<PAGE> 1
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 JANUARY 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 0-12102
HADCO CORPORATION
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2393279
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
12A MANOR PARKWAY, SALEM, NEW HAMPSHIRE 03079
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 898-8000
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Registrant has 13,535,404 shares of Common Stock, $0.05 Par Value, outstanding
at March 15, 1999.
<PAGE> 2
HADCO CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
January 30, 1999 (unaudited) and October 31, 1998.............. 3
Consolidated Condensed Statements of Income
for the Three Months ended January 30, 1999 and
January 31, 1998 (unaudited)................................... 4
Consolidated Condensed Statements of Cash Flows
for the Three Months ended January 30, 1999 and
January 31, 1998 (unaudited).................................. 5
Notes to Consolidated Condensed Financial
Statements..................................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 18
PART II - OTHER INFORMATION
Item 2. Changes in Securities.......................................... 19
Item 6. Exhibits and Reports on Form 8-K............................... 19
SIGNATURE............................................................... 20
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
ASSETS (unaudited)
January 30, October 31,
1999 1998
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents ............................. $ 9,626 $ 7,169
Accounts receivable, net of allowance for
doubtful accounts of $2,527 in 1999 and
$2,129 in 1998, respectively ......................... 114,957 111,094
Inventories ........................................... 70,894 67,017
Deferred tax asset .................................... 17,156 17,156
Prepaid expenses and other current assets ............. 9,524 18,666
--------- ---------
Total Current Assets ............................. 222,157 221,102
Property, Plant and Equipment, net .................... 323,164 322,887
Acquired Intangible Assets, net ....................... 188,614 191,421
Other Assets .......................................... 9,651 8,415
--------- ---------
$ 743,586 $ 743,825
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Short-term debt and current portion of long-term debt.. $ 2,847 $ 4,377
Accounts payable ...................................... 83,894 79,350
Accrued payroll and other employee benefits ........... 24,608 26,529
Other accrued expenses ................................ 12,810 19,016
--------- ---------
Total Current Liabilities ........................ 124,159 129,272
--------- ---------
Long Term Debt, net of current portion .................... 354,985 354,291
Deferred Tax Liability .................................... 59,520 59,521
Other Long-Term Liabilities ............................... 9,192 9,192
Commitments and Contingencies
Stockholders' investment:
Common stock, $.05 par value -
Authorized 50,000 shares
Issued and outstanding 13,485 in
1999 and 13,366 in 1998 ............................... 676 669
Paid-in capital ........................................... 176,405 173,906
Deferred compensation ..................................... (383) (44)
Retained earnings ......................................... 19,032 17,018
--------- ---------
Total Stockholders' Investment ................... 195,730 191,549
--------- ---------
$ 743,586 $ 743,825
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE> 4
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited )
(In thousands, except per share data)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------
January 30, January 31,
1999 1998
----------- -----------
<S> <C> <C>
Net Sales ...................................................... $ 235,979 $ 198,276
Cost of Sales .................................................. 203,546 159,208
--------- ---------
Gross Profit .............................................. 32,433 39,068
Operating Expenses ............................................. 20,995 17,784
--------- ---------
Income From Operations .................................... 11,438 21,284
Interest and Other Income, net ................................. 601 533
Interest Expense ............................................... (8,696) (2,099)
--------- ---------
Income before Provision for Income Taxes ................... 3,343 19,718
Provision for Income Taxes ..................................... 1,329 7,591
--------- ---------
Net Income ................................................. $ 2,014 $ 12,127
========= =========
Income per common and common equivalent shares (Note 1)
Basic ..................................................... $ 0.15 $ 0.93
========= =========
Diluted ................................................... $ 0.15 $ 0.90
========= =========
Weighted average common and common equivalent shares outstanding
(Note 1)
Basic ..................................................... 13,422 13,096
========= =========
Diluted ................................................... 13,651 13,505
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
<PAGE> 5
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
January 30, January 31,
1999 1998
----------- -----------
<S> <C> <C>
Net Income ................................................................... $ 2,014 $ 12,127
Adjustments to reconcile net income to net cash provided by
Operating activities --
Depreciation, amortization, deferred compensation and deferred taxes ..... 19,067 12,931
Loss in sale of fixed assets ............................................. 29 --
Changes in assets and liabilities --
Increase in accounts receivable ..................................... (3,861) (7,691)
Increase in inventories ............................................. (3,877) (8,018)
(Increase) Decrease in prepaid expenses and other current assets .... ( 507) 21
Decrease (Increase) in refundable taxes ............................. 9,644 ( 499)
Increase in other assets ............................................ ( 903) (2,498)
(Decrease) Increase in accounts payable and accrued expenses ........ (3,513) 1,302
Decrease in long term liabilities ................................... -- ( 22)
-------- --------
Net Cash Provided by Operating Activities .................................... 18,093 7,653
-------- --------
Cash Flows From Investing Activities:
Increase in other assets ................................................. (270) --
Purchases of property, plant and equipment ............................... (16,645) (19,366)
-------- --------
Net Cash Used In Investing Activities ........................................ (16,915) (19,366)
-------- --------
Cash Flows From Financing Activities:
Principal payments of long-term debt ..................................... (20,836) (1,224)
Net proceeds from issuance of long-term debt ............................. 20,000 10,000
Proceeds from exercise of stock options .................................. 207 147
Tax benefit from exercise of stock options ............................... 334 452
Proceeds from employee stock purchase plan ............................... 1,574 --
-------- --------
Net Cash Provided by Financing Activities .................................... 1,279 9,375
-------- --------
Net increase (decrease) in Cash and Cash Equivalents ......................... 2,457 (2,338)
Cash and Cash Equivalents Beginning of Period ................................ 7,169 13,733
-------- --------
Cash and Cash Equivalents End of Period ...................................... $ 9,626 $ 11,395
======== ========
Supplemental disclosure of cash flow information: Cash paid during period for:
Interest ............................................................... $ 13,509 $ 1,407
======== ========
Income taxes (net of refunds) ......................................... $ 61 $ 322
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
5
<PAGE> 6
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Hadco Corporation's (the "Company" or "Hadco") principal products are
multilayer rigid printed circuits and backplane and system assemblies. The
consolidated condensed financial statements reflect the application of
certain accounting policies as described in the accompanying notes to the
consolidated condensed financial statements, as well as the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1998.
