<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 APRIL 29, 2000
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 13,836,718 shares of Common Stock, $0.05 Par Value, outstanding
at May 19, 2000.
<PAGE> 2
HADCO CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
April 29, 2000 (unaudited) and October 30, 1999....................................... 3
Consolidated Condensed Statements of Operations
for the Three Months and Six Months ended April 29, 2000
and May 1, 1999 (unaudited)........................................................... 4
Consolidated Condensed Statements of Cash Flows
for the Six Months ended April 29, 2000
and May 1, 1999 (unaudited).......................................................... 5
Notes to Consolidated Condensed Financial
Statements............................................................................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................... 18
Item 3. Quantitative and Qualitative Disclosures about Market Risk............................ 22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................................... 23
Item 2. Changes in Securities................................................................. 23
Item 4. Submission of Matters to a Vote of Security Holders................................... 23
Item 6. Exhibits and Reports on Form 8-K...................................................... 24
SIGNATURE......................................................................................... 25
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
April 29, October 30,
2000 1999
--------- -----------
(unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents ........................................... $ 112 $ 9,078
Accounts receivable, net of allowance of $1,467 in 2000
and $1,478 in 1999 ............................................. 139,709 116,580
Inventories ......................................................... 65,823 63,926
Deferred tax asset .................................................. 17,469 11,480
Prepaid expenses and other current assets ........................... 7,734 7,688
--------- ---------
Total current assets ........................................... 230,847 208,752
Property, Plant and Equipment, net ........................................ 318,144 328,181
Acquired Intangible Assets, net ........................................... 173,216 179,319
Other Assets .............................................................. 9,027 8,571
--------- ---------
$ 731,234 $ 724,823
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt ................................... $ 2,383 $ 2,515
Accounts payable .................................................... 94,306 100,100
Accrued payroll and other employee benefits ......................... 30,209 36,419
Other accrued expenses .............................................. 23,358 21,937
--------- ---------
Total current liabilities ...................................... 150,256 160,971
--------- ---------
Long-Term Debt, net of current portion .................................... 267,408 278,309
--------- ---------
Deferred Tax Liability .................................................... 61,715 57,342
--------- ---------
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 - 13,835 in 2000 and 13,631 in 1999...... 693 683
Paid-in capital ..................................................... 186,284 179,528
Deferred compensation ............................................... (930) (184)
Retained earnings ................................................... 56,616 38,982
--------- ---------
Total stockholders' investment ................................. 242,663 219,009
--------- ---------
$ 731,234 $ 724,823
========= =========
</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 OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Net Sales ............................................ $ 275,422 $ 255,586 $ 520,165 $ 491,565
Cost of Sales ........................................ 225,820 217,209 429,622 420,755
--------- --------- --------- ---------
Gross Profit .................................... 49,602 38,377 90,543 70,810
Operating Expenses ................................... 23,280 20,060 44,006 37,978
Amortization of Goodwill and Acquired
Intangible Assets ............................... 3,051 3,049 6,103 6,126
--------- --------- --------- ---------
Income from Operations .......................... 23,271 15,268 40,434 26,706
Interest and Other Income, net ....................... 511 186 1,431 787
Interest Expense ..................................... (6,739) (7,783) (13,423) (16,479)
--------- --------- --------- ---------
Income Before Provision for Income Taxes......... 17,043 7,671 28,442 11,014
Provision for Income Taxes ........................... 6,476 3,049 10,808 4,378
--------- --------- --------- ---------
Net Income ...................................... $ 10,567 $ 4,622 $ 17,634 $ 6,636
========= ========= ========= =========
Net Income per Share:
Basic ................................. $ 0.77 $ 0.34 $ 1.28 $ 0.49
========= ========= ========= =========
Diluted ............................... $ 0.75 $ 0.34 $ 1.26 $ 0.49
========= ========= ========= =========
Weighted Average Shares Outstanding:
Basic ................................ 13,800 13,522 13,733 13,470
========= ========= ========= =========
Diluted .............................. 14,129 13,713 14,038 13,678
========= ========= ========= =========
</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
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
April 29, May 1,
2000 1999
--------- ------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income ................................................................ $ 17,634 $ 6,636
Adjustments to reconcile net income to net cash provided
by operating activities -
Depreciation and amortization ........................................ 41,573 38,678
Deferred compensation and deferred taxes ............................. (1,400) (322)
Director and executive officer stock grants .......................... 60 551
Loss (Gain) on disposal of fixed assets .............................. (283) 29
Changes in assets and liabilities -
Increase in accounts receivable ...................................... (23,129) (11,700)
Increase in inventories .............................................. (1,897) (1,626)
Decrease (Increase) in prepaid expenses and other current assets...... (46) 184
Decrease in refundable taxes ......................................... -- 12,717
Decrease (Increase) in other assets .................................. 736 (2,099)
Increase (Decrease) in accounts payable and accrued expenses ......... (10,583) 4,206
-------- --------
Net Cash Provided by Operating Activities ........................ 22,665 47,254
-------- --------
Cash Flows from Investing Activities:
Purchases of property, plant and equipment ................................ (26,862) (29,130)
Proceeds from sale of property, plant and equipment ....................... 520 --
-------- --------
Net Cash Used in Investing Activities ............................ (26,342) (29,130)
-------- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt ...................................... (36,033) (46,460)
Net proceeds from issuance of long-term debt .............................. 25,000 20,000
Proceeds from exercise of stock options ................................... 2,110 531
Proceeds from employee stock purchase plan ................................ 1,843 1,574
Tax benefit from exercise of nonqualified stock options ................... 1,791 1,045
-------- --------
Net Cash Used in Financing Activities ............................ (5,289) (23,310)
-------- --------
Net Decrease in Cash and Cash Equivalents ....................................... (8,966) (5,186)
Cash and Cash Equivalents, Beginning of Period .................................. 9,078 7,169
-------- --------
Cash and Cash Equivalents, End of Period ........................................ $ 112 $ 1,983
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ............................................................. $ 1,698 $ 15,908
======== ========
Income taxes (net of refunds) ........................................ $ 5,397 $ 421
======== ========
</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. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------
Hadco Corporation (the "Company" or "Hadco") was incorporated in
Massachusetts in 1966. Principal products and services of the Company
include:
PRINTED CIRCUITS:
Printed circuits are the basic platform used to interconnect
microprocessors, integrated circuits and other components essential to the
functioning of electronic systems. The Company provides customers with
printed circuit designs and fabricates the printed circuit for the
customer. The design and fabricated printed circuits are sold either
separately or as a complete package. The majority of printed circuits
fabricated by the Company are based on designs provided by the customer.
VALUE ADDED MANUFACTURING:
Value Added Manufacturing (VAM) primarily consists of backplane and system
assemblies. Backplane assemblies are generally larger and thicker printed
circuits on which connectors are mounted to receive and interconnect
printed circuits, integrated circuits and other electronic components.
System assemblies include the backplane, power supply, fan card, cabling
and system chassis.
The consolidated condensed financial statements reflect the application of
certain accounting policies as described in this note and elsewhere 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 30, 1999. These financial statements should be read in conjunction
with the financial statements and related disclosures included in the
above-referenced SEC filings.
INTERIM FINANCIAL STATEMENTS
----------------------------
The accompanying consolidated condensed balance sheet as of April 29, 2000,
and the consolidated condensed statements of operations for the three
months and six months ended April 29, 2000 and May 1, 1999 and the
consolidated condensed statements of cash flows for the six month periods
ended April 29, 2000 and May 1, 1999 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 periods are not necessarily
indicative of results to be expected for the entire year or any future
period.
