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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 22, 1997
COMPUTER PRODUCTS, INC.
- ------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Florida 0-4466 59-1205269
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(STATE OR OTHER JURISD- (COMMISSION (IRS EMPLOYER
ICTION OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
7900 Glades Road, Suite 500, Boca Raton, Florida 33434-4105
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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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N/A
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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<PAGE>
Item 7 of the Current Report on Form 8-K of Computer Products Inc., a Florida
corporation "CPI"), reporting events occurring on July 22, 1997 is amended and
restated in its entirety as set forth below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The following financial statements of businesses acquired are included herein
pursuant to Item 7(a):
Report of Independent Certified Public Accountants.
Combined Balance Sheets of the Elba Group as of December 31, 1996 (audited)
and June 30, 1997(unaudited).
Combined Statements of Operations and Retained Earnings of the Elba Group
for the Year Ended December 31, 1996 (audited) and for the Six Months
Ended June 30, 1997 and 1996 (unaudited).
Combined Statements of Cash Flows of the Elba Group for the Year Ended
December 31, 1996(audited) and for the Six Months Ended June 30, 1997 and
1996 (unaudited).
Notes to Combined Financial Statements.
(B) PRO FORMA FINANCIAL INFORMATION.
The following pro forma financial information is included herein pursuant to
Item 7(b):
Unaudited Condensed Combined Pro Forma Balance Sheet as of July 4, 1997.
Unaudited Condensed Combined Pro Forma Statement of Operations for the
Twenty-Six Weeks Ended July 4, 1997.
Unaudited Condensed Combined Pro Forma Statement of Operations for the Year
Ended January 3, 1997.
Notes to Unaudited Condensed Combined Pro Forma Financial Statements.
(C) EXHIBITS
Exhibit No. 23 -- Consent of Arthur Andersen LLP.
<PAGE>
ELBA GROUP
COMBINED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
TOGETHER WITH
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
the Elba Group:
We have audited the accompanying combined balance sheet of Elba Electric GmbH,
Elba Modul GmbH, Elba Elektronic AG, Elba Electronics Ltd. and Elba
Electric-Produktion s. r. o. (collectively the "Elba Group") as of December 31,
1996 and the related combined statements of income, retained earnings and cash
flows for the year then ended. 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 audit.
We conducted our audit 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 audit provides 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 the Elba Group as of December
31, 1996 and the results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
September 15, 1997.
<PAGE>
ELBA GROUP
COMBINED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $3,203,262
Accounts receivable (net of allowance of $245,412) 4,675,401
Inventories 1,998,890
Prepaid expenses 25,012
---------
Total current assets 9,902,565
PROPERTY, PLANT AND EQUIPMENT, net 2,719,925
OTHER ASSETS 345,733
-----------
Total assets $12,968,223
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 394,232
Accounts payable 797,402
Accrued liabilities 3,150,636
Due to shareholders 2,830,507
---------
Total current liabilities 7,172,777
COMMITMENTS AND CONTINGENCIES (See Note 7)
MINORITY INTEREST 908,230
SHAREHOLDERS' EQUITY:
Common stock 438,677
Capital surplus 5,101
Retained earnings 4,700,327
Foreign currency translation adjustment (256,889)
---------
Total shareholders' equity 4,887,216
---------
Total liabilities and shareholders' equity $12,968,223
===========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
ELBA GROUP
COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
NET SALES $26,635,016
COST OF SALES 16,478,460
----------
Gross margin 10,156,556
----------
EXPENSES:
Selling 2,389,471
General and administrative 1,944,071
Research and development 414,628
---------
Operating income 5,408,386
---------
OTHER INCOME (EXPENSE)
Interest expense (214,677)
Interest income 81,118
Other income 487,997
---------
Income before income taxes 5,762,824
PROVISION FOR INCOME TAXES 2,530,422
---------
Income before minority interest 3,232,402
MINORITY INTEREST (631,488)
--------
Net income 2,600,914
RETAINED EARNINGS, beginning of year 2,099,413
---------
RETAINED EARNINGS, end of year $4,700,327
