UNITED STATES
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 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ___________________
Commission File No. 1-9389
CHARTER POWER SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3314599
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Union Meeting Road
Blue Bell, Pennsylvania 19422
(Address of principal executive office)
(Zip Code)
(215) 619-2700
(Registrant's telephone number, including area code)
______________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO_____
Number of shares of the Registrant's Common Stock outstanding on June 5, 1997:
6,104,425
CHARTER POWER SYSTEMS, INC.
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1 - Financial Statements
Consolidated Balance Sheets -
April 30, 1997 and January 31, 1997................. 3
Consolidated Statements of Income -
Three Months Ended April 30, 1997 and 1996.......... 5
Consolidated Statements of Cash Flows -
Three Months Ended April 30, 1997 and 1996.......... 6
Notes to Consolidated Financial Statements.......... 8
Report of Independent Accountants................... 13
Item 2 - Management's Discussion and Analysis
Of Financial Condition and Results of Operations.... 14
PART II. OTHER INFORMATION 17
SIGNATURES 18
2
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
April 30, January 31,
1997 1997
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 1,033 $ 952
Restricted cash and cash equivalents - 1
Accounts receivable, less allowance for
doubtful accounts of $1,565 and
$1,414, respectively 42,362 41,682
Inventories 41,539 38,943
Deferred income taxes 7,325 7,315
Other current assets 638 437
------- -------
Total current assets 92,897 89,330
Property, plant and equipment, net 52,404 52,469
Intangible and other assets, net 5,555 6,208
Goodwill, net 11,614 11,966
------- -------
Total assets $162,470 $159,973
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 486 $ 476
Accounts payable 22,764 23,730
Accrued liabilities 16,719 14,468
Other current liabilities 6,328 5,220
------- -------
Total current liabilities 46,297 43,894
Deferred income taxes 4,206 3,923
Long-term debt 24,422 29,351
Other liabilities 8,787 7,899
------- -------
Total liabilities 83,712 85,067
------- -------
The accompanying notes are an integral part of these statements.
3
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands)
(Unaudited)
April 30, January 31,
1997 1997
---- ----
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value,
10,000,000 shares authorized;
6,557,976 and 6,547,476 shares
issued, respectively 66 65
Additional paid-in capital 39,539 39,326
Minimum pension liability adjustment (136) (136)
Treasury stock, at cost, 470,551 shares (11,232) (11,232)
Note receivable from stockholder,
net of discount of $68 and
$85, respectively (1,654) (1,636)
Cumulative translation adjustment (685) (374)
Retained earnings 52,860 48,893
------- -------
Total stockholders' equity 78,758 74,906
------- -------
Total liabilities and
stockholders' equity $162,470 $159,973
======= =======
The accompanying notes are an integral part of these statements.
4
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended
April 30,
1997 1996
---- ----
Net sales $73,346 $62,429
Cost of sales 54,363 47,308
------ ------
Gross profit 18,983 15,121
Selling, general and administrative
expenses 9,255 7,443
Research and development expenses 2,076 1,874
------ ------
Operating income 7,652 5,804
Interest expense, net 376 262
Other expense (income), net 712 ( 3)
------ ------
Income before income taxes 6,564 5,545
Provision for income taxes 2,429 1,899
------ ------
Net income $ 4,135 $ 3,646
====== ======
Net income per common and
common equivalent share $ .66 $ .56
====== ======
Weighted average common and
common equivalent shares 6,265 6,548
====== ======
Dividends per share $ .0275 $ .0275
====== ======
The accompanying notes are an integral part of these statements.
5
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three months ended
April 30,
1997 1996
---- ----
Cash flows provided (used) by operating activities:
Net income $ 4,135 $ 3,646
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,359 1,940
Deferred income taxes 273 150
Changes in:
Accounts receivable (740) (2,096)
Inventories (2,625) (2,964)
Other current assets (203) (478)
Accounts payable (964) 4,121
Accrued liabilities 2,250 (444)
Income taxes payable 1,849 1,489
Other current liabilities (654) (33)
Other liabilities 888 66
Other, net (224) 25
------ ------
Net cash provided by operating activities 7,344 5,422
------ ------
Cash flows provided (used) by investing activities:
Acquisition of businesses, net of cash
acquired - (19,739)
Acquisition of property, plant and equipment (2,298) (4,310)
Change in restricted cash 1 1,311
------ ------
Net cash used by investing activities (2,297) (22,738)
------ ------
Cash flows provided (used) by financing activities:
Repayment of long-term debt (4,919) (6,367)
Proceeds from new borrowings - 19,784
Proceeds from issuance of common stock 127 331
Payment of common stock dividends (167) (173)
------ ------
Net cash provided (used) by financing activities (4,959) 13,575
------ ------
Effect of exchange rate changes on cash (7) 4
------ ------
The accompanying notes are an integral part of these statements.
