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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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 3, 1998
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
ARTESYN TECHNOLOGIES, 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 July 31, 1998, was 38,865,419 shares.
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<PAGE>
ARTESYN TECHNOLOGIES, INC.
INDEX TO FORM 10-Q
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Statements of Operations - For the Thirteen
and Twenty-Six Weeks Ended July 3, 1998 and
July 4, 1997 3
Statements of Financial Condition - July 3, 1998
and January 2, 1998 4
Statements of Cash Flows - For the
Twenty-Six Weeks Ended July 3, 1998 and
July 4, 1997 5
Statement of Shareholders' Equity- For the
Twenty-Six Weeks Ended July 3, 1998 6
Notes to Condensed Consolidated Financial
Statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
Exhibit No. 27
SIGNATURE
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARTESYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
JULY 3, JULY 4, JULY 3, JULY 4,
1998 1997 1998 1997
---------- --------- -------- ----------
<S> <C> <C> <C> <C>
SALES $121,824 $130,878 $269,002 $245,341
COST OF SALES 89,402 95,080 198,359 179,987
---------- --------- -------- ----------
GROSS PROFIT 32,422 35,798 70,643 65,354
---------- --------- -------- ----------
OPERATING EXPENSES
Selling, general and administrative 14,399 12,350 28,751 24,397
Research and development 8,285 7,394 17,244 13,887
Restructuring charge - - 9,600 -
---------- --------- -------- ----------
TOTAL OPERATING EXPENSES 22,684 19,744 55,595 38,284
---------- --------- -------- ----------
OPERATING INCOME 9,738 16,054 15,048 27,070
OTHER INCOME (EXPENSE):
Interest expense (1,047) (1,038) (2,134) (2,125)
Interest income 664 430 1,344 871
---------- --------- -------- ----------
(383) (608) (790) (1,254)
---------- --------- -------- ----------
INCOME BEFORE INCOME TAXES 9,355 15,446 14,258 25,816
PROVISION FOR INCOME TAXES 3,180 5,009 4,847 8,303
---------- --------- -------- ----------
INCOME FROM CONTINUING OPERATIONS 6,175 10,437 9,411 17,513
DISCONTINUED OPERATIONS
Loss from operations, net of tax
benefit of $222 - - - (333)
Loss on disposal of RTP, net of tax
benefit of $1,152 - - - (1,729)
--------- -------- ---------- --------
NET INCOME $6,175 $10,437 $ 9,411 $15,451
========== ========= ======== =========
EARNINGS PER SHARE
BASIC-
Income from Continuing Operations $0.16 $0.29 $0.24 $0.49
Discontinued Operations - - - (0.06)
---------- --------- -------- ----------
Net income $0.16 $0.29 $0.24 $0.43
========== ========= ======== ==========
ASSUMING FULL DILUTION-
Income from Continuing Operations $0.15 $0.26 $0.23 $0.45
Discontinued Operations - - - (0.06)
---------- -------------------- ----------
Net income $0.15 $0.26 $0.23 $0.39
========== ========= ======== ==========
NUMBER OF SHARES USED IN THE PER SHARE
CALCULATION
Basic 38,646 36,379 38,554 36,273
Assuming dilution 41,004 40,184 41,254 39,546
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ARTESYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands Except Share Data)
JULY 3, JANUARY 2,
1998 1998
----------- -----------
(UNAUDITED) (AUDITED)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 55,407 $ 55,392
Accounts receivable, net 74,609 84,479
Inventories 61,720 59,663
Prepaid expenses and other 6,246 8,522
Deferred income taxes, net 6,505 5,293
----------- -----------
Total current assets 204,487 213,349
----------- -----------
PROPERTY, PLANT & EQUIPMENT, NET 63,679 61,581
----------- -----------
OTHER ASSETS
Goodwill, net 39,931 40,704
Deferred income taxes, net 4,683 4,509
Other assets, net 1,823 2,034
----------- -----------
Total other assets 46,437 47,247
----------- -----------
$314,603 $322,177
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt
and capital leases $ 7,260 $ 15,598
Accounts payable and accrued liabilities 76,816 81,929
----------- -----------
Total current liabilities 84,076 97,527
----------- -----------