==========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
ELBA GROUP
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net income $2,600,914
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 410,251
Provision for bad debts (77,609)
Minority interest 631,488
Changes in operating assets and liabilities:
Accounts receivable (733,198)
Inventories (262,014)
Prepaid expenses 70,830
Accounts payable (225,558)
Accrued liabilities 774,561
---------
Net cash provided by operating activities 3,189,665
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (512,783)
Proceeds from sale of equipment 16,561
Increase in other assets (385)
---------
Net cash used in investing activities (496,607)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt (378,435)
Dividends paid (446,416)
--------
Net cash used in financing activities (824,851)
CURRENCY TRANSLATION ADJUSTMENT (43,397)
-------
INCREASE IN CASH 1,824,810
CASH, beginning of year 1,378,452
---------
CASH, end of year $3,203,262
==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during the year for:
Interest $ 192,708
Income taxes $ 756,346
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
ELBA GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(1) ORGANIZATION AND OPERATIONS:
The Elba Group includes the following affiliated entities: Elba Electric GmbH
(and its majority-owned subsidiaries Elba Electronic S.A.R.L. and KRP Power
Source B.V.), Elba Modul GmbH, Elba Elektronic AG, Elba Electronics Ltd. and
Elba Electric-Produktion s. r. o. Elba Electric GmbH was founded in 1975 by Mr.
Horst Schultz ("Schultz"). Beginning in 1981 through 1995, Schultz acquired the
remaining companies in various locations throughout Northern Europe.
Collectively, the Elba Group will be referred to as the "Company".
The Company 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 Company is engaged in the design, manufacture and marketing of a wide range
of both AC/DC and DC/DC power conversion products in Europe. The Company's sales
are made through both direct and indirect sales channels to a wide customer base
in Europe. The principal markets served are communications, industrial, medical
and transport.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation-
The combined financial statements include the accounts of the entities
identified below which are majority-owned by Schultz and his wife Brigitte
Schultz ("B. Schultz"). At December 31, 1996, the common stock and ownership
percentages are as follows:
<TABLE>
<CAPTION>
Number of
Ownership % Shares Outstanding Common Stock ($)
----------- ------------------ ----------------
Schultz and Other Schultz and Other Schultz and Other
B. Schultz Shareholder B. Schultz Shareholder B. Schultz Shareholder
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Elba Electric GmbH 100% - 6 - $278,454 -
Elba Modul GmbH 100% - 4 - 69,614 -
Elba Elektronic AG 100% - 200 - 86,693 -
Elba Electronics Ltd. 75% 25% 75 25 116 $39
Elba Electric-Produktion s.r.o. 100% - 1 - 3,761 -
</TABLE>
The other shareholder's proportional share of the equity in the income and the
net assets of Elba Electronics, Ltd. are included in the combined results of the
Company in the accompanying combined financial statements.
All significant intercompany balances and transactions between affiliated
entities have been eliminated.
<PAGE>
Minority Interest-
Minority interest represents the minority shareholders' proportional share of
the equity in the income and the net assets of Elba Electronique S.A.R.L. and
KRP Power Source B.V. Elba Electronic GmbH owns 70% and 60% of Elba
Electronique, S.A.R.L. and KRP Power Source B.V., respectively. Schultz and B.
Schultz together own 20% of Elba Electronique S.A.R.L. The remaining 10%
ownership of Elba Electronique S.A.R.L. and 40% ownership of KRP Power Source
B.V. are included in minority interest in the accompanying combined financial
statements.
Cash-
Cash includes cash held in demand deposit accounts.
Revenue Recognition-
The Company recognizes revenue as products are shipped or services are rendered.
Net sales are comprised of gross sales less provisions for expected returns,
discounts and other sales allowances. Reserves for estimated returns are
established by the Company concurrently with the recognition of revenue. The
amount of reserves are established in accordance with generally accepted
accounting principles based upon consideration of a variety of factors,
including actual return, experience for products during the past several years
by product type and the market for the product. Actual product returns are,
however, dependent upon future events and may differ from established estimates.
