.
(b) Dividends. As determined by the Committee, amounts equal to any
dividends declared during the Deferral Period (or the Additional Deferral
Period, where applicable) with respect to the number of shares covered by a
Deferred Stock award may be paid to the Holder currently or deferred and deemed
to be reinvested in additional Deferred Stock.
(c) Vesting; Forfeiture. Upon the expiration of the Deferral Period (or
the Additional Deferral Period, where applicable) with respect to each award of
Deferred Stock and the satisfaction of any other applicable limitations, terms
or conditions, such Deferred Stock shall become vested in accordance with the
terms of the Agreement. Any Deferred Stock that does not vest shall be
forfeited to the Company and the Holder shall not thereafter have any rights
with respect to such Deferred Stock that has been so forfeited.
(d) Additional Deferral Period. A Holder may request to, and the
Committee may in its sole discretion at any time, defer the receipt of an award
(or an installment of an award) for an additional specified period or until a
specified event (the "Additional Deferral Period"). Subject to any exceptions
adopted by the Committee, such request must generally be made at least one year
prior to expiration of the Deferral Period for such Deferred Stock award (or
such installment).
SECTION 9. OTHER STOCK-BASED AWARDS.
9.1. Grant and Exercise. Other Stock-Based Awards may be awarded, subject
to limitations under applicable law, that are denominated or payable in, valued
in whole or in part by reference to, or otherwise based on, or related to,
shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation, purchase rights, shares of
Common Stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures, or other rights convertible into shares
of Common Stock and awards valued by reference to the value of securities of or
the performance of specified Subsidiaries. Other Stock-Based Awards may be
awarded either alone or in addition to or in tandem with any other awards under
this Plan or any other plan of the Company.
The Committee shall determine the eligible persons to whom and the time or times
at which grants of such awards shall be made, the number of shares of Common
Stock to be awarded pursuant to such awards, and all other terms and conditions
of the awards. Notwithstanding the foregoing, except to the extent that an
Other Stock-Based Award is granted in substitution for another outstanding award
or is delivered upon exercise of an Option, the amount of consideration to be
required to be received by the Company shall be either no consideration (other
than services) or, in the case of an Other Stock-Based Award in the nature of a
purchase right, an amount equal to or greater than 50% of the Fair Market Value
of the shares to which the award relates on the date of grant of such award.
9.2. Terms and Conditions. Each Other Stock-Based Award shall be subject
to the following terms and conditions:
(a) Dividends. The Holder of an Other Stock-Based Award shall be entitled
to receive, currently or on a deferred basis, dividends or dividend equivalents
with respect to the number of shares covered by the award, as determined by the
Committee. The Committee may provide that such amounts (if any) shall be deemed
to have been reinvested in additional Common Stock.
(b) Vesting; Forfeiture. Any Other Stock-Based Award and any Common Stock
covered by an Other Stock-Based Award shall vest or be forfeited to the extent
so provided in the Agreement.
SECTION 10. ACCELERATION.
10.1. Acceleration Upon Change of Control. Unless the award Agreement
provides otherwise or unless the Holder waives the application of this Section
10.1 prior to a Change of Control (as hereinafter defined), in the event of a
Change of Control:
(a) Each outstanding Stock Option, Stock Appreciation Right and Limited
Stock Appreciation Right granted under the Plan shall immediately become
exercisable in full notwithstanding the vesting or exercise provisions contained
in the Agreement; and
(b) All restrictions and deferral limitations related to awards of
Restricted Stock, Deferred Stock and Other Stock-Based Awards, shall be deemed
to have expired and all such awards and any related Retained Distributions shall
become vested.
10.2. Change of Control Defined. A "Change of Control" shall be deemed to
have occurred upon any of the following events:
(a) The consummation of any of the following transactions: (i) any merger,
reverse stock split, recapitalization or other business combination of the
Company, with or into another corporation, or an acquisition of securities or
assets by the Company, pursuant to which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities or other property, other than a transaction in
which the majority of the holders of Common Stock immediately prior to such
transaction will own at least 50% of the total voting power of the
then-outstanding securities of the surviving corporation immediately after such
transaction, or (ii) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (iii) the liquidation or dissolution of the
Company; or
(b) A transaction in which any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other
than the Company, or any profit-sharing, employee ownership or other employee
benefit plan sponsored by the Company or any Subsidiary, or any trustee of or
fiduciary with respect to any such plan when acting in such capacity, or any
group comprised solely of such entities): (i) shall purchase any Common Stock
(or securities convertible into Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the prior
consent of the Board, or (ii) shall become the "beneficial owner" (as such term
is defined in Rule 13d-3 under the Exchange Act), directly or indirectly (in one
transaction or a series of transactions), of securities of the Company
representing 50% or more of the total voting power of the then-outstanding
securities of the Company ordinarily (and apart from the rights accruing under
special circumstances) having the right to vote in the election of directors
(calculated as provided in Rule 13d-3(d) in the case of rights to acquire the
Company's securities); or
(c) If, during any period of two consecutive years, individuals who at the
beginning of such period constituted the entire Board and any new director whose
election by the Board, or nomination for election by the Company's stockholders
was approved by a vote of at least two thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election by the stockholders was previously so
approved, cease for any reason to constitute a majority thereof.
10.3. General Waiver by Committee. The Committee may, after grant of an
award, accelerate the vesting of all or any part of any Stock Option, Deferred
Stock, Restricted Stock or any Other Stock-Based Award and/or waive any
limitations or restrictions, if any, for all or any part of an award.
10.4. Acceleration Upon Termination of Employment. In the case of a
Holder whose employment with the Company or a Subsidiary is involuntarily
terminated for any reason (other than for cause), the Committee may accelerate
the vesting of all or any part of any award and/or waive in whole or in part any
or all of the remaining deferral limitations or restrictions imposed hereunder
or pursuant to the Agreement.
SECTION 11. AMENDMENTS AND TERMINATION.
11.1. Amendments to Plan. The Board may at any time, and from time to
time, amend any of the provisions of the Plan, and may at any time suspend or
terminate the Plan; provided, however, that no such amendment shall be effective
unless and until it has been duly approved by the stockholders of the
outstanding shares of Common Stock if (a) it increases the aggregate number of
shares of Common Stock which are available pursuant to the Plan, (except as
provided in Section 3 hereof) or (b) the failure to obtain such approval would
adversely affect the compliance of the Plan with the requirements of Rule 16b-3
under the Exchange Act, or with the requirements of any other applicable law,
rule or regulation.
11.2. Amendments to Individual Awards. The Committee may amend the terms
of any award granted under the Plan; provided, however, that subject to Section
3 hereof, no such amendment may be made by the Committee which in any material
respect impairs the rights of the Holder without the Holder's consent.
SECTION 12. TERM OF PLAN.
12.1. Effective Date. The Plan shall be effective as of August 29, 1990
("Effective Date"), subject to the approval of the Plan by the stockholders of
the Company within one year after the Effective Date. Any awards granted under
the Plan prior to such approval shall be effective when made (unless otherwise
specified by the Committee at the time of grant), but shall be conditioned upon,
and subject to, such approval of the Plan by the Company's stockholders (and no
awards shall vest or otherwise become free of restrictions prior to such
approval).
12.2. Termination Date. No award shall be granted pursuant to the Plan on
or after the tenth anniversary of the Effective Date, but awards granted prior
to such tenth anniversary may extend beyond that date. The Plan shall terminate
at such time as no further awards may be granted and all awards granted under
the Plan are no longer outstanding.
SECTION 13. GENERAL PROVISIONS.
13.1. Investment Representations. The Committee may require each person
acquiring shares of Common Stock pursuant to an award under the Plan to
represent to and agree with the Company in writing that the Holder is acquiring
the shares for investment without a view to distribution thereof.
13.2. Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
13.3. No Right of Employment. Nothing contained in the Plan or in any
award hereunder shall be deemed to confer upon any employee of the Company or
any Subsidiary any right to continued employment with the Company or any
Subsidiary, nor shall it interfere in any way with the right of the Company or
any Subsidiary to terminate the employment of any of its employees at any time.
13.4. Withholding Taxes. Not later than the date as of which an amount
first becomes includible in the gross income of the Holder for Federal income
tax purposes with respect to any award under the Plan, the Holder shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount. If permitted by the Committee,
tax withholding or payment obligations may be settled with Common Stock,
including Common Stock that is part of the award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional upon such payment or arrangements and the Company or the Holder's
employer (if not the Company) shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Holder from the Company or any Subsidiary.
13.5. Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Florida (without regard to choice of law provisions).
13.6. Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement
plan of the Company or any Subsidiary and shall not affect any benefits under
any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to awards under
this Plan).
13.7. Employee Status. A leave of absence, unless otherwise determined by
the Committee prior to the commencement thereof, shall not be considered a
termination of employment. Any awards granted under the Plan shall not be
affected by any change of employment, so long as the Holder continues to be an
employee of the Company or any Subsidiary.
13.8. Non-Transferability. Other than the transfer of a Stock Option,
Stock Appreciation Right or other award by will or by the laws of descent and
distribution, no award under the Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbered or charged, and any
attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void. No right or benefit hereunder shall
in any manner be liable for or subject to the debts, contracts, liabilities or
torts of the person entitled to such benefit. Any Stock Option, Stock
Appreciation Right or other award granted under this Plan is only exercisable
during the lifetime of the Holder by the Holder or by his guardian or legal
representative.
13.9. Applicable Laws. The obligations of the Company with respect to all
awards under the Plan shall be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required,
including, without limitation, the effectiveness of a registration statement
under the Securities Act of 1933, as amended, and (ii) the rules and regulations
of any securities exchange on which the Common Stock may be listed or the NASDAQ
National Market System if the Common Stock is designated for quotation thereon.
13.10. Conflicts. If any of the terms or provisions of the Plan conflict
with the requirements of Rule 16b-3 under the Exchange Act, or with the
requirements of any other applicable law, rule or regulation, and/or with
respect to Incentive Stock Options, Section 422 of the Code, then such terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of said Rule 16b-3, and/or with respect to Incentive Stock Options,
Section 422 of the Code. With respect to Incentive Stock Options, if this Plan
does not contain any provision required to be included herein under Section 422
of the Code, such provision shall be deemed to be incorporated herein with the
same force and effect as if such provision had been set out at length herein.
