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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 28, 1996
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EXIDE ELECTRONICS GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-18106 23-2231834
(State or other (Commission File Number) (IRS Employer Identification No.)
jurisdiciton of incorporation)
8609 SIX FORKS ROAD 27615
RALEIGH, NORTH CAROLINA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (919) 872-3020
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ITEM 5. OTHER EVENTS
Exide Electronics Group, Inc. (the "Company") reported financial results
for the fourth quarter and fiscal year ended September 30, 1996. Fourth
quarter revenues were $144.5 million, a 33% increase from $108.8 million in
the fourth quarter of fiscal year 1995. Revenues for the full year were $460
million, an increase of 18% over the prior year. (Operating performance, as
measured by earnings before interest, taxes, depreciation and amortization
(EBITDA), excluding non-recurring acquisition and restructuring charges, was
$17.2 million for the fourth quarter, more than 60% higher than the same
quarter in the previous year. EBITDA was $44.4 million for the full year
versus $33.4 million in the prior year.)
Net income for the fourth quarter was $1.2 million, compared to $3.6
million for the same quarter last year, reflecting the amortization of
remaining purchase accounting adjustments related to the write-up of certain
assets, amortization of intangible assets and interest costs related to the
acquisition of Deltec Power Systems, Inc. (Deltec). For the full year, the
Company reported a net loss of $10.3 million, including $14.6 million of
one-time pre-tax charges for acquisition and restructuring taken in the second
and third quarters of fiscal 1996. (Excluding the effect of nonrecurring
acquisition and restructuring charges and purchase accounting adjustments, pro
forma net income would have been $2.6 million for the fourth quarter and $5.2
million for the full year.)
Fully diluted earnings per share for the fourth quarter were $0.09 versus
$0.39 a year ago. For the year, the Company reported a loss of $1.15 per share
versus earnings of $0.84 per share in fiscal 1995. Excluding the effect of
nonrecurring acquisition and restructuring charges and purchase accounting
adjustments, pro forma fully diluted earnings per share were $0.22 and $0.46
for the fourth quarter and year ended September 30, 1996, respectively, versus
$0.47 and $1.42 for the same periods in the prior year.
Business Unit Performance
Revenues for the Company's principal business units are shown below (in
millions):
-------------------------------- --------------------------------
Quarter ended September 30, Year ended September 30,
-------------------------------- --------------------------------
Percent Percent
1996 1995 Change 1996 1995 Change
-------------------------------- --------------------------------
Small Systems Group (1) $ 69.0 $ 36.7 87.9% $ 200.3 $ 123.3 62.5%
Large Systems Group (1) 42.2 41.9 0.8 139.4 148.2 (6.0)
Worldwide Services Group 33.3 30.2 10.2 120.2 119.5 0.6
-------------------------------- --------------------------------
$ 144.5 $ 108.8 32.8% $ 459.9 $ 391.0 17.6%
================================ =================================
(1) In the Company's third fiscal quarter, certain product lines
(18-36kVA) were reclassified from SSG to LSG; all periods have been
restated.
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Small Systems Group revenues increased to $69.0 million for the fourth
quarter, nearly 88% over the year ago quarter. Much of the growth came from
sales of the Company's Powerware Prestige Uninterruptible Power Supplies (UPSs)
used for network and workstation protection, Deltec UPSs, and Lectro ZTT UPSs
for cable television markets. Sales of Prestige products in the United States
rose significantly in the fourth quarter, particularly through original
equipment manufacturer ("OEM") and distributor channels. International SSG
sales benefited from a new joint venture in Brazil. The Company also
benefited from the recent introductions of Deltec's new PowerRite Max and the
Company's NetUPS family of mid-priced line-interactive UPSs.
Large Systems Group revenues increased in the fourth quarter to $42.2
million. Sales in commercial segments for the fourth quarter rose 25% over
the prior year quarter to $37 million, the result of strong worldwide market
acceptance of mid-range UPSs, new ancillary products and the Deltec
acquisition. Higher commercial revenues offset a decline of nearly 60% in
federal product revenues in the fourth quarter due to the completion of most
product shipments to the Federal Aviation Administration (FAA) under a
multi-year program.
Total Worldwide Services Group revenues in the fourth quarter rose by
10.2% over the prior year quarter to $33.3 million, relecting growth in
commercial segments offset by the expected reduction of federal services
related to the near-term completion of the multi-year FAA program. Total
commercial service revenues reached $25.8 million for the fourth quarter, a 42%
increase over the prior year quarter. International service revenues nearly
doubled from the prior year quarter to $9.0 million. International growth was
attributable to the expanded worldwide service organization resulting from the
Deltec acquisition, the new joint venture in Brazil and continued growth in
the Company's traditional service channels.
Product gross margins improved from 25.0% in the fourth quarter of fiscal
year 1995 to 28.4% for the fourth quarter of fiscal 1996. Service gross
margins rose to 35.2% in the fourth quarter of fiscal 1996 from 30.5% in the
comparable period of fiscal 1995. This improvement was due to a higher volume
of commercial revenues and sales of higher margin services. For full fiscal
1996, product gross margins improved over 300 basis points and service margins
improved almost 200 basis points over 1995.
Operating Expenses
Fourth quarter revenues increased 10.8% or $14.0 million over the Company's
third fiscal quarter, while operating expenses, including selling, general and
administrative expenses, and research and development, increased 2.7% to
$34.5 million. Selling, general and administrative expenses increased 65% from
the fourth quarter in the prior year, primarily the result of incremental
expenses of recently acquired businesses, purchase accounting adjustments and
the amortization of intangible assets associated with the acquisition of
Deltec. Selling and marketing expenses also increased due to higher commissions
and incentives associated with commercial sales. Variable selling expenses are
generally higher for commercial revenues than for federal government revenues.