Inventories-
Inventories are stated at the lower of cost, on a first-in, first-out basis, or
market.
Property, Plant and Equipment-
Property, plant and equipment are stated at cost. Depreciation is provided using
a declining balance method that approximates the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are recorded at
cost and are amortized using the straight-line method over the remaining lease
term or the economic useful life, whichever is shorter. Expenditures for major
additions and improvements are capitalized, while minor replacements,
maintenance and repairs are charged to expense as incurred.
Product Warranty-
Generally, the Company offers a one year warranty on the majority of its product
sales. The Company recognizes estimated product warranty costs at the time the
related products are sold based on sales levels and costs incurred in prior
years.
Fair Value of Financial Instruments-
The Company's financial instruments consist of cash, accounts receivable, other
assets, loans payable, accounts payable, accrued liabilities and due to
shareholders. The amounts of these financial instruments reflected in the
accompanying combined balance sheet as of December 31, 1996 approximate fair
market value due to their short-term nature and market rates of interest.
Foreign Currency Translation-
The Company's functional currencies include the Deutsche Mark, Dutch Guilder,
French Franc, Swiss Franc and British Sterling. Assets and liabilities are
translated from their functional currency into U.S. dollars using exchange rates
in effect at the balance sheet date. Income and expense items are translated
using average exchange rates for the period. The effect of exchange rate
fluctuations on translating foreign currency assets and liabilities into U.S.
dollars is included in shareholders' equity.
Income Taxes-
Income taxes provided reflect the current and deferred tax consequences of
events that have been recognized in the Company's financial statements or tax
returns.
Concentration of Credit Risk-
The financial instrument that potentially subjects the Company to concentrations
of credit risk consists principally of accounts receivable. The Company sells
its products to customers primarily in Europe. The Company performs ongoing
credit evaluations of its customers' financial condition and generally does not
require collateral. The Company maintains reserves for potential credit losses,
and such losses have been within management's expectations. Management believes
the Company has no significant concentrations of credit risk.
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
(3) INVENTORIES:
The components of inventories are as follows:
December 31,
1996
----------
Raw materials $ 1,133,221
Work in process 541,872
Finished goods 323,797
------------
$ 1,998,890
============
(4) PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
Useful
Lives December 31,
(Years) 1996
------- -----------
<S> <C> <C>
Land - $ 573,487
Buildings 50 2,114,874
Machinery and equipment 10 3,588,372
Leasehold improvements 10 253,589
Furniture and fixtures 5 722,589
Patents, licenses, software 5-10 40,313
-------------
7,293,224
Less: accumulated depreciation and amortization 4,573,299
-------------
Property, plant and equipment, net $ 2,719,925
=============
</TABLE>
Depreciation and amortization expense on property, plant and equipment was
$410,251 for the year ended December 31, 1996.
(5) LOANS PAYABLE:
Elba Electric Gmbh maintains a loan with Commerzbank Hockenheim. The loan bears
interest at 5.5% to be repaid in monthly payments of approximately $40,000
through October 30, 1997. The loan is secured by real property of Elba Electric
GmbH.
(6) ACCRUED LIABILITIES:
The components of accrued liabilities are as follows:
December 31,
1996
----------
Compensation and benefits $ 1,652,967
Income taxes payable 995,598
Other 502,071
-------------
$ 3,150,636
=============
At December 31, 1996, other accrued liabilities primarily consist of an accrual
for product warranty costs.
(7) COMMITMENTS AND CONTINGENCIES:
Leases-
Future minimum payments under non-cancelable operating leases and rental
agreements are as follows as of December 31, 1996:
1997 $ 61,890
1998 65,938
1999 42,431
----------
$ 170,259
==========
Rent expense under non-cancelable operating leases amounted to approximately
$51,000 during 1996.
Litigation-
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position of the Company.