These financial statements should be read in conjunction with the financial
statements and related disclosures included in the above-referenced SEC
filing.
INTERIM FINANCIAL STATEMENTS
The accompanying consolidated condensed balance sheet as of January 30,
1999, and the consolidated condensed statements of income for the three
months ended January 30, 1999 and January 31, 1998 and the consolidated
condensed statement of cash flows for the three month periods ended January
30, 1999 and January 31, 1998 are unaudited but, in the opinion of
management, include all adjustments (consisting only of normal, recurring
adjustments) necessary for a fair presentation of results for these interim
periods. Results of operations for the interim period are not necessarily
indicative of results to be expected for the entire year or any future
period.
EARNINGS PER SHARE
A reconciliation of basic and diluted shares outstanding is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
(in thousands)
January 30, January 31,
1999 1998
----------- -----------
<S> <C> <C>
Basic weighted average shares outstanding........ 13,422 13,096
Weighted average common equivalent shares........ 229 409
------ ------
Diluted weighted average shares outstanding...... 13,651 13,505
====== ======
</TABLE>
Diluted weighted average shares outstanding for the three month periods
ended January 30, 1999 and January 31, 1998 do not include 650,430 and
485,290 common equivalent shares, respectively as their effect would be
anti-dilutive.
6
<PAGE> 7
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
2. ACQUISITIONS
On March 20, 1998, the Company acquired (the "Continental Acquisition") all
of the outstanding common stock of Continental Circuits Corp.
("Continental"). Unaudited pro forma operating results for the Company,
assuming the Continental Acquisition occurred on October 26, 1997, are as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
(in thousands, except
per share data)
January 30, January 31,
1999 1998
----------- -----------
<S> <C> <C>
Net Sales....................................... $235,979 $233,618
Net Income...................................... $2,014 $10,061
Basic Net Income Per Share...................... $.15 $.77
Diluted Net Income Per Share.................... $.15 $.74
</TABLE>
For purposes of these pro forma operating results, the acquired in-process
R&D was assumed to have been written off prior to October 26, 1997, so that
the operating results presented include only recurring costs.
3. INVENTORIES
Inventories are stated at the lower of cost, first-in, first-out (FIFO), or
market and consist of the following (in thousands):
<TABLE>
<CAPTION>
January 30, October 31,
1999 1998
----------- -----------
<S> <C> <C>
Raw Materials............................ $25,057 $25,856
Work-in-process.......................... 45,837 41,161
------- -------
$70,894 $67,017
======= =======
</TABLE>
4. LONG TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
January 30, October 31,
1999 1998
----------- -----------
<S> <C> <C>
Variable Rate Mortgages.............................. $730 $732
Revolving credit agreement .......................... 150,000 150,000
9 1/2% Senior Subordinated Notes due 2008............ 199,371 199,354
Obligations under capital leases with interest
rates ranging from 7% to 7.75%....................... 7,731 8,582
------- -------
357,832 358,668
Less - Current portion............................... 2,847 4,377
-------- --------
$354,985 $354,291
======== ========
</TABLE>
7
<PAGE> 8
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
5. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Basis of presentation. In connection with the acquisition of Continental
Circuits Corp., which was financed with approximately $184 million of
borrowings from the Company's line of credit, the Company on May 18, 1998
sold $200,000,000 aggregate principal amount of 9 1/2 % Senior Subordinated
Notes due in 2008 (the Notes). The Notes are fully and unconditionally
guaranteed on a senior subordinated basis, jointly and severally, by
certain of the Company's direct wholly-owned domestic subsidiaries (the
Guarantors). The Guarantors are Hadco Santa Clara, Inc., Hadco Phoenix,
Inc., CCIR of Texas Corp., and CCIR of California Corp. The condensed
consolidating financial statements of the Guarantors are presented below
and should be read in connection with the Consolidated Condensed Financial
Statements of the Company. Separate financial statements of the Guarantors
are not presented because (i) the Guarantors are wholly-owned and have
fully and unconditionally guaranteed the Notes on a joint and several basis
and (ii) the Company's management has determined such separate financial
statements are not material to investors and believes the condensed
consolidating financial statements presented are more meaningful in
understanding the financial position of the Guarantors.
There are no significant restrictions on the ability of the Guarantors to
make distributions to the Company.