13.11. Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by the
Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within 60 days after the Agreement has been delivered to the Holder for
his or her execution.
13.12. Consideration For Common Stock. The Committee may not grant any
awards under the Plan pursuant to which the Company will be required to issue
any shares of Common Stock unless the Company will receive consideration for the
shares of Common Stock sufficient under the laws of the State of Florida so that
such shares of Common Stock will be fully paid and non-assessable when issued.
13.13. Common Stock Certificates. Notwithstanding anything to the
contrary contained herein, whenever certificates representing shares of Common
Stock subject to an award are required to be delivered pursuant to the terms of
the Plan, the Company may in lieu of such delivery requirement comply with the
provisions of Section 607.0626 of the Florida Business Corporation Act.
All certificates for shares of Common Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed, any applicable Federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
13.14. Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.
<PAGE>
COMPUTER PRODUCTS, INC.
1990 OUTSIDE DIRECTORS STOCK OPTION PLAN
(RESTATED AS OF JANUARY 25, 1996)
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Computer Products, Inc.
(c) "Compensation" shall mean, for any Eligible Director, the amount of
cash actually paid to such Director as compensation for his or her service on
the Board and any committees thereof including, without limitation, all amounts
paid to such Director in connection with his or her attendance at any meetings
of the Board or committees thereof.
(d) "Date of Grant" shall mean the date an Eligible Director is initially
elected to the Board of Directors and each date after the Effective Date of the
Plan on which the Stockholders of the Company shall elect directors at an Annual
Meeting of such Stockholders or any adjournment thereof.
(e) "Deemed Value" shall mean, with respect to each share of Stock owned
by an Eligible Director on any Date of Grant, the Fair Market Value of a share
of Stock on the last day of the fiscal year of the Company immediately preceding
such Date of Grant.
(f) "Effective Date of the Plan" shall mean the original date of adoption
by the stockholders of the Company.
(g) "Eligible Director" shall mean any Director of the Company who is not
an employee of the Company or its subsidiaries.
(h) "Fair Market Value" shall mean the closing sales price, or the mean
between the closing high "bid" and low "asked" prices, as the case may be, of
the Stock in the over-the-counter market on the day on which such value is to be
determined, as reported by the National Association of Securities Dealers
Automated Quotation System or successor national quotation service. If the
Stock is listed on a national securities exchange, "Fair Market Value" shall
mean the closing price of the Stock on such national securities exchange on the
day on which such value is to be determined, as reported in the composite
quotations for securities traded on such exchange provided by the National
Association of Securities Dealers or successor national quotation service. In
the event no such quotations are available for the day in question, "Fair Market
Value" shall be determined by reference to the appropriate prices on the next
preceding day for which such prices are reported.
(i) "Option" shall mean an Eligible Director's stock option to purchase
Stock granted pursuant to the provisions of Article V hereof.
(j) "Optionee" shall mean an Eligible Director to whom an Option has been
granted hereunder.
(k) "Option Price" shall mean the price at which an Optionee may purchase
a share of Stock under a Stock Option Agreement.
(l) "Plan" shall mean the Computer Products, Inc. 1990 Outside Directors
Stock Option Plan, the terms of which are set forth herein.
(m) "Stock" shall mean the common stock, par value $.01 per share, of the
Company or, in the event that the outstanding shares of Stock are hereafter
changed into or exchanged for different stock or securities of the Company or
some other corporation, such other stock or securities.
(n) "Stock Option Agreement" shall mean an agreement between the Company
and the Optionee under which the Optionee may purchase Stock in accordance with
the Plan.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "Computer Products, Inc. 1990
Outside Directors Stock Option Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its Stockholders by affording Eligible Directors of the Company an
opportunity to acquire or increase their proprietary interests in the Company,
and thereby to encourage their continued service as directors and to provide
them additional incentives to achieve the growth objectives of the Company.
2.3 Effective Date. The Effective Date of the Plan is the date of
adoption by the stockholders of the Company.
2.4 Termination Date. The Plan shall terminate and no further Options
shall be granted hereunder upon the tenth anniversary of the Effective Date of
the Plan.
ARTICLE III
PARTICIPANTS
Each Eligible Director shall participate in the Plan, provided that he is
elected to a regular term as such a member at an Annual Meeting of Stockholders,
or any adjournment thereof.
ARTICLE IV
SHARES OF STOCK SUBJECT TO PLAN
4.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 4.2 hereof, the maximum number of shares of Stock which
may be issued and sold hereunder shall not exceed 500,000 shares of Stock.
Shares of Stock subject to an Option may be either authorized and unissued
shares or shares issued and later acquired by the Company; provided however, the
shares of Stock with respect to which an Option has been exercised shall not
again be available for Option hereunder. If outstanding Options granted
hereunder shall terminate or expire for any reason without being wholly
exercised prior to the end of the period during which Options may be granted
hereunder, new Options may be granted hereunder covering such unexercised
shares.
4.2 Antidilution. In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of merger, con-
solidation, reorganization, recapitalization, reclassification, combination of
shares, stock splitup or stock dividend:
(a) The aggregate number and kind of shares of Stock for which Options may
be granted hereunder shall be adjusted appropriately;
(b) The rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving corporation is
involved, each outstanding Option granted hereunder shall terminate, but
the Optionee shall have the right, immediately prior to such dissolution,
liquidation, merger or combination, to exercise his Option, in whole or in
part, to the extent that it shall not have been exercised, without regard
to the date on which such Option would otherwise have become exercisable
pursuant to Sections 5.4 and 5.5.
The foregoing adjustments and the manner of application thereof shall be
determined solely by the Board, and any such adjustment may provide for the
elimination of fractional share interests. The adjustments required under this
Article shall apply to any successor or successors of the Company and shall be
made regardless of the number or type of successive events requiring adjustments
hereunder.
ARTICLE V
OPTIONS
5.1 Option Grant, Number of Shares and Agreement.
(a) Subject to the provisions of Section 5.1(b) hereof, each Eligible
Director shall automatically be granted an Option to purchase Ten Thousand
(10,000) shares Stock on each Date of Grant. Each Option so granted shall be
evidenced by a written Stock Option Agreement, dated as of the Date of Grant and
executed by the Company and the Optionee, stating the Option's duration, time of
exercise, and exercise price. The terms and conditions of the Option shall be
consistent with the Plan.
(b) Notwithstanding the provisions of Section 5.1(a) hereof, an Eligible
Director shall not be entitled to receive a grant of an Option on any Date of
Grant unless the Deemed Value of all shares of Stock owned by such Eligible
Director on such Date of Grant shall be no less than three hundred percent
(300%) of (i) such Director's Compensation during the preceding fiscal year of
the Company or (ii) if such Director has not previously served, or served for
less than a full fiscal year, the average of all other Eligible Directors'
Compensation during the preceding fiscal year of the Company. An Eligible
Director, who shall not be entitled to receive a grant of an Option on any
particular Date of Grant as a result of the limitation set forth in this Section
5.1(b), shall not be precluded from receiving a grant of an option pursuant to
Section 5.1(a) hereof on any subsequent Dates of Grant on which the limitation
set forth herein shall be satisfied.
5.2 Option Price. The Option Price of the Stock subject to each Option
shall be the Fair Market Value of the Stock on its Date of Grant.
5.3 Exercise Period. The period for the exercise of each Option shall
expire on the tenth anniversary of the Date of Grant.
5.4 Option Exercise.
(a) Any Option granted under the Plan shall only become exercisable in
full on the first anniversary of the Date of Grant, provided that the Eligible
Director has not voluntarily resigned, or been removed "for cause", as a member
of the Board of Directors on or prior to the first anniversary of the Date of
Grant. An Option shall remain exercisable after its exercise date at all times
during the Exercise Period, regardless of whether the Optionee thereafter
continues to serve as a member of the Board.
(b) An Option may be exercised at any time or from time to time during the
term of the Option as to any or all full shares which have become exercisable in
accordance with this Section, but not as to less than 25 shares of Stock unless
the remaining shares of Stock that are so exercisable are less than 25 shares of
Stock. The Option price is to be paid in full in cash upon the exercise of the
Option. The holder of an Option shall not have any of the rights of a
Stockholder with respect to the shares of Stock subject to the Option until such
shares of Stock have been issued or transferred to him upon the exercise of his
Option.
(c) An Option shall be exercised by written notice of exercise of the
Option, with respect to a specified number of shares of Stock, delivered to the
Company at its principal office, and by cash payment to the Company at said
office of the full amount of the Option price for such number of shares. In
addition to, and prior to the issuance of a certificate for shares pursuant to
any Option exercise, the Optionee shall pay to the Company in cash the full
amount of any federal and state withholding or other employment taxes applicable
to the taxable income of such Optionee resulting from such exercise.
5.5 Nontransferability of Option. Options may not be transferred by an
Optionee otherwise than by will or the laws of descent and distribution. During
the lifetime of an Optionee, his Option may be exercised only by him (or by his
guardian or legal representative, should one be appointed). In the event of the
death of an Optionee, any Option held by him may be exercised by his legatee(s)
or other distributee(s) or by his personal representative.
ARTICLE VI
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof unless, in the opinion of counsel to the Corporation, there
has been compliance with all applicable legal requirements. An Option granted
under the Plan may provide that the Company's obligation to deliver shares of
Stock upon the exercise thereof may be conditioned upon the receipt by the
Company of a representation as to the investment intention of the holder thereof
in such form as the Company shall determine to be necessary or advisable solely
to comply with the provisions of the Securities Act of 1933, as amended, or any
other federal, state or local securities laws.
ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time terminate the Plan, and may at any time and from
time to time and, in any respect amend or modify the Plan. Notwithstanding the
foregoing, the provisions of Section 5.1 of this Plan may not be amended more
than once every six months, other than to comport with changes in the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder.
