Delaware
(State
or Other Jurisdiction of Incorporation or Organization)
|
75-3142681
(I.R.S.
Employer Identification No.)
|
811
Hansen Way, Palo Alto, California 94303
(Address
of Principal Executive Offices and Zip Code)
|
|
(650)
846-2900
(Registrant’s
telephone number, including area code)
|
|
Securities
registered pursuant to Section 12(b) of the
Act:
|
Title of each
Class
|
|
Name of Each Exchange on Which
Registered
|
|||
Common
Stock, par value $0.01 per share
|
|
The
Nasdaq Stock Market LLC
|
|
Securities
registered pursuant to Section 12(g) of the Act: None
|
Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act.
|
Yes
¨ No
x
|
||||
Indicate by
check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
|
Yes
¨ No
x
|
||||
Indicate by
check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
|
Yes
x No
¨
|
||||
Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form
10-K.
|
x
|
||||
Indicate by
check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated
filer” and “small reporting company” in Rule 12b-2 of the Exchange
Act.
|
|||||
Large
accelerated filer
|
¨
|
Accelerated
filer
|
x
|
||
Non-accelerated
filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller
reporting company
|
¨
|
||
Indicate by
check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
|
Yes
¨ No
x
|
||||
The
aggregate market value of common stock held by non-affiliates of the
registrant as of March 28, 2008 (the last business day of the registrant’s
most recently completed second fiscal quarter) was approximately $73
million, based on the closing sale price of $9.98 per share of common
stock as reported on the Nasdaq Stock Market.
|
|||||
Indicate the
number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: 16,360,349 shares of the
registrant’s common stock, par value $0.01 per share, were outstanding at
December 1, 2008.
|
Page |
|
PART I |
|
4
|
|
|
Risk Factors |
|
17 | ||
Item 1B. | Unresolved Staff Comments | 30 | |||
Item 2. | Properties |
30
|
|||
Item 3. | Legal Proceedings |
30
|
|||
Item 4. | Submission of Matters to a Vote of Security Holders | 30 |
|
PART II | 31 |
|
|
72 |
|
PART IV | 73 |
|
Item 1. |
Business
|
·
|
the
transmission of radar signals for navigation and
location;
|
·
|
the
transmission of deception signals for electronic
countermeasures;
|
·
|
the
transmission, reception and amplification of voice, data and video signals
for broadcasting, data links, Internet, flight testing and other types of
commercial and military
communications;
|
·
|
providing
power and control for medical diagnostic
imaging;
|
·
|
generating
microwave energy for radiation therapy in the treatment of cancer;
and
|
·
|
generating
microwave energy for various industrial and scientific
applications.
|
·
|
satellite
communications amplifier
subsystems;
|
·
|
radar
and electronic warfare subsystems;
|
·
|
specialized
antenna subsystems;
|
·
|
solid-state
integrated microwave assemblies;
|
·
|
medical
x-ray generators and control
systems;
|
·
|
modulators
and transmitters; and
|
·
|
various
electronic power supply and control equipment and
devices.
|
·
|
generate
or amplify (multiply) various forms of electromagnetic energy (these
products are generally referred to as VEDs, vacuum electron devices, or
simply as devices);
|
·
|
transmit,
direct, measure and control electromagnetic
energy;
|
·
|
provide
the voltages and currents to power and control devices that generate
electromagnetic energy; or
|
·
|
provide
some combination of the above
functions.
|
·
|
Klystrons
and gyrotrons: Klystrons are typically high-power VEDs that
operate over a narrow range of frequencies, with power output ranges from
hundreds of watts to megawatts and frequencies from 500 kilohertz to over
30 GHz. We produce and manufacture klystrons for a variety of radar,
communications, medical, industrial
and
|
scientific applications. Gyrotron oscillators and amplifiers operate at very high-power and very high frequencies. Power output of one megawatt has been achieved at frequencies greater than 100 GHz. These devices are used in areas such as fusion research, electronic warfare and high-resolution radar. |
·
|
Helix
traveling wave tubes: Helix traveling wave tubes are VEDs that
operate over a wide range of frequencies at moderate output power levels
(tens of watts to thousands of watts). These devices are ideal for
terrestrial and satellite communications and electronic warfare
applications.
|
·
|
Coupled
cavity traveling wave tubes: Coupled cavity traveling wave
tubes are VEDs that combine some of the power generating capability of a
klystron with some of the increased bandwidth (wider frequency range)
properties of a helix traveling wave tube. These amplifiers are medium
bandwidth, high-power devices, since power output levels can be as high as
one megawatt. These devices are used primarily for high-power and
multi-function radars, including front line radar
systems.
|
·
|
Magnetrons: Magnetron
oscillators are VEDs capable of generating high-power output at relatively
low cost. Magnetrons generate power levels as high as 20 megawatts and
cover frequencies up to the 40 GHz range. We design and manufacture
magnetrons for radar, electronic warfare and missile programs within the
defense market. Shipboard platforms include search and air traffic control
radar on most aircraft carriers, cruisers and destroyers of NATO-country
naval fleets. Ground-based installations include various military and
civil search and air traffic control radar systems. We are also a supplier
of magnetrons for use in commercial weather radar. Potential new uses for
magnetrons include high-power microwave systems for disruption of enemy
electronic equipment and the disabling or destruction of roadside bombs
and other IEDs.
|
·
|
Cross-field
amplifiers: Cross-field amplifiers are VEDs used for high-power
radar applications because they have power output capability as high as 10
megawatts. Our cross-field amplifiers are primarily used to support the
Aegis radar system used by the U.S. Navy and select foreign naval vessels.
We supply units for both new ships and
replacements.
|
·
|
Power
grid devices: Power grid devices are lower frequency VEDs that
are used to generate, amplify and control electromagnetic energy. These
devices are used in commercial and military communications systems and
radio and television broadcasting. We also supply power grid devices for
the shortwave broadcast market. Our products are also widely used in
equipment that serves the industrial markets such as textile drying, pipe
welding and semiconductor wafer
fabrication.
|
|
In
addition to VEDs, we also sell:
|
·
|
Microwave
transmitter subsystems: Our microwave transmitter subsystems
are integrated assemblies generally built around our VED products. These
subsystems incorporate specialized high-voltage power supplies to power
the VED, plus cooling and control systems that are uniquely designed to
work in conjunction with our devices to maximize life, performance and
reliability. Microwave transmitter subsystems are used in a variety of
defense and commercial applications. Our transmitter subsystems are
available at frequencies ranging from one GHz all the way up to 100 GHz
and beyond.
|
·
|
Satellite
communications amplifiers: Satellite communications amplifiers
provide integrated power amplification for the transmission of voice,
broadcast, data, Internet and other communications signals from ground
stations to satellites in all frequency bands. We provide a broad line of
complete, integrated satellite communications amplifiers that consist of a
VED or solid-state microwave amplifier, a power supply to power the
device, radio frequency conditioning circuitry, cooling equipment,
electronics to control the amplifier and enable it to interface with the
satellite ground station, and a cabinet. These amplifiers are often
combined in sub-system configurations with other components to meet
specific customer requirements. We offer amplifiers for both defense and
commercial applications. Our products include amplifiers based on
traveling wave tubes, klystrons, solid-state devices and millimeter wave
devices.
|
·
|
Receiver
protectors and control components: Receiver protectors are used
in the defense market in radar systems to protect sensitive receivers from
extraneous high-power signals, thereby preventing damage to the receiver.
We have been designing and manufacturing receiver protector products for
more than 50 years. We believe that we are the world’s largest
manufacturer of receiver protectors and the only manufacturer offering the
full range of available technologies. We also manufacture a wide range of
other components used to control the RF energy in the customer’s system.