NET INCOME PER SHARE
--------------------
A reconciliation of basic and diluted weighted average shares outstanding
is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
--------- ------ --------- ------
(in thousands)
<S> <C> <C> <C> <C>
Basic weighted average shares outstanding ........ 13,800 13,522 13,733 13,470
Weighted average common equivalent shares ........ 329 191 305 208
------ ------ ------ ------
Diluted weighted average shares outstanding....... 14,129 13,713 14,038 13,678
====== ====== ====== ======
</TABLE>
6
<PAGE> 7
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. NET INCOME PER SHARE (CONTINUED)
--------------------
Diluted weighted average shares outstanding for the three month periods
ended April 29, 2000 and May 1, 1999 do not include 445,460 and 1,088,855
common equivalent shares, respectively, as their effect would be
anti-dilutive. Diluted weighted average shares outstanding for the six
month periods ended April 29, 2000 and May 1, 1999 do not include 475,211
and 878,293 common equivalent shares, respectively, as their effect would
be anti-dilutive.
2. PENDING ACQUISITION
-------------------
On April 17, 2000, the Company entered into an Agreement and Plan of Merger
(the "Agreement") by and among the Company, Sanmina Corporation
("Sanmina"), and SANM Acquisition Subsidiary, Inc., a wholly-owned
subsidiary of Sanmina (the "Merger Sub"), providing for the merger of
Merger Sub with and into the Company (the "Merger"), after which the
separate corporate existence of Merger Sub shall cease and the Company
shall continue as the surviving corporation and a wholly-owned subsidiary
of Sanmina. In the Merger, all outstanding shares of Common Stock of the
Company shall each be converted into the right to receive 1.40 shares of
Common Stock of Sanmina (the "Sanmina Common Stock"). In addition, the
Company has granted Sanmina an option to purchase 19.9% of the outstanding
shares of the Company, which is exercisable only upon certain events. The
consummation of the Merger is subject to various conditions precedent,
including approval of the stockholders holding two-thirds of the
outstanding Common Stock of the Company and various state and Federal
regulatory agencies, as well as other customary conditions.
Horace H. Irvine, II, the Company's Chairman of the Board of Directors and
certain trusts for Mr. Irvine's benefit, collectively holders of
approximately 5% of the outstanding Company Common Stock, and all the other
Directors of the Company and certain officers of the Company, collectively
holders of approximately 1% of the outstanding Company Common Stock, have
agreed to vote in favor of the approval of the Merger and the Agreement.
3. INVENTORIES
-----------
Inventories are stated at the lower of cost or market on a first-in,
first-out (FIFO) basis, and consist of the following (in thousands):
<TABLE>
<CAPTION>
April 29, October 30,
2000 1999
--------- -----------
<S> <C> <C>
Raw Materials .................. $27,445 $18,679
Work-in-process................. 38,378 45,247
------- -------
$65,823 $63,926
======= =======
</TABLE>
7
<PAGE> 8
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
4. LONG-TERM DEBT
--------------
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
April 29, October 30,
2000 1999
--------- -----------
<S> <C> <C>
Variable rate mortgages ................................... $ 672 $ 640
Revolving credit facility ................................. 65,000 75,000
9 1/2% Senior Subordinated Notes due 2008 ................. 199,456 199,422
Obligations under capital leases with interest rates
ranging from 7% to 7.75% ................................ 4,663 5,762
--------- ---------
269,791 280,824
Less - Current portion .................................... (2,383) (2,515)
--------- ---------
$ 267,408 $ 278,309
========= =========
</TABLE>
Based on the amount outstanding on the Company's credit facility as of
April 29, 2000, the Company has approximately $133.75 million of borrowings
available.
5. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
--------------------------------------
During the fourth quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 131, Disclosure about Segments
of an Enterprise and Related Information. The Company's businesses are
internally reported as two segments. These segments, which are based on
differences in products, technologies, and services, are Printed Circuits
and Value Added Manufacturing (VAM). Hadco evaluates performance of these
segments based on profit or loss from operations, not including
non-recurring charges.
Transactions between segments are recorded at fair market value. Costs of
centralized sales, marketing and administration are allocated to the
segments receiving benefits of the centralized functions. Unallocated
general corporate expenses include the elimination of inter-segment
profits, the costs of executive management for the Company, plus the
amortization of acquired intangibles and goodwill relating to acquisitions.
Management does not represent that these segments, if operated separately,
would report the operating income and other financial information shown.
8
<PAGE> 9
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
5. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED)
--------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Net Sales:
Printed Circuits ................... $ 246,246 $ 217,706 $ 465,391 $ 414,077
VAM ................................ 40,825 47,787 73,748 93,079
Elimination ........................ (11,649) (9,907) (18,974) (15,591)
--------- --------- --------- ---------
$ 275,422 $ 255,586 $ 520,165 $ 491,565
========= ========= ========= =========
Operating Income:
Printed Circuits ................... $ 30,578 $ 21,573 $ 53,047 $ 34,437
VAM ................................ 122 1,927 168 3,236
Unallocated general corporate....... (7,429) (8,232) (12,781) (10,967)
--------- --------- --------- ---------
$ 23,271 $ 15,268 $ 40,434 $ 26,706
========= ========= ========= =========
Depreciation and Amortization:
Printed Circuits ................... $ 32,688 $ 15,073 $ 48,807 $ 30,035
VAM ................................ 1,784 799 2,664 1,590
Unallocated general corporate....... 7,101 3,400 10,591 7,053
--------- --------- --------- ---------
$ 41,573 $ 19,272 $ 62,062 $ 38,678
========= ========= ========= =========
Capital Expenditures:
Printed Circuits ................... $ 13,877 $ 11,163 $ 21,075 $ 27,070
VAM ................................ 1,174 607 2,274 807
Unallocated general corporate....... 2,994 715 3,513 1,253
--------- --------- --------- ---------
$ 18,045 $ 12,485 $ 26,862 $ 29,130
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
As of
---------------------------
April 29, October 30,
2000 1999
--------- -----------
<S> <C> <C>
Identifiable Assets:
Printed Circuits ....................... $465,419 $462,211
VAM .................................... 54,927 48,608
Unallocated general corporate........... 210,888 214,004
-------- --------
$731,234 $724,823
======== ========
</TABLE>
9
<PAGE> 10
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
5. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED)
--------------------------------------------------
The following is a reconciliation of segment operating income to
consolidated income before provision for income taxes:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- ---------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Total operating income for reportable segments...... $ 23,271 $ 15,268 $ 40,434 $ 26,706
Unallocated amounts:
Interest and other income, net ................ 511 186 1,431 787
Interest expense .............................. (6,739) (7,783) (13,423) (16,479)
-------- -------- -------- --------
Income before provision for income taxes ........... $ 17,043 $ 7,671 $ 28,442 $ 11,014
======== ======== ======== ========
</TABLE>
The following summarizes financial information by geographic areas:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Net Sales:
United States.................... $203,726 $202,627 $376,768 $384,362
Canada .......................... 34,021 22,815 68,847 46,790
Europe .......................... 16,214 17,222 34,033 30,937
Asia ............................ 13,756 10,573 31,962 24,621
Other ........................... 7,705 2,349 8,555 4,855
-------- -------- -------- --------
$275,422 $255,586 $520,165 $491,565
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of
----------------------------
April 29, October 30,
2000 1999
--------- -----------
<S> <C> <C>
Long-lived assets:
United States..................... $451,826 $466,434
Asia ............................. 48,373 49,420
Europe ........................... 188 217
-------- --------
$500,387 $516,071
======== ========
</TABLE>
10
<PAGE> 11
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
6. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
Basis of presentation. The Company sold on May 18, 1998, $200 million
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 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 consolidating condensed 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 consolidating condensed
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.