ARTICLE VIII
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall neither affect any other stock option,
incentive or other compensation plans in effect for the Company or any of its
subsidiaries, nor shall the adoption of the Plan preclude the Company from
establishing any other forms of incentive or other compensation plan for
directors of the Company.
ARTICLE IX
MISCELLANEOUS
9.1 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
9.2 Singular, Plural; Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender.
9.3 Headings, etc., No Part of Plan. Headings of articles and paragraphs
hereof are inserted for convenience and reference, and do not constitute a part
of the Plan.
COMPUTER PRODUCTS, INC.
EXECUTIVE ANNUAL INCENTIVE PLAN
TABLE OF CONTENTS
PAGE
----
I. Purpose 2
II. Effective Date 2
III. Plan Year 2
IV. Plan Administration 3
V. Eligibility 3
VI. Company Performance Objectives 4
- Threshold 4
- Performance Measures and Weights 4
VII. Incentive Awards 5
- Payout Cap 5
- Performance Schedule 5
VIII. Individual Annual Incentive Awards 5
- Payment 6
- Stock Option Award 6
IX. Special Incentive Awards 6
X. Termination of Employment 6/7
XI. Miscellaneous 7
- Plan Accounting 7
- Payment From General Assets 7
- No Right of Employment 7
- Non-Assignment/Death Benefits 8
- Amendment and Termination of Plan 8
- Change of Control 8
XII. Definitions 8/9
I. PURPOSE
Computer Products, Inc. (`Company'' or ``CPI'') establishes the Executive
Annual Incentive Plan (`Plan'') to provide a financial incentive for
selected members of management. This Plan is designed to achieve several
objectives to include:
- Linking Company business objectives with key executives' compensation;
- Rewarding teamwork and individual performance for achieving annual
business results;
- Providing motivation to key executives to excel by offering
competitive incentive and total cash compensation;
- Promoting human resources goals to attract, hire and retain quality
talent; and;
- Balancing short and long term considerations through compensation for
achievement of 12 months goals that are consistent with long term
objectives.
II. EFFECTIVE DATE
The Plan shall be effective on the first day of fiscal 1996 and will remain
effective until amended or terminated by the Board of Directors.
III. PLAN YEAR
The Plan Year shall be the Company's fiscal year. The Plan automatically
shall be renewed for each fiscal year thereafter, unless otherwise
terminated by the Board of Directors.
IV. PLAN ADMINISTRATION
The Plan shall be administered by the Chief Executive Officer (Plan
Administrator). The Compensation Committee of the Board will approve
annually Corporate and Division Head performance measures, objectives,
award levels and funding amounts.
The Chief Executive Officer/Plan Administrator, with support from the
executive staff, determines eligibility, approves actual awards, recommends
Corporate and Division Head performance measures/weights, objectives, award
levels and funding amounts. The Chief Executive Officer is authorized to
interpret and administer Plan provisions. The Chief Executive Officer as
Plan Administrator shall have no authority to amend or modify any of the
terms of the Plan, such authority being fully reserved to the Board of
Directors.
V. ELIGIBILITY
The Chief Executive Officer shall select those key executives
(`Participants'') who will be eligible to receive an annual incentive
award for the Plan Year. In determining eligibility, the Chief Executive
Officer shall consider the executive's potential impact on profitability,
revenue growth and operating results, as well as reporting level of the
executive.
To be eligible to be selected as a Participant, the executive must:
- report directly to a Division President and/or be within two reporting
levels of the Chief Executive Officer; and
- must be an active employee at the end of the Plan Year, unless
specified differently in other contractual agreements.
An eligible executive must be a Participant for a minimum of six months to
be eligible for a prorata award. Participants shall receive a copy of the
Plan to serve as written notice from the Plan Administrator of their
eligibility to participate in the Plan and their contingent rights to an
annual incentive award.
VI. COMPANY PERFORMANCE OBJECTIVES
Threshold:
The threshold is defined as the level at which payment of objectives will
begin. Actual thresholds for each measure will be detailed on the
individual sheets.
Net Income thresholds for Division/Corporate must be achieved in order for
other objectives to be paid.
Maximum payout for each performance measure is 200%.
Note: There may be no incentive payout if the corporation is not
profitable.
Performance Measures and Weights:
Annually, the Chief Executive Officer, with support from executive staff,
will determine and recommend the appropriate performance measures and
weights. Taking into consideration the annual business plan, the Chief
Executive Officer will develop target and performance objectives.
Performance measures will utilize `formulas'' or objective measures as
much as possible; however, discretion may be required particularly in
developing individual objectives. The Compensation Committee annually
approves Corporate and Division Heads performance measures.
Upon approval by the Compensation Committee, performance objectives/weights
will be communicated in writing to all Plan Participants at the beginning
of the Plan Year.
VII. INCENTIVE AWARDS
Payout Cap
Tax effected executive annual incentive awards shall be limited to no more
than 10% of the company's net income before the total after tax cost of the
executive annual incentive payout, unless otherwise approved by the
Compensation Committee and Board of Directors. (See Section XII for
definition of NI.) Should calculated payout at the end of the year exceed
this amount, the payouts may be reduced on a pro rata basis.
The Compensation Committee shall have discretion to interpret the effect of
`windfall'' events on the Plan. Examples of ``windfall'' events include
income/ (loss) from the sale of an asset, discontinued operations, effect
of changes in accounting principles, extraordinary credits, etc.
Performance Schedule
The award levels shall be based on the levels of financial performance
attained. Each Performance Measure will either be paid on a straight line
interpolation with a minimum payout at threshold and a maximum payout at
200% or on a calculation based on minimum payout at a predetermined
threshold up to a maximum of 200%. Actual thresholds and payment formulas
will be detailed on each participants individual plan documents.
VIII. INDIVIDUAL ANNUAL INCENTIVE AWARDS
As determined by the Chief Executive Officer/Plan Administrator, the annual
incentive award for a Participant shall be based on the individual
Participant's group level and achievement of mutually agreed to goals which
shall be set forth in writing in advance for the Plan Year.
Payment
The award level shall be expressed as a percent of base salary (See Section
XII for definition of base salary.) and shall be payable in cash within
seventy-five (75) days following the Plan Year. Awards shall be subject to
normal rules and regulations regarding the withholding of taxes.
As described in the Executive Equity Ownership Plan, the employee's EIP
payouts in whole or part will be made in common stock until the participant
has achieved the year end minimum ownership target. The number of common
shares will be determined by dividing the eligible compensation by the
common stock closing price as listed in the Wall Street Journal at the date
of award. Any resulting fractional shares will be paid in cash.
IX. SPECIAL INCENTIVE AWARDS
In the years when the Company is profitable overall, but individual
divisions achieve less than the minimum NI, the Chief Executive
Officer/Plan Administrator may recommend special incentive;
discretionary awards for high achievers in the Company and/or Divisions
that are profitable. For these discretionary awards, the Compensation
Committee has the authority to fund from 0-50% of the total participants
target award level.
X. TERMINATION OF EMPLOYMENT
In the event of death, extended disability or retirement, Plan Participants
will normally be entitled to receive prorated awards based upon the number
of months in which they have participated in the Plan for the applicable
Plan Year. (See Section XII for definitions.)
In the event of voluntary termination of a Plan Participant during the Plan
Year, the Participant will typically forfeit his award for the Plan Year.
In the event of involuntary termination of a Plan Participant through no
fault of his/her own during the Plan Year, the Participant may be entitled
to a prorated award. Such decisions regarding prorated awards will be
reviewed by the Compensation Committee.
In the event of termination for cause such as misconduct, fraud, or other
acts injurious to the Company, the Participant will not be entitled to any
award, whether prorated or not, for the Plan Year.
XI. MISCELLANEOUS
Plan Accounting
The Plan shall be funded by accrual during the Plan Year.
Payment from General Assets
The payment of an award under the Plan shall be from the general assets of
the Company, and a Participant under the Plan shall have no greater rights
to payment than other general creditors of the Company. There shall be no
separate trust for the payment of awards hereunder.
No Right of Employment
----------------------
Nothing in the Plan, including the employee's eligibility for participation
in the Plan, will infer any right of employment by the Company to such
employee. The Plan does not affect the terms of any employment agreements
that may exist between the Company and any Participant. The Company
retains all its rights to discipline or discharge employees who
participate in the Plan.
Non-Assignment/Death Benefits
-----------------------------
An award or the right to a payment of an award granted under this Plan
shall not be assignable or transferable by a Participant except by will or
the laws of descent and distribution. Each Participant may designate, on a
form approved by the Plan Administrator, a beneficiary or beneficiaries to
receive payment of any Plan death benefits that may be payable with respect
to the Participant. During the lifetime of a Participant, only the
Participant may receive payment of an award granted hereunder. No transfer
of an award shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will or
such evidence as the Company may deem necessary to establish the validity
of the transfer.
Amendment, Suspension, or Termination of the Plan
-------------------------------------------------
The Board of Directors, upon recommendation of the Compensation Committee,
may at any time elect to amend, suspend, or terminate the Plan.
Change of Control
-----------------
In the event of a sale, merger, consolidation, combination or
reorganization involving the Company and any other entity or corporation,
the Chief Executive Officer and Board of Directors shall not agree to such
merger, consolidation, combination or reorganization unless and until the
succeeding or continuing business entity shall expressly assume the
obligations of the Company under this Plan.
XII. DEFINITIONS
----------------
For purposes of this document and the Plan, the terms listed below are
defined as follows:
(1) BASE SALARY means all regular salary amounts actually paid to the
Participant during the Plan Year and shall not include commissions,
bonuses, options and/or any amounts received in connection with any fringe
benefit, retirement or welfare employee benefit program.
(2) NET INCOME (NI) Defined as net income (loss) before extraordinary
items, cumulative effect of changes in accounting principles and
discontinued operations, as reported by the company in its audited
consolidated statement of operations.
(3) MANAGEMENT NET INCOME (MNI) Defined as management net income as
calculated strictly according to the company's accounting policies and
contained in the company's management reporting system.
(4) CASH FLOW defined as operating cash flow (excluding intercompany
account activity) minus investing cash flow.