8
<PAGE> 9
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
As of January 30, 1999
----------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
(In Thousands)
ASSETS
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 83 $ 867 $ 8,676 $ -- $ 9,626
Accounts receivable, net 55,600 6,118 53,239 -- 114,957
Inventories 26,344 5,860 38,690 -- 70,894
Deferred tax asset -- -- 17,156 -- 17,156
Prepaid and other current assets 1,064 276 8,184 -- 9,524
--------- -------- --------- ---------- ---------
Total current assets 83,091 13,121 125,945 -- 222,157
Property, Plant and Equipment, net 137,985 50,696 134,483 -- 323,164
Intercompany Receivable -- 163 87,562 (87,725) --
Investments in Subsidiaries 16,227 -- 267,498 (283,725) --
Acquired Intangible Assets, net 188,614 -- -- -- 188,614
Other Assets 211 -- 9,440 -- 9,651
--------- -------- ---------- ---------- ---------
$ 426,128 $ 63,980 $ 624,928 $ (371,450) $ 743,586
========= ======== ========== ========== =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 2,049 $ 78 $ 720 $ -- $ 2,847
Accounts payable 37,367 5,590 40,937 -- 83,894
Intercompany payable 46,784 40,941 -- (87,725) --
Accrued payroll and other
employee benefits 2,230 163 22,215 -- 24,608
Accrued taxes 19,973 159 (20,132) -- --
Other accrued expenses 1,440 100 11,270 -- 12,810
--------- -------- --------- ---------- ---------
Total current liabilities 109,843 47,031 55,010 (87,725) 124,159
--------- -------- --------- ---------- ---------
Long-Term Debt, net of current portion 4,729 104 350,152 -- 354,985
--------- -------- --------- ---------- ---------
Deferred Tax Liability 44,676 -- 14,844 -- 59,520
--------- -------- --------- ---------- ---------
Other Long-Term Liabilities -- -- 9,192 -- 9,192
--------- -------- --------- ---------- ---------
Stockholders' Investment:
Common stock, $0.05 par value;
Authorized - 50,000 shares
Issued and outstanding - 13,485 in 1999 11 29,655 676 (29,666) 676
Paid-in capital 400,616 -- 176,405 (400,616) 176,405
Deferred compensation -- -- (383) -- (383)
Retained earnings (133,747) (12,810) 19,032 146,557 19,032
--------- -------- --------- ---------- ---------
Total stockholders' investment 266,880 16,845 195,730 (283,725) 195,730
--------- -------- --------- ---------- ---------
$ 426,128 $ 63,980 $ 624,928 $ (371,450) $ 743,586
========= ======== ========= ========== =========
</TABLE>
9
<PAGE> 10
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
As of October 31, 1998
-----------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ------------ ----------- ------------
(In Thousands)
ASSETS
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 836 $ 2 $ 6,331 $ -- $ 7,169
Accounts receivable, net 54,092 6,382 50,620 -- 111,094
Inventories 24,984 5,560 36,473 -- 67,017
Deferred tax asset -- -- 17,156 -- 17,156
Prepaid and other current assets 999 227 17,440 -- 18,666
--------- --------- --------- --------- ---------
Total current assets 80,911 12,171 128,020 -- 221,102
Property, Plant and Equipment, net 138,912 49,029 134,946 -- 322,887
Intercompany Receivable -- 160 91,463 (91,623) --
Investments in Subsidiaries 17,895 -- 267,882 (285,777) --
Acquired Intangible Assets, net 191,421 -- -- -- 191,421
Other Assets 686 -- 7,729 -- 8,415
--------- --------- --------- --------- ---------
$ 429,825 $ 61,360 $ 630,040 $(377,400) $ 743,825
========= ========= ========= ========== =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 3,417 $ 158 $ 802 $ -- $ 4,377
Accounts payable 34,249 4,941 40,160 -- 79,350
Intercompany payable 54,523 37,100 -- (91,623) --
Accrued payroll and other
employee benefits 3,465 160 22,904 -- 26,529
Accrued taxes 17,099 160 (17,259) -- --
Other accrued expenses 1,328 105 17,583 -- 19,016
--------- --------- --------- --------- ---------
Total current liabilities 114,081 42,624 64,190 (91,623) 129,272
--------- --------- --------- --------- ---------
Long-Term Debt, net of current
portion 3,796 230 350,265 -- 354,291
--------- --------- --------- --------- ---------
Deferred Tax Liability 44,677 -- 14,844 -- 59,521
--------- --------- --------- --------- ---------
Other Long-Term Liabilities -- -- 9,192 -- 9,192
--------- --------- --------- --------- ---------
Stockholders' Investment:
Common stock, $0.05 par value;
Authorized - 50,000 shares
Issued and outstanding -
13,366 in 1998 11 29,654 669 (29,665) 669
Paid-in capital 400,616 -- 173,906 (400,616) 173,906
Deferred compensation -- -- (44) -- (44)
Retained earnings (133,356) (11,148) 17,018 144,504 17,018
--------- --------- --------- --------- ---------
Total stockholders' investment 267,271 18,506 191,549 (285,777) 191,549
--------- --------- --------- --------- ---------
$ 429,825 $ 61,360 $ 630,040 $(377,400) $ 743,825
========= ========= ========= ========= =========
</TABLE>
10
<PAGE> 11
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(Continued)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ending January 30, 1999
----------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 114,955 $ 10,507 $ 110,517 $ -- $ 235,979
Cost of Sales 105,210 10,859 87,477 -- 203,546
--------- --------- --------- --------- ---------
Gross Profit 9,745 (352) 23,040 -- 32,433
Operating Expenses 5,247 678 15,070 -- 20,995
--------- --------- --------- --------- ---------
Income (Loss) From Operations 4,498 (1,030) 7,970 -- 11,438
Interest and Other Income (150) (626) 1,371 6 601
Interest Expense (198) (6) (8,492) -- (8,696)
--------- --------- --------- --------- ---------