6
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Dollars in thousands)
(Unaudited)
Three months ended
April 30,
1997 1996
---- ----
Increase (decrease) in cash and cash
equivalents 81 (3,737)
Cash and cash equivalents at beginning
of period 952 5,472
------ ------
Cash and cash equivalents at end of
period $ 1,033 $ 1,735
====== ======
SUPPLEMENTAL CASH FLOW
DISCLOSURES
Cash paid during the year for:
Interest paid, net $ 484 $ 248
Income taxes paid 308 261
SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Acquired businesses*:
Estimated fair value of assets acquired - $ 13,544
Goodwill and identifiable intangible
assets - 12,655
Purchase price obligations - (1,358)
Cash paid, net of cash acquired - (19,739)
------ -------
Liabilities assumed - $ 5,102
====== =======
Dividends declared but not paid $ 168 $ 177
Note receivable from stockholder in connection
with issuance of common stock - $ 664
* Restated to include final opening balance sheet adjustments as of
January 31, 1997.
The accompanying notes are an integral part of these statements.
7
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(UNAUDITED)
1. INTERIM STATEMENTS
The accompanying interim consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report to Shareholders for the fiscal year
ended January 31, 1997. The January 31, 1997 amounts were derived from the
Company's audited financial statements. The consolidated financial statements
presented herein are unaudited but, in the opinion of management, include all
necessary adjustments (which comprise only normal recurring items) required for
a fair presentation of the consolidated financial position as of April 30, 1997
and the consolidated statements of income and cash flows for the three months
ended April 30, 1997 and 1996. However, interim results of operations
necessarily involve more estimates than annual results and are not indicative of
results for the full fiscal year.
2. INVENTORIES
Inventories consisted of the following:
April 30, January 31,
1997 1997
---- ----
Raw materials ............................ $18,528 $17,506
Work-in-progress ......................... 10,456 11,599
Finished goods ........................... 12,555 9,838
------ ------
$41,539 $38,943
====== ======
3. INCOME TAXES
A reconciliation of the provision for income taxes from the statutory rate
to the effective rate is as follows:
Three months ended
April 30,
1997 1996*
---- ----
U.S. statutory income tax 35.0% 35.0%
State tax, net of federal income tax benefit 3.6 3.3
Reduction of taxes provided in prior years -- (3.6)
Tax effect of foreign operations (1.4) --
Foreign sales corporation (1.2) (0.7)
Other 1.0 0.2
---- ----
37.0% 34.2%
==== ====
*Reclassified for comparative purposes.
8
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands)
(UNAUDITED)
4. CONTINGENT LIABILITIES
With regard to the following contingent liabilities there have been no
material changes since January 31, 1997.
Because the Company uses lead and other hazardous substances in its
manufacturing processes, it is subject to numerous federal, Canadian, Mexican,
Irish, state and local laws and regulations that are designed to protect the
environment and employee health and safety. These laws and regulations include
requirements of periodic reporting to governmental agencies regarding the use
and disposal of hazardous substances and compliance with rigorous criteria
regarding exposure to employees and the disposal of scrap. In the opinion of the
Company, the Company complies in all material respects with these laws and
regulations.
Notwithstanding such compliance, if damage to persons or the environment
has been or is caused by hazardous substances used or generated in the conduct
of the Company's business, the Company may be held liable for the damage and be
required to pay the cost of remedying the same, and the amount of any such
liability might be material to the results of operations or financial condition.
However, under the terms of the purchase agreement with Allied for the
Acquisition of the Company (the Acquisition Agreement), Allied is obligated to
indemnify the Company for any liabilities of this type resulting from conditions
existing at January 28, 1986 that were not disclosed by Allied to the Company in
the schedules to the Acquisition Agreement.
The Company, along with numerous other parties, has been requested to
provide information to the United States Environmental Protection Agency (the
EPA) in connection with investigations of the source and extent of contamination
at several lead smelting facilities (the Third Party Facilities) to which the
Company had made scrap lead shipments for reclamation prior to the date of the
Acquisition. As of January 16, 1989, the Company, with the concurrence of
Allied, entered into an agreement with other potentially responsible parties
(PRPs) relating to remediation of a portion of one of the Third Party
Facilities, the former NL Industries (NL), facility in Pedricktown, New Jersey
(the NL Site), which agreement provides for their joint funding on a
proportionate basis of certain remedial investigation and feasibility study
activities with respect to that site.