(5) DISABILITY A Participant's incapacity to engage in any substantial
gainful activity because of a medically determinable physical or mental
impairment which can be expected to result in death, or to be of long,
continued and indefinite duration. Such determination of disability shall
be made by the Plan Administrator with the advice of competent medical
authority. All Participants in similar circumstances will be treated alike.
(6) RETIREMENT Termination of a Participant's employment at a specific
age determined by CPI, when Participant chooses to withdraw from their
position or occupation. Normal retirement age is age 65 or, if later, the
fifth anniversary of the Participant's employment date.
(7) TERMINATION FOR CAUSE `Cause'' shall mean such actions by
Participant involving dishonesty, fraud, the commission of a felony, gross
negligence, or willful misconduct, which resort in material harm to the
business and/or reputation of CPI as reasonably determined by CPI's Board
of Directors.
Attachment 1
PERFORMANCE WEIGHTS
MEASURES
CORPORATE:
CEO, CFO
NET INCOME 75%
REVENUE GROWTH 25%
OTHER CORPORATE MANAGEMENT:
NET INCOME 75%
REVENUE GROWTH* 25%
EFFECTIVE TAX RATE* 25%
COMPANY CASH FLOW* 25%
*MEASUREMENT APPLIED TO RELEVANT CORPORATE POSITION
DIVISIONS: (EXCEPT PCAP)
MANAGEMENT NET INCOME
REVENUE GROWTH
CASH FLOW
(% WILL VARY BY DIVISION BASED ON THE IMPORTANCE OF THIS
FACTOR TO THE INDIVIDUAL DIVISION PERFORMANCE)
PCAP
GROSS PROFIT MARGIN
OVERHEAD SPENDING
G&A SPENDING
CASH FLOW
HONG KONG DIRECT LABOR HEADCOUNT
(% WILL VARY BY DIVISION BASED ON THE SIGNIFICANCE OF THE
INDIVIDUAL'S IMPACT ON THESE MEASURES)
Attachment 2
PERFORMANCE SCHEDULE
PERCENT (%) OF PERCENT (%) OF
FINANCIAL PERFORMANCE TARGET INCENTIVE
TARGET ACHIEVED AWARD EARNED
--------------- ------------
Less than 70% Discretionary
70% 70%
75% 75%
80% 80%
85% 85%
90% 90%
95% 95%
100% 100%
105% 105%
110% 110% PAYOUT RATIO = 1 : 1
115% 115%
120% 120%
125% 125%
130% 130%
135% 135%
140% 140%
145% 145%
150% 150%
200% 200%
For levels of financial performance attained which are between
the increments cited in the Performance Schedule above, the
percent of target award earned is based upon straight-line
interpolation.
COMPUTER PRODUCTS, INC.
EXECUTIVE STOCK OWNERSHIP PLAN
INTRODUCTION
Computer Products, Inc. believes that senior executives who have the ability to
impact the success of the Company should also participate as shareholders in the
Company. The new Executive Stock Ownership Plan, effective January 1, 1996, has
been designed to achieve this goal.
Targeted stock ownership is in direct relation to your base salary and level of
incentive plan participation. As a Senior executive, you have a period of three
years (1996 - 1998) to meet your personal share target. If you achieve your
target, you will receive additional stock option grants.
BACKGROUND
The Executive Stock Ownership Plan provides you with a competitive approach to
compensation. It is based upon the best of practices gleaned from a study of
stock ownership programs among high technology companies and other Fortune 500
companies.
PARTICIPATION
The Plan identifies senior executives as required participants. Participants
are defined as the CEO, CFO, Division Presidents, and Senior Executives.
This brochure provides you with general information regarding the Executive
Stock Ownership Plan in which you will participate. If you have any questions
about this Plan, please contact the Corporate Human Resources department with
questions.
OWNERSHIP TARGETS
The three year program begins in January of 1996 and runs through 1998. The
program may be renewed for consecutive three year periods thereafter. Stock
ownership targets for the initial offering are as follows:
Share Target Range
Title Minimum-Maximum
CEO 75,000
CFO 12,500 25,000
Division Presidents 12,500 25,000
Senior Executives 2,000 8,000
The required ownership levels above are to be achieved and maintained as
follows:
% of Stock Ownership
Minimum Target
to be Achieved
Calendar Year at Year End
1996 33%
1997 67%
1998 100%
Note: New (hire) senior executives are given an extended period to meet their
initial minimum share target. As a new senior executive you can achieve your
target in 20% intervals over six years (0% in the first year).
REWARD -- STOCK OPTION GRANT!
When you achieve your minimum ownership target, a reward option is issued equal
to that target. A second reward option grant is issued at the end of the three
year plan period for any amount achieved over your minimum , up to your maximum.
Or, if you meet your maximum target earlier, the second option will be issued
shortly thereafter.
For example....
...a participant's share target minimum is 12,500 shares and the maximum is
25,000 shares. The participant achieves his/her minimum target on July 1, 1997.
The participant receives a new stock option grant for 12,500 shares.
At the end of the three year period in 1998, the participant has achieved an
additional 10,000 shares for a total of 22,500 shares toward the target
ownership. A second stock option grant for 10,000 shares will be issued.
The rewarded stock option grant is administered according to a vesting schedule:
The stock option grant is 50% vested upon a 25% increase in the stock. The
remaining 50% is vested upon an additional 25% increase in the stock price.
Increases are measured based on the grant price and must be sustained for 20
of 30 consecutive trading days. The grant price is established on the day
the verification of share target achievement is registered at Corporate.
OWNERSHIP LEVEL ENFORCEMENT
If minimum ownership levels are not achieved within the designated three year
time period, your Annual Executive Incentive/Commission will be paid (all or
a portion) in stock. (May cause "short swing" situation for some). The
stock must be held until minimum ownership requirements are met.
Additionally,m you can only receive additional stock options when minimum
targets are achieved.
1. WHY DID THE COMPANY DECIDE TO IMPLEMENT THIS PLAN?
The Board of Directors, supported by market data and research, believes that
companies whose executive stock ownership is significant, tend to outperform
those companies whose executives do not own substantial numbers of shares.
Therefore, the Executive Stock Ownership Plan was developed to continue to
build and strengthen both the Company and employee opportunity.
2.WHAT DOES THE COMPANY HOPE TO ACHIEVE THROUGH THE IMPLEMENTATION OF THIS
PLAN?
Computer Products, Inc. believes that senior executives who have the ability
to impact the success of the Company should also participate as shareholders
in the Company. The Company and executives will benefit. Executives who own
and retain shares participate in Company growth, increased share values, and
eligibility for additional stock options. In turn, the senior executives'
interests will grow in alignment with the shareholders' interests, thus
benefiting the future of the Company as a whole.
EXHIBIT NO. 11
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS - PRIMARY
FOR THE YEARS ENDED THE FRIDAY NEAREST
DECEMBER 31, 1995, 1994 AND 1993
(Amounts in Thousands)
<TABLE>
<CAPTION> 1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Weighted average shares outstanding 21,881 20,229 20,097
Net effect of dilutive stock options -
based on the treasury stock method
using average market price. 1,197 700 677
------ ---- ------
Weighted average number of common
and equivalent shares outstanding 23,078 20,929 20,774
====== ====== ======
</TABLE>
--------
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, 1995, 1994 AND 1993
(Amounts in Thousands Except Per Share Data)
<TABLE>
<CAPTION> 1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Shares outstanding 23,053 20,303 20,141
Net effect of dilutive stock options -
based on the treasury stock method
using the greater of month end market
price or average market price 1,499 1,063 677
Assumed conversion of convertible
subordinated debentures 7,218 7,329
------ ------ ------
Totals 24,552 28,584 28,147
====== ======= =======
* * * * *
Income after taxes $14,117 $6,059 $ 597
Add convertible debenture interest and
amortization,net of applicable federal
income taxes 788 2,260 2,064
------- ------ -----
$14,905 $8,319 $2,661
======== ======= ======
Per share amounts $ 0.61 $ 0.29 $ 0.09
==== ===== ====
Net income $13,720 $6,059 $2,867
Add convertible debenture interest and
amortization,net of applicable federal
income taxes
788 2,260 2,064
------ ------ ------
$14,508 $8,319 $4,931
======= ======= =======
Per share amounts $ 0.59 $0.29 $0.18
====== ====== =====
</TABLE>
FIVE-YEAR FINANCIAL HISTORY
For the Years Ended on the Friday Nearest December 31
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION> 1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Sales $191,378 $154,800 $123,790 $114,799 $83,240
Income(loss)from continuing 14,117 6,059 597 2,002 (4,234)
operations
Per share 0.61 0.29 0.03 0.10 (0.21)
Net income (loss) 13,720 6,059 2,867 2,676 (9,638)
Per share 0.59 0.29 0.14 0.13 (0.49)
FINANCIAL POSITION
Working capital $51,992 $40,346 $31,122 $29,524 $35,508
Property, plant & equipment, net 27,715 26,238 24,017 23,949 19,252
Total assets 136,491 114,396 101,436 102,662 105,423
Total debt 32,568 42,571 39,713 42,900 48,309
Shareholders' equity 61,522 39,958 32,802 30,806 28,531
Total capital 94,090 82,529 72,515 73,706 76,840
FINANCIAL STATISTICS
Selling,generaland administrative
expenses $34,210 $33,687 $32,030 $35,093 $24,166
- as a % of sales 17.9% 21.8% 25.9% 30.6% 29.0%
Research and development expenses 16,125 10,905 9,412 8,959 6,154
- as a % of sales 8.4% 7.0% 7.6% 7.8% 7.4%
Operating income 21,744 12,418 4,217 6,908 (1,461)
- as a % of sales 11.4% 8.0% 3.4% 6.0% (1.8%)
Total debt as a % of total
capital 35% 52% 55% 58% 63%
Debt to equity ratio 53% 107% 121% 139% 169%
Interest coverage ratio 7.03 3.44 1.27 1.81 0.14
OTHER DATA
Capital expenditures $ 7,381 $ 5,608 $ 3,411 $ 8,055 $ 1,508
Provision for depreciation and
amortization $ 5,252 $ 5,057 $ 4,817 $ 4,375 $ 3,710
Common shares outstanding 23,053 20,303 20,141 19,973 19,890
Common shareholders 6,700 5,900 7,300 7,500 9,000
Employees 1,629 1,600 1,547 1,470 1,432
Temporary employees and
contractors 1,273 779 532 459 221
</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>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
SALES $191,378 $154,800 $123,790
COST OF SALES 119,299 97,730 75,448
--------- -------- --------
GROSS PROFIT 72,079 57,070 48,342
-------- -------- --------
EXPENSES
Selling, general and administrative 34,210 33,747 31,713
Research and development 16,125 10,905 9,412