LONG-TERM LIABILITIES
Long-term debt and capital leases 45,830 52,949
Other long-term liabilities 8,254 9,025
----------- -----------
Total long-term liabilities 54,084 61,974
----------- -----------
Total liabilities 138,160 159,501
SHAREHOLDERS' EQUITY
Preferred stock, par value $.01; 1,000,000
shares authorized; none issued - -
Common stock, par value $.01; 80,000,000
shares authorized; 38,777,088 shares issued
and outstanding at July 3, 1998
(38,380,964 at January 2, 1998) 388 384
Additional paid-in capital 82,842 78,056
Retained earnings 98,180 88,769
Foreign currency translation adjustment (4,967) (4,533)
----------- -----------
Total shareholders' equity 176,443 162,676
----------- -----------
$314,603 $322,177
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ARTESYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
TWENTY-SIX WEEKS ENDED
JULY 3, JULY 4,
1998 1997
--------- --------
OPERATING ACTIVITIES:
Net income $9,411 $15,451
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,367 6,141
Provision for restructuring charge 9,600 -
Provision for discontinued operations - 1,636
Other non-cash charges 437 425
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 12,197 (14,282)
Increase in inventories and prepaid expenses (2,364) (13,340)
Increase (decrease)in accounts payable and
accrued liabilities (14,603) 21,748
Operating activities of discontinued operations - 1,423
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 23,045 19,202
-------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (9,671) (10,400)
Increase in other assets (420) (194)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (10,091) (10,594)
-------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt - 2,724
Principal payments on debt and capital leases (15,154) (5,910)
Proceeds from exercises of stock options 2,505 1,687
Proceeds from revolving credit loans - 7,564
Payments on revolving credit loans - (7,564)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (12,649) (1,499)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND EQUIVALENTS (290) (340)
-------- --------
INCREASE IN CASH AND EQUIVALENTS 15 6,769
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 55,392 34,676
-------- --------
CASH AND EQUIVALENTS, END OF PERIOD $55,407 $41,445
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ARTESYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTOF SHAREHOLDERS EQUITY
For the Twenty-Six Weeks Ended July 3, 1998
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY
COMMON STOCK PAID-IN RETAINED TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT
--------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 2, 1998 38,381 $384 $78,056 $88,769 $(4,533)
Issuance of common stock
under stock option plans 396 4 2,501
Tax benefit from exercises of
stock option 2,285
Foreign currency translation
adjustment (434)
Net income 9,411
--------- --------- ---------- -------- -----------
BALANCE, JULY 3, 1998 38,777 $388 $82,842 $98,180 $(4,967)
========= ========= ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ARTESYN TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 3, 1998
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
Artesyn Technologies, Inc. (the "Company"). The results of operations for the
thirteen and twenty-six weeks ended July 3, 1998 are not necessarily indicative
of the results that may be expected for fiscal year 1998. 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 1997 Annual Report to Shareholders and Form 10-Q for the thirteen week
period ended April 3, 1998.
Certain prior year amounts have been reclassified to conform with current year's
presentation.
2. INVENTORIES
The components of inventory are as follows ($000s):
July 3, January 2,
1998 1997
-------- --------
Raw materials $34,077 $31,181
Work in process 11,166 12,582
Finished goods 16,477 15,900
-------- --------
$61,720 $59,663
======== ========
3. PROPERTY, PLANT & EQUIPMENT, NET
Related accumulated depreciation was $62,137,000 and $50,858,000 at July 3, 1998
and January 2, 1998, respectively.