9
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands)
4. CONTINGENT LIABILITIES (continued)
In fiscal 1993 in accordance with an EPA order, a group comprised of the
Company and 30 other parties commenced work on the cleanup of a portion of the
NL Site based on a specified remedial approach which is now completed. The
Company did not incur costs in excess of the amount previously reserved.
With regard to the remainder of the NL Site, the EPA is pursuing
negotiations with NL and the other PRPs, including the Company, regarding the
conduct and funding of the remedial work plan. The EPA has proposed a cost
allocation plan, however, the allocation percentages between parties and the
basis for allocation of cost are not defined in the plan or elsewhere.
Therefore, a reliable range of the potential cost to the Company of this phase
of the clean-up cannot currently be determined. Accordingly, the Company has not
created any reserve for this potential exposure.
The remedial investigation and feasibility study at a second Third Party
Facility, the former Tonolli Incorporated facility at Nesquehoning, Pennsylvania
(the Tonolli Site), was completed in fiscal 1993. The EPA and the PRPs are
continuing to evaluate the draft remedial design work plan for the site. Based
on the estimated cost of the remedial approach selected by the EPA, the Company
believes that the potential cost of remedial action at the Tonolli Site is
likely to range between $16,000 and $17,000. The Company's allocable share of
this cost has not been finally determined, and will depend on such variables as
the financial capability of various other PRPs to fund their respective
allocable shares of the remedial cost. Based on currently available information,
however, the Company believes that its most likely exposure with respect to the
Tonolli Site will be the approximately $579 previously reserved, the majority of
which is expected to be paid over the next three to five years. The Company
expects to recover a portion of its monetary obligations for the remediation of
the Tonolli Site through litigation against third parties and recalcitrant PRPs.
The Company has responded to requests for information from the EPA with
regard to four other Third Party Facilities, one in September 1991, one (the
Chicago Site) in October 1991, one (the ILCO Site) in October 1993 and the
fourth (Bern Metal Super Fund Site) in March 1997. Of the four sites, the
Company has been identified as a PRP at the ILCO and Chicago Sites only.
Based on currently available information, the Company believes that the
potential cost of remediation at the ILCO Site is likely to range between
$54,000 and $59,000 (based on the estimated costs of the remedial approach
selected by the EPA). The Company's allocable share of this cost has not been
finally determined and will depend on such variables as the financial capability
of various other PRPs to fund their respective allocable shares of the remedial
10
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands)
4. CONTINGENT LIABILITIES (continued)
cost. However, on October 31, 1995 the Company received confirmation from the
EPA that it is a de minimis PRP at the ILCO Site. Based on currently available
information, however, the Company believes that its most likely exposure with
respect to the ILCO Site is an immaterial amount which has been previously
reserved, the majority of which is expected to be paid over the next three to
five years.
Based on currently available information, the Company believes that the
potential cost of the remediation at the Chicago Site is likely to range between
$8,000 and $10,500 (based on the preliminary estimated costs of the remediation
approach negotiated with the EPA). Sufficient information is not available to
determine the Company's allocable share of this cost. Based on currently
available information, however, the Company believes that its most likely
exposure with respect to the Chicago Site will be the approximately $283
previously reserved, the majority of which is expected to be paid over the next
two to five years.
Allied has accepted responsibility under the Acquisition Agreement for
potential liabilities relating to all Third Party Facilities other than the
aforementioned Sites. Based on currently available information, management of
the Company believes that the foregoing will not have a material adverse effect
on the Company's financial condition or results of operations.
5. ACQUISITIONS
Effective February 22, 1996 the Company acquired certain equipment and
inventory of LH Research, Inc. (LH) used in its power supply business, along
with all rights to the name "LH Research." In addition, effective March 12,
1996, the Company acquired from Burr-Brown Corporation its entire interest in
Power Convertibles Corporation (PCC) consisting of 1,044,418 shares of PCC
common stock and all outstanding preferred stock. In addition the Company
acquired or repaid $5,158 of indebtedness of PCC. On April 26, 1996, the Company
acquired 190,000 shares of PCC common stock from the former chief executive
officer of PCC which together with the shares previously acquired represented in
excess of 99.6% of the outstanding PCC common stock. As of May 29, 1996, the
Company purchased all remaining shares of PCC common stock and shares of PCC
common stock issuable upon exercise of stock options.
