1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended January 1, 1999
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: 33-96858-01 Commission File Number: 33-96858
COMMUNICATIONS & POWER COMMUNICATIONS & POWER
INDUSTRIES HOLDING INDUSTRIES, INC.
CORPORATION
(Exact name of registrant as specified in its (Exact name of registrant as specified in its
charter) charter)
DELAWARE DELAWARE
(State of Incorporation) (State of Incorporation)
77-0407395 77-0405693
(I.R.S. employer identification number) (I.R.S. employer identification number)
607 HANSEN WAY 607 HANSEN WAY
PALO ALTO, CALIFORNIA 94303-1110 PALO ALTO, CALIFORNIA 94303-1110
(415) 846-2900 (415) 846-2900
(Address, including zip code, and telephone (Address, including zip code, and telephone number,
number, including including area code, of registrant's principal executive
area code, of registrant's principal executive offices) offices)
Securities registered pursuant to Section 12(b) Securities registered pursuant to Section 12(b)
of the Act: of the Act:
NONE NONE
Securities registered pursuant to Section 12(g) Securities registered pursuant to Section 12(g)
of the Act: of the Act:
NONE NONE
Indicate by check mark whether each 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.
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding for each of the Registrant's classes
of Common Stock, as of the latest practicable date: COMMUNICATIONS & POWER
INDUSTRIES HOLDING CORPORATION: 196,420 SHARES OF COMMON STOCK, $.01 PAR VALUE,
AT JANUARY 1, 1999. COMMUNICATIONS & POWER INDUSTRIES, INC.: 1 SHARE OF COMMON
STOCK, $.01 PAR VALUE, AT JANUARY 1, 1999.
2
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
PART I: FINANCIAL INFORMATION
COMMUNICATIONS & POWER INDUSTRIES, INC.
Consolidated Condensed Balance Sheets, January 1, 1999 and October 2, 1998..................................2
Consolidated Condensed Statements of Operations, 13-week period ended
January 1, 1999 and 13-week period ended January 2, 1998....................................................3
Consolidated Condensed Statements of Cash Flows, 13-week period ended
January 1, 1999 and 13-week period ended January 2, 1998....................................................4
Notes to Consolidated Condensed Financial Statements........................................................5
Management's Discussion and Analysis of Financial Condition and Results of Operations......................10
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
Consolidated Condensed Balance Sheets, January 1, 1999 and October 2, 1998..................................6
Consolidated Condensed Statements of Operations, 13-week period ended
January 1, 1999 and 13-week period ended January 2, 1998....................................................7
Consolidated Condensed Statements of Cash Flows, 13-week period ended
January 1, 1999 and 13-week period ended January 2, 1998....................................................8
Notes to Consolidated Condensed Financial Statements........................................................9
Management's Discussion and Analysis of Financial Condition and Results of Operations......................10
PART II: OTHER INFORMATION
Other Information .........................................................................................14
SIGNATURES..........................................................................................................15
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3
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)
January 1, October 2,
1999 1998
--------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,482 $ 448
Accounts receivable, net 41,632 49,484
Inventories 57,400 52,923
Deferred taxes 6,981 6,981
Other current assets 1,562 1,440
--------- ---------
Total current assets 109,057 111,276
Property, plant, and equipment, net 78,027 78,099
Goodwill and other intangibles, net 30,625 25,147
Debt issue costs, net 6,462 6,522
Deferred taxes 8,168 8,168
--------- ---------
Total assets $ 232,339 $ 229,212
========= =========
LIABILITIES, REDEEMABLE
PREFERRED STOCK AND EQUITY
CURRENT LIABILITIES
Revolving credit facility $ 19,000 $ 13,300
Current portion of term loans 6,200 6,200
Current portion of capital leases 684 541
Accounts payable - trade 11,604 13,140
Accrued expenses 18,089 15,612
Product warranty 3,725 3,734
Income taxes payable 9,198 10,259
Advance payments from customers 2,116 2,533
--------- ---------
Total current liabilities 70,616 65,319
Senior term loans 22,200 23,750
Senior subordinated notes 100,000 100,000
Obligations under capital leases 2,523 2,548
--------- ---------
Total liabilities 195,339 191,617
--------- ---------
SENIOR REDEEMABLE PREFERRED STOCK 21,527 20,683
--------- ---------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Junior Preferred Stock 1 1
Common Stock -- --
Additional paid-in capital 34,108 33,582
Accumulated deficit (17,567) (15,614)
Less stockholder loans (1,069) (1,057)
--------- ---------
Net stockholders' equity 15,473 16,912
--------- ---------
Total liabilities, redeemable
preferred stock and equity $ 232,339 $ 229,212
========= =========
See accompanying notes to the unaudited interim consolidated condensed financial
statements.