Our receiver protectors and control components are integrated into
prominent fielded military programs. As radar systems have evolved to
improve performance and reduce size and weight, we have invested in
solid-state technology to develop the microwave control components to
allow us to offer more fully integrated products, referred to as
multifunction assemblies, as required by modern radar
systems.
|
·
|
Medical
x-ray imaging systems: We design and manufacture x-ray
generators for medical imaging applications. These consist of power
supplies, cooling, control and display subsystems that drive the x-ray
equipment used by healthcare providers for medical imaging. The energy in
an x-ray imaging system is generated by an x-ray tube which is another
version of a VED operating in a different region of the electromagnetic
spectrum. These generators use the high-voltage and control systems
expertise originally developed by us while designing power systems to
drive our other VEDs. We also provide the electronics and software
subsystems that control and tie together much of the other ancillary
equipment in a typical x-ray imaging
system.
|
·
|
Antenna
systems: We design and manufacture antenna systems for a variety of
applications, including, radar, electronic warfare, communications and
telemetry. Along with a variety of antenna types, including phased array,
edge and tilt scanning antennas, conformal electronic scanning antennas,
stabilized shipboard tracking antennas and our trademark FLAPS (“Flat
Parabolic Surface”) antennas, the antenna systems also include the highly
efficient harmonic drive pedestals used to support them. The antenna
systems used on airborne, shipboard and ground-based platforms are
designed to enable high performance, high data rate transmission at
frequencies ranging from one GHz to
100GHz.
|
Risk Factors |
·
|
delay
in shipments due to various factors, including cancellations by a
customer, delays in a customer’s own production schedules, natural
disasters or manufacturing
difficulties;
|
·
|
delay
in a customer’s acceptance of a product;
or
|
·
|
a
change in a customer’s financial condition or ability to obtain
financing.
|
·
|
changes
or anticipated changes in third-party reimbursement amounts or policies
applicable to treatments using our
products;
|
·
|
revenues
becoming affected by seasonal
influences;
|
·
|
changes
in foreign currency exchange rates;
|
·
|
changes
in the relative portion of our revenues represented by our various
products;
|
·
|
timing
of the announcement, introduction and delivery of new products or product
enhancements by us and by our
competitors;
|
·
|
disruptions
in the supply or changes in the costs of raw materials, labor, product
components or transportation
services;
|
·
|
the
impact of changing levels of sales to sole purchasers of certain of our
products; and
|
·
|
unfavorable
outcome of any litigation.
|
·
|
terminate
existing contracts, including for the convenience of the government or
because of a default in our performance of the
contract;
|
·
|
reduce
the value of existing contracts;
|
·
|
cancel
multi-year contracts or programs;
|
·
|
audit
our contract-related costs and fees, including allocated indirect
costs;
|
·
|
suspend
or debar us from receiving new contracts pending resolution of alleged
violations of procurement laws or regulations;
and
|
·
|
control
and potentially prohibit the export of our products, technology or other
data.
|
·
|
the
need to bid on programs in advance of contract performance, which may
result in unforeseen performance issues and costs;
and
|
·
|
the
expense and delay that may arise if our competitors protest or challenge
the award made to us, which could result in a reprocurement, modified
contract, or reduced work.
|
·
|
In
order to obtain the license for the sale of such a product, we are
required to obtain information from the potential customer and provide it
to the U.S. Government. If the U.S. Government determines that the sale
presents national security risks, it may not approve the
sale.
|
·
|
Delays
caused by the requirement to obtain a required license or other
authorization may cause delays in our production, sales and export
activities, and may cause us to lose potential
sales.
|
·
|
If
we violate these laws and regulations, we could be subject to fines or
penalties, including debarment as an exporter and/or a government
contractor.
|
·
|
changes
in currency rates with respect to the U.S.
dollar;
|
·
|
changes
in regulatory requirements;
|
·
|
potentially
adverse tax consequences;
|
·
|
U.S.
and foreign government policies;
|
·
|
currency
restrictions, which may prevent the transfer of capital and profits to the
United States;
|
·
|
restrictions
imposed by the U.S. Government on the export of certain products and
technology;
|
·
|
the
responsibility of complying with multiple and potentially conflicting
laws;
|
·
|
difficulties
and costs of staffing and managing international
operations;
|
·
|
the
impact of regional or country specific business cycles and economic
instability; and
|
·
|
geopolitical
developments and conditions, including international hostilities, acts of
terrorism and governmental reactions, trade relationships and military and
political alliances.
|
·
|
difficulties
in assimilating and integrating the operations, technologies and products
acquired;
|
·
|
the
diversion of our management’s attention from other business
concerns;
|
·
|
our
operating and financial systems and controls being inadequate to deal with
our growth; and
|
·
|
the
potential loss of key employees.
|
·
|
the
jurisdictions in which profits are determined to be earned and
taxed;
|
·
|
the
resolution of issues arising from tax audits with various tax
authorities;
|
·
|
changes
in the valuation of our deferred tax assets and
liabilities;
|
·
|
adjustments
to estimated taxes upon finalization of various tax
returns;
|
·
|
increases
in expenses not deductible for tax
purposes;
|
·
|
changes
in available tax credits;
|
·
|
changes
in share-based compensation
expense;
|
·
|
changes
in tax laws or the interpretation of such tax laws and changes in
generally accepted accounting principles;
and/or
|
·
|
the
repatriation of non-U.S. earnings for which we have not previously
provided for U.S. taxes.
|
·
|
it
will require us to dedicate a substantial portion of our cash flow from
operations, in the near term, to make interest payments on our
indebtedness, and in the longer term, to repay the outstanding principal
amount of our indebtedness, each of which will reduce the funds available
for working capital, capital expenditures and other general corporate
expenses;
|
·
|
it
could limit our flexibility in planning for or reacting to changes in our
business, the markets in which we compete and the economy at
large;
|
·
|
it
could limit our ability to borrow additional funds in the future, if
needed, because of applicable financial and restrictive covenants of our
indebtedness; and
|
·
|
it
could make us more vulnerable to interest rate increases because a portion
of our borrowings is, and will continue to be, at variable rates of
interest.
|
·
|
incur
additional indebtedness;
|
·
|
sell
assets or consolidate or merge with or into other
companies;
|
·
|
pay
dividends or repurchase or redeem capital
stock;
|
·
|
make
certain investments;
|
·
|
issue
capital stock of our subsidiaries;
|
·
|
incur
liens; and
|
·
|
enter
into certain types of transactions with our
affiliates.
|
·
|
a
board of directors that is classified such that only one-third of
directors are elected each year;
|
·
|
“blank
check” preferred stock that could be issued by our board of directors to
increase the number of outstanding shares and thwart a takeover
attempt;
|
·
|
limitations
on the ability of stockholders to call special meetings of
stockholders;
|
·
|
prohibiting
stockholder action by written consent and requiring all stockholder
actions to be taken at a meeting of our
stockholders;
|
·
|
establishing
advance notice requirements for nominations for election to the board of
directors or for proposing matters that can be acted upon by stockholders
at stockholder meetings; and
|
·
|
requiring
that the affirmative vote of the holders of at least two-thirds (66.7%) of
the voting power of our issued and outstanding capital stock entitled to
vote in the election of directors be obtained to amend certain provisions
of our amended and restated certificate of
incorporation.
|
Item 1B. Unresolved
Staff Comments
|
Item 2. Properties
|
Square
Footage
|
||||||||||
Location
|
Owned
|
Leased/
Subleased
|
Segment
Using the Property
|
|||||||
Beverly,
Massachusetts
|
174,000 |
(a)
|
VED
|
|||||||
Georgetown,
Ontario, Canada
|
192,000 |
(b)
|
22,000 |
VED
and satcom equipment
|
||||||
Woodland,
California
|
36,900 | 9,900 |
VED
|
|||||||
Palo
Alto, California
|
418,300 |
(c)
|
VED
and satcom equipment
|
|||||||
Mountain
View, California
|
42,500 |
VED
|
||||||||
Camarillo,
California
|
37,700 |
Other
|
||||||||
Various
other locations
|
21,000 |
(d)
|
VED
and satcom equipment
|
|
(a)
|
The
Beverly, Massachusetts square footage also includes
approximately 1,080 square feet leased to a
tenant.
|
(b)
|
Includes
a facility expansion completed in fiscal year 2007 that added
approximately 63,000 square feet.