The acquisitions were recorded using the purchase method of accounting. The
aggregate purchase prices were $4,428 and $16,932 for LH and PCC, respectively.
The purchase prices were allocated on the basis of the estimated fair market
11
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands)
5. ACQUISITIONS (continued)
values of the assets acquired and liabilities assumed. The results of operations
are included in the Company's consolidated financial statements from the date of
acquisition.
The following unaudited pro forma financial information combines the
consolidated results of operations as if both acquisitions had occurred as of
the beginning of the periods presented. Pro forma adjustments include only the
effects of events directly attributed to a transaction that are factually
supportable and expected to have a continuing impact. The pro forma adjustments
contained in the table below include amortization of intangibles, interest
expense on the acquisition debt, elimination of interest expense on debt not
acquired, reduction of certain selling, general and administrative expenses and
the related income tax effects.
Three months ended
April 30, 1996
------------------
Net sales.............................. $64,352
Net income............................. $ 3,392
Net income per common share ........... $ .52
The pro forma financial information does not necessarily reflect the
operating results that would have occurred had the acquisitions been consummated
as of the above dates, nor is such information indicative of future operating
results. In addition, the pro forma financial results contain estimates since
the acquired businesses did not maintain information on a period comparable with
the Company's fiscal year-end.
6. STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." SFAS No. 128 specifies new standards designed to improve the earnings
per share (EPS) information provided in financial statements by simplifying the
existing computational guidelines, revising the disclosure requirements, and
increasing the comparability of EPS data on an international basis. Some of the
changes made to simplify the EPS computations include: (i) eliminating the
presentation of primary EPS and replacing it with basic EPS, with the principal
difference being that common stock equivalents are not considered in computing
basic EPS, (ii) eliminating the modified treasury stock method and the three
percent materiality provision and (iii) revising the contingent share provisions
and the supplemental EPS data requirements. SFAS No. 128 also makes a number of
changes to existing disclosure requirements. SFAS No. 128 is effective for
financial statements issued for periods ending after December 15, 1997. The
Company has not yet determined the impact of the implementation of SFAS No. 128.
12
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Charter Power Systems, Inc.
We have reviewed the accompanying consolidated balance sheet of Charter Power
Systems, Inc. and Subsidiaries as of April 30, 1997, the related consolidated
statements of income for the three months ended April 30, 1997 and 1996 and the
related consolidated statements of cash flows for the three months ended April
30, 1997 and 1996. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 31, 1997 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended (not presented herein); and in our report dated March 14, 1997,
we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet as of January 31, 1997, is fairly presented, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
/s/ Coopers & Lybrand L.L.P.
------------------------
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 28, 1997
13
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the fiscal 1998 first quarter increased $10,917,000 or 17
percent compared to the equivalent quarter in fiscal 1997. This increase was
primarily due to higher sales of non-telecommunications related power supplies,
telecommunications-related sales and motive power sales. A portion of the sales
increase resulted from the recording of a full quarter of sales by the Company's
PCC subsidiary during fiscal 1998, versus a partial quarter in the comparable
period of the prior year due to the acquisition of PCC on March 12, 1997. On a
company-wide basis, fiscal 1998 first quarter telecommunications-related sales
increased 11 percent and were approximately 44 percent of total company sales
versus 47 percent of sales for the first quarter of fiscal 1997. Motive power
sales were up 20 percent for the current quarter due to higher volumes and
prices.
Gross profit for the first quarter of fiscal 1998 increased $3,862,000 or
26 percent to $18,983,000 from $15,121,000 in the first quarter of fiscal 1997,
resulting in a gross margin of 25.9 percent versus 24.2 percent in the prior
year. Gross margin increased primarily as a result of higher sales volumes,
shift in product mix and lower material costs, partially offset by higher
depreciation.
Selling, general and administrative expenses for the first quarter of
fiscal 1998 increased $1,812,000 or 24 percent over the comparable period of the
prior year. This increase was due to higher payroll costs, goodwill
amortization, due diligence costs, consulting fees and the recording of a full
quarter of selling, general and administrative expenses by the Company's PCC
subsidiary during fiscal 1998, versus a partial quarter in the comparable period
of the prior year due to the acquisition of PCC.
Research and development expenses remained proportional to sales at 3
percent of sales for the first quarter of fiscal 1998 and 1997.
Interest expense, net, increased for the quarter primarily due to higher
debt balances.
