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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 4, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-4466
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COMPUTER PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA
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(State or other jurisdiction of incorporation or organization)
59-1205269
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(I.R.S. Employer Identification No.)
7900 Glades Road, Suite 500, Boca Raton, Florida 33434
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 451-1000
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NOT APPLICABLE
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Former name, address and fiscal year if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares of Common Stock, $.01 par value, of the Registrant issued
and outstanding as of August 1, 1997, was 24,171,160 shares.
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<PAGE>
COMPUTER PRODUCTS, INC.
INDEX TO FORM 10-Q/A
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Statements of Operations - For the Thirteen
and Twenty-Six Weeks Ended July 4, 1997 and
June 28, 1996 3
Statements of Financial Condition - July 4, 1997
and January 3, 1997 4
Statements of Cash Flows - For the
Twenty-Six Weeks Ended July 4, 1997 and
June 28, 1996 5
Statements of Shareholders' Equity For the
Twenty-Six Weeks Ended July 4, 1997 6
Notes to Condensed Consolidated Financial
Statements 7-11
SIGNATURE
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<PAGE>
PART I. FINANCIAL INFORMATION
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
JULY 4, JUNE 28, JULY 4, JUNE 28,
1997 1996 1997 1996
------- ------ -------- --------
<S> <C> <C> <C> <C>
SALES $59,544 $48,066 $116,409 $95,432
COST OF SALES 37,502 30,332 74,760 60,596
------- ------- -------- -------
GROSS PROFIT 22,042 17,734 41,649 34,836
------- ------ -------- -------
EXPENSES:
Selling, general & administrative 8,860 7,388 17,572 14,780
Research & development 5,223 3,925 9,694 7,414
------- ------ ------ ------
14,083 11,313 27,266 22,194
------- ------ ------ ------
OPERATING INCOME 7,959 6,421 14,383 12,642
------- ------ ------ -------
OTHER INCOME (EXPENSE):
Interest expense (570) (654) (1,160) (1,363)
Interest income 347 258 674 475
Foreign exchange gain (loss) 111 (320) 77 (326)
------- ------ -------- -------
(112) (716) (409) (1,214)
------- ------ -------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 7,847 5,705 13,974 11,428
PROVISION FOR INCOME TAXES 2,119 1,487 3,773 3,032
------- ------ -------- -------
INCOME FROM CONTINUING OPERATIONS 5,728 4,218 10,201 8,396
DISCONTINUED OPERATIONS
Profit (loss)from operations, net of income
taxes of $58, ($222) and $41, respectively - 164 (333) (102)
Loss on disposal of RTP including provision of
$1,000 for operating losses during phase-out
period, net of tax benefit of $1,152 - - (1,729) -
------- ------ ------- -------
NET INCOME $5,728 $4,382 $8,139 $8,294
======= ====== ======== =======
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
PRIMARY-
Income from Continuing Operations $ 0.23 $ 0.17 $ 0.41 $ 0.34
Discontinued Operations - 0.01 (0.08) -
------ ------ ------ -------
Net Income $ 0.23 $ 0.18 $ 0.33 $ 0.34
====== ====== ====== =======
ASSUMING FULL DILUTION-
Income from Continuing Operations $ 0.23 $ 0.17 $ 0.40 $ 0.33
Discontinued Operations - 0.01 (0.08) -
------ ------ ------- -------
Net Income $ 0.23 $ 0.18 $ 0.32 $ 0.33
====== ====== ====== =======
COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING:
Primary 24,882 24,508 24,776 24,331
Fully Diluted 25,161 24,691 25,146 24,760
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands Except Share Data)
<TABLE>
<CAPTION>
JULY 4, JANUARY 3,
1997 1997
(UNAUDITED) (AUDITED)
------------ ----------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and equivalents $ 32,639 $ 26,141
Accounts receivable, net 38,881 35,989
Inventories 34,255 28,726
Prepaid expenses 3,626 2,038
Deferred income taxes, net 1,304 965
Current assets of discontinued operations 5,681 7,646
-------- ---------
Total current assets 116,386 101,505
-------- --------
PROPERTY, PLANT & EQUIPMENT, NET 30,052 28,686
-------- --------
OTHER ASSETS
Goodwill, net 19,328 20,022