|
(c)
|
Includes
49,100 square feet that are subleased from Varian, Inc. Varian, Inc.
subleases the land from Varian Medical Systems, Inc. and Varian Medical
Systems leases the land from Stanford University.
|
(d)
|
Leased
facilities occupied by our field sales and service
organizations.
|
Item 3. Legal
Proceedings
|
Market
For Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
High
|
Low
|
|||||||
Fiscal
year 2007
|
||||||||
First
fiscal quarter (September 30, 2006 to December 29, 2006)
|
$ | 15.46 | $ | 13.04 | ||||
Second
fiscal quarter (December 30, 2006 to March 30, 2007)
|
$ | 19.76 | $ | 14.96 | ||||
Third
fiscal quarter (March 31, 2007 to June 29, 2007)
|
$ | 21.11 | $ | 18.81 | ||||
Fourth
fiscal quarter (June 30, 2007 to September 28, 2007)
|
$ | 20.72 | $ | 16.20 | ||||
Fiscal
year 2008
|
||||||||
First
fiscal quarter (September 29, 2007 to December 28, 2007)
|
$ | 20.77 | $ | 16.35 | ||||
Second
fiscal quarter (December 29, 2007 to March 28, 2008)
|
$ | 17.22 | $ | 9.09 | ||||
Third
fiscal quarter (March 29, 2008 to June 27, 2008)
|
$ | 14.00 | $ | 9.40 | ||||
Fourth
fiscal quarter (June 28, 2008 to October 3, 2008)
|
$ | 16.02 | $ | 12.13 |
Period
|
Total
Number of Shares Purchased
|
Average Price Paid per
Share1
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the Plans or
Programs
(in thousands)2
|
||||||||||||
June
28-August 1, 2008
|
- | $ | - | - | $ | 10,200 | ||||||||||
August
2-August 29, 2008
|
31,200 | $ | 14.18 | 31,200 | $ | 9,757 | ||||||||||
August
30-October 3, 2008
|
38,828 | $ | 14.30 | 38,828 | $ | 9,200 | ||||||||||
70,028 | $ | 14.25 | 70,028 | $ | 9,200 |
|
||
1
Excludes brokerage commission of $0.03
per
share.
|
||
2
On May 28,
2008, we announced the approval of our common stock repurchase program,
which authorizes us to repurchase up to $12.0 million of our common stock
from time to time through May 23, 2009. The program may be modified or
terminated by our board of directors at any time.
|
Item 6. Selected
Financial Data
|
FIVE-YEAR
SELECTED FINANCIAL DATA
|
||||||||||||||||||||||||
(in
thousands, except per share amounts)
|
||||||||||||||||||||||||
Year
Ended
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
36-Week
|
16-Week
|
|||||||||||||||||||
October
3,
2008
(Successor)
|
September
28,
2007
(Successor)
|
September
29,
2006
(Successor)
|
September
30,
2005
(Successor)
|
Period
Ended
October 1,
2004 (Successor)
|
Period
Ended
January
22, 2004 (Predecessor)
|
|||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||||||
Sales
|
$ | 370,014 | $ | 351,090 | $ | 339,717 | $ | 320,732 | $ | 202,266 | $ | 79,919 | ||||||||||||
Cost
of sales(1)
|
261,086 | 237,789 | 236,063 | 216,031 | 141,172 | 56,189 | ||||||||||||||||||
Gross
profit
|
108,928 | 113,301 | 103,654 | 104,701 | 61,094 | 23,730 | ||||||||||||||||||
Research
and development
|
10,789 | 8,558 | 8,550 | 7,218 | 5,253 | 2,200 | ||||||||||||||||||
Selling
and marketing
|
21,144 | 19,258 | 19,827 | 18,547 | 11,082 | 4,352 | ||||||||||||||||||
General
and administrative
|
22,746 | 21,519 | 22,418 | 27,883 | 12,499 | 6,026 | ||||||||||||||||||
Merger
expenses(2)
|
- | - | - | - | - | 6,374 | ||||||||||||||||||
Amortization
of acquisition-related intangible assets
|
3,103 | 2,316 | 2,190 | 7,487 | 13,498 | - | ||||||||||||||||||
Acquired
in-process research and development(3)
|
- | - | - | - | 2,500 | - | ||||||||||||||||||
Net
loss on disposition of fixed assets
|
205 | 129 | 586 | 446 | 197 | 7 | ||||||||||||||||||
Total
operating costs and expenses
|
57,987 | 51,780 | 53,571 | 61,581 | 45,029 | 18,959 | ||||||||||||||||||
Operating
income
|
50,941 | 61,521 | 50,083 | 43,120 | 16,065 | 4,771 | ||||||||||||||||||
Interest
expense, net
|
19,055 | 20,939 | 23,806 | 20,310 | 10,518 | 8,902 | ||||||||||||||||||
Loss
on debt extinguishment(4)
|
633 | 6,331 | - | - | - | - | ||||||||||||||||||
Income
tax expense
|
10,804 | 11,748 | 9,058 | 9,138 | 2,899 | 439 | ||||||||||||||||||
Net
income (loss)
|
$ | 20,449 | $ | 22,503 | $ | 17,219 | $ | 13,672 | $ | 2,648 | $ | (4,570 | ) | |||||||||||
Earnings
per share(5)
|
||||||||||||||||||||||||
Basic
|
$ | 1.25 | $ | 1.39 | $ | 1.20 | $ | 1.05 | $ | 0.20 | N/A | (6) | ||||||||||||
Diluted
|
$ | 1.16 | $ | 1.27 | $ | 1.09 | $ | 0.98 | $ | 0.19 | N/A | (6) | ||||||||||||
Shares
used to calculate net earnings per share(7)
|
||||||||||||||||||||||||
Basic
|
16,356 | 16,242 | 14,311 | 13,079 | 13,063 | N/A | (6) | |||||||||||||||||
Diluted
|
17,697 | 17,721 | 15,789 | 13,974 | 13,700 | N/A | (6) | |||||||||||||||||
Cash
dividend per share(8)
|
$ | - | $ | - | $ | 1.19 | $ | 5.80 | $ | - | $ | - | ||||||||||||
Other
Financial Data:
|
||||||||||||||||||||||||
EBITDA(9)
|
$ | 61,271 | $ | 64,288 | $ | 59,096 | $ | 57,297 | $ | 32,816 | $ | 6,549 | ||||||||||||
EBITDA
margin(10)
|
16.6 | % | 18.3 | % | 17.4 | % | 17.9 | % | 16.2 | % | 8.2 | % | ||||||||||||
Operating
income margin(11)
|
13.8 | % | 17.5 | % | 14.7 | % | 13.4 | % | 7.9 | % | 6.0 | % | ||||||||||||
Net
income (loss) margin(12)
|
5.5 | % | 6.4 | % | 5.1 | % | 4.3 | % | 1.3 | % | (5.7) | % | ||||||||||||
Depreciation
and amortization(13)
|
$ | 10,963 | $ | 9,098 | $ | 9,013 | $ | 14,177 | $ | 16,751 | $ | 1,778 | ||||||||||||
Capital
expenditures(14)
|
$ | 4,262 | $ | 8,169 | $ | 10,913 | $ | 17,131 | $ | 3,317 | $ | 459 | ||||||||||||
Ratio of earnings to fixed charges(15) | 2.57 | x | 2.59 | x | 2.08 | x | 2.10 | x | 1.51 | x | - | |||||||||||||
Net
cash provided by operating activities
|
$ | 33,881 | $ | 21,659 | $ | 10,897 | $ | 31,349 | $ | 12,203 | $ | 6,574 | ||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||||||
Working
capital
|
$ | 88,103 | $ | 81,547 | $ | 77,113 | $ | 65,400 | $ | 72,385 | $ | - | ||||||||||||
Total
assets
|
$ | 466,948 | $ | 476,222 | $ | 441,759 | $ | 454,544 | $ | 431,207 | $ | - | ||||||||||||
Long-term
debt
|
$ | 224,660 | $ | 245,567 | $ | 245,067 | $ | 284,231 | $ | 210,606 | $ | - | ||||||||||||
Total
stockholders’ equity
|
$ | 143,865 | $ | 125,906 | $ | 99,673 | $ | 52,667 | $ | 107,594 | $ | - | ||||||||||||
(1)
|
Includes
charges for the amortization of inventory write-up of $351 incurred in
connection with the Econco acquisition for fiscal year 2005, and $5,500
incurred during the 36-week period ended October 1, 2004 in connection
with our January 2004 merger.