(8) INCOME TAXES:
Each company within the Elba Group provides for income taxes at the statutory
income tax rates in their respective countries. Deferred income taxes resulting
from the recognition, in different periods, of certain components of income and
expenses for financial statements and income tax reporting purposes are not
material to the combined financial statements.
(9) RELATED PARTY TRANSACTIONS:
Included in accounts receivable at December 31, 1996 is $431,315 due from
shareholders of which $396,141 is due from Schultz and B. Schultz bearing
interest of 5.25%. The remaining $35,173 are non-interest bearing amounts due
from the minority shareholders of Elba Electronique S.A.R.L. and KRP Power
Source B.V. At December 31, 1996, other assets included $339,484 due from
employees at Elba Electric GmbH and Elba Modul GmbH. In general, all employee
loans bear interest of 6% and are repaid over a ten year period. The amount due
to shareholders as of December 31, 1996 represents non-interest bearing advances
due on demand.
(10) SIGNIFICANT CUSTOMER:
Sales to one customer amounted to approximately $4.1 million for the year ended
December 31, 1996.
(11) SUBSEQUENT EVENT:
On July 22, 1997, pursuant to an Agreement on the Sale, Purchase and Transfer of
Shares by and among Mr. Horst Schultz and Mrs. Brigitte Schultz (the "Sellers")
and certain wholly-owned subsidiaries of Computer Products Inc., (collectively
the "Purchasers"), the Purchasers acquired all the outstanding common stock of
the Company, including minority shares, for 52 million Deutsche Marks
(approximately $28.5 million).
<PAGE>
ELBA GROUP
COMBINED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS:
<S> <C>
Cash $4,219,906
Accounts receivable (net of allowance of $245,412) 3,624,176
Inventories 2,285,550
Prepaid expenses 124,133
----------
Total current assets 10,253,765
PROPERTY, PLANT AND EQUIPMENT, net 2,208,002
OTHER ASSETS 393,120
-----------
Total assets $12,854,887
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable $ 394,860
Accounts payable 825,037
Accrued liabilities 3,113,133
Due to shareholders 1,269,096
---------
Total current liabilities 5,602,126
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 1,135,590
SHAREHOLDERS' EQUITY:
Common stock 438,677
Capital surplus 5,101
Retained earnings 5,616,434
Foreign currency translation adjustment 56,959
---------
Total shareholders' equity 6,117,171
---------
Total liabilities and shareholders' equity $12,854,887
===========
</TABLE>
<PAGE>
ELBA GROUP
COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
---------- ----------
<S> <C> <C>
NET SALES $12,174,224 $12,336,666
COST OF SALES 7,933,155 7,698,253
---------- ----------
Gross margin 4,241,069 4,638,413
EXPENSES:
Selling 1,117,798 1,128,199
General and administrative 855,937 920,449
Research and development 349,071 196,867
---------- ----------
Operating income 1,918,263 2,392,898
OTHER INCOME (EXPENSE):
Interest expense (101,279) (120,395)
Interest income 77,417 57,622
Other income 184,876 265,710
---------- ----------
Income before income taxes 2,079,277 2,595,835
PROVISION FOR INCOME TAXES 935,810 1,168,126
---------- ----------
Income before minority interest 1,143,467 1,427,709
MINORITY INTEREST 227,360 281,259
---------- ----------
Net income $ 916,107 $1,146,450
========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ELBA GROUP
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six-Months Ended
June 30,
1997 1996
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $916,107 $1,146,450
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 205,125 205,125
Provision for bad debts - (36,476)
Minority interest 227,360 281,259
Changes in operating assets and liabilities:
Accounts receivable 1,051,225 (344,603)
Inventories (286,660) (123,147)
Prepaid expenses (99,121) 33,290
Accounts payable 27,635 (123,488)
Accrued liabilities (37,503) 154,913
----------- ----------
Net cash provided by operating activities 2,004,168 1,193,323
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment - (512,782)
Proceeds from sale of equipment 306,798 7,784
Increase in other assets (47,387) (181)
----------- ----------
Net cash provided (used) in investing activities 259,411 (505,179)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt (1,560,783) (177,865)
Dividends paid - (446,416)
----------- ----------
Net cash used in financing activities (1,560,783) (624,281)
CURRENCY TRANSLATION ADJUSTMENT 313,848 (43,397)
----------- ----------
INCREASE IN CASH 1,016,644 20,466
CASH, beginning of period 3,203,262 1,378,452
----------- ----------
CASH, end of period $4,219,906 $1,398,918
=========== ==========
</TABLE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following tables set forth selected unaudited pro forma combined financial
data for Computer Products, Inc. ("CPI") for the fiscal year ended January 3,
1997 and for the twenty-six week period ended July 4, 1997 after giving effect
to the acquisition, as if it had been consummated, with respect to the statement
of operations data, at the beginning of the periods presented, or, with respect
to balance sheet data, as of the date presented. The unaudited condensed
combined pro forma financial statements were prepared utilizing the accounting
policies of the respective entities as outlined in their historical financial
statements except as described in the accompanying notes.