11
<PAGE> 12
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
As of April 29, 2000
-------------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ----------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ (2,291) $ 231 $ 2,172 $ -- $ 112
Accounts receivable, net 62,113 9,774 67,822 -- 139,709
Inventories 32,517 5,903 27,403 -- 65,823
Deferred tax asset -- -- 17,469 -- 17,469
Prepaid and other current assets 1,377 225 6,132 -- 7,734
--------- --------- --------- --------- ---------
Total current assets 93,716 16,133 120,998 -- 230,847
Property, Plant and Equipment, net 136,598 48,562 132,984 -- 318,144
Intercompany Receivable 25,471 5,475 36,664 (67,610) --
Investments in Subsidiaries 11,105 -- 288,909 (300,014) --
Acquired Intangible Assets, net 173,216 -- -- -- 173,216
Other Assets 22 -- 9,005 -- 9,027
--------- --------- --------- --------- ---------
$ 440,128 $ 70,170 $ 588,560 $(367,624) $ 731,234
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 2,155 $ 73 $ 155 $ -- $ 2,383
Accounts payable 37,416 7,767 49,123 -- 94,306
Intercompany payable 23,316 44,294 -- (67,610) --
Accrued payroll and other
employee benefits 1,820 362 28,027 -- 30,209
Other accrued expenses 45,939 94 (22,675) -- 23,358
--------- --------- --------- --------- ---------
Total current liabilities 110,646 52,590 54,630 (67,610) 150,256
--------- --------- --------- --------- ---------
Long-Term Debt, net of current portion 2,366 6 265,036 -- 267,408
--------- --------- --------- --------- ---------
Deferred Tax Liability 44,676 -- 17,039 -- 61,715
--------- --------- --------- --------- ---------
Other Long-Term Liabilities -- -- 9,192 -- 9,192
--------- --------- --------- --------- ---------
Stockholders' Investment:
Common stock, $0.05 par value;
Authorized - 50,000 shares
Issued and outstanding - 13,835 11 29,655 693 (29,666) 693
Paid-in capital 400,616 130 186,284 (400,746) 186,284
Deferred compensation -- -- (930) -- (930)
Retained earnings (118,187) (12,211) 56,616 130,398 56,616
--------- --------- --------- --------- ---------
Total stockholders' investment 282,440 17,574 242,663 (300,014) 242,663
--------- --------- --------- --------- ---------
$ 440,128 $ 70,170 $ 588,560 $(367,624) $ 731,234
========= ========= ========= ========= =========
</TABLE>
12
<PAGE> 13
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
As of October 30, 1999
-------------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ----------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ (2,679) $ 1,378 $ 10,379 $ -- $ 9,078
Accounts receivable, net 49,926 7,566 59,088 -- 116,580
Inventories 28,085 6,590 29,251 -- 63,926
Deferred tax asset -- -- 11,480 -- 11,480
Prepaid and other current assets 2,221 244 5,223 -- 7,688
--------- --------- --------- --------- ---------
Total current assets 77,553 15,778 115,421 -- 208,752
Property, Plant and Equipment, net 141,510 49,638 137,033 -- 328,181
Intercompany Receivable 24,783 3,122 46,365 (74,270) --
Investments in Subsidiaries 12,162 -- 280,444 (292,606) --
Acquired Intangible Assets, net 179,319 -- -- -- 179,319
Other Assets 29 -- 8,542 -- 8,571
--------- --------- --------- --------- ---------
$ 435,356 $ 68,538 $ 587,805 $(366,876) $ 724,823
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 2,114 $ 73 $ 328 $ -- $ 2,515
Accounts payable 41,842 5,583 52,675 -- 100,100
Intercompany payable 28,089 46,181 -- (74,270) --
Accrued payroll and other
employee benefits 1,628 300 34,491 -- 36,419
Other accrued expenses 37,355 97 (15,515) -- 21,937
--------- --------- --------- --------- ---------
Total current liabilities 111,028 52,234 71,979 (74,270) 160,971
--------- --------- --------- --------- ---------
Long-Term Debt, net of current portion 3,307 43 274,959 -- 278,309
--------- --------- --------- --------- ---------
Deferred Tax Liability 44,676 -- 12,666 -- 57,342
--------- --------- --------- --------- ---------
Other Long-Term Liabilities -- -- 9,192 -- 9,192
--------- --------- --------- --------- ---------
Stockholders' Investment:
Common stock, $0.05 par value;
Authorized - 50,000 shares
Issued and outstanding - 13,631 11 29,655 683 (29,666) 683
Paid-in capital 400,616 -- 179,528 (400,616) 179,528
Deferred compensation -- -- (184) -- (184)
Retained earnings (124,282) (13,394) 38,982 137,676 38,982
--------- --------- --------- --------- ---------
Total stockholders' investment 276,345 16,261 219,009 (292,606) 219,009
--------- --------- --------- --------- ---------
$ 435,356 $ 68,538 $ 587,805 $(366,876) $ 724,823
========= ========= ========= ========= =========
</TABLE>
13
<PAGE> 14
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended April 29, 2000
-----------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ----------- ------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 121,592 $ 16,511 $ 137,319 $ -- $ 275,422
Cost of Sales 106,444 14,768 104,608 -- 225,820
--------- --------- --------- --------- ---------
Gross Profit 15,148 1,743 32,711 -- 49,602
Operating Expenses 2,447 934 19,899 -- 23,280
Amortization of Goodwill and Acquired
Intangible Assets 3,051 -- -- -- 3,051
--------- --------- --------- --------- ---------
Income (Loss) From Operations 9,650 809 12,812 -- 23,271
Interest and Other Income 386 165 (1,054) 1,014 511
Interest Expense (56) (5) (6,678) -- (6,739)
--------- --------- --------- --------- ---------
Income Before Provision for Income
Taxes 9,980 969 5,080 1,014 17,043
Provision for Income Taxes 4,806 138 1,532 -- 6,476
Equity in Income (Loss) of Subsidiary (183) -- 6,005 (5,822) --
--------- --------- --------- --------- ---------
Net Income $ 4,991 $ 831 $ 9,553 $ (4,808) $ 10,567
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended April 29, 2000
-----------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ----------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 225,253 $ 31,571 $ 263,341 $ -- $ 520,165
Cost of Sales 199,916 28,829 200,877 -- 429,622
--------- --------- --------- --------- ---------
Gross Profit 25,337 2,742 62,464 -- 90,543
Operating Expenses 4,719 1,842 37,445 -- 44,006
Amortization of Goodwill and Acquired
Intangible Assets 6,103 -- -- -- 6,103
--------- --------- --------- --------- ---------
Income From Operations 14,515 900 25,019 -- 40,434
Interest and Other Income, net 886 593 (2,288) 2,240 1,431
Interest Expense (124) (11) (13,288) -- (13,423)
--------- --------- --------- --------- ---------
Income Before Provision for
Income Taxes 15,277 1,482 9,443 2,240 28,442
Provision for Income Taxes 8,125 299 2,384 -- 10,808
Equity in Income (Loss) of Subsidiary (1,057) -- 8,335 (7,278) --
--------- --------- --------- --------- ---------
Net Income $ 6,095 $ 1,183 $ 15,394 $ (5,038) $ 17,634
========= ========= ========= ========= =========
</TABLE>
14
<PAGE> 15
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended May 1, 1999