|
(2)
|
Represents
merger expenses resulting from our January 2004
merger.
|
(3)
|
Represents
a write off of in-process research and development resulting from our
January 2004 merger.
|
(4)
|
Resulted
from early repayment of our previous senior credit facilities in
connection with the amendment and restatement of such facilities and early
extinguishment of $10 million and $58 million of our floating rates senior
notes in fiscal years 2008 and 2007, respectively. For fiscal year 2008,
the amount of loss includes non-cash write-offs of $0.4 million
of unamortized debt issue costs and issue discount costs and $0.2 million
in cash payments for call premiums. For fiscal year 2007, the amount of
loss includes non-cash write-offs of $4.7 million of
unamortized debt issue costs and issue discount costs and $1.9 million in
cash payments for call premiums, partially offset by $0.3 million of cash
proceeds from the early termination of the related interest rate swap
agreement.
|
(5)
|
Basic
earnings per share represents net income divided by weighted average
common shares outstanding, and diluted earnings per share represents net
income divided by weighted average common and common equivalent shares
outstanding.
|
(6)
|
Due
to the significant change in capital structure at the closing date of its
January 2004 merger, the predecessor amount has not been presented because
it is not considered comparable to the amount for CPI
International.
|
(7)
|
On
April 7, 2006, in connection with the amendment and restatement of the
certificate of incorporation of CPI International, we effected a
3.059-to-1 stock split of the outstanding shares of common stock of CPI
International as of such date. All share and per share amounts for
Successor periods herein have been retroactively restated to reflect the
stock split.
|
(8)
|
In
February 2005 and in December 2005 we paid special cash dividends of
$75,809 and $17,000, respectively, to stockholders of CPI International.
Cash dividend per share is calculated by dividing the dollar amount of the
dividend by weighted average common shares
outstanding.
|
(9)
|
EBITDA represents earnings before
net interest expense, provision for income taxes and depreciation and
amortization. For the reasons listed below, we believe that GAAP-based
financial information for leveraged businesses such as ours should
be supplemented by EBITDA so that investors better
understand our financial performance in connection with their analysis of
our business:
|
·
|
EBITDA
is a component of the measure used by our board of directors and
management team to evaluate our operating
performance;
|
·
|
our
senior credit facilities contain a covenant that requires us to maintain a
senior secured leverage ratio that contains EBITDA as a component, and our
management team uses EBITDA to monitor compliance with such covenant; see
“Management’s discussion and analysis of financial condition and results of operations-Liquidity and
Capital Resources-Covenant
compliance;”
|
·
|
EBITDA
is a component of the measure used by our management team to make
day-to-day operating decisions;
|
·
|
EBITDA
facilitates comparisons between our operating results and those of
competitors with different capital structures and therefore is a component
of the measure used by the management to facilitate internal comparisons
to competitors’ results and our industry in general;
and
|
·
|
the
payment of bonuses to certain members of management is contingent upon,
among other things, the satisfaction by us of certain targets that contain
EBITDA as a component.
|
|
Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. Although we use EBITDA as a financial measure to assess the performance of our business, the use of EBITDA is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business. When analyzing our performance, EBITDA should be considered in addition to, and not as a substitute for, net income, cash flows from operating activities or other statements of operations or statements of cash flows data prepared in accordance with GAAP. |
Year
Ended
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
36-Week
|
16-Week
|
|||||||||||||||||||
October
3,
|
September
28,
|
September
29,
|
September
30,
|
Period
Ended
|
Period
Ended
|
|||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
October
1, 2004
|
January
22, 2004
|
|||||||||||||||||||
(Successor)
|
(Successor)
|
(Successor)
|
(Successor)
|
(Successor)
|
(Predecessor)
|
|||||||||||||||||||
Net
income (loss)
|
$ | 20,449 | $ | 22,503 | $ | 17,219 | $ | 13,672 | $ | 2,648 | $ | (4,570 | ) | |||||||||||
Depreciation
and amortization(13)
|
10,963 | 9,098 | 9,013 | 14,177 | 16,751 | 1,778 | ||||||||||||||||||
Interest
expense, net
|
19,055 | 20,939 | 23,806 | 20,310 | 10,518 | 8,902 | ||||||||||||||||||
Income
tax expense
|
10,804 | 11,748 | 9,058 | 9,138 | 2,899 | 439 | ||||||||||||||||||
EBITDA
|
$ | 61,271 | $ | 64,288 | $ | 59,096 | $ | 57,297 | $ | 32,816 | $ | 6,549 |
(10) | EBITDA margin represents EBITDA divided by sales. |
(11)
|
Operating
income margin represents operating income divided by
sales.
|
(12)
|
Net
income (loss) margin represents net income (loss) divided by
sales.
|
(13)
|
Depreciation
and amortization excludes amortization of deferred debt issuance costs,
which are included in interest expense,
net.
|
(14)
|
Fiscal
years 2007 and 2006 include $4.1 million and $2.3 million, respectively,
of capital expenditures for the expansion of our building in Georgetown,
Ontario, Canada. Fiscal years 2006 and 2005 include capital expenditures
of $4.7 million and $13.1 million, respectively, resulting from the
relocation of our San Carlos, California facility to Palo Alto, California
and Mountain View, California.
|
(15)
|
For
purposes of computing the ratio of earnings to fixed charges, earnings
consist of income from continuing operations before income taxes and fixed
charges less capitalized interest. Fixed charges consist of interest
expense, including amortization of debt issuance costs and that portion of
rental expenses that management considers to be a reasonable approximation
of interest. Earnings were insufficient to cover fixed charges by $4,131
for the 16-week period ended January 22,
2004.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Fiscal
Year Ended
|
||||||||||||||||||||||||
October 3, 2008 | September 28, 2007 | Increase | ||||||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||||||
Amount
|
Orders
|
Amount
|
Orders
|
Amount
|
Percent
|
|||||||||||||||||||
Radar
and Electronic Warfare
|
$ | 141.5 | 38 | % | $ | 138.2 | 41 | % | $ | 3.3 | 2 | % | ||||||||||||
Medical
|
67.7 | 18 | 66.3 | 19 | 1.4 | 2 | ||||||||||||||||||
Communications
|
127.1 | 34 | 106.7 | 31 | 20.4 | 19 | ||||||||||||||||||
Industrial
|
24.8 | 7 | 21.8 | 6 | 3.0 | 14 | ||||||||||||||||||
Scientific
|
13.1 | 3 | 10.7 | 3 | 2.4 | 22 | ||||||||||||||||||
Total
|
$ | 374.2 | 100 | % | $ | 343.7 | 100 | % | $ | 30.5 | 9 | % |
·
|
Radar and Electronic
Warfare: The majority of our orders in the radar and electronic
warfare markets are for products for domestic and international defense
and government end uses. Orders in these markets are characterized by many
smaller orders in the $0.5 million to $3.0 million range by product or
program, with no significant products or programs by themselves explaining
the annual change. Timing of these orders may vary from year to year.
Orders for these markets increased approximately 2% from $138.2 million in
fiscal year 2007 to $141.5 million in fiscal year 2008. In fiscal year
2008, increased demand for products to support the HAWK missile system,
due to delays in the receipt of previously expected orders for this
program, and increased demand for products to support the APN-245
Automatic Carrier Landing System were partially offset by a $5.9 million
decrease in demand for products to support the Aegis weapons system,
continued delays in the placement of defense orders and an expected
decrease in orders to support the EarthCare cloud-profiling radar program
due to the timing of that program.