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are ($000s):
July 3, January 2,
1998 1998
------- -------
Accounts payable $30,983 $36,790
Accrued liabilities:
Compensation and benefits 13,454 14,875
Income taxes payable 13,204 14,071
Restructuring reserve 4,463 -
Warranty reserve 3,262 3,457
Other 11,450 12,736
------- -------
$76,816 $81,929
======= =======
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 3, July 4,
1998 1997
------- --------
Provision computed at United States
federal statutory rate 35.0% 35.0%
Effect of state income taxes 2.7 5.1
Amortization of goodwill 0.3 0.2
Foreign tax effects (1.5) (3.2)
Change in the valuation allowance (3.0) (5.0)
Other 0.5 0.1
------- -------
Effective tax rate 34.0% 32.2%
======= =======
6. RESTRUCTURING CHARGE
In connection with the Company's restructuring plan following the merger with
Zytec Corporation, the Company recorded a pre-tax restructuring charge of $9.6
million during the first quarter of 1998. This charge relates to the elimination
of duplicate facilities in an effort to reduce costs pursuant to the Company's
integration plan. Specific restructuring actions include the elimination of
three manufacturing facilities through the consolidation of manufacturing
operations, with corresponding personnel reductions, the realignment of the
Company's workforce to eliminate duplicate functions, particularly in
administrative areas, the rationalization of product lines, and other
cost-savings actions.
The components of the restructuring charge recorded in the first quarter of
1998, payments and other activities during the second quarter of 1998, and the
remaining reserve balances at July 3, 1998 were as follows ($000s):
<TABLE>
<CAPTION>
Employee
Termination Product Line Asset Facility
Benefits Rationalization Write-offs Closures Total
-------------- --------------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Restructuring provision $3,956 $2,411 $1,231 $2,002 $9,600
Cash payments (1,449) - - (46) (1,495)
Non-cash activities - (2,411) (1,231) - (3,642)
------------- --------------- ------------ ---------- -----------
Restructuring reserve at July 3, 1998 $2,507 $ - $ - $1,956 $4,463
============= =============== ============ ========== ===========
</TABLE>
Employee termination benefits primarily represent severance pay and other
benefits associated with the elimination of approximately 400 positions
worldwide, with more than 70% of the eliminated positions coming from the
rationalization of certain duplicate manufacturing locations in Europe. As of
July 3, 1998, 262 positions had been eliminated worldwide. The provision for the
facility closures includes lease termination payments, service contracts
obligations, and other exit costs associated with facility closures. The product
line rationalization provision of the restructuring charge relates to the
discontinuation of non-core product lines and write-offs of certain inventory
items not transferable to other locations. In addition, certain fixed assets
(including duplicate management information systems and unusable equipment) were
written down to their net realizable value.
Total expected cash expenditures relating to the initial restructuring charge
are estimated to be approximately $6.0 million, which, with the exception of
certain lease-related cash requirements, is expected to be paid within the next
twelve months.
As of July 3, 1998, approximately $4.5 million of the restructuring charge is
included in accrued liabilities and the remainder is recorded as a reduction in
the carrying amount of related assets.
7. COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards No. 130 ("SFAS
130"), "Reporting Comprehensive Income", effective January 3, 1998. SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in financial statements. The components of the Company's
comprehensive income are as follows ($000s):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 3, July 4, July 3, July 4,
1998 1997 1998 1997
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net income $6,175 $10,437 $9,411 $15,451
Foreign currency translation adjustment 1,414 (1,514) (657) (3,811)
Tax (provision) benefit (481) 515 223 1,243
--------------- -------------- --------------- ---------------
933 (999) (434) (2,568)
--------------- -------------- --------------- ---------------
Comprehensive income $7,108 $9,438 $8,977 $12,883
=============== ============== =============== ===============
</TABLE>
8. EARNINGS PER SHARE
The following data show the amounts used in computing earnings per share and the
effects on income and the weighted-average number of shares of potential
dilutive common stock. The reconciliation of the numerator and denominator of
the EPS calculation is presented below (000s except per share data):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 3, July 4, July 3, July 4,
1998 1997 1998 1997
----------- ---------- ----------- -----------
BASIC EPS
<S> <C> <C> <C> <C>
Income from continuing operations $ 6,175 $10,437 $ 9,411 $17,513
----------- ---------- ----------- -----------
Weighted average shares 38,646 36,379 38,554 36,273
----------- ---------- ----------- -----------
Per share - Basic $0.16 $0.29 $0.24 $0.49
=========== ========== =========== ===========
ASSUMING DILUTION
Income from continuing operations $ 6,175 $10,437 $ 9,411 $17,513
Add: after-tax interest on
convertible note - 138 - 276
----------- ---------- ----------- -----------
$ 6,175 $ 10,575 $ 9,411 17,789
----------- ---------- ----------- -----------
Weighted average shares 38,646 36,379 38,554 36,273
Effect of dilutive items
Stock options 2,358 2,638 2,700 2,106
Convertible note - 1,167 - 1,167
----------- ---------- ----------- -----------
41,004 40,184 41,254 39,546
----------- ---------- ----------- -----------
Per share- Diluted $0.15 $0.26 $0.23 $0.45
=========== ========== =========== ===========
Antidilutive weighted options 736 238 351 570
</TABLE>
The above antidilutive weighted options to purchase shares of common stock were
not included in computing diluted EPS because their effects were antidilutive
for the respective periods.
9. DERIVATIVE FINANCIAL 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 3, 1998, the Company held
$1.1 million of forward currency exchange contracts on payables maturing in one
to three months. At January 2, 1998, the Company held $6.6 million of forward
currency exchange contracts on receivables maturing in one to three months while
no contracts on payables were outstanding. 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.
10. RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. FAS
133 requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in the fair value depends on the
intended use of the derivative and the resulting designation. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
The Company believes the adoption of SFAS No. 133 will not have a material
effect on the Company's financial condition or results of operations.
11. SUBSEQUENT EVENT
On July 22, 1998, the Company's Board of Directors authorized a share repurchase
program to purchase up to 4.0 million shares of the Company's common stock in
the open market or in privately-negotiated transactions, depending on market
conditions and other factors.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales for the quarter were $121.8 million, down 7% from the $130.9 million a
year ago. For the first six months of 1998, sales totaled $269.0 million, up 10%
from $245.3 million in 1997. Sales were adversely impacted by lower end use
demand in the Company's primary market segments - networking,
telecommunications, computing and wireless infrastructure. This lower demand has
been exacerbated by inventory reduction initiatives at certain customers.
The reduced sales volume contributed to lower gross margins in the quarter of
26.6% compared to 27.3% in the second quarter of 1997. Also, the current
year-to-date margin of 26.3% was down compared to the 26.6% reported for the
six-month period a year ago as the Company reduced its own inventories in
response to lower customer demand.
Selling, general and administrative expenses were $14.4 million and $28.8
million for the thirteen and twenty-six weeks ended July 3, 1998, respectively,
compared to $12.4 million and $24.4 million for the comparable prior year
periods. The increase in 1998 was partially due to additional spending for the
integration activities following the merger with Zytec Corporation and the
inclusion of the Elba Group acquired in July of 1997. The integration costs were
incurred to support marketing activities, to change the Company's name to
Artesyn Technologies, to begin implementation of a new enterprise-wide
information system, and to familiarize the Company's employees, customers,
suppliers and investors with the resources of the new Artesyn Technologies.
The Company has been taking aggressive steps to curb operating expenses and to
eliminate excess manufacturing resources wherever prudent. Looking ahead, the
Company has a cautious demand outlook through the next two quarters as incoming
orders do not yet support an appreciable revenue increase.