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COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)
13-Week 13-Week
period ended period ended
January 1, January 2,
1999 1998
------------ ------------
Sales $ 57,781 $ 57,373
Cost of sales 43,654 42,726
======== ========
Gross profit 14,127 14,647
-------- --------
Operating costs and expenses:
Research and development 2,066 1,804
Marketing 4,594 4,706
General and administrative 3,908 3,326
======== ========
Total operating costs and expenses 10,568 9,836
-------- --------
Operating income 3,559 4,811
Foreign currency gain/(loss) (158) 160
Interest income/(expense) (4,406) (4,654)
-------- --------
Earnings (loss) before taxes (1,005) 317
Income tax expense (benefit) (422) 119
-------- --------
Net earnings (loss) (583) 198
Preferred dividends:
Senior Redeemable Preferred Stock 790 689
Junior Preferred Stock 527 459
======== ========
(Loss)/earnings attributable to common stock $ (1,900) $ (950)
======== ========
See accompanying notes to the unaudited consolidated condensed financial
statements.
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COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
13-Week 13-Week
period ended period ended
January 1, January 2,
1999 1998
------------ ------------
OPERATING ACTIVITIES
Net cash provided by (used in) operating activities $ 7,713 $ 15,409
-------- --------
INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment -- 5
Purchase of property, plant and equipment, net (1,841) (1,162)
Product lines acquisitions (8,961) (2,730)
-------- --------
Net cash used in investing activities (10,802) (3,887)
-------- --------
FINANCING ACTIVITIES
Net (Repayments)/Proceeds from debt issue costs (29) --
Net (Repayments)/Proceeds goodwill and other intangibles, net 2 --
Net (Repayments)/Proceeds from revolving credit facility 5,700 (9,300)
Net (Repayments)/Proceeds from senior term loans (1,550) (1,050)
-------- --------
Net cash provided by (used in) financing activities 4,123 (10,350)
-------- --------
NET DECREASE IN
CASH AND CASH EQUIVALENTS 1,034 1,172
Cash and cash equivalents at beginning of period 448 2,027
-------- --------
Cash and cash equivalents at end of period $ 1,482 $ 3,199
======== ========
See accompanying notes to the unaudited consolidated condensed financial
statements.
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COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
NOTES TO UNAUDITED CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(unaudited)
The accompanying unaudited consolidated condensed financial statements of
Communications & Power Industries, Inc. ("CPI") have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in annual financial
statements have been condensed or omitted and, accordingly, these financial
statements should be read in conjunction with the financial statements and the
notes thereto contained in CPI's October 2, 1998 Annual Report on Form 10-K.
Management believes that these unaudited interim condensed financial statements
contain all adjustments, all of which are of a normal, recurring nature,
necessary to present fairly the financial position of CPI, and its results of
operations and cash flows, for the interim period presented. The results for the
interim periods reported are not necessarily indicative of the results for the
full fiscal year 1999.
During the quarter ended January 1, 1999, CPI paid preferred stock dividends on
its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the
issuance of 7,903 additional shares of its Senior Redeemable Preferred Stock and
5,269 shares of its Junior Preferred Stock, respectively.