Deferred income taxes, net 1,241 863
Other assets, net 1,211 1,171
Long-term assets of discontinued operations 1,356 1,594
-------- --------
Total other assets 23,136 23,650
-------- --------
$169,574 $153,841
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 4,861 $ 4,155
Accounts payable and accrued liabilities 42,928 34,210
Current liabilities of discontinued operations 1,244 2,055
-------- --------
Total current liabilities 49,033 40,420
LONG-TERM DEBT 21,161 23,408
LEASE LIABILITIES 5,889 5,994
-------- --------
TOTAL LIABILITIES 76,083 69,822
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SHAREHOLDERS' EQUITY
Preferred stock, par value $.01; 1,000,000 shares
authorized; none issued
Common stock, par value $.01; 80,000,000 shares
authorized; 24,036,076 shares issued and
outstanding at July 4, 1997 (23,849,759
at January 3, 1997) 240 239
Additional paid-in capital 47,743 44,724
Retained earnings 46,922 38,783
Foreign currency translation adjustment (1,414) 273
-------- --------
TOTAL SHAREHOLDERS' EQUITY 93,491 84,019
-------- --------
$169,574 $153,841
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
JULY 4, JUNE 28,
1997 1996
-------- --------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $8,139 $8,294
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,390 2,831
Provision for discontinued operations 1,636 -
Other non-cash charges 52 1,756
Changes in operating assets and liabilities:
Increase in accounts receivable (3,872) (1,166)
(Increase) decrease in inventories and
prepaid expenses (7,536) 115
Increase (decrease) in accounts payable
and accrued liabilities 9,115 (5,658)
Net cash provided by (used in) discontinued
operations 1,423 (11)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 12,347 6,161
-------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (4,688) (2,792)
Proceeds from sale of property, plant and equipment 25 70
Investing activities of discontinued operations (32) (667)
(Increase) decrease in other assets (162) 78
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (4,857) (3,311)
-------- --------
FINANCING ACTIVITIES:
Principal payments on debt and capital leases (1,660) (1,979)
Proceeds from exercises of stock options 979 2,217
Repurchases of common stock - (2,032)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (681) (1,794)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
EQUIVALENTS (311) (47)
-------- --------
INCREASE IN CASH AND EQUIVALENTS 6,498 1,009
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 26,141 26,650
-------- --------
CASH AND EQUIVALENTS, END OF PERIOD $32,639 $27,659
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
For the Twenty-Six Weeks Ended July 4, 1997
(Amounts in Thousands)
(Unaudited)
Foreign
Additional Currency
Common Stock Paid-in Retained Translation
Shares Amount Capital Earnings Adjustment
--------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 3, 1997 23,850 $239 $44,724 $38,783 $273
Issuance of common stock under
stock option plans 186 1 979
Tax benefit from exercises of 2,040
stock options
Foreign currency translation
adjustment (1,687)
Net income 8,139
--------- --------- ---------- -------- -----------
Balance, July 4, 1997 24,036 240 $47,743 $46,922 $(1,414)
========= ========= ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 4, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Certain information and footnote disclosures required by
generally accepted accounting principles for complete financial statements have
been condensed or omitted.
In the opinion of management, the accompanying financial statements include all
adjustments (consisting of normal recurring accruals) considered necessary to
present fairly the financial position, results of operations, and cash flows of
Computer Products, Inc. (the "Company"). The results of operations for the
thirteen and twenty-six weeks ended July 4, 1997 are not necessarily indicative
of the results that may be expected for fiscal year 1997. For further
information, these Condensed Consolidated Financial Statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 1996 Annual Report to Shareholders and Form 10-Q for the thirteen week
period ended April 4, 1997.
Certain prior year amounts have been reclassified to reflect discontinued
operations as described in Note 6.