The Company continued its commitment to new products for its global
communication customers as it invested $8.3 million, or 6.8% of sales, in
research and development activities during the second quarter of 1998, compared
to $7.4 million, or 5.6%, in the comparable year ago quarter. The Company
believes that the timely introduction of new technology and products is an
important component of its competitive strategy and anticipates future research
and development spending will not significantly differ from the historical trend
as a percentage of sales of approximately 6-8%.
The Company recorded a pre-tax restructuring charge of $9.6 million during the
first quarter of 1998. This charge relates to the elimination of duplicate
manufacturing facilities in an effort to reduce costs pursuant to the Company's
integration plan. Specific restructuring actions include the elimination of
three manufacturing facilities through the consolidation of manufacturing
operations, with corresponding personnel reductions, the realignment of the
Company's workforce to eliminate duplicate functions particularly in
administrative areas, the rationalization of product lines, and other
cost-savings actions. Total expected cash expenditure relating to the
restructuring charge is estimated to be approximately $6.0 million, which, with
the exception of certain lease-related cash requirements, is expected to be paid
within the next twelve months. To date, the Company has paid $1.5 million
primarily for employee termination benefits.
Income from continuing operations for the second quarter of 1998 decreased 41%
to $6.2 million, or $0.15 per share, from the $10.4 million, or $0.26 per share,
reported for the comparable year-ago quarter. Excluding the $9.6 million pre-tax
restructuring charge taken in the first quarter of 1998, income from continuing
operations for the twenty-six weeks ended July 3, 1998 was $15.7 million, or
$0.38 per share, down from $17.5 million, or $0.45 per share, for the comparable
period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
At July 3, 1998, the Company's cash balance remained at $55.4 million as on
January 2, 1998 as significant uses of cash for principal debt repayments and
capital expenditures were funded with cash from operations and proceeds from
exercises of stock options.
Accounts receivable decreased $9.9 million, or 12%, from January 2, 1998 due to
lower sales volume and increased collection activities.
Accounts payable decreased $5.8 million, or 16%, from January 2, 1998 due to
decreases in capital expenditures and material purchases on lower sales volume.
Effective June 30, 1998, the Company repaid the outstanding balance of $3.2
million on its 6.9% mortgage note maturing July 1, 2001.
Cash provided by operations increased to $23.0 million for the twenty-six weeks
ended July 3, 1998 from $19.2 million for the twenty-six weeks ended July 4,
1997. The increase was primarily due to income from operations, excluding the
$9.6 million pre-tax restructuring charge, and a smaller increase in inventory,
partially offset by a decrease in accounts payable and accrued liabilities.
Net cash used in financing activities of $12.6 million for the twenty-six weeks
ended July 3, 1998 reflects mainly long-term debt and capital lease principal
repayments including $2.2 million on the Company's seven-year term loan, $3.2
million on its 6.9% mortgage note, and approximately $7.6 million on the
Company's Austrian subsidiary's revolving loans and notes payable partially
offset by proceeds from option exercises.
On July 22, 1998, the Company's Board of Directors authorized a share repurchase
program to purchase up to 4.0 million shares of the Company's common stock in
the open market or in privately-negotiated transactions, depending on market
conditions and other factors.
The Company has a $20 million revolving line of credit that extends through
April 1, 2000. As of July 3, 1998, the Company had made no borrowings under the
line of credit and was in compliance with the agreement's covenants. Based on
current plans and business conditions, the Company believes that its cash and
equivalents, its available credit line, cash generated from operations, and
other financing activities are expected to be adequate to meet capital
expenditures, working capital requirements, debt and capital lease obligations,
and operating lease commitments through the remainder of fiscal 1998.