Demand for our
products to support ships with the Aegis weapons system has two
components: we support new ship builds and we provide spare and repair
products for previously fielded ships. Over the past several years, we
have seen high demand for products to support a significant number of new
ship builds for the Aegis weapons program for U.S. and international
military customers. We have now received all orders for our products
required to support these new ship builds, and, as a result, we expect the
near-term demand to be primarily for spare and repair products. Therefore,
our near-term orders for this program are expected to be at similar or
somewhat lower levels than in fiscal year 2008, and our near-term sales
are expected to be at significantly lower levels than in fiscal year 2008.
We expect demand for our products to increase again in several years as
the new ships are commissioned, deployed and added to the installed base,
after which they also will require spare and repair products.
During fiscal year
2008, previously unexpected delays in the receipt of orders for radar and
electronic warfare programs impacted the timing of our sales for these
programs. We expect these delays to continue for the foreseeable
future.
|
·
|
Medical: Orders for our medical products consist of orders for medical imaging applications, such as x-ray imaging, PET and MRI applications, and for radiation therapy applications for the treatment of cancer. The approximately 2% increase in medical orders from fiscal year 2007 to fiscal year 2008 was due primarily to an increase in demand for x-ray generators from one customer and other international customers, as well as an increase in orders for products for radiation therapy applications. This increase was partially offset by the absence |
in
fiscal year 2008, due to timing, of a Russian tender program in which we
had participated in fiscal years 2006 and 2007. In fiscal year 2007, we
received approximately $6 million in orders for the Russian tender
program. The program did not recur in fiscal year
2008.
In
addition, in fiscal year 2007, demand for products for MRI applications
was very strong, as a customer ordered a two-year supply of these products
in one fiscal year, and we shipped a significant amount of these products
during that fiscal year. As a result, in fiscal year 2008, orders for
products for MRI applications decreased approximately $5.3 million as
compared to fiscal year 2007.
|
|
·
|
Communications: The
approximately 19% increase in communications orders was primarily
attributable to increases in orders for products to support military
communications applications, including the receipt of our first production
orders for Increment One of the Warfighter Information Network Tactical
(“WIN-T”) military communications program, and telemetry and TCDL orders
received by our recently acquired Malibu division. These increases were
partially offset by a decrease in orders for certain military
communications programs, including WIN-T’s predecessor program, the
now-completed Joint Network Node (“JNN”) military communications program
for which we had strong demand in fiscal year 2007, and a decrease in
orders for direct-to-home broadcast applications. We expect our
participation in military communications programs to continue to
grow.
|
· |
Industrial: Orders in
the industrial market, one of our smallest markets, are cyclical. The $3.0
million increase in industrial orders was attributable to orders for
products used in a wide variety of industrial applications, including
industrial fabrication applications, international test systems and food
processing, cargo screening and other industrial
applications.
|
· |
Scientific: Orders in
the scientific market, our smallest market, are historically one-time
projects and can fluctuate significantly from period to period. The $2.4
million increase in scientific orders was primarily the result of orders
for products to support a new accelerator project for fusion research at
an international scientific institute.
|
Year
Ended
|
||||||||||||||||||||||||
October
3, 2008
|
September
28, 2007
|
September
29, 2006
|
||||||||||||||||||||||
%
of
|
%
of
|
%
of
|
||||||||||||||||||||||
Amount
|
Sales
|
Amount
|
Sales
|
Amount
|
Sales
|
|||||||||||||||||||
Sales
|
$ | 370.0 | 100.0 | % | $ | 351.1 | 100.0 | % | $ | 339.7 | 100.0 | % | ||||||||||||
Cost
of sales
(a)
|
261.1 | 70.6 | 237.8 | 67.7 | 236.1 | 69.5 | ||||||||||||||||||
Gross
profit
|
108.9 | 29.4 | 113.3 | 32.3 | 103.7 | 30.5 | ||||||||||||||||||
Research
and development
|
10.8 | 2.9 | 8.6 | 2.4 | 8.6 | 2.5 | ||||||||||||||||||
Selling
and marketing (a)
|
21.1 | 5.7 | 19.3 | 5.5 | 19.8 | 5.8 | ||||||||||||||||||
General
and administrative (a)
|
22.7 | 6.1 | 21.5 | 6.1 | 22.4 | 6.6 | ||||||||||||||||||
Amortization
of acquisition-related intangibles
|
3.1 | 0.8 | 2.3 | 0.7 | 2.2 | 0.6 | ||||||||||||||||||
Net
loss on disposition of assets
|
0.2 | 0.1 | 0.1 | 0.0 | 0.6 | 0.2 | ||||||||||||||||||
Operating
income
|
50.9 | 13.8 | 61.5 | 17.5 | 50.1 | 14.7 | ||||||||||||||||||
Interest
expense, net
|
19.1 | 5.2 | 20.9 | 6.0 | 23.8 | 7.0 | ||||||||||||||||||
Loss
on debt extinguishment
|
0.6 | 0.2 | 6.3 | 1.8 | - | - | ||||||||||||||||||
Income
before taxes
|
31.3 | 8.5 | 34.3 | 9.8 | 26.3 | 7.7 | ||||||||||||||||||
Income
tax expense
|
10.8 | 2.9 | 11.7 | 3.3 | 9.1 | 2.7 | ||||||||||||||||||
Net
income
|
$ | 20.4 | 5.5 | % | $ | 22.5 | 6.4 | % | $ | 17.2 | 5.1 | % | ||||||||||||
Other
Data:
|
||||||||||||||||||||||||
EBITDA
(b)
|
$ | 61.3 | 16.6 | % | $ | 64.3 | 18.3 | % | $ | 59.1 | 17.4 | % |
Note: Totals
may not equal the sum of the components due to independent rounding.
Percentages are calculated based on rounded dollar amounts
presented.
|
(a)
|
Fiscal
year 2006 includes a special bonus expense (see “Special Bonus” below) of
$3.25 million, allocated as follows: $0.3 million to cost of sales, $0.2
million to selling and marketing and $2.75 million to general and
administrative.
|
(b)
|
EBITDA
represents earnings before net interest expense, provision for income
taxes and depreciation and amortization. For the reasons listed below, we
believe that GAAP-based financial information for leveraged businesses
such as ours should be supplemented by EBITDA so that investors better
understand our financial performance in connection with their analysis of
our business:
|
|
·
|
EBITDA
is a component of the measures used by our board of directors and
management team to evaluate our operating
performance;
|
|
·
|
our
senior credit facilities contain a covenant that requires us to maintain a
senior secured leverage ratio that contains EBITDA as a component, and our
management team uses EBITDA to monitor compliance with such
covenant;
|
|
·
|
EBITDA
is a component of the measures used by our management team to make
day-to-day operating decisions;
|
|
·
|
EBITDA
facilitates comparisons between our operating results and those of
competitors with different capital structures and therefore is a component
of the measures used by the management to facilitate internal comparisons
to competitors' results and our industry in general;
and
|
|
·
|
the
payment of management bonuses is contingent upon, among other things, the
satisfaction by us of certain targets that contain EBITDA as a
component.
|
|
Other
companies may define EBITDA differently and, as a result, our measure of
EBITDA may not be directly comparable to EBITDA of other companies.