During the quarter ended January 1, 1999, CPI completed the acquisition of the
Microwave Components Division ("MCD") of Aydin Corporation for approximately
$8.9 million with net assets of approximately $2.4 million. The $6.5 million
difference between the purchase price and the fair value of the net assets
acquired was allocated to goodwill and other intangibles and will be amortized
over estimated useful lives ranging from 1 to 15 years. This acquisition was
accounted for as a purchase.
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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)
January 1, October 2,
1999 1998
--------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,482 $ 448
Accounts receivable, net 41,632 49,484
Inventories 57,400 52,923
Deferred taxes 6,981 6,981
Other current assets 1,562 1,440
--------- ---------
Total current assets 109,057 111,276
Property, plant, and equipment, net 78,027 78,099
Goodwill and other intangibles, net 30,625 25,147
Debt issue costs, net 6,462 6,522
Deferred taxes 8,168 8,168
--------- ---------
Total assets $ 232,339 $ 229,212
========= =========
LIABILITIES, REDEEMABLE PREFERRED STOCK,
PREFERRED STOCK OF SUBSIDIARY AND EQUITY
CURRENT LIABILITIES
Revolving credit facility $ 19,000 $ 13,300
Current Portion of term loans 6,200 6,200
Current Portion of capital leases 684 541
Accounts payable - trade 11,604 13,140
Accrued expenses 18,089 15,612
Product warranty 3,725 3,734
Income taxes payable 9,198 10,259
Advance payments from customers 2,116 2,533
--------- ---------
Total current liabilities 70,616 65,319
Senior term loans 22,200 23,750
Senior subordinated notes 100,000 100,000
Obligations under capital leases 2,523 2,548
--------- ---------
Total liabilities 195,339 191,617
--------- ---------
SENIOR REDEEMABLE PREFERRED STOCK OF SUBSIDIARY 21,527 20,683
--------- ---------
JUNIOR PREFERRED STOCK OF SUBSIDIARY 14,926 14,400
--------- ---------
STOCKHOLDERS' EQUITY:
Common Stock 2 2
Additional paid-in capital 19,181 19,181
Accumulated deficit (17,567) (15,614)
Less stockholder loans (1,069) (1,057)
--------- ---------
Net stockholders' equity 547 2,512
--------- ---------
Total liabilities, redeemable preferred stock, preferred
stock of subsidiary and equity $ 232,339 $ 229,212
========= =========
See accompanying notes to the unaudited consolidated condensed financial
statements.
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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)
13-Week 13-Week
period ended period ended
January 1, January 2,
1999 1998
------------ ------------
Sales $ 57,781 $ 57,373
Cost of sales 43,654 42,726
-------- --------
Gross profit 14,127 14,647
-------- --------
Operating costs and expenses:
Research and development 2,066 1,804
Marketing 4,594 4,706
General and administrative 3,908 3,326
-------- --------
Total operating costs and expenses 10,568 9,836
-------- --------
Operating income 3,559 4,811
Foreign currency gain/(loss) (158) 160
Interest income/(expense) (4,406) (4,654)
-------- --------
Earnings (loss) before taxes (1,005) 317
Income tax expense (benefit) (422) 119
-------- --------
Net earnings (loss) (583) 198
Preferred dividends:
Senior Redeemable Preferred Stock 790 689
Junior Preferred Stock 527 459
-------- --------
(Loss)/earnings attributable to common stock $ (1,900) $ (950)
======== ========
See accompanying notes to the unaudited consolidated condensed financial
statements.
