<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________to_____________
COMMISSION FILE NUMBER: 1-12432
AMERICAN POWER CONVERSION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2722013
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)
132 FAIRGROUNDS ROAD, WEST KINGSTON, RHODE ISLAND 02892
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 401-789-5735
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH
SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH
REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS
FOR THE PAST 90 DAYS.
YES [ X ] NO [ ]
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON
STOCK, $.01 PAR VALUE, ON NOVEMBER 5, 1996 WAS 94,539,927 SHARES.
1
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
AMERICAN POWER CONVERSION CORPORATION AND SUBSIDIARIES
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION:
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS:
CONSOLIDATED CONDENSED BALANCE SHEETS -
SEPTEMBER 30, 1996 (UNAUDITED) AND 3 - 4
DECEMBER 31, 1995
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME - NINE MONTHS AND THREE MONTHS ENDED 5
SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS - NINE MONTHS AND THREE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED) 6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS (UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 - 11
PART II - OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
2
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
PART I - CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
ITEM 1 - FINANCIAL STATEMENTS
AMERICAN POWER CONVERSION CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 1996 31, 1995
(UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $146,532,480 $39,039,735
Accounts receivable,
less allowance for doubtful accounts
of $9,948,000 in 1996 and $6,920,000
in 1995 102,318,012 71,199,105
Inventories:
Raw materials 63,307,000 62,495,212
Work-in-process and finished goods 47,435,799 85,045,841
Total inventories 110,742,799 147,541,053
Prepaid expenses and other current assets 12,204,866 9,277,986
Deferred income taxes 18,766,000 11,323,000
Total current assets 390,564,157 278,380,879
Property, plant and equipment:
Land, buildings and improvements 18,077,875 15,973,746
Machinery and equipment 58,508,001 51,353,043
Office equipment and furniture 21,652,391 17,860,365
Purchased software 6,972,069 4,160,439
105,210,336 89,347,593
Less accumulated depreciation and
amortization 31,147,512 22,144,085
Net property, plant and equipment 74,062,824 67,203,508
Other assets 1,160,811 1,003,452
Total assets $465,787,792 $346,587,839
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
3
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
AMERICAN POWER CONVERSION CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 1996 31, 1995
(UNAUDITED)
Current liabilities:
<S> <C> <C>
Accounts payable $47,119,052 $26,406,283
Accrued expenses 9,272,608 5,790,421
Accrued compensation 11,774,014 6,472,255
Accrued sales and marketing programs 14,076,296 6,780,595
Accrued pension contributions 4,696,354 4,677,639
Income taxes payable 14,092,404 1,795,751
Total current liabilities 101,030,728 51,922,944
Deferred income tax liability 6,222,000 4,899,000
Total liabilities 107,252,728 56,821,944
Shareholders' equity:
Common stock, $.01 par value;
Authorized 200,000,000 shares;
Issued 94,290,804 shares in 1996,
93,270,933 shares in 1995 942,908 932,709
Additional paid-in capital 45,214,243 37,122,872
Retained earnings 313,929,176 251,710,314
Treasury stock, 125,000 shares, at
cost (1,551,263) -
Total shareholders' equity 358,535,064 289,765,895
Total liabilities
and shareholders' equity $465,787,792 $346,587,839
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
4
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
AMERICAN POWER CONVERSION CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $496,818,057 $373,747,703 $193,755,373 $141,993,350
Cost of goods sold 289,311,462 204,446,667 111,771,927 82,749,541
Gross profit 207,506,595 169,301,036 81,983,446 59,243,809
Operating expenses:
Research and development 10,683,151 9,351,018 3,457,103 3,219,557
Selling, general
and administrative 106,626,716 81,323,937 38,216,667 30,212,148
Total operating expenses 117,309,867 90,674,955 41,673,770 33,431,705
Operating income 90,196,728 78,626,081 40,309,676 25,812,104
Other income
(deductions):