Although we use EBITDA as a financial measure to assess the performance of
our business, the use of EBITDA is limited because it does not include
certain material costs, such as interest and taxes, necessary to operate
our business. When analyzing our performance, EBITDA should be considered
in addition to, and not as a substitute for, net income, cash flows from
operating activities or other statements of operations or statements of
cash flows data prepared in accordance with
GAAP.
|
For a reconciliation of Net Income to EBITDA, see Note 11 of the accompanying audited consolidated financial statements. |
Year
Ended
|
||||||||||||||||||||||||
October
3, 2008
|
September
28, 2007
|
Increase
(Decrease)
|
||||||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||||||
Amount
|
Sales
|
Amount
|
Sales
|
Amount
|
Percent
|
|||||||||||||||||||
Radar
and Electronic Warfare
|
$ | 151.8 | 40 | % | $ | 144.2 | 41 | % | $ | 7.6 | 5 | % | ||||||||||||
Medical
|
65.8 | 18 | 67.6 | 19 | (1.8 | ) | (3 | ) | ||||||||||||||||
Communications
|
117.8 | 32 | 112.3 | 32 | 5.5 | 5 | ||||||||||||||||||
Industrial
|
25.1 | 7 | 20.5 | 6 | 4.6 | 22 | ||||||||||||||||||
Scientific
|
9.5 | 3 | 6.5 | 2 | 3.0 | 46 | ||||||||||||||||||
Total
|
$ | 370.0 | 100 | % | $ | 351.1 | 100 | % | $ | 18.9 | 5 | % |
·
|
Radar and Electronic Warfare:
The majority of our sales in the radar and electronic warfare
markets are for products for domestic and international defense and
government end uses. Approximately two-thirds of our sales in the
radar and electronic warfare markets are sales of replacements,
spares and repairs. The timing of order receipts and subsequent shipments
in these markets may vary from year to year. On a combined basis, sales
for these two markets increased approximately 5% from $144.2 million in
fiscal year 2007 to $151.8 million in fiscal year 2008. The increase in
sales was due primarily to increased sales to support the HAWK missile
system, increased sales for other radar systems and sales of radar
products by our recently acquired Malibu
division.
|
·
|
Medical: Sales
of our medical products consist of sales for medical imaging applications,
such as x-ray imaging, PET and MRI, and for radiation therapy applications
for the treatment of cancer. The 3% decrease in sales of our medical
products was primarily due to a Russian tender program in which we
participated in fiscal years 2006 and 2007 that did not recur in fiscal
year 2008. In fiscal year 2008, sales for the Russian tender program
decreased $5.5 million in comparison to fiscal year
2007.
In
addition, in fiscal year 2007, a customer ordered a two-year supply of
products for MRI applications in one fiscal year, resulting in unusually
strong demand for these products, and we shipped a significant amount of
these products during that fiscal year. As a result, in fiscal year 2008,
sales of products for MRI applications decreased approximately $2.4
million.
Excluding
the Russian tender program and MRI applications from both fiscal years
2007 and 2008, medical sales increased 12% from $53.4 million in fiscal
year 2007 to $59.6 million in fiscal year
2008.
|
·
|
Communications: The 5%
increase in sales in the communications market was primarily the result of
sales of telemetry and TCDL products by our recently acquired Malibu
division, as well as the start of production shipments for Increment One
of the WIN-T military communications program. These increases were
partially offset by a decrease in sales of products for certain military
communications programs, including the now-completed JNN program, and
certain broadcast network applications for which we had strong sales in
fiscal year 2007.
In fiscal year 2008, the $7.3 million
increase in sales of products to support the WIN-T military communications
program was offset by a $3.7 million decrease in sales of products to
support its predecessor, the JNN military communications program, due to
the completion of that program. We expect that our overall participation
levels in the WIN-T program, which ramped up for production in the first
six months of fiscal year 2008, will be significantly higher than our
participation levels in the previous JNN program. Our sales of products
to
|
|
support
military communications applications increased in fiscal year 2008, and we
expect our participation in military communications programs to continue
to grow.
|
·
|
Industrial:
Sales in the industrial market are cyclical. The $4.6 million
increase in industrial sales was due to sales of products used in a wide
variety of industrial applications, including induction welding, dialectic
heating and instrumentation applications and domestic and international
test systems.
|
·
|
Scientific: Sales in the
scientific market are historically one-time projects and can fluctuate
significantly from period to period. The $3.0 million increase in
scientific sales was primarily the result of increased product shipments
for the Spallation Neutron Source at Oakridge National Laboratory. We
received approximately $5 million in orders for this program in fiscal
year 2007 and expect to complete our shipments of products for this
program in the second quarter of fiscal year
2009.
|
Year Ended
|
||||||||
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Company
sponsored
|
$ | 10.8 | $ | 8.6 | ||||
Customer
sponsored, charged to cost of sales
|
$ | 12.0 | $ | 7.7 | ||||
$ | 22.8 | $ | 16.3 |
Year Ended
|
||||||||
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Non-cash
write-off of deferred debt issue costs and issue discount
costs
|
$ | 0.4 | $ | 4.7 | ||||
Cash
payments for call premiums
|
0.2 | 1.9 | ||||||
Cash
proceeds from early termination of interest rate swap on floating
rate senior notes
|
- | (0.3 | ) | |||||
$ | 0.6 | $ | 6.3 |
Year
Ended
|
||||||||||||||||||||||||
September
28, 2007
|
September
29, 2006
|
Increase
(Decrease)
|
||||||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||||||
Amount
|
Sales
|
Amount
|
Sales
|
Amount
|
Percent
|
|||||||||||||||||||
Radar
and Electronic Warfare
|
$ | 144.2 | 41 | % | $ | 146.7 | 43 | % | $ | (2.5 | ) | (2 | ) % | |||||||||||
Medical
|
67.6 | 19 | 57.6 | 17 | 10.0 | 17 | ||||||||||||||||||
Communications
|
112.3 | 32 | 106.7 | 31 | 5.6 | 5 | ||||||||||||||||||
Industrial
|
20.5 | 6 | 22.1 | 7 | (1.6 | ) | (7 | ) | ||||||||||||||||
Scientific
|
6.5 | 2 | 6.6 | 2 | (0.1 | ) | (2 | ) | ||||||||||||||||
Total
|
$ | 351.1 | 100 | % | $ | 339.7 | 100 | % | $ | 11.4 | 3 | % |
·
|
Radar and Electronic Warfare:
The majority of our sales in the radar and electronic warfare
markets are for products for domestic and international defense and
government end uses. The timing of order receipts and subsequent shipments
in these markets may vary from year to year. Sales for these markets were
essentially unchanged, totaling $146.7 million in fiscal year 2006 and
$144.2 million in fiscal year 2007.
|
·
|
Medical: Sales of
our medical products consist of sales for medical imaging applications,
such as x-ray imaging, PET and MRI applications, and for radiation therapy
applications for the treatment of cancer. The approximately 17% increase
in sales of our medical imaging and radiation therapy products was
primarily due to a $6.9 million increase in sales of our products used in
x-ray imaging. The increase in sales of x-ray imaging products resulted
from growth in our market share, as well as a $1.9 million increase in
shipments for the second year of a tender program that supported the
expansion of the Russian medical infrastructure. Sales of our products
used in MRI applications also increased $2.4 million, as a customer
ordered a two-year supply of products for MRI applications in one fiscal
year, a significant amount of which we shipped during fiscal year
2007.
|
·
|
Communications: The
approximately 5% increase in sales in the communications market was
primarily the result of sales of telemetry and TCDL products by our
recently acquired Malibu division, increased sales of both newer and
traditional satellite communications amplifiers for foreign broadcast
network and direct-to-home applications, as well as newer satellite
communications amplifiers for foreign news gathering and mobile
applications and U.S. military satellite communications programs. These
increases were partially offset by a decrease in shipments of our
traditional satellite communications products for North American
direct-to-home broadcast
applications.
|
·
|
Industrial: Sales in the
industrial market, one of our smallest markets, are cyclical. The decrease
in industrial sales was primarily due the timing of orders and shipments
of products used in industrial heating systems, electromagnetic
susceptibility test programs and other industrial
applications.
|
·
|
Scientific: Sales in the
scientific market, our smallest market, are historically one-time projects
and can fluctuate significantly from period to period. Sales in this
market were essentially unchanged.