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9
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
13-Week 13-Week
period ended period ended
January 1, July 4,
1999 1997
------------ ------------
OPERATING ACTIVITIES
Net cash provided by (used in) operating activities $ 7,713 $ 15,409
-------- --------
INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment -- 5
Purchase of property, plant and equipment, net (1,841) (1,162)
Product line acquisitions (8,961) (2,730)
-------- --------
Net cash used in investing activities (10,802) (3,887)
-------- --------
FINANCING ACTIVITIES
Net (Repayments)/Proceeds from debt issue costs (29) --
Net (Repayments)/Proceeds from goodwill and other intangible, net 2 --
Net (Repayments)/Proceeds from revolving credit facility 5,700 (9,300)
Net (Repayments)/Proceeds from senior term loans (1,550) (1,050)
-------- --------
Net cash provided by (used in) financing activities 4,123 (10,350)
-------- --------
NET DECREASE IN
CASH AND CASH EQUIVALENTS 1,034 1,172
Cash and cash equivalents at beginning of period 448 2,027
-------- --------
Cash and cash equivalents at end of period $ 1,482 $ 3,199
======== ========
See accompanying notes to the unaudited consolidated condensed financial
statements.
-8-
10
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
NOTES TO UNAUDITED CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(unaudited)
The accompanying unaudited condensed consolidated financial statements of
Communications & Power Industries Holding Corporation ("Holding") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
annual financial statements have been condensed or omitted and, accordingly,
these financial statements should be read in conjunction with the financial
statements and the notes thereto contained in Holding's October 2, 1998 Annual
Report on Form 10-K. Management believes that these unaudited interim condensed
financial statements contain all adjustments, all of which are of a normal,
recurring nature, necessary to present fairly the financial position of Holding,
and its results of operations and cash flows, for the interim period presented.
The results for the interim periods reported are not necessarily indicative of
the results for the full fiscal year 1999.
During the quarter ended January 1, 1999, CPI paid preferred stock dividends on
its Senior Redeemable Preferred Stock and its Junior Preferred Stock through the
issuance of 7,903 additional shares of its Senior Redeemable Preferred Stock and
5,269 shares of its Junior Preferred Stock, respectively.
During the quarter ended January 1, 1999, CPI completed the acquisition of the
Microwave Components Division ("MCD") of Aydin Corporation for approximately
$8.9 million with net assets of approximately $2.4 million. The $6.5 million
difference between the purchase price and the fair value of the net assets
acquired was allocated to goodwill and other intangibles and will be amortized
over estimated useful lives ranging from 1 to 15 years. This acquisition was
accounted for as a purchase.
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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Orders during the first quarter of Fiscal 1999 were $51.6 million as compared to
$62.1 million for the first quarter of Fiscal 1998, a decrease of 16.9%
primarily related to the Far East economic conditions and delays in several
major programs that continue to hinder growth in the Company's communications
and industrial markets. This reduced level of orders was anticipated by the
Company and backlog as of the end of the first quarter of Fiscal 1999 declined
to $155.0 million, or approximately seven months of sales. However, incoming
order levels fluctuate significantly on a quarterly basis and a particular
quarter's order rate may not be indicative of future order levels. In addition,
the Company's sales are highly dependent upon manufacturing scheduling,
performance and shipments and, accordingly, it is not possible to accurately
predict when these orders will be recognized as sales.
Sales for the first quarter of Fiscal 1999 were $57.8 million including $1.4
million of sales from the Company's new operating division that was acquired in
October of 1998. This recent acquisition has added a line of high quality, solid
state microwave and millimeter wave amplifiers, frequency converters and
multiplier amplifiers that are sold into the communications market. Sales for
the first quarter of Fiscal 1999 were consistent with sales in the first quarter
of Fiscal 1998 of $57.4 million but the mix by end market shifted slightly.
Products sold to the radar, medical and electronic countermeasures markets
increased by $1.6 million, $1.0 million, $0.7 million, respectively due to the
on-going demand for logistic spares, increased business in European x-ray
markets and increase production levels of the Company's new transmitter
products. Products sold to the communications and industrial markets decreased
by $2.3 million and $.5 million, respectively due to the slowdown from Far East
customers mentioned above partially offset by new product introductions.