Interest income 3,363,742 995,169 1,652,652 108,305
Interest expense - (227,231) - (203,606)
Other income(expenses) 1,392 (26,220) (6,288) 41,637
Earnings before
income taxes 93,561,862 79,367,799 41,956,040 25,758,440
Income taxes 31,343,000 26,588,000 14,055,000 8,629,000
Net income $62,218,862 $52,779,799 $27,901,040 $17,129,440
Earnings per share $ .66 $ .56 $ .30 $ .18
Weighted average
shares outstanding 93,994,887 93,492,265 94,401,094 93,765,475
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
5
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
AMERICAN POWER CONVERSION CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
Cash flows from operating
activities:
<S> <C> <C> <C> <C>
Net income $62,218,862 $52,779,799 $27,901,040 $17,129,440
Adjustments to reconcile
net income to net
cash provided by (used
in) operating activities:
Depreciation and
amortization 9,003,427 6,018,054 3,558,682 1,455,974
Provision for losses on
accounts receivable 3,188,000 3,000,000 910,000 1,698,000
Provision for deferred
taxes (6,120,000) (4,911,000) (3,699,000) (1,208,000)
Increase in accounts
receivable (34,306,907) (20,023,683) (17,020,240) (4,085,851)
(Increase) decrease in
inventories 36,798,254 (61,328,271) 5,244,603 3,669,766
(Increase) decrease in
prepaid expenses and
other current assets (2,926,880) (1,849,692) (981,476) 1,970,328
(Increase) decrease in
other assets (157,359) (60,500) (19,098) 3,601
Increase (decrease) in
accounts payable 20,712,769 (6,587,660) 18,505,335 (14,218,109)
Increase in accrued
accrued expenses 16,098,362 3,310,946 9,279,906 3,293,703
Increase in income taxes
payable 12,296,653 3,215,849 10,706,572 796,718
Net cash provided by (used
in) operating activities 116,805,181 (26,436,158) 54,386,324 10,505,570
Cash flows from investing
activities:
Capital expenditures, net
of capital grants (15,862,743) (19,855,738) (7,157,018) (3,934,287)
Proceeds from sale of
equipment - 130,310 - -
Sales/maturities of short-
term investments - 13,707,529 - -
Purchases of short-term
investments - (802,800) - -
Net cash used in investing
activities (15,862,743) (6,820,699) (7,157,018) (3,934,287)
Cash flows from financing
activities:
Line of credit borrowings,
net of repayments - 8,370,000 - (130,000)
Issuances of common stock 8,101,570 6,519,006 2,242,055 1,066,111
Purchases of common stock (1,551,263) - (65,004) -
Net cash provided by
financing activities 6,550,307 14,889,006 2,177,051 936,111
Net increase (decrease) in
cash and cash equivalents 107,492,745 (18,367,851) 49,406,357 7,507,394
Cash and cash equivalents
at beginning of period 39,039,735 29,072,717 97,126,123 3,197,472
Cash and cash equivalents
at end of period $146,532,480 $10,704,866 $146,532,480 $10,704,866
</TABLE>
The Company paid approximately $25,166,000 and $29,698,000 for
income taxes for the nine month periods ended September 30, 1996
and 1995, respectively. During the first nine months of 1995,
changes in unrealized holding losses on short-term investments
resulted in increases to shareholders' equity and to short-term
investments of $497,000.
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
6
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) MANAGEMENT REPRESENTATION: In the opinion of management,
the accompanying unaudited interim financial statements contain
all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position and the
results of operations for the interim periods. The results of
operations for the interim period are not necessarily indicative
of results to be expected for the full year.
(2) PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the financial statements of American Power
Conversion Corporation and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
(3) PER SHARE DATA: Earnings per common share are based on the
weighted average number of shares of common stock and dilutive
common stock options outstanding during each period. Under the
treasury stock method, the unexercised options were assumed to be
exercised at the beginning of the period or at issuance, if
later. The assumed proceeds were then used to purchase common
stock at the average market price during the period. Common
stock equivalents whose inclusion would have the effect of
increasing earnings per share (i.e., antidilutive) are excluded
from the computation. Primary and fully diluted earnings per
share are equivalent for all periods presented.