Income (Loss) Before Provision
for Income Taxes 4,150 (1,662) 849 6 3,343
Provision for (benefit from) Income Taxes 2,873 -- (1,544) -- 1,329
Equity in income (loss) of subsidiary (1,668) -- (385) 2,053 --
--------- --------- --------- --------- ---------
Net Income (Loss) $ (391) $ (1,662) $ 2,008 $ 2,059 $ 2,014
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ending January 31, 1998
-----------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 68,279 $ 9,027 $ 120,970 $ -- $ 198,276
Cost of Sales 57,425 8,298 93,485 -- 159,208
--------- --------- --------- --------- ---------
Gross Profit 10,854 729 27,485 -- 39,068
Operating Expenses 2,706 832 14,246 -- 17,784
--------- --------- --------- --------- ---------
Income (Loss) From Operations 8,148 (103) 13,239 -- 21,284
Interest and Other Income 380 -- 153 -- 533
Interest Expense (170) (272) (1,657) -- (2,099)
--------- --------- --------- --------- ---------
Income (Loss) Before Provision
for Income Taxes 8,358 (375) 11,735 -- 19,718
Provision for Income Taxes 3,867 -- 3,724 -- 7,591
Equity in income (loss) of subsidiary (375) -- 4,116 (3,741) --
--------- --------- --------- --------- ---------
Net Income (Loss) $ 4,116 $ (375) $ 12,127 $ (3,741) $ 12,127
========= ========= ========= ========= =========
</TABLE>
11
<PAGE> 12
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended January 30, 1999
---------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities $ 5,207 $ 4,190 $ 8,690 $ 6 $ 18,093
-------- -------- -------- -------- --------
Cash Flows from Investing Activities:
Foreign Sales Corp. dividend -- (6) 6 -- --
Purchases of property, plant and equipment (5,254) (3,119) (8,272) -- (16,645)
Increase in other assets (270) 6 -- (6) (270)
-------- -------- -------- -------- --------
Net cash used in investing activities (5,524) (3,119) (8,266) (6) (16,915)
-------- -------- -------- -------- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt (436) (206) (20,194) -- (20,836)
Net proceeds from issuance of long-term debt -- -- 20,000 -- 20,000
Proceeds from exercise of stock options -- -- 207 -- 207
Proceeds from the sale of common stock -- -- 1,574 -- 1,574
Tax benefit from exercise of
Stock options -- -- 334 -- 334
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities (436) (206) 1,921 -- 1,279
-------- -------- -------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents (753) 865 2,345 -- 2,457
Cash and Cash Equivalents, Beginning of Period 836 2 6,331 -- 7,169
-------- -------- -------- -------- --------
Cash and Cash Equivalents, End of Period $ 83 $ 867 $ 8,676 $ -- $ 9,626
======== ======== ======== ======== ========
</TABLE>
12
<PAGE> 13
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended January 31, 1998
---------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ 6,348 $ 7,996 $ (6,691) $ -- $ 7,653
-------- -------- -------- ------- --------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment (3,836) (3,129) (12,401) -- (19,366)
-------- -------- -------- ------- --------
Net cash used in investing activities (3,836) (3,129) (12,401) -- (19,366)
-------- -------- -------- ------- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt (909) (38) (277) -- (1,224)
Net proceeds from issuance of long-term debt -- -- 10,000 -- 10,000
Proceeds from exercise of stock options -- -- 147 -- 147
Tax benefit from exercise of
stock options -- -- 452 -- 452
-------- -------- -------- ------- --------
Net cash provided by (used in) financing
activities (909) (38) 10,322 -- 9,375
-------- -------- -------- ------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 1,603 4,829 (8,770) -- (2,338)
Cash and Cash Equivalents, Beginning of Period (1,603) 2,249 13,087 -- 13,733
-------- -------- -------- ------- --------
Cash and Cash Equivalents, End of Period $ -- $ 7,078 $ 4,317 $ -- $ 11,395
======== ======== ======== ======= ========
</TABLE>
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained in this Quarterly Report on
Form 10-Q, the matters discussed below or elsewhere in this Quarterly
Report on Form 10-Q are forward-looking statements that involve risks and
uncertainties. Hadco Corporation makes such forward-looking statements
under the provisions of the "Safe Harbor" section of the Private Securities
Litigation Reform Act of 1995. Any forward-looking statements should be
considered in light of the factors described below in this Item 2 and under
"Year 2000 Readiness Disclosure Statement" and "Factors That May Affect
Future Results" below. Actual results may vary materially from those
projected, anticipated or indicated in any forward-looking statements. In
this Quarterly Report on Form 10-Q, the words "anticipates," "believes,"
"expects," "intends," "future," "could," "may," and similar words or
expressions (as well as other words or expressions referencing future
events, conditions or circumstances) identify forward-looking statements.
As used herein, the terms "Company" and "Hadco," unless otherwise indicated
or the context otherwise requires, refer to Hadco Corporation and its
subsidiaries. On March 20, 1998, the Company acquired all of the
outstanding capital stock of Continental (the "Continental Acquisition").
Unless otherwise indicated or the context otherwise requires, the results
of Continental's operations and other financial information relating to
Continental since March 20, 1998 are included in the Company's historical
consolidated financial information presented herein.