The acquisition of the Elba Group was accounted for under the purchase method of
accounting. Accordingly, the unaudited condensed combined pro forma financial
statements reflect CPI's preliminary allocation of purchase price of Elba which
will be subject to further adjustments as CPI finalizes the allocation of the
purchase price in accordance with generally accepted accounting principles. The
unaudited pro forma combined financial data do not reflect any cost savings or
synergies anticipated by Computer Products' management as a result of the
acquisition. In addition, the unaudited pro forma condensed combined results
of operations do not necessarily reflect actual results which would have
occurred if the acquisition had taken place at the beginning of the earliest
period presented or as of the date indicated, nor are they necessarily
indicative of the results of future combined operations.
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
REFLECTING COMPUTER PRODUCTS, INC. AFTER GIVING EFFECT TO THE ACQUISITION
(In Thousands, Except For Per Share Data)
ELBA Pro Forma
CPI Group Pro Forma Total
7/4/97 6/30/97 Adjustments 7/4/97
----------- ----------- ----------------- ----------
ASSETS
Current Assets
<S> <C> <C> <C> <C>
Cash and equivalents $32,639 $4,220 $ (1,600) (A) $35,259
Accounts receivable, net 38,881 3,624 42,505
Inventories 34,255 2,286 36,541
Prepaid expenses and other 3,626 124 3,750
Deferred income taxes, net 1,304 1,304
Current assets of discontinued operations 5,681 5,681
----------- ----------- ----------- ----------
Total current assets 116,386 10,254 (1,600) 125,040
----------- ----------- ----------- ----------
Property, Plant & Equipment, Net 30,052 2,208 933 (A) 33,193
----------- ----------- ----------- ----------
Other Assets
Goodwill, net 19,328 21,815 (A) 41,143
Deferred income taxes, net 1,241 1,241
Other assets, net 1,211 393 100 (A) 1,704
Long-term assets of discontinued operations 1,356 1,356
----------- ----------- ----------- ----------
Total other assets 23,136 393 21,915 45,444
----------- ----------- ----------- ----------
Total Assets $169,574 $12,855 $21,248 $203,677
=========== =========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 4,861 $ 395 $ $ 5,256
Accounts payable and accrued liabilities 42,928 5,207 48,135
Current liabilities of discontinued operations 1,244 - 1,244
Total current liabilities ----------- ----------- ----------- ----------
49,033 5,602 54,635
Long-Term Liabilities
Long-term debt 21,161 28,501 (A) 49,662
Lease liabilities 5,889 5,889
----------- ----------- ----------- ----------
Total long-term liabilities 27,050 28,501 55,551
----------- ----------- ----------- ----------
Total Liabilities 76,083 5,602 28,501 110,186
----------- ----------- ----------- ----------
Shareholders' Equity
Common stock 240 478 (478) (A) 240
Additional paid-in capital 47,743 55 (55) (A) 47,743
Retained earnings 46,922 6,663 (6,663) (A) 46,922
Foreign currency translation adjustment (1,414) 57 (57) (A) (1,414)
----------- ----------- ----------- ----------
Total Shareholders' Equity 93,491 7,253 (7,253) 93,491
----------- ----------- ----------- ----------
Total Liabilities and Shareholders' Equity $169,574 $12,855 $21,248 $203,677
=========== =========== =========== ==========
Outstanding shares of common stock 24,036 24,036
=========== ==========
Book value per common share $3.89 $3.89
=========== ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
REFLECTING COMPUTER PRODUCTS, INC. AFTER GIVING EFFECT TO THE ACQUISITION
(In Thousands Except Per Share Amounts)
CPI Elba
Twenty-Six Group Pro Forma
Weeks Ended Six Months Pro Forma Total
7/4/97 6/30/97 Adjustments 7/4/97
------------ ----------- ------------- --------------
<S> <C> <C> <C>
Sales $116,409 $12,174 $ $128,583