(4) SHAREHOLDERS' EQUITY: Changes in paid-in capital for the
periods presented represent the issuances of common stock
resulting from the exercise of employee stock options, as well as
the Company's contributions to the Employee Stock Ownership Plan.
7
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Revenues
Net sales were $193,755,373 for the third quarter of 1996, an
increase of 36.5% compared to $141,993,350 for the same period in
1995. Net sales for the first nine months of 1996 were
$496,818,057 compared to $373,747,703 in 1995, an increase of
32.9%. The Company experienced solid worldwide growth across all
major products and geographies during the third quarter of 1996.
North American net sales grew 32% versus the third quarter of
1995, while third quarter international net sales grew 44%
compared to the same period last year. The increases are
attributable to continued strong worldwide demand for the
Company's products across fast-growing core markets, including
computer networking, internetworking equipment and point-of-sale
devices, as well as what the Company believes is an increasing
awareness by computer users of the consequences of data loss and
hardware damage which can be caused by power problems. The
Company continues to experience increased sales growth in
emerging international markets as international sales (excluding
Canada) comprised 36.0% of net sales in the first nine months of
1996 compared to 33.9% in the first nine months of 1995.
Cost of Goods Sold
Cost of goods sold was $111,771,927 or 57.7% of net sales in the
third quarter of 1996 compared to $82,749,541 or 58.3% in the
third quarter of 1995. Cost of goods sold for the first nine
months of 1996 was $289,311,462 or 58.2% of net sales compared to
$204,446,667 or 54.7% in 1995. Although gross margins eroded
from the first nine months of 1995 to the comparable period in
1996, gross margins improved during the third quarter of 1996
over the third quarter of 1995. The year-to-date gross margin
erosion was primarily attributable to several factors, including
but not limited to: increased reserves for potential excess
inventories in light of the product transition which occurred
within the Smart-UPS(R) product family; a shift in product sales
mix from the high-end Smart-UPS products to the lower margin
Smart-UPS v/s products offset by a favorable margin impact of
increasing sales of third generation Smart-UPS products; and
increased indirect manufacturing costs associated with additional
indirect manufacturing personnel and other costs incurred to
support manufacturing infrastructure expansion and a transition
toward more specific product-focused factories. The third
quarter 1996 gross margin improvement over last year was
primarily attributable to improving average selling prices and
reduced inventory reserve provisioning.
Operating Expenses
Operating expenses include selling, general and administrative
and research and development expenses.
Selling, general and administrative (SG&A) expenses were
$38,216,667 or 19.7% of net sales for the third quarter of 1996
compared to $30,212,148 or 21.3% of net sales for the third
quarter of 1995. For the first nine months of 1996, SG&A
expenses were $106,626,716 or 21.5% of net sales compared to
$81,323,937 or 21.8% of net sales for 1995. The increases in
spending for the three and nine month periods in 1996 over last
year were due primarily to costs associated with increased
advertising and promotional costs, as well as costs associated
with increased staffing of sales and other related positions both
domestically and internationally. The decreases in SG&A expenses
as a percentage of sales for the three and nine month periods
during 1996 over last year is attributable to certain fixed SG&A
expenses spread over a higher revenue base in 1996. The
allowance for bad debts at September 30, 1996 was 8.9% of
accounts receivable, unchanged from 8.9% at December 31, 1995.
The Company has experienced and continues to experience very
strong collection performance with accounts receivable balances
outstanding over 60 days representing 4.7% and 5.8% of total
receivables at September 30, 1996 and December 31, 1995,
respectively. Write-offs of uncollectible accounts have
historically represented less than 1% of total receivable
balances. A majority of international customer balances are
covered by receivables insurance.