|
Year Ended
|
||||||||
September
28,
|
September
29,
|
|||||||
2007
|
2006
|
|||||||
Company
sponsored
|
$ | 8.6 | $ | 8.6 | ||||
Customer
sponsored, charged to cost of sales
|
$ | 7.7 | $ | 6.2 | ||||
$ | 16.3 | $ | 14.8 |
Cash
and Working Capital
|
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
and cash equivalents
|
$ | 28.7 | $ | 20.5 | $ | 30.2 | ||||||
Working
capital
|
$ | 88.1 | $ | 81.5 | $ | 77.1 |
October
3,
|
September
28,
|
September 29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
cash provided by operating activities
|
$ | 33.9 | $ | 21.7 | $ | 10.9 | ||||||
Net
cash used in investing activities
|
$ | (2.8 | ) | $ | (30.4 | ) | $ | (0.2 | ) | |||
Net
cash used in financing activities
|
$ | (22.9 | ) | $ | (1.0 | ) | $ | (7.1 | ) | |||
Net
increase (decrease) in cash and cash equivalents
|
$ | 8.2 | $ | (9.7 | ) | $ | 3.6 |
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than
5 years
|
||||||||||||||||
Operating
leases
|
$ | 8,272 | $ | 2,037 | $ | 2,432 | $ | 907 | $ | 2,896 | ||||||||||
Purchase
commitments
|
29,394 | 28,148 | 1,234 | 12 | - | |||||||||||||||
Debt
obligations
|
225,750 | 1,000 | 87,750 | 125,000 | 12,000 | |||||||||||||||
Interest
on debt obligations
|
56,520 | 17,167 | 32,642 | 5,308 | 1,403 | |||||||||||||||
FIN No. 48 tax liabilities | 5,609 | 5,609 | - | - | - | |||||||||||||||
Total
cash obligations
|
$ | 325,545 | $ | 53,961 | $ | 124,058 | $ | 131,227 | $ | 16,299 | ||||||||||
Standby
letters of credit
|
$ | 4,609 | $ | 4,609 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Term
loan, expiring 2014
|
$ | 88,750 | $ | 99,750 | ||||
8%
Senior subordinated notes due 2012
|
125,000 | 125,000 | ||||||
Floating
rate senior notes due 2015, net of issue discount of $90 and
$183
|
11,910 | 21,817 | ||||||
225,660 | 246,567 | |||||||
Less: Current
portion
|
1,000 | 1,000 | ||||||
Long-term
portion
|
$ | 224,660 | $ | 245,567 | ||||
Standby
letters of credit
|
$ | 4,609 | $ | 3,725 |
Year
|
Optional
Redemption Price
|
|||
2008
|
104 | % | ||
2009
|
102 | % | ||
2010
and thereafter
|
100 | % |
Year
|
Optional
Redemption Price
|
|||
2008
|
102 | % | ||
2009
|
101 | % | ||
2010
and thereafter
|
100 | % |
EBITDA(a)
|
$ | 61,271 | |||
Stock
compensation expense(b)
|
2,135 | ||||
Loss
on debt extinguishment(c)
|
633 | ||||
Consolidated
EBITDA
|
$ | 64,039 | |||
(a)
|
For
a reconciliation of net income to EBITDA for fiscal year 2008, see
footnote 9 in “Selected Financial
Data.”
|
(b)
|
Represents
a non-cash charge for stock compensation related to stock options, and
restricted stock and the discount on our employee stock
purchases.
|
(c)
|
Represents
costs associated with our debt refinancing during fiscal year 2008, which
include non-cash write-offs of $0.4 million of unamortized debt
issue costs and issue discount costs and $0.2 million in cash payments for
call premiums.
|
·
|
There
is no default under the indenture.
|
·
|
The
ratio of Communications & Power Industries’ Consolidated Cash Flow (as
defined in the indenture) for the most recent four quarters to
Communications & Power Industries’ Consolidated Interest Expense (as
defined in the indenture) for the same period is at least
2:1.
|
·
|
The
amount of the proposed dividend plus all previous Restricted Payments (as
defined in the indenture) does not exceed the aggregate contractual limit
on Restricted Payments, which is based on one-half of the aggregate
Consolidated Net Income of Communications & Power Industries since the
date of the issuance of the 8% senior subordinated notes, the amount of
certain capital contributions and certain other items. In addition, the
indenture permits up to $10 million of additional Restricted Payments
outside of the contractual limit described in the preceding
sentence.
|
Item 7A. Quantitative
and Qualitative Disclosures About Market
Risk
|
Item 8. Financial
Statements and Supplementary Data
|
Item 9. Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure
|
Item 9B. Other
Information
|
Item 10. |
Directors,
Executive Officers and Corporate
Governance
|
Item 11. |
Executive
Compensation
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Principal
Accounting Fees and Services
|
Exhibits,
Financial Statement Schedules
|
·
|
Reports
of Independent Registered Public Accounting
Firm
|
·
|
Consolidated
Balance Sheets
|
·
|
Consolidated
Statements of Operations
|
·
|
Consolidated
Statements of Stockholders’ Equity and Comprehensive
Income
|
·
|
Consolidated
Statements of Cash Flows
|
·
|
Notes
to Consolidated Financial
Statements
|
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 28,670 | $ | 20,474 | ||||
Restricted
cash
|
776 | 2,255 | ||||||
Accounts
receivable, net
|
47,348 | 52,589 | ||||||
Inventories
|
65,488 | 67,447 | ||||||
Deferred
tax assets
|
11,411 | 9,744 | ||||||
Prepaid
and other current assets
|
3,823 | 4,639 | ||||||
Total
current assets
|
157,516 | 157,148 | ||||||
Property,
plant, and equipment, net
|
62,487 | 66,048 | ||||||
Deferred
debt issue costs, net
|
4,994 | 6,533 | ||||||
Intangible
assets, net
|
78,534 | 81,743 | ||||||
Goodwill
|
162,611 | 161,573 | ||||||
Other
long-term assets
|
806 | 3,177 | ||||||
Total
assets
|
$ | 466,948 | $ | 476,222 | ||||
Liabilities
and stockholders’ equity
|
||||||||
Current
Liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 1,000 | $ | 1,000 | ||||
Accounts
payable
|
21,109 | 21,794 | ||||||
Accrued
expenses
|
23,044 | 26,349 | ||||||
Product
warranty
|
4,159 | 5,578 | ||||||
Income
taxes payable
|
7,766 | 8,748 | ||||||
Advance
payments from customers
|
12,335 | 12,132 | ||||||
Total
current liabilities
|
69,413 | 75,601 | ||||||
Deferred
income taxes
|
27,321 | 28,394 | ||||||
Long-term
debt, less current portion
|
224,660 | 245,567 | ||||||
Other
long-term liabilities
|
1,689 | 754 | ||||||
Total
liabilities
|
323,083 | 350,316 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity
|
||||||||
Preferred
stock ($0.01 par value; 10,000 shares authorized and none issued and
outstanding)
|
- | - | ||||||
Common
stock ($0.01 par value, 90,000 shares authorized;
16,538 and 16,370 shares issued; 16,332
and 16,370 shares outstanding)
|
165 | 164 | ||||||
Additional
paid-in capital
|
71,818 | 68,763 | ||||||
Accumulated
other comprehensive (loss) income
|
(1,809 | ) | 937 | |||||
Retained
earnings
|
76,491 | 56,042 | ||||||
Treasury
stock, at cost (206 and 0 shares)
|
(2,800 | ) | - | |||||
Total
stockholders’ equity
|
143,865 | 125,906 | ||||||
Total
liabilities and stockholders' equity
|
$ | 466,948 | $ | 476,222 |
Year Ended
|
|||||||||||||
October
3,
|
September
28,
|
September
29,
|
|||||||||||
2008
|
2007
|
2006
|
|||||||||||
Sales
|
$ | 370,014 | $ | 351,090 | $ | 339,717 | |||||||
Cost
of sales
|
261,086 | 237,789 | 236,063 | ||||||||||
Gross
profit
|
108,928 | 113,301 | 103,654 | ||||||||||
Operating
costs and expenses:
|
|||||||||||||
Research
and development
|