2. INVENTORIES
The components of inventory are as follows ($000s):
July 4, January 3,
1997 1997
-------- --------
Raw materials $18,720 $14,953
Work in process 5,828 4,424
Finished goods 9,707 9,349
-------- --------
$34,255 $28,726
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3. PROPERTY, PLANT & EQUIPMENT, NET
Related accumulated depreciation was $28,125,000 and $26,064,000
at July 4, 1997 and January 3, 1997, respectively.
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are ($000s):
July 4, January 3,
1997 1997
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Accounts payable $21,288 $16,136
Accrued liabilities:
Compensation and benefits 6,028 5,793
Income taxes payable 6,247 5,080
Accrued loss on disposal of subsidiary 1,560 -
Other 7,805 7,201
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$42,928 $34,210
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5. INCOME TAXES
The provision for income taxes reflects federal, state, and foreign taxes. The
effective income tax rate on pretax earnings differs from that computed at the
United States federal statutory rate for the following reasons:
Twenty-Six Weeks Ended
July 4, June 28,
1997 1996
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Provision computed at United States
federal statutory rate 35.0% 35.0%
Effect of state income taxes 4.8 4.2
Amortization of goodwill 0.2 0.2
Foreign tax effects (7.2) (4.1)
Change in the valuation allowance (5.9) (9.0)
Other 0.1 0.2
------- -------
Effective tax rate 27.0% 26.5%
======= ========
6. DISCONTINUED OPERATIONS
On April 17, 1997, the Company announced its intention to sell its Industrial
Automation division, RTP Corp. ("RTP") pursuant to a plan of disposal approved
by the Board of Directors.
At April 4, 1997, the estimated loss on the disposal of the discontinued
operations of $1,729,000 (net of income tax benefit of $1,152,000) represented
the estimated loss on the disposal of RTP's net assets and a pre-tax provision
of $1,000,000 for expected operating losses during the phase-out period.
RTP's sales for the thirteen and twenty-six weeks ended July 4, 1997 were
$2,541,000 and $4,793,000, respectively. Prior year's RTP sales for the
comparable periods were $3,607,000 and $6,677,000, respectively. RTP's operating
results for the second quarter of 1997 and 1996 are shown separately in the
accompanying consolidated statements of operation.
Assets and liabilities of the discontinued operations have been separately
classified in the accompanying statements of financial condition and consist of
the following ($000s):
July 4, January 3,
1997 1997
---------- ---------
Accounts receivable, net $2,526 $4,129
Inventories 3,144 3,494
Prepaid expenses and other 51 100
Property, Plant & Equipment, net 1,316 1,517
---------- --------
Total assets $7,037 $9,240
========== =========
Accounts payable and other accruals $1,244 $2,055
========== =========
All prior year amounts have been restated for the discontinued operations to
conform with the current year's presentation.
7. DERIVATIVE FINANCIAL INSTRUMENTS
FOREIGN EXCHANGE INSTRUMENTS --The Company enters into 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 denominated in foreign currencies made by its international subsidiaries.
The foreign exchange contracts on receivables require the Company to exchange
European ECU for Irish Punts. The foreign exchange contracts on payables require
the Company to exchange Japanese Yen to receive US dollars. At July 4, 1997, the
Company held $5.0 million of forward currency exchange contracts on receivables
and $0.9 million of forward currency exchange contracts on payables maturing in
one to three months. No contracts were outstanding as of January 3, 1997. Gains
and losses on these contracts are included in the consolidated statement of
operations as they arise. Costs associated with entering into these contracts
are amortized over the contracts lives which typically mature within one year.
The amount of any gain or loss on these contracts during the period was not
material. The Company does not hold or issue
financial instruments for trading purposes.
INTEREST RATE INSTRUMENTS -- The Company periodically enters into interest rate
swaps, cap and collar agreements to reduce the impact of changes in interest
rates on its floating rate debt. The swap agreement is a contract to exchange
floating rate for fixed interest payments periodically over the life of the
agreement without the exchange of the underlying notional amounts. The notional
amounts of interest rate agreements are used to measure interest to be paid or
received and do not represent the amount of exposure to credit loss. The
differential paid or received on interest rate agreements is recognized as an
adjustment to interest expense. See Note 9 - Subsequent Events.