Restructuring charge 3,000
-------- -------- --------
50,335 44,652 44,125
-------- -------- --------
OPERATING INCOME 21,744 12,418 4,217
-------- -------- --------
OTHER INCOME (EXPENSE)
Interest expense (3,253) (3,760) (3,735)
Interest income 1,116 522 519
-------- -------- --------
(2,137) (3,238 (3,216)
------- ------- -------
INCOME BEFORE INCOME TAXES 19,607 9,180 1,001
PROVISION FOR INCOME TAXES 5,490 3,121 404
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING
PRINCIPLES AND EXTRAORDINARY ITEM 14,117 6,059 597
Cumulative effect of changes in
accounting principles 2,270
Extraordinary item (397)
-------- -------- --------
NET INCOME $13,720 $ 6,059 $ 2,867
======== ======== ========
EARNINGS PER SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES AND
EXTRAORDINARY ITEM $ 0.61 $ 0.29 $ 0.03
Cumulative effect of changes in
accounting principles 0.11
Extraordinary item (0.02)
-------- -------- -------
Net Income $ 0.59 $ 0.29 $ 0.14
======== ======== ========
Common and common equivalent shares
outstanding 23,078 20,929 20,774
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
As of the Friday Nearest December 31
(Amounts in Thousands)
<TABLE>
<CAPTION> 1995 1994
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $26,650 $20,211
Accounts receivable, net 29,933 24,669
Inventories, net 31,236 20,047
Prepaid expenses and other 2,575 2,157
Deferred income taxes, net 517 528
------ ------
Total current assets 90,911 67,612
PROPERTY, PLANT & EQUIPMENT, NET 27,715 26,238
OTHER ASSETS
Goodwill, net 13,532 14,911
Deferred income taxes, net 2,521 3,395
Other assets 1,812 2,240
------ ------
Total other assets 17,865 20,546
------- --------
$136,491 $114,396
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,719 $ 1,820
Accounts payable and accrued liabilities 36,200 25,446
------ ------
Total current liabilities 38,919 27,266
LONG-TERM LIABILITIES
Long-term debt 29,849 7,368
Lease liabilities 6,201 6,421
Convertible subordinated debentures 33,383
------ ------
Total long-term liabilities 36,050 47,172
------ ------
Total liabilities 74,969 74,438
COMMITMENTS AND CONTINGENCIES (see Notes 7,
9 and 11)
SHAREHOLDERS' EQUITY
Preferred stock, par value $.01; 1,000,000
shares authorized; none issued
Common stock, par value $.01; 80,000,000
shares authorized; 23,052,781 issued
and outstanding in 1995 (20,302,654 231 203
shares in 1994)
Additional paid-in capital 40,633 27,190
Retained earnings 20,886 13,521
Foreign currency translation adjustment (228) (956)
------ ------
Total shareholders' equity 61,522 39,958
-------- --------
$136,491 $114,396
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended on the Friday Nearest December 31
(Amounts in Thousands)
<TABLE>
<CAPTION> 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $13,720 $ 6,059 $ 2,867
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 5,252 5,057 4,817
Provision for restructuring 3,000
Cumulative effect of changes in (2,270)
accounting principles
Deferred income taxes 2,533 1,872 71
Provision for inventory losses 3,877 3,043 1,166
Other non-cash charges 627 375 204
Changes in operating assets and
liabilities:
Increase in accounts receivable (5,302) (1,423) (3,435)
Increase in inventories, prepaid
expenses and other (15,421) (4,964) (3,519)
Increase (decrease) in accounts
payable and accrued liabilities 11,972 2,679 (1,805)
-------- -------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 17,258 12,698 1,096
-------- -------- --------
INVESTING ACTIVITIES
Purchases of property, plant &
equipment (7,381) (4,686) (3,411)
Proceeds from sale of building 1,524 800
(Increase) decrease in other assets 1,103 (433) (335)
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (4,754) (5,119) (2,946)
-------- -------- --------
FINANCING ACTIVITIES
Principal payments on debt and leases (1,947) (1,259) (3,428)
Proceeds from exercises of stock
options 4,209 253 286
Repurchases of common stock (8,305)
Issuance of long-term debt 24,375 3,600
Repurchase of convertible
subordinated debentures (24,505) (520)
-------- -------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (6,173) 2,074 (3,142)
-------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND EQUIVALENTS 108 412 (423)
-------- -------- --------
INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 6,439 10,065 (5,415)
CASH AND EQUIVALENTS, BEGINNING OF
YEAR 20,211 10,146 15,561
-------- -------- --------
CASH AND EQUIVALENTS, END OF YEAR $26,650 $20,211 $10,146
======== ======== ========
</TABLE>
[FN]
NONCASH INVESTING AND FINANCING ACTIVITIES:
In fiscal 1995, holders of the Company's convertible subordinated debentures
representing a principal amount of $9,121,000 converted the debentures into
1,972,085 shares of the Company's common stock (see Note 8). Also, goodwill
decreased by $646,000 as a result of utilizing tax loss carryforwards
obtained in a prior business combination.
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
$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.
<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 Stock Paid-In Retained Translation
Shares Amount Capital Earnings Adjustments
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 2, 1993 19,973 $200 $26,455 $ 4,595 $ (444)
Issuance of stock 38 100
Exercises of stock options 130 1 285
Foreign currency
translation adjustment (1,257)
Net income 2,867
BALANCE, DECEMBER 31, 1993 20,141 201 26,840 7,462 (1,701)
Issuance of stock 42 1 98
Exercises of stock options 120 1 252
Foreign currency
translation adjustment 745
Net income 6,059
BALANCE, DECEMBER 30, 1994 20,303 203 27,190 13,521 (956)
Issuance of stock 33 100
Exercises of stock options 1,883 19 3,955
Tax benefit from exercises
of stock options 1,945
Repurchases and retirement
of common stock (1,138) (11) (1,939) (6,355)
Conversion of convertible
subordinated debentures 1,972 20 9,382
Foreign currency
translation adjustment 728
Net income 13,720
BALANCE, DECEMBER 29, 1995 23,053 $231 $40,633 $20,886 $ (228)
</TABLE>
- --------
See notes to consolidated financial statements.
<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 $1,490,000 and $1,354,000 at December 29, 1995 and
December 30, 1994, 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. Reserves are provided for excess and obsolete
inventories.
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 and Other Intangibles
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 $4,943,000 and $4,210,000
at December 29, 1995 and December 30, 1994, 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. At December 29, 1995, other
intangibles consist primarily of debt issuance costs which are being amortized
on a straight-line basis over a five-year period. Related accumulated
amortization was $1,860,000 and $2,945,000 at December 29, 1995 and December 30,
1994, respectively.
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 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.
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.
Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
`Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of', which requires adoption in fiscal 1996. SFAS No. 121
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used, and for long-lived assets and certain identifiable intangibles to
be disposed. The Company believes the adoption of SFAS No. 121 will not have a
material effect on the Company's financial condition or results of operations.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, `Accounting for Stock-Based Compensation'', which requires adoption in
fiscal 1996. SFAS No. 123 requires that the Company's financial statements
include certain disclosures about stock-based employee compensation arrangements
and permits the adoption of a change in accounting for such arrangements.
Changes in accounting for stock-based compensation are optional and the Company
plans to adopt only the disclosure requirements in 1996.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Reclassifications
Certain amounts in the 1994 and 1993 financial statements have been
reclassified to be consistent with the method of presentation used in the 1995
financial statements.
2.INVENTORIES
The components of inventories, net of allowances for slow-moving and obsolete
items, are as follows ($000s):
<TABLE>
<CAPTION> 1995 1994
------- -------
<S> <C> <C>
Raw materials $15,350 $11,016
Work in process 4,215 3,174
Finished goods 11,671 5,857
------- -------
Inventories, net $31,236 $20,047
======= =======
</TABLE>
3.PROPERTY, PLANT & EQUIPMENT
Property, plant & equipment is comprised of ($000s):
<TABLE>
<CAPTION> 1995 1994
------- -------
<S> <C> <C>
Land $ 762 $ 1,327
Buildings 18,428 20,715
Equipment 32,897 28,247
Leasehold improvements 1,348 968
------- -------
53,435 51,257
Less accumulated depreciation 25,720 25,019
------- -------
Property, plant & equipment, net $27,715 $26,238
======= =======
</TABLE>
Depreciation expense was $3,931,000, $3,483,000 and $3,097,000 in fiscal
years 1995, 1994 and 1993, respectively.
4.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are as follows
($000s):
<TABLE>
<CAPTION> 1995 1994
------- -------
<S> <C> <C>
Accounts payable $17,041 $10,123
Accrued liabilities:
Compensation and benefits 8,948 7,685
Income taxes payable 2,272 1,449
Other 7,939 6,189
------- -------
Total $36,200 $25,446
======= =======
</TABLE>
At December 29, 1995 and December 30, 1994, other accrued liabilities
primarily consists of accruals for product warranty costs, commissions,
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, and, in connection with this plan, 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 fiscal 1994 operating costs by $1.2 million, a
reduction which was achieved during that 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 29,
1995, the Company had completed its restructuring activities.
6.SHORT-TERM BORROWINGS
On April 4, 1995, the Company entered into an unsecured credit agreement with
First Union National Bank of Florida (`First Union'') which provided for a $20
million revolving line of credit which extends through April 1, 1998. The
agreement provides for interest at the Company's option of either .75% above the
London Interbank Offered Rate (`LIBOR'') or at the prime rate minus .50%, and
includes a fee of .25% on the unused balance. The agreement contains certain
restrictive covenants which, among other things, require the Company to maintain
certain financial ratios and limit the purchase, redemption or retirement of
capital stock and other assets. As of December 29, 1995, the Company had made
no borrowings under the line of credit and was in compliance with the
agreement's covenants.