RESULTS OF OPERATIONS
Net sales for the first quarter of 1999 increased 19.0% over the same
period in 1998. The increase resulted from several factors including the
Continental Acquisition, which added $35.2 million to the net sales of
printed circuits, and an increase in backplane and system assembly net
sales of $20 million; these increases were partially offset by a decrease
in printed circuit net sales (excluding the Continental Acquisition) of
$19.1 million. Net sales of printed circuits decreased due to slightly
lower unit shipments, and a 10.6% decrease in average pricing for the first
quarter of 1999 over the same period in 1998. The shift towards printed
circuits with more layers and greater densities partially offset the
reductions in unit volume and price. Backplane and system assembly net
sales increased due to higher production volume and shipments.
The gross profit margin decreased to 13.7% of net sales in the first
quarter of 1999 from 19.7% in the comparable period in fiscal 1998. Lower
pricing on printed circuits caused gross margins to decrease by 5.9
percentage points. Lower capacity utilization from printed circuit
operations caused margins to decrease by 2.3 percentage points. The effect
of lower overall gross margins from Hadco Phoenix (formerly Continental)
operations caused margins to decrease by 1.7 percentage points. All of
these decreases were partially offset by lower unit costs through improved
production efficiencies resulting in an overall decrease in the gross
margin of 6.0 percentage points.
Operating expenses, as a percent of net sales, decreased slightly to 8.9%
in the first quarter of 1999 from 9.0% in the comparable period in fiscal
1998.
The Company includes in operating expenses charges for actual expenditures
and accruals, based on estimates, for environmental matters. To the extent
and in amounts Hadco believes circumstances warrant, it will continue to
accrue and charge to operating expenses cost estimates relating to
environmental matters.
Interest income decreased in the first quarter of 1999 as compared to the
first quarter of 1998 due to lower average cash balances available for
investing. Interest expense increased in the first quarter of 1999 as
compared to the first quarter of 1998, due to higher average outstanding
debt balances for the first quarter of 1999 compared to the first quarter
of 1998 as a result of the Continental Acquisition.
14
<PAGE> 15
INCOME TAXES
In accordance with generally accepted accounting principles, the Company
provides for income taxes on an interim basis, using its anticipated
effective annual income tax rate. The Company anticipates an effective
annual income tax rate for fiscal 1999 of 39.75%, which is slightly less
than the combined federal and state statutory rates. The anticipated
effective rate was increased by amortization of goodwill which is not tax
deductible, and this was offset by the benefit of the Company's foreign
sales corporation and various state investment tax credits. The effective
tax rate for fiscal 1999 is based on current tax laws.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of fiscal 1999, net cash flow from operations was
$18.1 million versus $7.7 million in the first quarter of fiscal 1998. The
difference is a result of improved working capital management and a refund
of fiscal 1998 estimated tax payments during the first quarter of fiscal
1999.
In the first quarter of fiscal 1999, cash used in investing activities
decreased over the comparable period in fiscal 1998 due to lower capital
expenditures.
In the first quarter of fiscal 1999, cash provided by financing activities
decreased due to reduced borrowings under the Company's revolving line of
credit with various banks pursuant to an Amended and Restated Revolving
Credit Agreement, as amended (the "Credit Facility").
At January 30, 1999, the Company had working capital of approximately $98.0
million and a current ratio of 1.79, compared to working capital of
approximately $91.8 million and a current ratio of 1.71 at October 31,1998.
Cash, cash equivalents and short-term investments at January 30, 1999 were
approximately $9.6 million, an increase of $2.4 million from approximately
$7.2 million at October 31, 1998.
The Company believes that cash generated from operations and its borrowing
capacity will be sufficient to fund anticipated working capital, capital
expenditure and debt payment requirements through calendar year 1999.
Because the Company's capital requirements cannot be predicted with
certainty, however, there is no assurance that the Company will not require
additional financing during this period. There is no assurance that any
additional financing will be available on terms satisfactory to the Company
or not disadvantageous to the Company's security holders.
The Company believes the ultimate disposition of known environmental
matters will not have a material adverse effect upon the liquidity, capital
resources, business or consolidated financial position of the Company.
However, one or more of such environmental matters could have a significant
negative impact on the Company's consolidated financial results for a
particular reporting period.
YEAR 2000 READINESS DISCLOSURE STATEMENT
The Company has undertaken an internal assessment of its operations in
order to determine the extent to which the Company may be adversely
affected by Year 2000 issues. This internal assessment has included both
Information Technology (IT) systems and non-IT systems. By the end of
fiscal year 1998, the Company's assessment of its IT systems had been
completed. The critical software systems used by the Company to run its
business include MFG/PRO, Peoplesoft, Oracle, and Corsair. The Company
believes that all of these programs are currently Year 2000 compliant.