------------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------ ----------- ----------- ------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 115,042 $ 11,716 $ 128,828 $ -- $ 255,586
Cost of Sales 101,206 11,557 104,446 -- 217,209
--------- --------- --------- --------- ---------
Gross Profit 13,836 159 24,382 -- 38,377
Operating Expenses 2,256 884 16,920 -- 20,060
Amortization of Goodwill and Acquired
Intangible Assets 3,049 -- -- -- 3,049
--------- --------- --------- --------- ---------
Income (Loss) From Operations 8,531 (725) 7,462 -- 15,268
Interest and Other Income, net (480) 217 (368) 817 186
Interest Expense (17) 1 (7,767) -- (7,783)
--------- --------- --------- --------- ---------
Income (Loss) Before Provision for
Income Taxes 8,034 (507) (673) 817 7,671
Provision for Income Taxes 4,406 112 (1,469) -- 3,049
Equity in Income (Loss) of Subsidiary (1,436) -- 3,009 (1,573) --
--------- --------- --------- --------- ---------
Net Income (Loss) $ 2,192 $ (619) $ 3,805 $ (756) $ 4,622
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended May 1, 1999
------------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Net Sales $ 229,996 $ 22,224 $ 239,345 $ -- $ 491,565
Cost of Sales 206,415 22,417 191,923 -- 420,755
--------- --------- --------- --------- ---------
Gross Profit 23,581 (193) 47,422 -- 70,810
Operating Expenses 4,426 1,563 31,989 -- 37,978
Amortization of Goodwill and Acquired
Intangible Assets 6,126 -- -- -- 6,126
--------- --------- --------- --------- ---------
Income (Loss) From Operations 13,029 (1,756) 15,433 -- 26,706
Interest and Other Income, net (630) (408) 1,002 823 787
Interest Expense (215) (5) (16,259) -- (16,479)
--------- --------- --------- --------- ---------
Income (Loss) Before Provision for
Income Taxes 12,184 (2,169) 176 823 11,014
Provision for Income Taxes 7,279 112 (3,013) -- 4,378
Equity in Income (Loss) of Subsidiary (3,104) -- 2,624 480 --
--------- --------- --------- --------- ---------
Net Income (Loss) $ 1,801 $ (2,281) $ 5,813 $ 1,303 $ 6,636
========= ========= ========= ========= =========
</TABLE>
15
<PAGE> 16
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended April 29, 2000
---------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities $ 11,381 $ 1,382 $ 7,662 $ 2,240 $ 22,665
-------- -------- -------- -------- --------
Cash Flows from Investing Activities:
Foreign Sales Corp. dividend -- (2,240) 2,240 -- --
Purchase of property, plant and equipment (10,604) (2,492) (13,766) -- (26,862)
Proceeds from sale of property, plant and
equipment 511 -- 9 -- 520
Investments in subsidiaries -- 2,240 -- (2,240) --
-------- -------- -------- -------- --------
Net cash used in investing activities (10,093) (2,492) (11,517) (2,240) (26,342)
-------- -------- -------- -------- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt (900) (37) (35,096) -- (36,033)
Proceeds from issuance of long-term debt -- -- 25,000 -- 25,000
Proceeds from exercise of stock options -- -- 2,110 -- 2,110
Proceeds from the employee stock
purchase plan -- -- 1,843 -- 1,843
Tax benefit from exercise of stock options -- -- 1,791 -- 1,791
-------- -------- -------- -------- --------
Net cash used in financing activities (900) (37) (4,352) -- (5,289)
-------- -------- -------- -------- --------
Net Increase (Decrease) in Cash and Cash
Equivalents 388 (1,147) (8,207) -- (8,966)
Cash and Cash Equivalents,
Beginning of Period (2,679) 1,378 10,379 -- 9,078
-------- -------- -------- -------- --------
Cash and Cash Equivalents,
End of Period $ (2,291) $ 231 $ 2,172 $ -- $ 112
======== ======== ======== ======== ========
</TABLE>
16
<PAGE> 17
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
6. SUPPLEMENTAL GUARANTOR CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
-------------------------------------------------------------------
(Continued)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended May 1, 1999
--------------------------------------------------------------------------------
Guarantor Non-Guarantor Parent Elimination Consolidated
Subsidiaries Subsidiaries Corporation Entries Total
------------ ------------- ----------- ----------- ------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities $ 9,461 $ 5,752 $ 31,218 $ 823 $ 47,254
-------- -------- -------- -------- --------
Cash Flows from Investing Activities:
Foreign Sales Corp. dividend -- (823) 823 -- --
Purchase of property, plant and equipment (9,308) (3,926) (15,896) -- (29,130)
Investments in subsidiaries -- 823 -- (823) --
-------- -------- -------- -------- --------
Net cash used in investing activities (9,308) (3,926) (15,073) (823) (29,130)
-------- -------- -------- -------- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt (932) (225) (45,303) -- (46,460)
Proceeds from issuance of long-term debt -- -- 20,000 -- 20,000
Proceeds from exercise of stock options -- -- 531 -- 531
Proceeds from the employee stock
purchase plan -- -- 1,574 -- 1,574
Tax benefit from exercise of stock options -- -- 1,045 -- 1,045
-------- -------- -------- -------- --------
Net cash used in financing activities (932) (225) (22,153) -- (23,310)
-------- -------- -------- -------- --------
Net Increase (Decrease) in Cash and Cash
Equivalents (779) 1,601 (6,008) -- (5,186)
Cash and Cash Equivalents,
Beginning of Period 836 2 6,331 -- 7,169
-------- -------- -------- -------- --------
Cash and Cash Equivalents,
End of Period $ 57 $ 1,603 $ 323 $ -- $ 1,983
======== ======== ======== ======== ========
</TABLE>
17
<PAGE> 18
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.
RESULTS OF OPERATIONS - SECOND QUARTER
- --------------------------------------
Net sales for the second quarter of fiscal 2000 increased 7.8%, or $19.8
million, over net sales for the same period in fiscal 1999. Printed circuit net
sales increased 12.9%, or $26.8 million, in the second quarter of fiscal 2000
from the comparable period in fiscal 1999 due to higher unit shipments and a
shift in mix towards higher priced printed circuits with more layers and greater
densities. This increase was partially offset by a 2.1 percentage point decline
in average pricing for printed circuits. VAM net sales decreased 14.6%, or $7.0
million, in the second quarter of fiscal 2000 from $47.8 million in the
comparable period in fiscal 1999. VAM net sales decreased due to reduced
production of low margin assembly products.
The gross profit margin increased to 18.0% of net sales for the quarter ended
April 29, 2000 from 15.0% in the comparable quarter in fiscal 1999. Better
capacity utilization of printed circuit operations caused gross margins to
increase 4.7 percentage points. This increase in gross margin was offset by
lower pricing on printed circuits, which decreased gross margins by 1.3
percentage points, and by lower capacity utilization of VAM operations, which
caused gross margins to decrease by 0.4 percentage points.