Financial Condition
The Company's inventories decreased more than $6 million from June 30, 1996
balances and more than $17 million from March 31, 1996. On a revenue increase
of $14 million over the third fiscal quarter, accounts receivable rose $2.0
million, reflecting improved days sales outstanding. Total debt has been
reduced by $21 million since the Deltec acquisition in March 1996.
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EXIDE ELECTRONICS GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unauditied, in thousands, except per share amounts)
========================================================================================================================
Three Months Ended Year Ended
September 30, September 30,
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1996 1995 1996 1995
---------- ----------- ------------- ----------
Revenues
Products $ 111,165 $ 78,563 $ 339,723 $ 271,482
Services 33,326 30,235 120,213 119,496
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Total revenues 144,491 108,798 459,936 390,978
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Cost of revenues
Products 79,635 (1) 58,929 245,239 204,683
Services 21,598 21,009 80,792 82,430
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Total cost of revenues 101,233 (1) 79,938 326,031 287,113
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Gross profit 43,258 28,860 133,905 103,865
Selling, general and administrative expense 30,857 (1) 18,697 99,055 69,966
Research and development expense 3,674 2,543 12,655 9,929
Acquisition and restructuring expense - 1,500 14,621 7,700
---------- ----------- ---------- ----------
Income from operations 8,727 6,120 7,574 16,270
Interest expense 7,133 1,660 23,194 5,575
Interest income (124) (126) (469) (485)
Other income (526) (329) (446) (897)
---------- ----------- ---------- ----------
Income (loss) before income taxes 2,244 4,915 (14,705) 12,077
Provision (benefit) for income taxes 752 1,298 (4,926) 4,692
Minority interest in joint ventures 250 - 535 -
---------- ----------- ---------- ----------
Net income (loss) $ 1,242 $ 3,617 $ (10,314) $ 7,385
========== =========== ========== ==========
Preferred stock accretion and dividends 342 - 751 592
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Net income (loss) applicable to common shareholders $ 900 $ 3,617 $ (11,065) $ 6,793
========== =========== ========== ==========
Pro forma net income excluding nonrecurring
items $ 2,594 $ 4,430 $ 5,188 $ 12,982
========== =========== ========== ==========
EBITDA (2) $ 17,172 $ 10,485 $ 44,370 $ 33,415
========== =========== ========== ==========
PRIMARY EARNINGS PER SHARE
Net income (loss) $ 0.09 $ 0.42 $ (1.15) $ 0.84
========== =========== ========== ==========
Pro forma net income excluding nonrecurring
items $ 0.22 $ 0.51 $ 0.46 $ 1.54
========== =========== ========== ==========
Weighted average number of common and equivalent
shares outstanding 10,016 8,627 9,592 8,054
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Pro forma weighted average number of common and
equivalent shares outstanding 10,016 8,627 9,660 8,054
========== =========== ========== ==========
FULLY DILUTED EARNINGS PER SHARE
Net income (loss) $ 0.09 $ 0.39 $ (1.15) $ 0.84
========== =========== ========== ==========
Pro forma net income excluding nonrecurring
items $ 0.22 $ 0.47 $ 0.46 $ 1.42
========== =========== ========== ==========
Weighted average number of common and equivalent
shares outstanding 10,019 9,776 9,592 9,673
========== =========== ========== ==========
Pro forma weighted average number of common and
equivalent shares outstanding 10,019 9,776 9,719 9,673
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========================================================================================================================
(1) Includes $2.7 million of costs relating to purchase accounting adjustments
that will not recur in future periods.
(2) EBITDA represents income from operations plus depreciation and amortization,
acquisition and restructuring expenses and other one-time charges. While
EBITDA should not be construed as a substitute for income from
operations, net income and cash flows, the Company has included EBITDA
because it is commonly used by certain investors and analysts to analyze
and compare companies on the basis of operating performance, leverage and
liquidity and to determine a company's ability to service debt.
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EXIDE ELECTRONICS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited, in thousands)
==============================================================================
September 30, March 31, (1)
ASSETS 1996 1996
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Current assets
Cash and cash equivalents $ 7,848 $ 5,882
Accounts receivable 129,423 123,580
Inventories 90,061 107,770
Other current assets 19,797 24,029
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Total current assets 247,129 261,261
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Property, plant, and equipment, net 48,921 50,373
Goodwill, intangible and other assets 193,613 196,516
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$ 489,663 $ 508,150
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LIABILITIES, REDEEMABLE PREFERRED STOCK, & COMMON SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt $ 14,393 $ 7,978
Accounts payable 71,285 69,030
Deferred revenues 23,553 21,966
Other accrued liabilities 25,733 26,812
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Total current liabilities 134,964 125,786
---------- ----------
Long-term debt 109,380 137,655
Subordinated notes 121,920 121,756
Deferred liabilities 7,627 6,760
Redeemable preferred stock 18,312 18,028
Minority interest 762 -
Common shareholders' equity 96,698 98,165
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$ 489,663 $ 508,150
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==============================================================================
(1) Unaudited balance sheet at March 31, 1996 provided for comparison purposes
only.
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EXIDE ELECTRONICS GROUP, INC.
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.
EXIDE ELECTRONICS GROUP, INC.
(Registrant)
By: /s/ MARTY R. KITTRELL
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Marty R. Kittrell
Vice President and
Chief Financial Officer
Date: October 31, 1996