However, the Company has experienced and may continue to experience
interfacing problems when upgrades are received from the vendors of these
software programs. The Company has
15
<PAGE> 16
YEAR 2000 READINESS DISCLOSURE STATEMENT (CONTINUED)
completed some limited testing of its various IT systems, running programs
with dates including and after the year 2000. During these tests the
Company has not yet experienced any problems with processing of data and
effecting transactions. The Company intends to perform further testing of
its IT systems during the first half of calendar 1999. There can be no
assurance, however, that additional testing of its IT systems will not
uncover Year 2000 issues, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
The Company's internal assessment of its manufacturing equipment for Year
2000 compliance is being done on a plant-by-plant basis. The Company
anticipates that all of its internal assessment of manufacturing equipment
will be completed by March 31, 1999. To date, the Company has identified
three operating systems which are important to the Company's operations,
each of which will need software upgrades in order to be Year 2000
compliant. Two of these operating systems are utilized in multiple
departments and locations including the tooling/engineering phase of the
fabrication business. The Company believes that Year 2000 compliant
software upgrades for each of the two engineering systems have already been
developed and tested, and the Company plans to install such upgrades on or
before July 1, 1999. There can be no assurance that such upgrades will be
Year 2000 compliant or that such upgrades will be installed in a timely
basis. The Company has also determined that software in certain of its
manufacturing systems is not currently Year 2000 compliant. The Company
believes that upgrades currently exist to address the Year 2000 issue in
this software. The vendor has told the Company that it will complete the
software upgrade by the end of second quarter 1999, and will deliver and
install it at the Company not later than June 30, 1999. There can be no
assurance, however, that such vendor will be able to deliver a Year 2000
compliant software upgrade or that it will be installed at the Company
prior to January 1, 2000. Testing of the Company's manufacturing systems
for Year 2000 compliance has been started. The Company intends to develop a
test plan for all critical systems not later than March 31, 1999 and to
complete testing by June 30, 1999.
The Company has also undertaken a survey of its suppliers' Year 2000
compliance status and, to date, has received responses from more than 80%
of those surveyed, a majority of whom have certified they are compliant.
Corporate purchasing will be responsible for obtaining data from those
suppliers who have not yet responded to the Company's inquiries, and for
obtaining updated information from the Company's more critical suppliers
and those who indicated they were not Year 2000 compliant. The Company
intends to conduct detailed exchanges with its key suppliers in order to
assess the Company's need for contingency plans and in order to develop
contingency plans, if required, on a supplier-by-supplier basis.
During the first fiscal quarter of 1999, the Company retained the services
of a consulting company and has two full-time outside Year 2000 compliance
consultants to assist it in guiding its assessment, testing, remediation,
and related efforts. To date, approximately 10,000 hours of employee time
have been devoted to Year 2000 issues and approximately $2.5 million has
been expended in systems upgrades directly relating to Year 2000 issues.
The source of such funds has been the working capital of the Company.
Present estimates for further expenditures of both employee time and
expenses to address Year 2000 issues are between 12,000 and 18,000 employee
hours and between $2 million and $5 million, respectively. To date, the
Company has experienced minor delays for some non-Year 2000 related IT
projects as a result of the Company's Year 2000 compliance efforts. The
Company has not yet determined whether it has the internal resources to
expend the necessary employee hours to address and resolve the Year 2000
issues at each of its manufacturing facilities; the Company may choose to
retain outside consultants or otherwise outsource certain work, which would
increase the expenses for Year 2000 issues and decrease the employee time
commitment. The Company anticipates making an initial decision regarding
the availability of Company resources for Year 2000 issues sometime in the
second quarter of 1999, but will continually review this issue in light of
the completion of its internal assessment and the results of additional
testing and remediation efforts. There can be no assurance that the
Company's costs relating to its Year 2000 compliance will not be greater
than that currently expected.
16
<PAGE> 17
YEAR 2000 READINESS DISCLOSURE STATEMENT (CONTINUED)
A software or systems Year 2000 compliance failure with respect to the
Company's internal systems and software, or that of third party service
providers or major customers, could prevent the Company from being able to
fulfill orders of its customers. Any such failure, if not quickly remedied,
would have a material adverse affect on the Company's business, results of
operations and financial condition. The lost revenues that would result
from the Company's inability to operate even one of its major volume
manufacturing plants for any significant period of time would have a
material adverse effect on the Company. The Company could face an even
greater risk of significant damages for which the Company could be liable
if it is found responsible for the shutdown of one of its customers'
facilities. This could occur if the Company was unable to supply parts
integral to the end products manufactured by the Company's customers. In
such circumstances, the legal liability of the Company could have a
material adverse effect on the Company's business, results of operations
and financial condition.
At present, the Company has not developed any contingency plans for
addressing any Year 2000 difficulties it may experience. The Company
intends to develop such plans, both with respect to its suppliers and with
respect to its own internal operations, on or before May 1, 1999.
FACTORS THAT MAY AFFECT FUTURE RESULTS
This Quarterly Report on Form 10-Q contains various "forward-looking"
statements within the meaning of the Securities Litigation Reform Act of
1995, including, but not limited to, those concerning gross and operating
margins, Year 2000 readiness and compliance, the sufficiency of the
Company's working capital, and environmental matters. In this Form 10-Q,
the words "anticipates," "believes," "expects," "intends," "future,"
"could," "may," and similar words and expressions (as well as other words
or expressions referencing future events, conditions or circumstances)
identify forward-looking statements. Such forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those projected, anticipated or indicated in the
forward-looking statements. Potential risks and uncertainties include, but
are not limited to, such factors as: the Company's dependence on the
electronics industry; fluctuations in quarterly operating results; the
variability of customer orders; significant portions of released backlog
may be subject to cancellation or postponement without penalty; the effect
of unforeseen problems in the Company's computer systems and those of third
parties with which the Company deals, specifically those related to "Year
2000" issues; the effect of acquisitions on the Company; the ability of the
Company to compete successfully in the future; the rapid technological
change and continuing process development that characterizes the Company's
markets; manufacturing process disruptions; the operation of the Company's
Malaysia facility; the effect of economic turmoil, currency devaluations
and financial market instability in Asia on the Company; the Company's
significant customer concentration; the Company's ability to obtain,
integrate, manage and utilize manufacturing capacity; the Company's ability
to manage its growth; environmental matters; the availability of raw
materials and components and price fluctuations in such materials and
components; the Company's dependence on key personnel; the Company's
ability to protect its intellectual property; and certain anti-takeover
provisions applicable to the Company. Further information on factors that
could cause actual results to differ from those anticipated is detailed in
various publicly available documents filed by the Company from time to time
with the Securities and Exchange Commission. Such information includes, but
is not limited to, those factors appearing under the caption "Factors That
May Affect Future Results" and elsewhere in the Company's Annual Report on
Form 10-K for the year ended October 31, 1998. Any forward-looking
statement should be considered in light of these factors.