7.LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt is comprised of the following: 1995 1994
------- -------
($000s) ($000s)
<S> <C> <C>
8.25% interest-bearing note, due in bi-annual
installments, maturing April 1, 2002 (a) $25,000
7.5% mortgage note due in monthly
installments of $79,268, including
interest, through January 31, 2000 (d) 3,065 $3,674
6.9% mortgage note due in monthly
installments of $27,700, including interest,
through June 28, 2001 (b)(d) 3,477 3,568
Non-interest-bearing note, due 1997, net of
unamortized discount of $155,000 and $222,000
at December 29, 1995 and December 30, 1994,
respectively, based on an imputed interest
rate of 10% (c)(d) 618 857
Non-interest-bearing Senior Subordinated Note
due in common stock of the Company on January
3, 1996 100 400
10% mortgage note due in monthly installments
of $7,600, including interest, through April
1, 1995 469
Other 308 220
------- -------
32,568 9,188
Less: current maturities 2,719 1,820
------- -------
Long-term debt $29,849 $7,368
======== =======
</TABLE>
[FN]
(a)On April 4, 1995, the Company entered into an unsecured credit agreement
with First Union which provided for a $25 million seven-year term loan.
The note specifies repayment as follows: $1,500,000 due on April 1, 1996
and April 1, 1997, and $2,200,000 due on April 1 and October 1 of each
year beginning October 1, 1997 until maturity, with interest payable
monthly. Proceeds from the term loan were used to redeem the Company's
Debentures (see Note 8). The agreement contains certain restrictive
covenants which are the same as those discussed in Note 6. In May 1995,
the Company entered into an Interest Rate Collar Agreement with First
Union, which set boundaries for the interest payment terms on its $25
million term loan. The agreement placed a ceiling of 9.75% on the
Company's floating rate option in exchange for First Union's ability to
elect a fixed rate option of 8.25%. In June 1995, First Union exercised
its option to receive interest at the fixed rate for the remaining term
of the loan.
(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 6.9% 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 a subsidiary's 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 (``IDA'') 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.
(d)Collateralized by properties with an aggregate net book value of
approximately $12,641,000 at December 29, 1995.
Maturities of long-term debt are as follows: $2,719,000 in 1996, $4,965,000
in 1997, $5,332,000 in 1998, $5,326,000 in 1999, $4,558,000 in 2000 and
$9,823,000 thereafter.
Interest paid was approximately $3,274,000, $3,877,000, and $3,688,000 in
1995, 1994 and 1993, respectively.
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 were subordinated to all existing and future Senior Indebtedness of
the Company (as defined in the indenture), and were 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.
In May 1995, the Company called for redemption all of its outstanding
Debentures which amounted to $33.4 million. The Debentures were redeemed for an
aggregate amount of $1,054.86 per $1,000 of principal amount (consisting of a
redemption payment of $1,010 plus accrued and unpaid interest of $44.86). As a
result of the redemption, holders of Debentures representing a principal amount
of $9.1 million elected to convert the Debentures into 1,972,085 shares of the
Company's common stock, pursuant to the terms of the Debentures, while the
balance of $24.3 million was redeemed. This transaction resulted in an increase
in Shareholders' Equity of approximately $9.4 million. The redemption resulted
in an extraordinary loss of approximately $397,000 (net of taxes of $187,000),
consisting of a 1% redemption premium of $165,000 and a write-off of unamortized
financing costs of $232,000.
9.LEASE COMMITMENTS
The Company is obligated under noncancellable operating 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):
<TABLE>
<CAPTION> Rental Sublease
Obligations Income
----------- -------
<S> <C> <C>
YEAR
1996 $ 3,443 $2,414
1997 3,396 2,414
1998 2,721 402
1999 2,544
2000 2,574
Thereafter 13,684
------- -------
Total $28,362 $5,230
======= =======
</TABLE>
Rental expense under operating leases amounted to $2,512,000, $2,142,000 and
$2,184,000 in 1995, 1994 and 1993, respectively. Sublease income was
$1,655,000, $1,611,000 and $1,570,000 for 1995, 1994 and 1993, respectively.
Lease liabilities have been recorded 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. Lease liabilities are estimated
based on contract provisions and historical and current market rates. These
estimates can be materially affected by changes in market conditions.
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 in the first quarter of 1993 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 income taxes for domestic and foreign operations consists of
the following ($000s):
<TABLE>
<CAPTION> 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
U.S. $13,903 $7,018 $(1,175)
Foreign 5,704 2,162 2,176
-------- -------- --------
Total income before income
taxes $19,607 $9,180 $ 1,001
======== ======= ========
</TABLE>
The components of the provision for income taxes consist of the following
($000s):
<TABLE>
<CAPTION> 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Currently payable:
Federal $ 299 $ 170
State 1,253 596 $127
Foreign 1,405 483 206
-------- -------- --------
Total current 2,957 1,249 333
-------- -------- --------
Deferred provision (benefit):
Federal 2,280 1,660 (423)
State 186 212 302
Foreign 67 192
-------- ------- --------
Total deferred 2,533 1,872 71
-------- -------- --------
Total provision for income
taxes $5,490 $3,121 $404
======== ======== ========
</TABLE>
- --------
The exercise of non-qualified stock options resulted in state and federal
income tax benefits to the Company related to the difference between the fair
market price at the date of exercise and the exercise price. In 1995, the
provision for income taxes excludes current tax benefits of $1,945,000 related
to the exercise of stock options credited directly to additional paid-in
capital.
During 1995 and 1994, the Company utilized tax loss carryforwards obtained in
a prior business combination. The effect of utilizing these carryforwards was to
reduce goodwill by approximately $646,000 and $795,000 in 1995 and 1994,
respectively. In 1993, the Company had a net loss for federal income tax
purposes.
Income taxes have not been provided on the undistributed earnings of the
Company's foreign subsidiaries, which approximated $22.1 million as of December
29, 1995, as the Company does not intend to repatriate such earnings.
The effective income tax rate differs from the statutory federal income tax
rate for the following reasons:
<TABLE>
<CAPTION> 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Statutory federal income tax 35.0% 34.0% 34.0%
rate
Foreign tax effects (2.7) (2.8) (23.3)
Adjustments to beginning of
year deferred tax assets 9.1
Amortization of goodwill 0.3 0.7 8.5
Change in the valuation (11.7) (8.4) 7.3
allowance
Effect of AMT and state 7.3 7.7 (0.4)
income taxes
Other (0.2) 2.8 5.2
-------- -------- --------
Effective income tax rate 28.0% 34.0% 40.4%
======== ======== ========
</TABLE>
Significant components of the Company's deferred income tax assets and
liabilities as of December 29, 1995 and December 30, 1994 are as follows
($000s):
<TABLE>
<CAPTION> 1995 1994
------- -------
<S> <C> <C>
Acquired net operating loss carryforwards
(expiring 1998 through 2000) $1,211 $ 2,496
Lease liabilities 2,474 2,659
Inventory reserves 2,007 2,094
Net operating loss carryforwards (expiring 2,725 2,648
2003 through 2008)
Tax credit carryforwards (expiring 1996
through 2001) 2,034 1,899
Other accrued liabilities 2,133 2,172
Other 344 408
-------- --------
Total deferred tax assets
12,928 14,376
Valuation allowance (9,890) (10,453)
-------- ---------
Net deferred income tax assets $ 3,038 $ 3,923
======== ========
</TABLE>
The valuation allowance at December 29, 1995 includes approximately $605,000
associated with acquired net operating loss carryforwards, which, if
subsequently recognized, will reduce goodwill and $2.5 million related to the
exercise of stock options which, when recognized, will be credited directly to
additional paid-in capital. During the year ended December 29, 1995, the
valuation allowance decreased by $563,000 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 $3.0 million.
The Company made payments for federal, state and foreign income taxes of
approximately $878,000, $534,000, and $206,000 during 1995, 1994, and 1993,
respectively.
11. CONTINGENCIES
In current and prior years, the Company received grant assistance, under grant
agreements, from the IDA in connection with the Company's establishment of its
Irish manufacturing facility. The funds received reduced the cost of facility
and equipment and operating expenses. On October 26, 1994, the Company entered
into a new Grant Agreement whereby the IDA granted the sum of approximately $2.0
million to the Company in consideration of the Company providing employment for
a given number of Irish citizens, over a three year period. As of December 29,
1995, the Company had received approximately $1.3 million of the $2.0 million
grant. The funds received reduced operating expenses incurred in connection with
the expansion of the Company's operations in Ireland. In the event of
noncompliance with certain terms and conditions of the above mentioned grant
agreements, the Company may be required to repay approximately $2.2 million of
funds received to date. Management believes that noncompliance with the
agreements is unlikely.
12.STOCK REPURCHASES
During fiscal 1995, the Company repurchased and retired a total of 1,138,000
shares of its common stock pursuant to a share buy-back plan announced in May
1995. According to the plan, the Company intends to repurchase from time to
time up to an aggregate of 2,000,000 shares through open market transactions to
minimize the dilutive effect of the shares issued to converting
debentureholders. The excess of the cost of shares repurchased over par value
was allocated to additional paid-in capital based on the pro-rata share amount
of additional paid-in capital for all shares with the difference charged to
retained earnings.
13.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 224,183 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. Options outstanding have been granted at
prices ranging from $1.63 to $7.38 per share. During 1995, the price of options
exercised ranged from $1.75 to $4.875. Stock option activity was as follows:
<TABLE>
<CAPTION> 1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
OPTIONS OUTSTANDING, BEGINNING OF YEAR 3,650,438 3,663,567 3,814,665
Options granted 882,551 682,115 306,960
Options exercised (1,998,440) (120,378) (130,146)
Options canceled (232,042) (574,866) (327,912)
--------- --------- ---------
OPTIONS OUTSTANDING, END OF YEAR 2,302,507 3,650,438 3,663,567
========= ========= =========
OPTIONS EXERCISABLE, END OF YEAR 2,068,299 2,077,270 1,194,017
</TABLE>
14.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, or growth equity and fixed income
funds. The Company may, at the discretion of the Board of Directors, make a
contribution to the Plan. The Board of Directors authorized contributions of
$400,000, $218,000 and $250,000, respectively, for fiscal years 1995, 1994 and
1993.