Operating expenses increased by $3.2 million for the second quarter of fiscal
2000 over the second quarter of fiscal 1999. Operating expenses as a percent of
net sales increased to 8.5% in the second quarter of fiscal 2000 compared to
7.8% in the comparable period of fiscal 1999. The increase is due to an increase
of $2.6 million in selling expenses from expanded sales coverage and commissions
on higher sales, an increase of $0.6 million in general and administrative
expenses and slightly higher research and development expenses. Amortization of
intangible assets was consistent between years. 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 known environmental matters.
Interest and other income, net increased by $0.3 million for the quarter ended
April 29, 2000 as compared to the comparable prior fiscal year period primarily
due to higher gains on the disposal of fixed assets. Interest expense decreased
by $1.0 million in the second quarter of fiscal 2000 as compared to the second
quarter of fiscal 1999 due to lower average outstanding debt balances during the
second quarter of fiscal 2000 as compared to the second quarter of fiscal 1999.
18
<PAGE> 19
RESULTS OF OPERATIONS - YEAR TO DATE
- ------------------------------------
Net sales for the six months ended April 29, 2000 increased 5.8%, or $28.6
million, over net sales for the same period in fiscal 1999. Printed circuit net
sales increased 12.0%, or $47.9 million, in the first six months of fiscal 2000
from the comparable period in fiscal 1999 due to higher unit shipments and a
shift in mix towards higher priced printed circuits with more layers and greater
densities. This increase was partially offset by a 1.8 percentage point decline
in average pricing for printed circuits. VAM net sales decreased 20.8%, or $19.3
million, in the first six months of fiscal 2000 from $93.1 million in the
comparable period in fiscal 1999. VAM sales decreased due to reduced production
of low margin assembly products.
The gross profit margin increased to 17.4% of net sales for the six months ended
April 29, 2000 from 14.4% in the comparable period in fiscal 1999. Better
capacity utilization from printed circuit operations caused gross margins to
increase by 5.1 percentage points. This increase in gross margin was offset by
lower pricing on printed circuits, which decreased gross margins by 1.6
percentage points, and by lower capacity utilization of VAM operations, which
caused gross margins to decrease by 0.5 percentage points.
Operating expenses increased by $6.0 million, from 7.7% of net sales in the
first half of fiscal 1999 to 8.5% of net sales in the same period in fiscal
2000. The increase was due to higher selling expenses related to increased
bookings and expanded sales coverage, a slight increase in general and
administrative expenses and slightly higher research and development expenses.
Amortization of intangible assets was consistent between years.
Interest and other income, net increased by $0.6 million for the six months
ended April 29, 2000 as compared to the six months ended May 1, 1999 due to
higher average invested cash balances and higher gains on the disposal of
equipment. Interest expense decreased by $3.1 million in the six months ended
April 29, 2000 as compared to the six months ended May 1, 1999 due to lower
average outstanding debt balances during fiscal 2000.
INCOME TAXES
- ------------
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 2000 of 38%, 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), offset by the benefit
of the Company's foreign sales corporation, research and development tax credits
and various state investment tax credits. The effective tax rate for fiscal 2000
is based on current tax laws.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash provided by operating activities for the first six months of fiscal
2000 was $22.7 million, a reduction of $24.6 million from the comparable prior
year period. This reduction resulted primarily from an increase in accounts
receivable of $23.1 million, and a reduction of $10.6 million in accounts
payable and accrued expenses. The reduction in accounts payable and accrued
expenses resulted from higher incentive compensation accrued in fiscal 1999 and
paid during the first quarter of fiscal 2000. In addition, the Company incurred
a significant amount of capital expenditures during the fourth quarter of fiscal
1999, which were paid during the first quarter of fiscal 2000.
Net cash used in investing activities in the first half of fiscal 2000 was $26.3
million, a decrease of $2.8 million from the first half of fiscal 1999, due to
lower capital expenditures.
Net cash used in financing activities was $5.3 million in the first six months
of fiscal 2000 compared to $23.3 million in the comparable prior year period.
The Company repaid a net of $10.0 million of its credit facility in the first
six months of fiscal 2000, compared to $25.0 million in the comparable prior
year period.
19
<PAGE> 20
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
- ------------------------------------------
At April 29, 2000, the Company had working capital of $80.6 million and a
current ratio of 1.54, as compared to working capital of $47.8 million and a
current ratio of 1.30 at October 30, 1999. The increase in working capital
resulted primarily from an increase in accounts receivable, as customer order
and shipment rates increased, combined with the reductions in accounts payable
noted above.
The Company believes its current borrowing capacity, coupled with the funds
generated from the Company's operations will be sufficient to fund its
anticipated working capital, capital expenditure and debt payment requirements
through fiscal year 2000. 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, including the holders
of the Notes.
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
- ----------------------------------------
As part of the Year 2000 project, the Company completed an internal assessment
of its operations to determine the extent to which the Company could be
adversely affected by Year 2000 issues. This internal assessment included both
Information Technology (IT) systems and non-IT systems. The Company also
surveyed all of its active suppliers to determine their Year 2000 compliance
status. In Fiscal 1999, the Company developed business continuity/contingency
plans for all its facilities. These plans cover Year 2000 issues and potential
disruptions.
The Company has not to date encountered any date-related processing issues or
any business interruption in connection with the Year 2000 roll-over to January
1, 2000. However, we could still experience unanticipated problems and costs
caused by undetected errors or defects from the Year 2000 issue.
A software or system Year 2000 compliance failure, with respect to the Company's
internal systems, software and equipment or that of third party service
providers, major customers or suppliers, could prevent the Company from
fulfilling customer orders. Any such failure, if not quickly remedied, would
have a material adverse effect 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 if the
Company were to be 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.
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
20
<PAGE> 21
FACTORS THAT MAY AFFECT FUTURE RESULTS (CONTINUED)
- --------------------------------------------------
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; 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 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, production services and components, and price
fluctuations in such materials, services 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 30, 1999. Any
forward-looking statement should be considered in light of these factors.
NEW ACCOUNTING STANDARDS
- ------------------------
In March 2000, the FASB issued FASB Interpretation No. 44, Accounting for
Certain Transactions Involving Stock Compensation - An Interpretation of APB
Opinion No. 25 ("Interpretation 44"). Interpretation 44 clarifies the
application of APB No. 25 in certain situations, as defined. Interpretation 44
is effective July 1, 2000 but is retroactive for certain events that occurred
after December 15, 1998. The Company does not expect that the adoption of
Interpretation 44 will materially affect its consolidated results of operations.
The Securities and Exchange Commission issued Staff Accounting Bulletin (SAB)
No. 101, Revenue Recognition, in December 1999. The Company is required to adopt
this new accounting guidance through a cumulative charge to operations, in
accordance with Accounting Principles Board Opinion (APB) No. 20 Accounting
Changes, no later than the second quarter of fiscal 2000. The Company believes
that the adoption of the guidance in SAB No. 101 will not have a material impact
on future operating results.
21
<PAGE> 22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DERIVATIVE FINANCIAL INSTRUMENTS, OTHER FINANCIAL INSTRUMENTS, AND DERIVATIVE
COMMODITY INSTRUMENTS
SFAS No. 107 requires disclosure about fair value of financial instruments.
Financial instruments consist of cash equivalents, accounts receivable, accounts
payable and long-term debt obligations. The fair value of these financial
instruments approximates their carrying amount, except for the 9 1/2% Senior
Subordinated Notes (the "Notes"), at April 29, 2000. The faIR market value of
the Notes was $200 million with a carrying amount of $199.5 million at April 29,
2000.