Products sold to the scientific market were flat. The communications market
remains the Company's largest market with sales of $24.9 million, or 43.1% of
total sales, during the first quarter of Fiscal 1999 compared to $27.2 million,
or 47.4% of total sales, in the first quarter of Fiscal 1998. The Company's
second largest market is the radar market with sales of $18.1 million, or 31.4%
of total sales, during the first quarter of Fiscal 1999 compared to $16.5
million, or 28.8% of total sales, during the same period in Fiscal 1998.
Gross profit was $14.1 million, or 24.4% of sales, in the first quarter of
Fiscal 1999 compared to $14.6 million, or 25.5% of sales, in the first quarter
of Fiscal 1998 due primarily to product mix with lower margins realized on the
development and initial production of new products as well as higher
depreciation costs.
Operating costs and expenses were $10.6 million, or 18.6% of sales for the first
quarter of Fiscal 1999, as compared to $9.8 million, or 17.1%, for the first
quarter of Fiscal 1998. Operating costs and expenses increased between the two
time periods primarily due to higher amortization costs of $0.5 million related
to the Company's recent acquisition and to higher research and development
spending of $0.3 million as the Company continues its focus on releasing new
products.
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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
Earnings before interest, income taxes, depreciation and amortization
("EBITDA")(1) for the first quarter of Fiscal 1999 was approximately $6.8
million, or 11.8% of sales, compared to approximately $7.7 million, or 13.3% of
sales, for the first quarter of Fiscal 1998. EBITDA declined by $0.9 million, or
3.3%, due primarily to product mix and higher research and development spending
mentioned above.
FINANCIAL CONDITION
Cash flows provided by operating activities for the first quarter of Fiscal 1999
were $7.7 million, a decrease of $7.7 million from the $15.4 million provided by
operating activities during the first quarter of Fiscal 1998. Cash flow
decreased $4.4 million due to the timing of receivable collections as days sales
outstanding (DSO) increased to 63 days at the end of the first quarter of Fiscal
1999 from 61 days at the end of the first quarter of Fiscal 1998. The timing of
accounts payable and accrued expense payments decreased cash from operations by
approximately $1.9 million and slightly higher levels of inventory decreased
cash by $0.8 million.
Investing activities increased to $10.8 million in the first quarter of Fiscal
1999 compared to $3.9 million in the first quarter of Fiscal 1998 due to the
acquisition of the Microwave Components Division of Aydin Corporation, which was
completed in October 1998. In the first quarter of Fiscal 1998, the Company
invested $2.7 million in two small product line acquisitions to add to products
that were currently being manufactured in the Company's Beverly, Massachusetts
and Palo Alto, California facilities. The current acquisition will be operating
in stand-alone, leased facilities in San Jose, California.
The Company's current primary source of liquidity, other than funds generated
from operations, is the $45.0 million revolving credit facility provided under
its senior credit agreement (of which $16.3 million was available as of January
29, 1999). In the first quarter of Fiscal 1999, the Company borrowed $5.7
million to repay $1.6 million of term loans and to complete the acquisition
mentioned above. Management believes that the Company will have adequate capital
resources and liquidity (including cash flow from operations and borrowing under
its revolving credit facility) to meet its obligations, fund all required
capital expenditures and pursue its business strategy for the foreseeable future
and, in any event, for the next 12 months.
Year 2000
The Company has conducted a comprehensive review of its computer systems and
applications to identify systems that could be affected by the "Year 2000" issue
and has developed a remediation plan.
- ---------------------
(1) EBITDA is presented because some investors may use it as a financial
indicator of the ability to service or incur indebtedness. EBITDA should not be
considered as an alternative to net earnings (loss), as a measure of operating
results, cash flows or liquidity.
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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
All systems that are considered to be mission critical have been identified and
addressed in this plan. The Company has also reviewed its products, process
equipment and facilities systems as part of its overall Year 2000 readiness.