Other expense, net, for the first quarter of fiscal 1998 increased $715,000
over the comparable quarter of the prior year. This increase was primarily due
to higher amortization expense associated with the write-off of capitalized debt
acquisition costs related to the Company's current credit facility and the
Development Authority of Rockdale County Industrial Revenue Bonds. Other
expense, net, also increased due to a foreign exchange loss during the current
quarter versus a slight exchange gain in the first quarter of fiscal 1997,
coupled with lower nonoperating income during the first quarter of fiscal 1998.
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
As a result of the above, income before income taxes for the first quarter
of fiscal 1998 increased $1,019,000 or 18 percent from the comparable quarter of
the prior year. Provision for income taxes increased $530,000 for the first
quarter of fiscal 1998 versus the first quarter of the prior year as a result of
higher income before taxes and a higher effective tax rate. The effective tax
rate for the current quarter increased to 37.0 percent versus 34.2 percent for
the first quarter of fiscal 1997 which included a benefit associated with a
reduction in taxes provided for in prior years. Net income rose 13 percent from
the first quarter of fiscal 1997 to $4,135,000 or 66 cents per share.
Liquidity and Capital Resources
- -------------------------------
Net cash flows provided by operating activities increased 35 percent to
$7,344,000 for the first quarter of fiscal 1998 compared to $5,422,000 for the
same quarter of the prior year. This increase was primarily due to higher
depreciation and amortization expense during the current first quarter; less of
an increase in accounts receivable; and an increase in accrued liabilities
during the first quarter of fiscal 1998 versus a decrease in the first quarter
of fiscal 1997. These changes resulting in higher cash flows from operations,
were partially offset by a decrease in accounts payable during the first quarter
of fiscal 1998 compared to an increase in fiscal 1997 which included the
required purchase of certain raw materials with extended payment terms.
Net cash used by investing activities decreased $20,441,000 to $2,297,000
in the first quarter of fiscal 1998 versus the first quarter of fiscal 1997
which included the purchase by the company of PCC and certain equipment and
inventory of LH for $19,739,000.
Net cash used by financing activities was $4,959,000 compared to net cash
provided by financing activities of $13,575,000 in the prior year's first
quarter. The additional borrowings in the prior year's first quarter were used
primarily for the funding of the acquisitions of PCC and LH. The repayment of
long-term debt totaling $4,919,000 for the current quarter was lower than the
first quarter of fiscal 1997 which included the accelerated retirement of the
Company's remaining term loan portion of its long-term debt.
The Company's availability under the current loan agreement is expected to
be sufficient to meet its ongoing cash needs for working capital requirements,
debt service, capital expenditures and possible strategic acquisitions. Capital
expenditures in the first quarter of fiscal 1998 were incurred primarily to fund
capacity expansion, new product development, a continuing series of cost
reduction programs, normal maintenance capital, and regulatory compliance.
Fiscal 1998 capital expenditures are expected to be approximately $16,000,000
for similar purposes.
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Forward Looking Statements
- --------------------------
Certain information contained in this Quarterly Report on Form 10-Q,
including, without limitation, information appearing under Item 2, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," are
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Factors
that appear with the forward-looking statements, or in the Company's other
Securities and Exchange Commission filings, could affect the Company's actual
results and could cause the Company's actual results to differ materially from
those expressed in any forward-looking statements made by the Company in this
Quarterly Report on Form 10-Q.
16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4.1 Sixth Amendment to Financing and Security Agreement dated April 16,
1997 (filed herewith).
10.1 Charter Power Systems, Inc. Incentive Compensation Plan (filed here-
with).
11. Computation of per share earnings (filed herewith).
15. Letter from Coopers & Lybrand L.L.P., independent accountants for the
Company, regarding unaudited interim financial information (filed
herewith).
27. Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K:
None.
17
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.
CHARTER POWER SYSTEMS, INC.
June 13, 1997 BY: /s/ Alfred Weber
---------------------------------
Alfred Weber
Chairman, President and Chief
Executive Officer
June 13, 1997 BY: /s/ Stephen E. Markert, Jr.
----------------------------------
Stephen E. Markert, Jr.
Vice President Finance and
Treasurer
(Principal Financial and
Accounting Officer)
18
EXHIBIT INDEX
4.1 Sixth Amendment to Financing and Security Agreement dated April 16,
1997 (filed herewith).
10.1 Charter Power Systems, Inc. Incentive Compensation Plan (filed here-
with).
11. Computation of per share earnings (filed herewith).
15. Letter from Coopers & Lybrand L.L.P., independent accountants for the
Company regarding unaudited interim financial information (filed
herewith).
27. Financial Data Schedule (filed herewith).
19