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 Company's credit facility at interest rates,
which are fixed, for a maximum of six months. At April 29, 2000, the Company's
outstanding borrowings under the credit facility were $65.0 million, which was
borrowed under one Eurodollar loan which expires on May 26, 2000 and is at a
rate of 6.75%. The Company has the option to fix the interest rates on the
Eurodollar rate loan 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 small sales offices in Ireland and Great Britain, where expenses are
paid in British Pounds, Irish Punts and Eurodollars. However, the Company
believes that these operating expenses will not have a material adverse effect
on the Company's business, results of operations or financial condition.
22
<PAGE> 23
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
In March 2000, the Court approved and entered the Consent Decree in the Auburn
Road environmental litigation. Under the terms of the Consent Decree, the
Company is a cash-out party and does not have responsibility for performance of
ongoing remedial or monitoring work at the site.
ITEM 2. - CHANGES IN SECURITIES
Under the Company's Outside Directors' Compensation Plan of 2000 (the "Outside
Directors' Plan"), non-employee directors of the Company receive payment of an
annual fee in the form of restricted Common Stock of the Company. Non-employee
directors may elect to defer receipt of any such payment. On March 3, 2000, the
non-employee directors received an aggregate of 1,056 shares of Common Stock
pursuant to the Outside Directors' Plan. Of such shares, receipt of 352 shares
was deferred in accordance with the Outside Directors' Plan. The aggregate value
of all such shares issued on March 3, 2000 to non-employee directors was $59,801
(based on a fair market value on that date of $56.63 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 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders of Hadco Corporation was held on
March 2, 2000.
(b) No information provided due to inapplicability of item.
(c) A vote was proposed to (1) fix the number of directors at eight (8)
and to elect a Board of Directors to serve for the ensuing year or
until their respective successors are duly elected and qualified; (2)
approve the Hadco Corporation Outside Directors' Compensation Plan of
2000; and (3) ratify the selection of Arthur Andersen LLP as auditors
for the fiscal year ending October 28, 2000.
The voting results are as follows:
<TABLE>
<CAPTION>
Votes Votes
Votes For Against Withheld
--------- ------- ---------
<S> <C> <C> <C>
(1) Horace H. Irvine II 12,784,836 N/A 68,652
Andrew E. Lietz 12,784,836 N/A 68,652
Oliver O. Ward 12,784,836 N/A 68,652
John F. Smith 12,784,836 N/A 68,652
John E. Pomeroy 12,784,836 N/A 68,652
James C. Taylor 12,784,836 N/A 68,652
Mauro J. Walker 12,784,836 N/A 68,652
Gilbert M. Roddy, Jr. 12,784,836 N/A 68,652
</TABLE>
23
<PAGE> 24
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)
<TABLE>
<CAPTION>
Votes Votes
Votes For Against Withheld
--------- ------- ---------
<S> <C> <C> <C>
(2) Hadco Corporation
Outside Directors'
Compensation Plan
of 2000 12,135,850 593,393 143,424
(3) Arthur Andersen, LLP
Ratification 12,863,258 3,973 5,436
</TABLE>
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amendment to Registrant's By-laws.
10.1 Second Amendment dated April, 2000 to Lease between Registrant
and Manor Parkway LLC for 12B Manor Parkway, Salem, NH.
*10.2 Amendment to Registrant's 1998 Stock Plan.
*10.3 Amendment to Registrant's November 29, 1995 Stock Option Plan.
*10.4 Amendment to Registrant's September 1990 Stock Option Plan.
*10.5 Amendment to Registrant's 1991 Non-Employee Directors' Stock
Option Plan.
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 6(a).
(b) Reports on Form 8-K
Current Report on Form 8-K filed May 16, 2000;
Current Report on Form 8-K filed May 3, 2000;
Current Report on Form 8-K filed April 18, 2000;
Current Report on Form 8-K filed March 30, 2000; and
Current Report on Form 8-K filed March 20, 2000.
24
<PAGE> 25
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: May 22, 2000 By: /s/ F. Gordon Bitter
-------------------------------
F. Gordon Bitter
Senior Vice President and Chief
Financial Officer (principal
financial officer and principal
accounting officer)
25
<PAGE> 1
EXHIBIT 3.1
AMENDMENT TO
BY-LAWS OF HADCO CORPORATION
This Amendment (the "Amendment") to the By-Laws of Hadco Corporation
(the "By-Laws") is effective as of April 17, 2000. The By-Laws shall be amended
as follows:
The following language shall be added as Paragraph 8 to Article VI
thereof:
8. 1987 MASSACHUSETTS CONTROL SHARE ACQUISITION ACT. The 1987
Massachusetts Control Share Acquisition Act, Chapter 110D of
the Massachusetts General Laws, as it may be amended from time
to time, shall not apply to the Corporation.
Except as specifically amended hereby, each of the provisions of the
By-Laws are hereby ratified and confirmed and shall remain in full force and
effect.
<PAGE> 1
EXHIBIT 10.1
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (the "SECOND AMENDMENT") is made as of
April 28, 2000 between MANOR PARKWAY LLC, a Minnesota limited liability company
("LANDLORD"), and HADCO CORPORATION, a Massachusetts corporation ("TENANT").
RECITALS:
A. Tenant occupies certain premises in the building (the "BUILDING")
located at 12B Manor Parkway, Salem, New Hampshire under that certain Lease
dated November 1, 1995 (the "ORIGINAL LEASE") between Equity Property Associates
I, a New Hampshire limited partnership ("PRIOR LANDLORD"), as landlord, and
Tenant, as Tenant. The original Lease has been amended by that certain Amendment
to Lease dated May 29, 1998 (the "FIRST AMENDMENT") between Prior Landlord and
Tenant. The Original Lease, as amended by the First Amendment, is the "PRIOR
LEASE". All capitalized terms not otherwise defined in this Second Amendment
shall have the meanings specified in the Prior Lease. The Prior Lease, as
amended by this Second Amendment, is the "LEASE".
B. Landlord has purchased the Building and has succeeded to all right,
title and interest of Prior Landlord, in, to and under the Prior Lease.
C. The premises originally leased under the Original Lease consist of
approximately 5,376 rentable square feet of space (the "ORIGINAL PREMISES") in
the Building. The First Amendment added to the Original Premises an additional
1,081 square feet of space in the Building (the "FIRST EXPANSION PREMISES"). The
Original Premises, together with the First Expansion Premises, are the "PRIOR
PREMISES".
D. Under the Original Lease, the initial Term (the "INITIAL TERM") was
scheduled to expire on October 31, 2000. The First Amendment extended the
expiration date of the Initial Term to May 31, 2003, and granted Tenant two
options to renew the Term, (the "RENEWAL OPTIONS").
E. Landlord and Tenant have agreed, according to the terms of this
Second Amendment, to: (i) add to the Prior Premises that certain additional
space in the Building (the "SECOND EXPANSION PREMISES") which contains
approximately 4,947 rentable square feet, and which is depicted on the EXHIBIT A
attached to this Second Amendment; and (ii) renew the Term for the ten-year
"First Renewal Term", as that term is defined below in Section 3 of this Second
Amendment.
NOW THEREFORE, the parties agree as follows:
1. INTERPRETATION. The Prior Lease, as amended by this Second
Amendment, remains in full force and effect. In the event of a conflict between
the terms of the Prior Lease and this Second Amendment, this Second Amendment
shall control.