17
<PAGE> 18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DERIVATIVE FINANCIAL INSTRUMENTS, OTHER FINANCIAL INSTRUMENTS, AND
DERIVATIVE COMMODITY INSTRUMENTS
At January 30, 1999, the Company did not participate in any derivative
financial instruments, or other financial and commodity instruments for
which fair value disclosure would be required under SFAS No. 107. The
Company holds no investment securities which would require disclosure of
market risk.
PRIMARY MARKET RISK EXPOSURES
The Company's primary market risk exposures are in the areas of interest
rate risk and foreign currency exchange rate risk. The Company incurs
interest expense on loans made under the Credit Facility at interest rates
which are fixed for a maximum of six months. At January 30, 1999, the
Company's outstanding borrowings on the Credit Facility were $150 million,
at a weighted average interest rate of 6.3125%. This interest rate is a
combination of two Eurodollar rate loans of $50 million and $100 million at
6.3125% each. The Eurodollar rates are fixed until March 24, 1999 and April
26, 1999, respectively, at which time the Company can again fix these rates
for periods of one, two, three or six months. The Eurodollar Rate is
subject to market risks and will fluctuate.
Substantially all of the Company's business outside the United States is
conducted in U.S. dollar denominated transactions. The Company does operate
a volume manufacturing facility in Malaysia. Some of the expenses of this
facility are denominated in Malaysian ringgits. Expenses denominated in
ringgits include local salaries and wages, utilities and some operating
supplies. The Company also funds a small sales office in Ireland where
expenses are incurred in British Pounds, Irish Punts and Euros. However,
the Company believes that the operating expenses currently incurred in
foreign currencies are immaterial, and therefore any associated market risk
is unlikely to have a material adverse effect on the Company's business,
results of operations or financial condition.
18
<PAGE> 19
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Under the Company's Executive Incentive Compensation Deferred Bonus Plan,
as Amended and Restated July 1, 1998 (the "Executive Bonus Plan"), certain
executives of the Company received payment of a portion of their incentive
compensation for fiscal 1998 in the form of restricted Common Stock of the
Company. On November 12, 1998, the executives received an aggregate of
9,085 shares of restricted Common Stock pursuant to the Executive Bonus
Plan. The aggregate value of all such shares issued on November 12, 1998 to
Executives was $275,366 (based on a fair market value on that date of
$30.31 per share).
Each of the shares of Common Stock of the Company referenced above was
issued by the Company in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act for an offering to a small
number of knowledgeable investors.
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
*10.1 Amendment to Hadco Corporation's Retirement Plan dated as of
December 2, 1998
21.1 List of Subsidiaries
27. Financial Data Schedule
* Indicates a management contract or any compensatory plan, contract
or arrangement required to be filed as an exhibit pursuant to Item
14(c).
(b) Reports on Form 8-K
None
19
<PAGE> 20
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.
Hadco Corporation
Date: March 15, 1999 By: /s/ F. Gordon Bitter
-------------------------
F. Gordon Bitter
Senior Vice President and Chief
Financial Officer (principal
financial officer and principal
accounting officer)
20
<PAGE> 1
EXHIBIT 10.1
AMENDMENT TO HADCO CORPORATION'S RETIREMENT PLAN DATED AS OF DECEMBER 2, 1998.
1. Under Section 1434 of the Small Business Job Protection Act of 1996,
the compensation definition for purposes of the limits on contributions and
benefits for defined contribution plans has been revised to include, in addition
to compensation for which a W-2 must be provided, the amount of elective
deferrals under qualified plans and salary reduction contributions to cafeteria
plans, for years beginning on or after January 1, 1998. In order to implement
these provisions of Section 1434 of SBJPA, the Plan is amended as set out below,
effective as of January 1, 1998.
The definition of "414(q) Compensation" in Section 1.08 of the Plan is
amended to read as follows:
"414(q) Compensation shall mean Compensation increased by elective
deferrals as defined in Section 402(g)(3) of the Code and any amount
which is contributed or deferred by the Employer at the election of the
Employee and which is not includible in the gross income of the
Employee under Section 125 of the Code."
The first paragraph of Section 3.09(a) is amended to read as follows:
"(a) Maximum Annual Additions
All annual additions made under the provisions of this Article
III within any Plan Year and with respect to any Participant
shall not exceed the lesser of:
(i) Thirty thousand dollars ($30,000.00) or, if greater,
one-fourth of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code, or
(ii) for Plan Years ending on or before December 31, 1997,
25% of the Participant's Compensation for such Plan
Year, or for Plan Years beginning on or after January
1, 1998, 25% of the Participant's 414(q) Compensation
for such Plan Year."