The Company's focus is first on products and business critical systems and
equipment. Evaluation of products is substantially complete as only a few CPI
products contain microprocessors or microcode. To date, no significant problems
have been found in existing CPI products. Also, CPI is contacting its suppliers
to ensure that they have appropriate plans in place to adequately address the
century change issue. CPI's goals for the Year 2000 project are to have all
business critical process Year 2000 conversions, corrective actions, work
arounds and tests completed by October 31, 1999. To date, two of the Company's
six Divisions have successfully modified or replaced Enterprise Resource
Planning ("ERP") systems. The other four are scheduled to "go-live" on a new ERP
system starting in March 1999 and being completed in June 1999.
Timely completion of its Year 2000 project is a priority of the Company and the
remediation plan, along with the timetable for its completion and budgeted
remediation costs, have been approved by the Company's Year 2000 project team,
management, and the Board of Directors. Management currently estimates that it
will spend approximately $5.0 million primarily through a capital lease program
to replace outdated Varian legacy systems. To date, approximately $4.4 million
has been incurred. Other remediation efforts include a mix of capital
expenditures and operating expense and an estimated $1.5 million is planned for
Fiscal 1999. The Company's estimated timetable and budgeted remediation costs
are based on assumptions which management believes are reasonable and
appropriate. Management is committing and will continue to commit necessary
human and financial resources to complete its remediation plans on a timely
basis.
To date, based on both written and verbal discussions, management has no
information that indicates a significant vendor or service provider may be
unable to sell goods or provide services to the Company or that any significant
customer may be unable to purchase from the Company because of Year 2000 issues.
Further, the Company has not received any notifications from regulatory agencies
to which it is subject indicating that the Company must achieve compliance by a
specific date or significant regulatory action will be taken.
The Company presently believes that, with modifications to existing software and
conversion to new software, the Year 2000 problem will not pose significant
operational problems for the Company's systems as modified and converted.
However, if such modifications and conversions are not completed timely, the
Year 2000 problem could have a material impact on the operations of the Company.
Management is still in the process of developing contingency plans but expects
that manual processing procedures to maintain accurate processing of information
and data are available. Contingency plans are expected to be completed by June
1999.
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14
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
Forward-Looking Information
Except for historical information, this Management's Discussion and Analysis
contains forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those projected. Such risks
and uncertainties include: product demand and market acceptance risks; the
effect of general economic conditions; the impact of competitive products and
pricing; new product development and commercialization; technological
difficulties and the ability to increase margins; the timing of renewed growth
in the Far East; U.S. Government export policies; and other risks detailed from
time to time in the Company's filings with the Securities and Exchange
Commission.
-13-
15
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries
COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries
Holding Corporation)
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2: CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are being filed as part of this report:
10.1.5 Fifth Amendment to Credit Agreement among CPI,
Holding, the other obligors named therein, the lenders
named therein and Bankers Trust Company, as Agent,
dated as of February 12, 1999
27.1 Financial Data Schedule (Communications & Power
Industries, Inc.)
27.2 Financial Data Schedule (Communications & Power
Industries Holding Corporation)
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended January 1,
1999.
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16
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.
COMMUNICATIONS & POWER INDUSTRIES, INC.
By: /s/ Al D. Wilunowski
--------------------------------------------------
Al D. Wilunowski
Chief Executive Officer and President
Date: February 12, 1998
By: /s/ Lynn E. Harvey
--------------------------------------------------
Lynn E. Harvey
Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)
Date: February 12, 1998
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EXHIBIT INDEX
Exhibit
No. Document
---- --------
10.1.5 Fifth Amendment to Credit Agreement among CPI,
Holding, the other obligors named therein, the lenders
named therein and Bankers Trust Company, as Agent,
dated as of February 12, 1999
27.1 Financial Data Schedule (Communications & Power
Industries, Inc.)
27.2 Financial Data Schedule (Communications & Power
Industries Holding Corporation)