<PAGE> 2
2. EXPANSION OF PREMISES. Effective May 1, 2000, the Second Expansion
Premises shall become part of the premises leased under the Lease for the
remainder of the Term, and each reference in the Lease to the "Premises" shall
be a collective reference to the Original Premises, the First Expansion
Premises, and the Second Expansion Premises. Tenant agrees that on and after May
1, 2000 the Premises shall be conclusively deemed, for all purposes related to
the Lease, to contain 11,404 rentable square feet. Tenant acknowledges that,
prior to the date of this Second Amendment, it has inspected the Second
Expansion Premises and has accepted possession of the Second Expansion Premises
in their "As-Is" condition without any objection or claim whatsoever relating to
the condition of the Second Expansion Premises. Tenant's occupancy of the Second
Expansion Premises prior to the date of this Second Amendment and through April
30, 2000 have been and shall continue to be subject to the terms of the Lease,
with the same effect as if the Second Expansion Premises were part of the
"Premises" throughout such period, except that Tenant shall not be obligated to
pay Annual Fixed Rent or Operating Costs or Tax Expenses with respect to the
Second Expansion Premises for the period prior to May 1, 2000.
3. RENEWAL OF TERM. The Prior Lease is hereby amended so that the
Initial Term will expire on April 30, 2000, and the Term is hereby renewed for
the period (the "FIRST RENEWAL TERM") from May 1, 2000 through April 30, 2010.
The renewal of the Term for the First Renewal Term shall be deemed to be
Tenant's exercise of both Renewal Options, and Tenant shall have no further
right to renew or extend the Term beyond the First Renewal Term, whether under
the Exhibit D to the First Amendment, or otherwise.
4. RENT.
a. ANNUAL FIXED RENT. Each 12-month period during the Term
commencing on May 1 shall be a "FIRST RENEWAL TERM LEASE YEAR".
Effective on and after May 1, 2000, Tenant shall pay Annual Fixed Rent
in accordance with the following schedule:
<TABLE>
<CAPTION>
- ------------------------------------- ----------------------------------- -----------------------------------
FIRST RENEWAL TERM ANNUAL FIXED RENT MONTHLY INSTALLMENTS OF
LEASE YEAR ANNUAL FIXED RENT
=============================================================================================================
<S> <C> <C>
1 $ 92,372.40 $7,697.70
- ------------------------------------- ----------------------------------- -----------------------------------
2 $ 94,219.85 $7,851.65
- ------------------------------------- ----------------------------------- -----------------------------------
3 $ 96,104.25 $8,008.69
- ------------------------------------- ----------------------------------- -----------------------------------
4 $ 98,026.33 $8,168.86
- ------------------------------------- ----------------------------------- -----------------------------------
5 $ 99,986.86 $8,332.24
- ------------------------------------- ----------------------------------- -----------------------------------
6 $101,986.59 $8,498.88
- ------------------------------------- ----------------------------------- -----------------------------------
7 $104,026.33 $8,668.86
- ------------------------------------- ----------------------------------- -----------------------------------
8 $106,106.85 $8,842.24
- ------------------------------------- ----------------------------------- -----------------------------------
9 $108,228.99 $9,019.08
- ------------------------------------- ----------------------------------- -----------------------------------
10 $110,393.57 $9,199.46
- ------------------------------------- ----------------------------------- -----------------------------------
</TABLE>
<PAGE> 3
b. OPERATING COSTS AND TAX EXPENSES. Notwithstanding that,
under the Prior Lease, Annual Fixed Rent included a specified "Included
Operating Expense Share" and an "Included Tax Expense Share", Annual
Fixed Rent on and after May 1, 2000 shall be entirely net of all
Operating Expenses and Tax Expenses. Effective on and after May 1,
2000, Tenant shall pay to Landlord, together with each monthly
installment of Annual Fixed Rent, one-twelfth of the full amount of
Tenant's Share of Landlord's estimate of Operating Costs and Landlord's
Tax Expenses for the current calendar year. Effective on and after may
1, 2000, Tenant's Share of Operating Expenses and Landlord's Tax
Expenses shall be 38.01%.
5. ALLOWANCE FOR TENANT WORK. Prior to the date of this Second
Amendment, Tenant has performed certain tenant improvement work (the "TENANT
WORK") in the Second Expansion Premises. Landlord shall reimburse Tenant for all
or some portion of the total cost to Tenant of all labor, materials, and
services supplied in the construction or installment of the Tenant Work,
together with all design costs and other fees and expenses properly allocable to
the performance of the Tenant Work (Collectively, the "PROJECTS COSTS") through
an allowance (the "ALLOWANCE") in an amount of up to $100,000.00. Provided that
no default then exists with respect to Tenant's obligation to pay any rent and
Tenant is then lawfully in occupancy of the Second Expansion Premises in the
routine conduct of its business, Landlord shall pay to Tenant a sum in the
amount of the lower of the $100,000.00 or the actual Project Costs within 10
business days after the last to occur of the following: (i) Landlord's building
manager's receipt and approval of a statement from Tenant's architect or general
contractor (the "SUBSTANTIAL COMPLETION CERTIFICATE") certifying that
substantial completion of the Tenant Work has occurred; (ii) Tenant has
delivered to Landlord a certificate of occupancy from TOWN OF SALEM for the
Second Expansion Premises; (iii) Landlord has received full lien waivers for all
of the Tenant Work; and (iv) Tenant has submitted to Landlord a written request
for payment of the Allowance. Tenant shall be solely responsible for all Project
Costs for the Second Expansion Premises in excess of the Allowance. Project
Costs shall not include, and the Allowance shall not be payable with respect to,
any overhead or other "internal" costs or expenses of Tenant, any costs or
expenses which are not actually paid to third parties unaffiliated with Tenant,
or any costs of purchasing, leasing, and/or installing any equipment or other
personal property which will not become part of the Second Expansion Premises
and the property of Landlord upon installation in the Second Expansion Premises.
<PAGE> 4
THIS Second Amendment is executed as of the date recited above.
MANOR PARKWAY LLC, a Minnesota limited
liability company
By: ERP Manor Parkway LLC, a Minnesota limited
liability company, its Chief Manager
By: /s/ Authorized Signatory
--------------------------------------
Its:
--------------------------------------
HADCO CORPORATION, a Massachusetts corporation
By: /s/ Patricia Randall
------------------------------------------
Its: Vice President and General Counsel
------------------------------------------
<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO
HADCO CORPORATION 1998 STOCK PLAN
This Amendment (the "Amendment") to the Hadco Corporation 1998 Stock
Plan (the "Plan") is effective as of April 17, 2000. The Plan shall be amended
as follows:
Sections 12 (B) and (C) shall be deleted in their entirety and replaced
with the following:
B. CONSOLIDATIONS OR MERGERS. Upon any sale of all or substantially all
of the assets of the Company, or upon any merger, consolidation or tender offer
in respect of which the stockholders holding all of the Company's outstanding
voting securities immediately prior to the consummation thereof, hold less than
50% of all of the Company's outstanding voting securities immediately after such
consummation (each of the foregoing sale, merger, consolidation or tender offer
hereinafter called an "Acquisition"), then: (i) the date upon which all then
outstanding Stock Rights granted under this Plan become fully vested and
exercisable shall be automatically accelerated to occur immediately prior to the
consummation of such Acquisition and (ii) the date(s) upon which all then
outstanding repurchase, forfeiture or other similar restrictions, if any, (but
not any securities law restrictions which may apply to such stock or its
disposition) on shares of stock subject to Stock Rights or grant pursuant to an
Award shall lapse shall be automatically accelerated to occur immediately prior
to the consummation of such Acquisition. Notwithstanding any language in any
option or award agreement between the Company and a Participant, in no event
shall any outstanding option be subject to forfeiture solely as a result of its
non-exercise after the acceleration of vesting pursuant to clause (i) above and
prior to the consummation of an Acquisition.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company pursuant to which securities
of the Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, a Participant upon exercising a Stock Right
shall be entitled to receive for the purchase price paid upon such exercise the
securities as determined under the terms of the recapitalization or
reorganization he or she would have then received if he or she had exercised
such Stock Right prior to such recapitalization or reorganization.