2. Section 1704(n) of the Small Business Job Protection Act of 1996
also included certain requirements for making up contributions for veterans who
leave
<PAGE> 2
employment for relatively short periods of military service and who are
re-employed by the company pursuant to the Uniformed Services Employment and
Reemployment Rights Act (USERRA). Under Revenue Procedure 96-49, the IRS
provided model amendments which can be adopted to implement the requirements of
USERRA as incorporated into Section 414(u) of the Code. The following amendment
is adopted pursuant to the provisions of Rev. Proc. 96-49.
A new Section 3.12 is added to the Plan effective as of October 13,
1996 to read as follows:
"3.12 CONTRIBUTIONS UNDER USERRA
Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with
Section 414(u) of the Internal Revenue Code."
3. The following amendment has been requested by the IRS in order to
clarify that an Employee who is absent from work on account of maternity or
paternity leave will not be deemed to have incurred a period of severance for
purposes of determining eligibility to participate in the plan on account of
such leave.
The second sentence of the second paragraph of Section 2.01 of the Plan
is hereby amended to read as follows:
"A period of severance shall mean a period of time during which the
Employee is no longer employed by the Employer, and shall begin on the
earlier of (i) the date on which the Employee quits, retires, is
discharged or dies or (ii) the first anniversary of the first day of a
period in which the Employee remains absent from service (with or
without pay) with the Employer for any reason other than quit,
retirement, discharge or death, such as on account of vacation,
holiday, sickness, disability, leave of absence or layoff; provided,
however, that "second anniversary" shall be substituted for "first
anniversary" under this clause (ii) for an Employee who is absent from
service beyond the first anniversary of the first day of absence by
reason of the pregnancy of the individual, the birth of a child of the
individual, the placement of a child with the individual in connection
with the adoption of such child by such individual, or for purposes of
caring for such child for a period beginning immediately following such
birth or placement."
2
<PAGE> 3
]
5. The following amendments have been requested by the IRS in order to
clarify that qualified non-elective contributions are fully vested when made,
and that the distribution rules under Section 4.04 of the Plan apply to such
contributions.
Section 3.04 of the Plan is amended to read as follows:
"Qualified Non-elective Contributions shall be paid to the Trustee as
soon a pacticable after the end of the Plan Year, but in any event not
later than the due date for the Employer's federal income tax return
for the Fiscal Year which ends within such Plan Year, including
extensions, shall be allocated to the 401(k) Accounts of Participants
on whose behalf the contributions are made, and shall be fully vested
when made."
Section 4.04 shall be amended by inserting the words "(including 401(k)
and Qualified Non-Elective Contributions)" after the reference to
"401(k) Accounts" in the title and in the introductory paragraph of
said Section.
5. Section 10.07(c) must be amended to clarify that "five percent
owner" is to be defined by reference to Section 416(i) of the Code.
Section 10.07(c) is amended by adding the following sentence to the end
thereof:
"The determination of who is a five percent owner shall be made in
accordance with Section 416(i) of the Code and the regulations
thereunder."
6. The reference in Section 6.05 to "Section 1.42" shall be corrected
to refer to "Section 1.43", and the reference in Section 10.07(e)(ii) to
"subsection 10.07(f)" shall be corrected to refer to "Section 10.07(e)".
3
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF HADCO CORPORATION
DIRECT SUBSIDIARIES (100%) OWNED BY HADCO CORPORATION) STATE OR COUNTRY/
TERRITORY OF ORGANIZATION
Hadco Santa Clara, Inc. (f/k/a Zycon Corporation) Delaware
Hadco Phoenix, Inc. (f/k/a Continental Circuits Corp.) Delaware
Zycon Corporation (a name holding corporation) Delaware
Continental Circuits Corp. (a name holding corporation) Delaware
Hadco Foreign Sales Corporation U.S. Virgin Islands
Hadco Ireland Limited Ireland
Hadco Scotland Limited Scotland
INDIRECT SUBSIDIARIES STATE OR COUNTRY/
TERRITORY OF ORGANIZATION
CCIR of California Corp. (100% owned by Hadco Phoenix, California
Inc.)
CCIR of Texas Corp. (100% owned by Hadco Texas
Phoenix, Inc.)
Hadco Corporation (Malaysia) SDN.BHD. (f/k/a Zycon Malaysia
Corporation, SDN.BHD) (100% owned by Hadco Santa
Clara, Inc.
Continental Circuits International, Inc. (100% owned by Barbados
Hadco Phoenix, Inc.
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-30-1999
<PERIOD-START> NOV-01-1999
<PERIOD-END> JAN-30-1999
<EXCHANGE-RATE> 1
<CASH> 9,626
<SECURITIES> 0
<RECEIVABLES> 117,484
<ALLOWANCES> 2,527
<INVENTORY> 70,894
<CURRENT-ASSETS> 222,157
<PP&E> 649,986
<DEPRECIATION> 326,822
<TOTAL-ASSETS> 743,586
<CURRENT-LIABILITIES> 124,159
<BONDS> 354,985
0
0
<COMMON> 676
<OTHER-SE> 195,054
<TOTAL-LIABILITY-AND-EQUITY> 743,586
<SALES> 235,979
<TOTAL-REVENUES> 235,979
<CGS> 203,546
<TOTAL-COSTS> 224,541
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,696
<INCOME-PRETAX> 3,343
<INCOME-TAX> 1,329
<INCOME-CONTINUING> 2,014
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,014
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