FORWARD LOOKING STATEMENTS
Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
are based on the Company's current expectations with respect to future sales,
operating efficiencies, growth and working capital needs. Such statements
involve risks and uncertainties which may cause actual results to differ
materially from those set forth in these forward-looking statements. Factors
that might affect such forward-looking statements include, among others, general
economic conditions and growth in the power supply and communications
industries, changes in customer mix, competitive factors and pricing pressures,
changes in product mix, the timely development and acceptance of new products,
ability to attract and retain customers including new OEM communications
customers, ability to attract and retain personnel, inventory risks due to
shifts in market demand, changes in absorption of manufacturing overhead,
domestic and foreign regulatory approvals and other risks described in the
Company's various reports filed with the Securities and Exchange Commission.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting of Shareholders on May 6, 1998.
(c) The following matters were voted upon at the Annual Meeting of Shareholders:
1. The election of the nominees for Directors who will serve for a term to
expire at the Annual Meeting of Shareholders to be held in 1999 was voted
on by the shareholders. The nominees, all of whom were elected, were:
Edward S. Croft, III, Fred C. Lee, Lawrence J. Matthews, Joseph M.
O'Donnell, Stephen A. Ollendorff, Phillip A. O'Reilly, Bert Sager, A.
Eugene Sapp, Jr., Ronald D. Schmidt, Lewis Solomon and John M. Steel. The
Inspectors of Election certified the following vote tabulations:
FOR WITHHELD
--------- ---------
Edward S. Croft, III 34,611,538 497,950
Fred C. Lee 34,878,826 230,662
Lawrence J. Matthews 34,871,767 237,721
Joseph M. O'Donnell 34,878,005 231,483
Stephen A. Ollendorff 34,609,153 500,335
Phillip A. O'Reilly 34,932,982 176,596
Bert Sager 34,932,517 176,971
A. Eugene Sapp, Jr. 34,941,927 167,561
Ronald D. Schmidt 34,861,143 248,345
Lewis Solomon 34,940,742 168,746
John M. Steel 34,865,766 243,722
2. A proposal to amend the Company's Articles of Incorporation to change the
Company's name to Artesyn Technologies, Inc. The Inspectors of Election
certified the following vote tabulations:
FOR AGAINST ABSTAIN
----------------------------------------------
34,915,468 119,561 74,459
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit No. 27 -- Financial Data Schedule.
(B) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the thirteen-week period
ended July 3, 1998.
<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.
ARTESYN TECHNOLOGIES, INC.
--------------------------
(Registrant)
DATE: August 11, 1998 BY: Richard J. Thompson
-------------------
Richard J. Thompson
Vice President Finance
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Prior year data was restated to reflect pooling-of-interests merger effective
December 29, 1997.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JAN-01-1999 JAN-02-1998
<PERIOD-END> JUL-03-1998 JUL-04-1997
<CASH> 55,407 41,445
<SECURITIES> 0 0
<RECEIVABLES> 76,222 75,922
<ALLOWANCES> 1,613 1,439
<INVENTORY> 61,720 58,986
<CURRENT-ASSETS> 204,487 189,772
<PP&E> 125,816 96,939
<DEPRECIATION> 62,137 43,563
<TOTAL-ASSETS> 314,603 270,616
<CURRENT-LIABILITIES> 84,076 88,023
<BONDS> 45,830 46,668
0 0
0 0
<COMMON> 83,230 61,964
<OTHER-SE> 93,213 71,655
<TOTAL-LIABILITY-AND-EQUITY> 314,603 270,616
<SALES> 269,002 245,341
<TOTAL-REVENUES> 269,002 245,341
<CGS> 198,359 179,988
<TOTAL-COSTS> 198,359 179,988
<OTHER-EXPENSES> 55,595 38,283
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,134 2,107
<INCOME-PRETAX> 14,258 25,816
<INCOME-TAX> 4,847 8,303
<INCOME-CONTINUING> 9,411 17,513
<DISCONTINUED> 0 (2,062)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 9,411 15,451
<EPS-PRIMARY> 0.24 0.43
<EPS-DILUTED> 0.23 0.39
<FN>
<F1>Primary EPS represents basic and diluted represents assuming full dilution
under new fas 128
</FN>
</TABLE>