Except as specifically amended hereby, each of the terms and conditions
of the Plan is hereby ratified and confirmed and shall remain in full force and
effect.
<PAGE> 1
EXHIBIT 10.3
AMENDMENT TO
HADCO CORPORATION NON-QUALIFIED STOCK OPTION
PLAN OF 1995
This Amendment (the "Amendment") to the Hadco Corporation Non-Qualified
Stock Option Plan of 1995 (the "Plan") is effective as of April 17, 2000. The
Plan shall be amended as follows:
Sections 11 (b) and (c) shall be deleted in their entirety and replaced
with the following:
(b) Upon any sale of all or substantially all of the assets of the
Company, or upon any merger, consolidation or tender offer in respect of which
the stockholders holding all of the Company's outstanding voting securities
immediately prior to the consummation thereof, hold less than 50% of all of the
Company's outstanding voting securities immediately after such consummation
(each of the foregoing sale, merger, consolidation or tender offer hereinafter
called an "Acquisition"), then the date upon which all then outstanding options
granted under this Plan become fully vested and exercisable shall be
automatically accelerated to occur immediately prior to the consummation of such
Acquisition. Notwithstanding any language in any option agreement between the
Company and an optionee, in no event shall any outstanding option be subject to
forfeiture solely as a result of its non-exercise after the acceleration of
vesting described above in this subsection and prior to the consummation of an
Acquisition.
(c) In the event of a recapitalization or reorganization of the Company
pursuant to which securities of the Company or of another corporation are issued
with respect to the outstanding shares of Common Stock, an optionee upon
exercising an option shall be entitled to receive for the purchase price paid
upon such exercise securities he or she would have received if he or she had
exercised such option prior to such recapitalization or reorganization.
Except as specifically amended hereby, each of the terms and conditions
of the Plan is hereby ratified and confirmed and shall remain in full force and
effect.
<PAGE> 1
EXHIBIT 10.4
AMENDMENT TO
HADCO CORPORATION NON-QUALIFIED STOCK OPTION
PLAN OF 1990
This Amendment (the "Amendment") to the Hadco Corporation Non-Qualified
Stock Option Plan of 1990 (the "Plan") is effective as of April 17, 2000. The
Plan shall be amended as follows:
Section 11 (b) shall be deleted in its entirety and replaced with the
following:
(b) Upon any sale of all or substantially all of the assets of the
Company, or upon any merger, consolidation or tender offer in respect of which
the stockholders holding all of the Company's outstanding voting securities
immediately prior to the consummation thereof, hold less than 50% of all of the
Company's outstanding voting securities immediately after such consummation
(each of the foregoing sale, merger, consolidation or tender offer hereinafter
called an "Acquisition"), then the date upon which all then outstanding options
granted under this Plan become fully vested and exercisable shall be
automatically accelerated to occur immediately prior to the consummation of such
Acquisition. Notwithstanding any language in any option agreement between the
Company and an optionee, in no event shall any outstanding option be subject to
forfeiture solely as a result of its non-exercise after the acceleration of
vesting described above in this subsection and prior to the consummation of an
Acquisition.
Except as specifically amended hereby, each of the terms and conditions
of the Plan is hereby ratified and confirmed and shall remain in full force and
effect.
<PAGE> 1
EXHIBIT 10.5
AMENDMENT TO
HADCO CORPORATION NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN OF 1991
This Amendment (the "Amendment") to the Hadco Corporation Non-Employee
Director Stock Option Plan of 1991 (the "Plan") is effective as of April 17,
2000. The Plan shall be amended as follows:
Sections 11 (a) and (b) shall be deleted in their entirety and replaced
with the following:
(a) Vesting of Options Granted under Section 8(a) of Plan. Options
granted under Section 8(a) of this Plan shall vest (i.e., become exercisable) in
the Optionee and thus become exercisable in accordance with the following
schedule:
CUMULATIVE NUMBER OF SHARES
FOR WHICH OPTION IS EXERCISABLE DATE OF VESTING
1/5 of total Option Shares At the date of approval of the Plan
by the shareholders of the Company
(all as described in Section 8). In
the event such approval has been
received by the date of the grant
of the option then at said date of
grant of option.
2/5 of total Option Shares 1 year anniversary of the date of
the grant of option.
3/5 of total Option Shares 2 year anniversary of the date of
the grant of option.
4/5 of total Option Shares 3 year anniversary of the date of
the grant of option.
100% of total Option Shares 4 year anniversary of the date of
the grant of option.
Upon any sale of all or substantially all of the assets of the Company, or upon
any merger, consolidation or tender offer in respect of which the stockholders
holding all of the Company's outstanding voting securities immediately prior to
the consummation thereof hold less than 50% of all of the Company's outstanding
voting securities immediately after such consummation
<PAGE> 2
(each of the foregoing sale, merger, consolidation or tender offer hereinafter
called an "Acquisition"), then the date upon which all then outstanding options
granted under this Plan become fully vested and exercisable shall be
automatically accelerated to occur immediately prior to the consummation of such
Acquisition. Notwithstanding any language in any option agreement between the
Company and an Optionee, in no event shall any outstanding option granted under
Section 8(a) of this Plan be subject to forfeiture solely as a result of its
non-exercise after the acceleration of vesting described above in this
subsection and prior to the consummation of an Acquisition.
(b) Vesting of Options Granted under Section 8(b) of Plan. Options
granted under Section 8(b) of this Plan shall vest (i.e. become exercisable) in
the Optionee immediately upon grant. Notwithstanding any language in any option
agreement between the Company and an Optionee, in no event shall any outstanding
option granted under Section 8(b) of this Plan be subject to forfeiture solely
as a result of its non-exercise prior to the consummation of an Acquisition.
Except as specifically amended hereby, each of the terms and conditions
of the Plan is hereby ratified and confirmed and shall remain in full force and
effect.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-28-2000
<PERIOD-START> JAN-30-2000
<PERIOD-END> APR-29-2000
<EXCHANGE-RATE> 1
<CASH> 112
<SECURITIES> 0
<RECEIVABLES> 141,176
<ALLOWANCES> 1,467
<INVENTORY> 65,823
<CURRENT-ASSETS> 230,847
<PP&E> 723,902
<DEPRECIATION> 405,758
<TOTAL-ASSETS> 731,234
<CURRENT-LIABILITIES> 150,256
<BONDS> 267,408
0
0
<COMMON> 693
<OTHER-SE> 241,970
<TOTAL-LIABILITY-AND-EQUITY> 731,234
<SALES> 275,422
<TOTAL-REVENUES> 275,933
<CGS> 225,820
<TOTAL-COSTS> 252,151
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,739
<INCOME-PRETAX> 17,043
<INCOME-TAX> 6,476
<INCOME-CONTINUING> 10,567
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,567
<EPS-BASIC> 0.77
<EPS-DILUTED> 0.75
</TABLE>