15.FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS - In
1995, the Company utilized foreign currency forward contracts to minimize its
exposure to potentially adverse changes in foreign currency exchange rates on
anticipated but not firmly committed purchases or sales made by its
international subsidiaries. No forward contracts were outstanding at December
29, 1995 and the amount of any gain or loss on these contracts during the year
was not material. The Company does not hold or issue financial instruments for
trading purposes.
The Company enters into various other types of financial instruments in the
normal course of business. Fair values for certain financial instruments are
based on quoted market prices. For other financial instruments, fair values are
based on the appropriate pricing models using current market information. The
amounts ultimately realized upon settlement of these financial instruments will
depend on actual market conditions during the remaining life of the instruments.
Fair values of cash and equivalents, accounts receivable, accounts payable,
other current liabilities and debt reflected in the December 29, 1995 statement
of financial condition approximate carrying value at that date.
CONCENTRATION OF CREDIT RISK - The Company's cash and equivalents and accounts
receivable are subject to potential credit risk. The Company's cash management
and investment policies restrict investments to low risk, highly-liquid
securities and the Company performs periodic evaluations of the credit standing
of the financial institutions with which it deals. Concentrations of credit risk
with respect to trade receivables are limited due to the large number of
customers comprising the Company's customer base and their dispersion across
geographic regions. As of December 29, 1995 and December 30, 1994, the Company
had no significant concentrations of credit risk.
16.SIGNIFICANT CUSTOMER
For the years ended December 29, 1995 and December 30, 1994, sales to one
customer amounted to $20.7 million, or 11%, and $9.9 million, or 6.4%, of
consolidated net sales, respectively.
17.FOREIGN OPERATIONS
The Company is engaged principally in the development, manufacturing and sale
of electronic products and subsystems for power conversion, industrial
automation and other real-time systems applications. The Company's sales are
made through both direct and indirect sales channels to a wide customer base in
North America, Europe and the Pacific Rim. The principal markets served are
telecommunications, networking, wireless communications and computing. In
recent years, the Company's primary focus has been to grow its presence in the
communications marketplace, particularly in the networking and
telecommunications sectors.
Approximately 80% of the Company's products are manufactured in foreign
locations. Specifically, 65% of the Company's 1995 sales were from products
manufactured in the Company's facilities in Hong Kong and China, 16% from
products manufactured in the Company's facility in the Republic of Ireland and
the remaining 19% from domestic operations. Included in the Company's
consolidated statement of financial condition at December 29, 1995 are the net
assets of the Company's European and Asian subsidiaries which total
approximately $16.5 million and $14.9 million, respectively.
Sales and marketing operations outside the United States are conducted
principally through Company sales representatives, independent manufacturer's
representatives and distributors in Canada, Europe and the Pacific Rim. Sales
are primarily in U.S. dollars and certain European currencies. Intercompany
sales are in U.S. dollars and are based on cost plus a reasonable profit but
less than pricing to unaffiliated customers. There were no material amounts of
United States export sales.
A summary of the Company's operations by geographic area is presented below
($000s):
<TABLE>
<CAPTION> 1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
SALES
TO UNAFFILIATED CUSTOMERS:
United States $139,274 $117,300 $ 96,327
Europe & other 46,428 34,794 23,434
Asia-Pacific Rim 5,676 2,706 4,029
INTERCOMPANY SALES:
United States 2,937 3,897 3,360
Europe & other 4,219 2,225 182
Asia-Pacific Rim 79,191 50,701 38,356
Eliminations (86,347) (56,823) (41,898)
--------- --------- ---------
Consolidated $191,378 $154,800 $123,790
========= ========= =========
INCOME (LOSS) BEFORE INCOME
TAXES
United States $18,197 $12,686 $4,646
Europe & other 5,362 2,169 2,462
Asia-Pacific Rim 3,560 1,799 1,312
Other (a) (6,075) (7,437) (7,561)
Eliminations ( 1,437) (37) 142
--------- --------- ---------
Consolidated $19,607 $ 9,180 $1,001
========= ========= =========
IDENTIFIABLE ASSETS
United States $ 61,967 $ 55,720 $ 60,504
Europe & other 21,657 17,112 11,814
Asia-Pacific Rim 33,058 23,784 18,693
Other (a) 22,262 18,062 10,669
Eliminations (2,453) (282) (244)
--------- --------- ---------
Consolidated $136,491 $114,396 $101,436
========= ========= =========
</TABLE>
[FN]
(a)Other included in the table above represents interest, corporate general and
administrative expenses, and certain assets not allocable to other geographic
segments.
18.SELECTED CONSOLIDATED QUARTERLY DATA (UNAUDITED)
(Amounts in Thousands Except Per Share Data and Stock Prices)
<TABLE>
<CAPTION> FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
FISCAL 1995
Sales $44,297 $47,316 $46,905 $52,860
Gross profit 16,152 17,524 18,390 20,012
Income before extraordinary item 2,019 2,866 4,358 4,874
Net Income 2,019 2,469 4,358 4,874
Earnings per share before 0.09 0.12 0.18 0.20
extraordinary item
Earnings per share 0.09 0.10 0.18 0.20
Stock price:
High 5.00 6.25 8.94 13.25
Low 3.13 4.81 5.88 7.50
FISCAL 1994
Sales $37,664 $38,393 $36,941 $41,802
Gross profit 13,757 14,392 13,787 15,133
Net Income 1,215 1,513 1,458 1,874
Earnings per share 0.06 0.07 0.07 0.09
Stock price:
High 2.94 3.19 3.63 3.63
Low 2.25 2.13 2.69 2.88
</TABLE>
The Company recorded an after-tax extraordinary item of $397,000 in the
second quarter of 1995. Data in the above tables are presented on a thirteen-
week period basis rather than on a calendar quarter basis.
As of December 29, 1995, there were approximately 6,700 shareholders
comprised of record holders and individual participants in security position
listings.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Operating performance improved significantly in 1995 producing net income
of $13.7 million, or $0.59 per share, versus $6.1 million, or $0.29 per share,
in 1994, as a result of a 24% sales increase, lower manufacturing overhead and
operating expense efficiencies. Operating income increased to $21.7 million or
11.4% of sales compared to $12.4 million or 8.0% a year ago, with total
operating expenses as a percent of sales decreasing from 29% to 26%. Selling,
general and administrative expenses remained at relatively the same level in
dollar terms, decreasing from 22% of sales a year ago to 18%, while investment
in research and development increased 48% as the Company continued to focus on
developing customer defined product solutions for the communications industry.
The following table summarizes the Company's sales performance by product
category ($000s):
<TABLE>
<CAPTION> 1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Power Conversion $155,426 $117,995 $ 94,501
Computer Systems 19,026 18,198 16,053
Industrial Automation 16,926 18,607 13,236
--------- --------- ---------
Total $191,378 $154,800 $123,790
========= ========= =========
</TABLE>
The increase in sales is the result of the Company's further penetration of
the communications marketplace particularly in the networking and
telecommunications sectors. Sales growth in the Company's Power Conversion
business was largely due to new OEM customer programs and expansion of its
distribution sales channels in North America, Europe and Asia. Computer
Systems sales grew as a result of new product introductions directed
towards the communications and graphics market sectors while Industrial
Automation sales decreased year to year largely due to lower demand from
utility customers.
1995 COMPARED TO 1994
SALES increased by 24% in 1995 and order backlog increased by 41% from $37.0
million at December 30, 1994 to $52.1 million at December 29, 1995. The growth
resulted from a $37.4 million (32%) sales increase in Power Conversion and a
$0.8 million (5%) increase in Computer Systems offset by a decrease of $1.7
million (9%) in Industrial Automation.
Power Conversion sales increased over 1994 primarily due to continued strong
worldwide growth in both direct and indirect sales channels. The Company's
European Power Conversion business recorded a 33% increase in sales over 1994
while North American sales increased 28% over the prior year. These
improvements resulted from the Company's efforts in developing new and existing
customer partnerships in high growth market sectors within the communications
marketplace, introducing new products and expanding its distribution channels.
Sales to customers in Asia and the Pacific Rim increased 110% to $5.7 million
due to increased demand from customers in China, the Company's largest Asian
marketplace.
Computer Systems sales increased by 5% over 1994 on increased demand for
several newly released products from both new and established OEM customers in
product applications such as video-on-demand, machine vision and voice
messaging. In 1996, Computer Systems will continue its initiative to develop
new products aimed at customers in the communications industry.
Industrial Automation sales decreased 9% from 1994 due to lower sales to
nuclear utility customers. The business has been adversely affected in recent
years by the cyclical nature of utility customer demand and is developing new
products which will expand its industrial customer base reducing its reliance on
utility sector sales as the business strives for consistent sales growth.
The strong growth in the Power Conversion business required expansion of
production capabilities and, to address this requirement, the Company increased
its manufacturing presence in China by contracting additional workforce and
investing in plant and equipment. Likewise, to service the increasing demand
from European customers, the Company completed a $7.0 million capital investment
program to acquire manufacturing plant and equipment in the Republic of Ireland
providing the European business with advanced surface mount technology
manufacturing capability.
GROSS PROFIT in 1995 increased by $15.0 million compared to 1994 on
higher sales volume while gross margin increased to 37.7% of sales in 1995
from 36.9% in 1994. This performance improvement resulted from the
Company's ongoing commitment to reduce manufacturing costs and implement
overall process improvements and the favorable effect of higher volumes on
fixed cost per unit. These factors were sufficient to overcome price
increases paid for certain components that are in short supply industry
wide and an increasing proportion of sales to OEM customers at lower
overall margins. Price increases resulting from supply shortages of certain
components are expected to persist in 1996 presenting a continuing
challenge to the Company in its efforts to obtain adequate quantities of
scarce components to fulfill customer commitments. During 1995, the
Company compensated for these shortages by acquiring additional inventories
of certain components and will continue this practice on a selective basis
in 1996.