-
Cost of Sales 74,760 7,933 82,693
------------ ----------- ------------ --------------
Gross Profit 41,649 4,241 45,890
------------ ----------- ------------ --------------
Expenses
Selling, general and administrative 17,572 1,974 545 (B) 20,091
Research and development 9,694 349 10,043
------------ ----------- ------------ --------------
27,266 2,323 545 30,134
------------ ----------- ------------ --------------
Operating Income 14,383 1,918 (545) 15,756
Other Income (Expense)
Interest expense (1,160) (101) (795) (C) (2,056)
Interest income 674 77 751
Foreign exchange gain 77 77
Other income 185 185
------------ ----------- ------------ --------------
(409) 161 (795) (1,043)
------------ ----------- ------------ --------------
Income before Income Taxes 13,974 2,079 (1,340) 14,713
Provision (benefit) for Income Taxes 3,773 936 (603) (D) 4,106
------------ ----------- ------------ --------------
Income from Continuing Operations 10,201 1,143 (737) 10,607
Discontinued Operations
Loss from operations of RTP,
net of income taxes benefit (333) (333)
Estimated loss on disposal of RTP (1,729) (1,729)
------------ ----------- ------------ --------------
Net income $8,139 $1,143 $(737) $8,545
============ =========== ============ ==============
Earnings Per Common and Equivalent Share
Primary
Income from continuing operations $0.41 $0.43
Loss from discontinued operations (0.01) (0.01)
Estimated loss on disposal of RTP (0.07) (0.07)
------------ --------------
Net income $0.33 $0.35
============ ==============
Assuming Full Dilution
Income from continuing operations $0.40 $0.42
Loss from discontinued operations (0.01) (0.01)
Estimated loss on disposal of RTP (0.07) (0.07)
------------ --------------
Net income $0.32 $0.34
============ ==============
Common and equivalent shares outstanding
Primary 24,776 24,776
Fully diluted 25,146 25,146
See accompanying notes to unaudited pro forma condensed combined financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
REFLECTING COMPUTER PRODUCTS, INC. AFTER GIVING EFFECT TO THE ACQUISITION
(In Thousands Except Per Share Amounts)
Elba
CPI Group Pro Forma
Year Ended Year Ended Pro Forma Total
1/3/97 12/31/96 Adjustments 1/3/97
------------ ----------- --------------- -------------
<S> <C> <C> <C> <C>
Sales $207,563 $26,635 $ - $234,198
Cost of Sales 132,689 16,478 149,167
------------ ----------- ------------ -----------
Gross Profit 74,874 10,157 85,031
------------ ----------- ------------ -----------
Expenses
Selling, general and administrative 30,877 4,334 1,091 (B) 36,302
Research and development 15,741 415 16,156
------------ ----------- ------------ -----------
46,618 4,749 1,091 52,458
------------ ----------- ------------ -----------
Operating Income 28,256 5,408 (1,091) 32,573
Other Income (Expense)
Interest expense (2,734) (214) (1,590) (C) (4,538)
Interest income 1,079 81 1,160
Foreign exchange loss (825) (825)
Other income 488 488
------------ ----------- ------------ -----------
(2,480) 355 (1,590) (3,715)
------------ ----------- ------------ -----------
Income before Income Taxes 25,776 5,763 (2,681) 28,858
Provision (benefit) for Income Taxes 6,702 2,531 (1,206) (D) 8,027
------------ ----------- ------------ -----------
Income from Continuing Operations 19,074 3,232 (1,475) 20,831
Discontinued Operations
Profit from operations of RTP,
net of income taxes 504 504
----------- ----------- ------------ -----------
Net income $19,578 $3,232 $(1,475) $21,335
============ =========== ============ ===========
Earnings Per Common and Equivalent Share
Primary
Income from continuing operations $0.78 $0.85
Profit from discontinued operations 0.02 0.02
--------- -----------
Net income $0.80 $0.87
============ ===========
Assuming Full Dilution