Research and development expenses were $3,457,103 or 1.8% of net
sales and $3,219,557 or 2.3% of net sales for the third quarter
of 1996 and 1995, respectively. Research and development
expenses for the first nine months of 1996 were $10,683,151 or
2.2% of net sales compared to $9,351,018 or 2.5% of net sales in
1995. The increased research and development spending primarily
8
<PAGE>
reflects increased numbers of software and hardware engineers and
costs associated with new product development and engineering
support, while the decrease as a percentage of sales for the nine
month period is attributable to certain fixed R&D expenses spread
over a higher revenue base in 1996.
Other Income (Expenses) and Income Taxes
Interest income increased by 1,425.9% and 238.0% for the three
months and nine months ended September 30, 1996 compared to the
same periods in 1995. The increase is primarily attributable to
higher average cash balances available for investment during the
third quarter and first nine months of 1996.
The Company's effective tax rate was approximately 33.5% for both
the three-month and nine-month periods ended September 30, 1996
and 1995.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at September 30, 1996 was $289,533,429 compared
to $226,457,935 at December 31, 1995. The Company has been able
to increase its working capital position as the result of
continued strong operating results and despite internally
financing the capital investment of the expansion of its
operations. The Company's cash position rose approximately
$107.5 million, or 275%, to $146.5 million at September 30, 1996
compared to December 31, 1995.
Worldwide inventories were $110,742,799 at September 30, 1996
compared to $147,541,053 at December 31, 1995. Inventory levels
have decreased as a result of the Company's concerted efforts to
reduce inventory levels as a percentage of sales. Inventory
levels as a percentage of quarterly sales have declined from 104%
in the fourth quarter of 1995 to 57% in the third quarter of
1996. The total inventory reserves at September 30, 1996 were
$12.1 million compared to $6.5 million at December 31, 1995. The
increased inventory reserves have been provided primarily to
cover the potential loss exposure that may result from excess
inventories as the demand for second generation products
diminishes. Second generation Smart-UPS represented
approximately 6% of total inventories at September 30, 1996. The
Company's reserve estimate methodology involves quantifying the
total inventory position having potential loss exposure, reduced
by an amount reasonably forecasted to be sold, and adjusting its
interim reserve provisioning to cover the net loss exposure.
During the first quarter of 1996, the Company announced that the
Board of Directors had authorized the repurchase of up to $15
million worth of the Company's outstanding Common Stock. The
objective of the repurchase program is to offset potential
dilution of earnings per share which may result from employee
stock programs. The Company has repurchased approximately $1.6
million of its common shares as of September 30, 1996.
Capital investment for the first nine months of 1996 consisted
primarily of manufacturing and office equipment. The nature and
level of capital spending was made to improve manufacturing
capabilities and to support the increased selling, marketing and
administrative efforts necessitated by the Company's significant
growth. Net capital expenditures were financed from available
operating cash. The Company had no material capital commitments
at September 30, 1996, except for a commitment to purchase
certain software and related hardware to replace its current
enterprise-wide manufacturing, distribution and financial
applications. The cost of the software licenses, project
consulting and hardware requirements will be approximately $6
million. The implementation of the new system began during the
third quarter of 1996.
The Company's Ireland facility is providing manufacturing and
technical support in order to better service the Company's
markets in Europe, the Middle East, Africa and Russia. In
February 1994, the Company executed an agreement with the
Industrial Development Authority of Ireland ("IDA") under which
the Company will receive grant monies equal to 40% of the costs
incurred for machinery, equipment and building improvements for
the Galway facility. The maximum amount attainable under the
agreement is approximately $13.1 million. The grant monies would
be repayable, in whole or in part, should (1) the Company fail to
meet certain employment goals established under the agreement
which are to be achieved over a five year implementation period
and/or (2) the Company discontinues operations in Ireland prior
to the termination of the agreement. The agreement terminates
eight years from the date of the last claim made by the Company
for grant monies. The total cumulative amount of capital grant
claims submitted through September 30, 1996 was approximately
$9.5 million. The total cumulative amount of capital grants
received through September 30, 1996 amounted to approximately
$6.1 million.