OPERATING EXPENSES declined to approximately 26% of sales in 1995 from the
29% reported a year ago. OPERATING INCOME rose to 11.4% of sales from 8.0% in
1994, despite the increase in research and development expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES in 1995 declined to 18% of sales
versus 22% a year ago, resulting from the significantly higher sales volume and
efficiencies generated by information systems investment and greater management
focus on reducing total enterprise cost per product.
RESEARCH AND DEVELOPMENT EXPENSES increased $5.2 million (48%) compared
to 1994 as the Company invested in new product platforms to service the
communications marketplace. As a result of the Company's increased product
development activities, six new families of products were introduced in
1995. The Company views continued investment in research and development as
critical to its future growth and competitiveness and is committed to
continuing its efforts in new standard and custom product development.
NET INTEREST COST decreased to $2.1 million from $3.2 million in 1994 as
a result of higher cash balances and interest rates and from lower debt
after the redemption of the Company's debentures.
PROVISION FOR INCOME TAXES decreased to 28% of pretax income in 1995 from
34% in 1994. The effective tax rate for 1995 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 27 and 28 of the Notes
to Consolidated Financial Statements.
1994 COMPARED TO 1993
SALES increased by 25% in 1994 and order backlog increased by 15% from $32.3
million at December 31, 1993 to $37.0 million at December 30, 1994. The growth
resulted from a $23.5 million (25%) sales increase in Power Conversion, a $5.4
million (41%) increase in Industrial Automation, and a $2.1 million (13%)
increase in Computer Systems.
Power Conversion sales increased over 1993 primarily due to strong growth in
the European business and increased worldwide demand from OEMs. 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 towards customers in the telecommunications and networking market
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 during 1994 decreased 33% from 1993 due
to stringent government economic controls to curb inflation in China.
Computer Systems sales increased by 13% over 1993 on increased demand from
many of its established OEM customers and sales of several new products which
were released during the year including the Nitro60 based on Motorola's MC 68060
microprocessor, while Industrial Automation sales increased 41% over 1993 as
nuclear utility customer demand recovered from the depressed levels encountered
in the prior year.
GROSS PROFIT for the year increased by $8.7 million on higher sales volume.
However, gross margin declined from 39.1% of sales for 1993 to 36.9% for 1994,
primarily due to changes in mix within Power Conversion toward higher volume
sales to OEM customers at 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 resulting from cost reduction efforts and the transition of
North American Power Conversion manufacturing to overseas locations during 1994.
OPERATING EXPENSES declined to 29% of sales in 1994 from 33% in 1993
(excluding the $3.0 million pretax restructuring charge). OPERATING INCOME rose
to 8.0% of sales from 5.8% (excluding the restructuring charge) in 1993, despite
the decline in gross profit as a percent of sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES declined steadily during 1994
to 22% of sales compared to 26% in 1993, reflecting cost containment measures
implemented by management to confine growth in expenses in light of the reduced
gross margins.
RESEARCH AND DEVELOPMENT EXPENSES increased by 16% over 1993 as the Company
continued to invest in new product development in each of its businesses.
PROVISION FOR INCOME TAXES was 34% and 40% of pretax income 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.
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 in 1993 was not material. Prior years financial
statements have not been restated to apply the provisions of these statements.
OTHER
In fiscal 1996, the Company is required to adopt the provisions of Statements
of Financial Accounting Standards (`SFAS'') No. 121, ``Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of''and
No. 123, `Accounting for Stock-Based Compensation.'' The Company believes the
adoption of SFAS No. 121 will not have a material effect on the Company's
financial condition or results of operations. Changes in accounting for stock-
based compensation are optional and the Company plans to adopt only the
disclosure requirements in 1996.
The Company maintains significant assets and operations in Europe and Asia
and, as a result, its financial performance could be significantly affected by
foreign currency gains and losses. As a result of its procurement of products
and sales in foreign currencies, the Company may be exposed to cost increases
relative to local currencies. To mitigate potential adverse trends, the
Company's operating strategy and pricing take into account changes in exchange
rates over time. In 1995, the Company also entered into foreign currency
forward contracts to fix certain of its product costs.
FINANCIAL CONDITION
CASH AND EQUIVALENTS increased to $26.7 million at December 29, 1995 from
$20.2 million at December 30, 1994. The increase is the result of higher net
income, proceeds of $1.5 million from the sale of the Pompano Beach, Florida
facility, and $4.2 million from the exercise of stock options, partially offset
by the repurchase of 1,138,000 shares of the Company's common stock for $8.3
million and purchases of plant and equipment for $7.4 million.
ACCOUNTS RECEIVABLE, NET increased $5.3 million over 1994 due to the
growth in fourth quarter sales reported principally in the Power Conversion
business.
INVENTORIES, NET increased $11.2 million (56%) from December 30, 1994
primarily in the Power Conversion business to meet higher sales volumes and
to protect against component shortages being experienced in the electronics
marketplace. Due to the increase in inventory and increased utilization of
vendor financing, accounts payable increased $6.9 million.
PROPERTY, PLANT & EQUIPMENT increased $1.5 million net of changes in
accumulated depreciation. The increase relates to the expansion of
manufacturing capacity in the European and Asia Pacific Power Conversion
divisions and additional capital expenditures to support the increased sales
volume.
LONG-TERM DEBT - In April 1995, the Company entered into an unsecured credit
agreement with First Union National Bank of Florida which provided for a $25
million seven-year term loan and a $20 million three-year revolving line of
credit. Proceeds from the term loan were used to redeem the Company's
debentures. The revolving facility replaced and expanded the Company's previous
$15 million line of credit which expired in March 1995. No borrowings have been
made under the revolving line of credit to date.
CONVERTIBLE SUBORDINATED DEBENTURES - In May 1995, the Company called for
redemption all of its outstanding debentures which amounted to $33.4 million. As
a result of the redemption, holders of debentures representing a principal
amount of $9,121,000 elected to convert the debentures into 1,972,085 shares of
the Company's common stock while the balance of $24,262,000 was redeemed.
SHAREHOLDERS' EQUITY increased $21.6 million (54%) from 1994 due to the
following: earnings for the period of $13.7 million, proceeds from exercises of
stock options of $4.2 million, current tax benefits of $1.9 million related to
the exercise of stock options, and $9.4 million from conversion of $9.1 million
debentures into 1,972,085 shares of the Company's common stock, partially offset
by the repurchase and retirement of 1,138,000 shares of the Company's common
stock for $8.3 million.
CASH FLOWS AND LIQUIDITY
NET CASH PROVIDED BY OPERATING ACTIVITIES increased to $17.3 million in 1995
versus $12.7 million in 1994 and $1.1 million in 1993. The increase in 1995 is
mainly the result of higher net income offset by an overall higher investment in
net operating assets. The 1994 increase reflected the Company's improved
management of operating assets and liabilities. The Company believes its
available credit line, its cash flow from operations, and other financing
activities are adequate to fund its working capital requirements in 1996.
NET CASH USED IN INVESTING ACTIVITIES decreased to $4.8 million in 1995 from
$5.1 million in 1994 due to proceeds of $1.5 million from the sale of its
Pompano Beach, Florida facility which partially offset the $7.4 million
investment in plant & equipment related to the continued upgrading of the
Company's worldwide manufacturing capabilities. The increase in 1994 compared to
1993 related mainly to acquisitions of manufacturing plant and equipment.
NET CASH USED IN FINANCING ACTIVITIES in 1995 of $6.2 million consists of the
issuance of the $25 million seven-year term loan, net of debt issuance costs,
and the $4.2 million proceeds from the exercise of stock options, reduced by the
repurchase of $24.3 million of the Company's Debentures, the repurchase of
1,138,000 shares of the Company's common stock for $8.3 million and by long-term
debt principal payments. Net cash provided by financing activities in 1994 of
$2.1 million includes the issuance of a $3.6 million mortgage loan partially
reduced by the repurchase of $520,000 of Debentures and by long-term debt
principal payments. Net 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 scheduled debt payments.
<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 29, 1995 and December 30, 1994, and the related consolidated
statements of operations, shareholders' equity and cash flows for the three
fiscal years ended December 29, 1995. 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 29, 1995 and December 30, 1994, and the results of
their operations and their cash flows for the three fiscal years ended December
29, 1995 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."
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 18, 1996.
<PAGE>
STATEMENT OF MANAGEMENT RESPONSIBILITY
The Company's management is responsible for the preparation, integrity and
objectivity of the consolidated financial statements and other financial
information presented in this report. The accompanying financial statements
have been prepared in conformity with generally accepted accounting principles
and reflect the effects of certain estimates and judgments made by management.
The Company's management maintains an effective system of internal control
that is designed to provide reasonable assurance that assets are safeguarded and
transactions are properly recorded and executed in accordance with management's
authorization. The system is continuously monitored by direct management review
and by internal auditors who conduct an extensive program of audits throughout
the company. The Company selects and trains qualified people who are provided
with and expected to adhere to the Company's standards of business conduct.
These standards, which set forth the highest principles of business ethics and
conduct, are a key element of the Company's control system. Additionally, our
independent certified public accountants, Arthur Andersen LLP, obtain a
sufficient understanding of the internal control structure in order to plan and
complete the annual audit of the Company's financial statements.
The Audit Committee of the Board of Directors, which consists of six outside
directors, meets regularly with management, the internal auditors and the
independent certified public accountants to review accounting, reporting,
auditing and internal control matters. The Committee has direct and private
access to both internal and external auditors.
JOSEPH M. O'DONNELL
President and Chief Executive Officer
RICHARD J. THOMPSON
Vice President, Finance and Chief Financial Officer
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
C.P. Power Products (Zhong Shan) Co., Ltd. People's Republic of China
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 incorporation of our reports included in or incorporated
by reference in this Form 10-K, 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
Nos. 33-42516, 33-63503, 33-63501, and 33-63499.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
March 22, 1996.
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