Income from continuing operations $0.76 $0.83
Profit from discontinued operations 0.02 0.02
------------ -----------
Net income $0.78 $0.85
============ ===========
Common and equivalent shares outstanding
Primary 24,517 24,517
Fully diluted 25,026 25,026
See accompanying notes to unaudited pro forma condensed combined financial statements
</TABLE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
The pro forma adjustments with respect to the Elba Group acquisition have been
applied to the pro forma combined condensed balance sheet as if the acquisition
had taken place on July 4, 1997, or as of the beginning of the periods presented
in the case of the pro forma combined condensed statements of operations for the
fiscal year ended January 3, 1997 and the twenty-six week period ended July 4,
1997. The adjustments are based upon currently available information and certain
estimates and assumptions as discussed below.
The following adjustments have been made in the unaudited pro forma condensed
combined statements to give effect to the acquisition of the Elba Group:
(A)The purchase price for the capital stock of the Elba Group was approximately
$28.5 million in cash. Direct acquisition costs of approximately $1.6 million
were also incurred. Such purchase price is subject to a downward
adjustment based upon a post-closing audit pursuant to the terms of the
Elba Purchase Agreement. The estimated amounts recorded for assets and
liabilities may differ from the final assigned values as determined by the
audit of the Elba Group as of July 22, 1997.
The purchase price was funded by proceeds from two seven-year term loans
from First Union National Bank, London Branch in the aggregate principal
amount of 52 million Deutsche Marks, or approximately $28.5 million.
The loans bear interest at Libor plus .75%, or approximately 5.6%.
Debt issuance costs incurred in connection with obtaining the loans were
capitalized at approximately $100,000 and are being amortized over the life
of the loans. Amortization of such costs was not reflected in the pro
forma statements due to immateriality.
The land and buildings acquired were recorded at their estimated fair market
values based on the result of an independent appraisal. Pro forma adjustment
for depreciation expense was not presented due to immateriality.The excess of
the purchase price versus the net assets acquired,after giving effect to the
fair market value for land and buildings, was recorded as goodwill to be
amortized over 20 years.
(B)To record amortization of goodwill based on a 20 year life in connection with
the Elba Group acquisition.
(C)To record interest expense on the debt incurred to finance the acquisition of
the Elba Group.
(D)To recognize the income tax effect of pro forma adjustments related to the
acquisition of the Elba Group.
The pro forma results have been prepared for comparative purposes only and do
not purport to indicate what necessarily would have occurred had the entities
been acquired at the beginning of the periods presented, or as of the date
indicated, nor what results may be in the future.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMPUTER PRODUCTS, INC.
-----------------------
(Registrant)
Dated: September 22, 1997
By: /s/ Richard J. Thompson
----------------------------
Richard J.Thompson,
Vice President-Finance and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. 23 Consent of Arthur Andersen LLP
<PAGE>
Exhibit No. 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 8-K/A into the previously
filed Registration Statements of Computer Products, Inc. on Forms S-3
(Registration Nos. 33-70326 and 33-49176) and Forms S-8 (Registration Nos.
33-42516, 33-63501, 33-63499, and 333-08475).
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida
September 22, 1997.