Under a separate agreement with the IDA, the Company will also
receive up to $3,000 per new employee hired for the direct
reimbursement of training costs. The total cumulative amount of
training grant claims submitted through September 30, 1996 was
9
<PAGE>
approximately $2.0 million. The total cumulative amount of
training grants received through September 30, 1996 amounted to
approximately $.7 million.
The Company continues to investigate potential sites for
manufacturing expansion in international locations. The Company
began establishing a manufacturing operation in the Philippines
during the second quarter of 1996. The Company purchased and
improved a 70,000 square foot facility for approximately $1.5
million which was financed from operating cash. The Company is
currently pursuing a second location in the Philippines. Capital
expenditures for the Philippines expansion are estimated to be $6-
7 million for 1996 and will be financed from operating cash and,
if needed, short-term borrowings.
Management believes that current internal cash flows together
with available cash, available credit facilities or, if needed,
the proceeds from the sale of additional equity, would provide
sufficient financing support for capital spending needs and other
working capital requirements for the foreseeable future. At
September 30, 1996, the Company had available for future
borrowings $50 million under an unsecured line of credit
agreement at a floating interest rate equal to the bank's cost of
funds rate plus .625% and an additional $15 million under an
unsecured line of credit agreement with a second bank at a
similar interest rate. No borrowings were outstanding under
these facilities at September 30, 1996. Additionally, the
Company has no significant financial commitments outstanding
other than those required in the normal course of business.
Foreign Currency Activity
During the fourth quarter of 1994, the Company began invoicing
its customers in Great Britain, France and Germany in their
respective local currencies. During the second quarter of 1996,
the Company began invoicing certain of its Japan customers in
Yen. Realized and unrealized transaction gains or losses are
included in the results of operations and are measured based upon
the effect of changes in exchange rates on the actual or expected
amount of functional currency cash flows. Transaction gains and
losses were not material to the results of operations during the
third quarter and first nine months of 1996 and 1995.
At September 30, 1996, the Company's unhedged foreign currency
accounts receivable, by currency, were as follows:
British Pounds - 2,721,000 (approx. US$4,225,000)
French Francs - 10,768,000 (approx. US$2,090,000)
German Marks - 5,565,000 (approx. US$3,660,000)
Japanese Yen - 349,233,000 (approx. US$3,325,000)
Total gross accounts receivable at September 30, 1996 was
approximately $112,266,000. The Company had non-trade
receivables of 2,960,000 Irish Pounds (approximately
US$4,725,000), as well as Irish Pound denominated liabilities of
4,850,000 (approximately US$7,750,000). The Company also had
liabilities denominated in various European currencies of
US$1,630,000, as well as Yen denominated liabilities of
approximately US$20,000.
The Company continually reviews its foreign exchange exposure and
considers various risk management techniques including the
netting of foreign currency receipts and disbursements, rate
protection agreements with customers/vendors and derivatives
arrangements, including foreign exchange contracts. The Company
presently does not utilize rate protection agreements or
derivatives arrangements.
The Company's rationale for not hedging its foreign currency risk
exposure through derivatives arrangements is based on the
assessment that the net foreign currency position was not
material to the financial condition or results of operations of
the Company at September 30, 1996 and, to a lesser degree, an
assessment that the risk of loss from exchange rate fluctuations
was not material based upon available forecasts of short-term
exchange rate movements for the currencies noted above.
Legal Proceedings
As initially reported in Report on Form 10-Q for the quarter
ended June 30, 1995, several purported class action lawsuits were
filed in the United States District Court for the District of
Rhode Island in which the Company was named as a defendant, along
with certain of its officers. The lawsuits relate to disclosures
made by the Company in its public filings and press releases and
assert violations of federal securities laws. The plaintiffs
seek unspecified damages, interest, costs and fees. In mid-
February 1996, a derivative lawsuit was filed by two shareholders
on behalf and for the benefit of the Company against certain
present and former officers and/or directors of the Company in
the Superior Court of Suffolk County, Massachusetts. The Company
was also named as a nominal defendant. The derivative action
plaintiffs allege that the individual defendants in that case
traded in the stock of the Company allegedly in breach of their
fiduciary duty to the Company. It is possible that other claims
10
<PAGE>
may be made against the Company in these actions or that related
allegations could be made that could give rise to other
consequences. The Company intends to defend these lawsuits
vigorously and any similar lawsuits that may be filed; however,
the ultimate outcome of these matters cannot yet be determined.