8. NEW ACCOUNTING PRONOUNCEMENT
On March 3, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". This
statement simplifies the standards for computing and presenting earnings per
share ("EPS") and makes them comparable to international EPS standards. SFAS 128
replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures. SFAS 128 will
be effective beginning with the fourth quarter of 1997 and, upon adoption, will
require restatement of all prior periods presented. The Company has quantified
the impact of applying the new standard to the second quarter results. Pro forma
information is as follows:
Thirteen Weeks Twenty-Six Weeks
Ended Ended
July 4, June 28, July 4, June 28,
1997 1996 1997 1996
-------- --------- ---------- -----------
EARNINGS PER COMMON SHARE
Income from Continuing Operations $0.24 $0.18 $0.43 $0.36
Discontinued Operations, net of tax - 0.01 (0.09) -
------- -------- -------- --------
Net Income $0.24 $0.19 $0.34 $0.36
======== ======== ======== ========
EARNINGS PER COMMON SHARE - ASSUMING DILUTION
Income from Continuing Operations $0.23 $0.17 $0.41 $0.34
Discontinued Operations, net of tax - 0.01 (0.08) -
------- ------- -------- -------
Net Income $0.23 $0.18 $0.33 $0.34
======== ======== ========= =========
9. SUBSEQUENT EVENTS
SALE OF SUBSIDIARY
Effective July 5, 1997, the Company sold its industrial automation division, RTP
Corp., to RT Acquisition Florida Corp. Proceeds from the sale, which are subject
to adjustment, included $2.0 million cash and a subordinated unsecured five-year
note in the aggregate principal amount of approximately $2.5 million bearing
interest at the prime rate. The estimated after-tax loss on the sale of $1.7
million was recorded in the first quarter of 1997.
ACQUISITION
Effective July 22, 1997, the Company acquired the Elba Group, a privately-held
European designer, manufacturer and marketer of a wide range of both AC/DC and
DC/DC power conversion products. Computer Products purchased Elba for
approximately $29 million in cash provided by two seven-year term loans from a
financial institution. Elba has design, sales and manufacturing organizations in
Oberhausen and Einsiedel, Germany; Chomutov, Czech Republic and Etten-Leur,
Netherlands. The Company also has sales offices in Pfaffikon, Switzerland;
Vaulx-Milieu, France; and Chesterfield, United Kingdom.
The acquisition will be accounted for under the purchase method of accounting.
Accordingly, the excess of the purchase price over the estimated fair value of
the net assets acquired will be recorded as goodwill and will be amortized on a
straight line basis over a period of 20 years.
LOAN AGREEMENTS
Effective July 15, 1997, the Company amended and restated its existing revolving
and term loan agreement to reprice its outstanding term loan and to provide for
a new $20 million three-year multi-currency revolving working capital line of
credit. The new multi-currency revolving facility, which expires in April 2000,
replaces the Company's previous $20 million credit line which would have expired
on April 1, 1998. The interest rate on the revolver is at the London Interbank
Offering Rate "Libor" plus .50%. No borrowings are outstanding under the
existing line. The Company's 1995 seven-year term loan, which has an outstanding
balance of $22 million, was repriced to bear interest at Libor plus .75%
compared to the previous rate set at Libor plus 1.5%.
In addition, effective July 15, 1997, the Company and one of its subsidiaries
entered into two separate unsecured seven-year term loans with a bank providing
an aggregate of 52 million Deutsche marks. The term loans bear interest at Libor
plus .75%, or approximately 5.6%. Proceeds from the term loans were used to
finance the Elba Group acquisition on July 22, 1997.
Effective July 14, 1997, the Company entered into two interest rate swap
agreements with a bank pursuant to which it exchanged its floating rate interest
obligations on the aggregate 52 million Deutsche marks notional principal amount
for a fixed rate payment obligation of 5.58% per annum for a seven-year period
beginning July 22, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPUTER PRODUCTS, INC.
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(Registrant)
DATE: October 28, 1997 BY: Richard J. Thompson
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Richard J. Thompson
Vice President Finance
Chief Financial Officer