No provision for any liability that may result from the actions
has been recognized in the consolidated condensed financial
statements included in Item 1 of this Report.
Factors That May Affect Future Performance
This document contains forward-looking statements based on
current expectations that involve a number of risks and
uncertainties. The factors that could cause actual results to
differ materially include the following: general economic
conditions and growth rates in the power protection industry and
related industries, including but not limited to the PC, server
and networking industries; competitive factors and pricing
pressures; changes in product mix; changes in the seasonality of
demand patterns; the timely development and acceptance of new
products; inventory risks due to shifts in market demand;
component constraints and shortages; risk of nonpayment of
accounts receivable; ramp-up and expansion of manufacturing
capacity and the risks described from time to time in the
Company's filings with the Securities and Exchange Commission.
11
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8 - K
(A) EXHIBITS:
EXHIBIT NO. 11 - COMPUTATION OF EARNINGS PER SHARE (PAGE 14)
EXHIBIT NO. 27 - FINANCIAL DATA SCHEDULE
(B) REPORTS ON FORM 8-K
NO REPORT ON FORM 8-K WAS FILED BY AMERICAN POWER CONVERSION
CORPORATION DURING THE QUARTER ENDED SEPTEMBER 30, 1996.
12
<PAGE>
FORM 10-Q
SEPTEMBER 30, 1996
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT
OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
AMERICAN POWER CONVERSION CORPORATION
/s/ Donald M. Muir
--------------------------------
Date: November 8, 1996
Donald M. Muir
CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER)
13
FORM 10-Q
SEPTEMBER 30, 1996
EXHIBIT 11
AMERICAN POWER CONVERSION CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
Primary:
<S> <C> <C> <C> <C>
Weighted average
shares outstanding 93,750,973 92,839,686 94,039,026 93,111,855
Net effect of
dilutive stock
options based on the
treasury stock method
using the average
market price 243,914 652,579 362,068 653,620
Total 93,994,887 93,492,265 94,401,094 93,765,475
Net income $62,218,862 $52,779,799 $27,901,040 $17,129,440
Per share amount $ .66 $ .56 $ .30 $ .18
Fully diluted:
Weighted average
shares outstanding 93,750,973 92,839,686 94,039,026 93,111,855
Net effect of
dilutive stock
options based on the
treasury stock method
using the period
end market price 543,815 450,946 561,597 450,946
Total 94,294,788 93,290,632 94,600,623 93,562,801
Net income $62,218,862 $52,779,799 $27,901,040 $17,129,440
Per share amount $ .66 $ .56 $ .30 $ .18
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET AT SEPTEMBER 30, 1996 AND CONSOLIDATED
CONDENSED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1.00
<CASH> 146,532,480
<SECURITIES> 0
<RECEIVABLES> 112,266,012
<ALLOWANCES> 9,948,000
<INVENTORY> 110,742,799
<CURRENT-ASSETS> 390,564,157
<PP&E> 105,210,336
<DEPRECIATION> 31,147,512
<TOTAL-ASSETS> 465,787,792
<CURRENT-LIABILITIES> 101,030,728
<BONDS> 0
0
0
<COMMON> 942,908
<OTHER-SE> 357,592,156
<TOTAL-LIABILITY-AND-EQUITY> 465,787,792
<SALES> 496,818,057
<TOTAL-REVENUES> 496,818,057
<CGS> 289,311,462
<TOTAL-COSTS> 406,621,329
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 93,561,862
<INCOME-TAX> 31,343,000
<INCOME-CONTINUING> 62,218,862
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,218,862
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