10,789 | 8,558 | 8,550 | ||||||||||
Selling
and marketing
|
21,144 | 19,258 | 19,827 | ||||||||||
General
and administrative
|
22,746 | 21,519 | 22,418 | ||||||||||
Amortization
of acquisition-related intangible assets
|
3,103 | 2,316 | 2,190 | ||||||||||
Net
loss on disposition of fixed assets
|
205 | 129 | 586 | ||||||||||
Total
operating costs and expenses
|
57,987 | 51,780 | 53,571 | ||||||||||
Operating
income
|
50,941 | 61,521 | 50,083 | ||||||||||
Interest
expense, net
|
19,055 | 20,939 | 23,806 | ||||||||||
Loss
on debt extinguishment
|
633 | 6,331 | - | ||||||||||
Income
before taxes
|
31,253 | 34,251 | 26,277 | ||||||||||
Income
tax expense
|
10,804 | 11,748 | 9,058 | ||||||||||
Net
income
|
$ | 20,449 | $ | 22,503 | $ | 17,219 | |||||||
Earnings
per share:
|
|||||||||||||
Basic
|
$ | 1.25 | $ | 1.39 | $ | 1.20 | |||||||
Diluted
|
$ | 1.16 | $ | 1.27 | $ | 1.09 | |||||||
Shares
used to calculate earnings per share:
|
|||||||||||||
Basic
|
16,356 | 16,242 | 14,311 | ||||||||||
Diluted
|
17,697 | 17,721 | 15,789 |
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Comprehensive
|
Retained
|
Treasury Stock
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Income (Loss)
|
Earnings
|
Shares
|
Amount
|
Total
|
|||||||||||||||||||||||||
Balances,
September 30, 2005
|
13,079 | $ | 131 | $ | 34,595 | $ | 1,621 | $ | 16,320 | - | $ | - | $ | 52,667 | ||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | 17,219 | - | - | 17,219 | ||||||||||||||||||||||||
Unrealized
loss on cash flow hedges, net of tax
|
- | - | - | (942 | ) | - | - | - | (942 | ) | ||||||||||||||||||||||
Total
comprehensive income
|
16,277 | |||||||||||||||||||||||||||||||
Proceeds
from initial public offering, net
of issuance costs
|
2,941 | 27 | 47,272 | - | - | - | - | 47,299 | ||||||||||||||||||||||||
Stock-based
compensation cost
|
- | - | 299 | - | - | - | - | 299 | ||||||||||||||||||||||||
Exercise
of stock options
|
20 | 2 | 53 | - | - | - | - | 55 | ||||||||||||||||||||||||
Tax
benefit related to stock option exercises
|
- | - | 76 | - | - | - | - | 76 | ||||||||||||||||||||||||
Issuance
of restricted stock awards
|
10 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Special
cash dividend
|
- | - | (17,000 | ) | - | - | - | - | (17,000 | ) | ||||||||||||||||||||||
Balances,
September 29, 2006
|
16,050 | 160 | 65,295 | 679 | 33,539 | - | - | 99,673 | ||||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | 22,503 | - | - | 22,503 | ||||||||||||||||||||||||
Unrealized
gain on cash flow hedges, net of tax
|
- | - | - | 431 | - | - | - | 431 | ||||||||||||||||||||||||
Total
comprehensive income
|
22,934 | |||||||||||||||||||||||||||||||
Adoption
of SFAS No. 158, net of tax
|
- | - | - | (173 | ) | - | - | - | (173 | ) | ||||||||||||||||||||||
Stock-based
compensation cost
|
- | - | 1,128 | - | - | - | - | 1,128 | ||||||||||||||||||||||||
Exercise
of stock options
|
262 | 3 | 721 | - | - | - | - | 724 | ||||||||||||||||||||||||
Tax
benefit related to stock option exercises
|
- | - | 781 | - | - | - | - | 781 | ||||||||||||||||||||||||
Issuance
of common stock under employee stock purchase plan
|
51 | 1 | 838 | - | - | - | - | 839 | ||||||||||||||||||||||||
Issuance
of restricted stock awards
|
7 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Balances,
September 28, 2007
|
16,370 | 164 | 68,763 | 937 | 56,042 | - | - | 125,906 | ||||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | 20,449 | - | - | 20,449 | ||||||||||||||||||||||||
Unrealized
loss on cash flow hedges, net of tax
|
- | - | - | (2,697 | ) | - | - | - | (2,697 | ) | ||||||||||||||||||||||
Unrealized
actuarial loss and prior service credit for
pension liability, net of tax
|
- | - | - | (49 | ) | - | - | - | (49 | ) | ||||||||||||||||||||||
Total
comprehensive income
|
17,703 | |||||||||||||||||||||||||||||||
Stock-based
compensation cost
|
- | - | 2,160 | - | - | - | - | 2,160 | ||||||||||||||||||||||||
Exercise
of stock options
|
9 | - | 38 | - | - | - | - | 38 | ||||||||||||||||||||||||
Tax
benefit related to stock option exercises
|
- | - | 5 | - | - | - | - | 5 | ||||||||||||||||||||||||
Issuance
of common stock under employee
stock purchase plan
|
72 | 1 | 852 | - | - | - | - | 853 | ||||||||||||||||||||||||
Issuance
of restricted stock awards
|
89 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Forfeiture
of restricted stock awards
|
(2 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Purchase
of treasury stock
|
- | - | - | - | - | (206 | ) | (2,800 | ) | (2,800 | ) | |||||||||||||||||||||
Balances,
October 3, 2008
|
16,538 | $ | 165 | $ | 71,818 | $ | (1,809 | ) | $ | 76,491 | (206 | ) | $ | (2,800 | ) | $ | 143,865 |
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
income
|
$ | 20,449 | $ | 22,503 | $ | 17,219 | ||||||
Adjustments
to reconcile net income to net cash
provided by operating activities:
|
||||||||||||
Depreciation
|
7,607 | 6,562 | 6,561 | |||||||||
Amortization
of intangibles
|
3,356 | 2,536 | 2,452 | |||||||||
Amortization
of deferred debt issue costs
|
1,197 | 1,401 | 1,417 | |||||||||
Amortization
of discount on floating rate senior notes
|
15 | 49 | 50 | |||||||||
Non-cash
loss on debt extinguishment
|
420 | 4,659 | - | |||||||||
Non-cash
defined benefit pension expense
|
55 | - | - | |||||||||
Stock-based
compensation expense
|
2,135 | 1,239 | 274 | |||||||||
Allowance
for doubtful accounts
|
- | (329 | ) | 11 | ||||||||
Deferred
income taxes
|
(1,360 | ) | (561 | ) | (5,927 | ) | ||||||
Net
loss on the disposition of assets
|
205 | 129 | 586 | |||||||||
Tax
benefit from stock option exercises
|
50 | 1,281 | 76 | |||||||||
Excess
tax benefit on stock option exercises
|
(18 | ) | (781 | ) | (47 | ) | ||||||
Changes
in operating assets and liabilities, net
of acquired assets and assumed liabilities:
|
||||||||||||
Restricted
cash
|
1,479 | (509 | ) | (459 | ) | |||||||
Accounts
receivable
|
5,241 | (7,388 | ) | (4,344 | ) | |||||||
Inventories
|
1,986 | (8,473 | ) | (3,688 | ) | |||||||
Prepaid
and other current assets
|
(470 | ) | (811 | ) | 1 | |||||||
Other
long-term assets
|
(208 | ) | 476 | 329 | ||||||||
Accounts
payable
|
(685 | ) | (215 | ) | (2,320 | ) | ||||||
Accrued
expenses
|
(4,953 | ) | (320 | ) | (4,054 | ) | ||||||
Product
warranty
|
(1,419 | ) | (653 | ) | (401 | ) | ||||||
Income
taxes payable
|
(779 | ) | (2,262 | ) | 8,877 | |||||||
Advance
payments from customers
|
203 | 2,202 | (5,757 | ) | ||||||||
Other
long-term liabilities
|
(625 | ) | 924 | 41 | ||||||||
Net
cash provided by operating activities
|
33,881 | 21,659 | 10,897 | |||||||||
Cash
flows from investing activities
|
||||||||||||
Proceeds
from sale of property, plant and equipment
|
- | - | 11,334 | |||||||||
Expenses
relating to sale of San Carlos property
|
- | - | (577 | ) | ||||||||
Capital
expenditures
|
(4,262 | ) | (8,169 | ) | (10,913 | ) | ||||||
Acquisitions,
net of cash acquired
|
1,615 | (22,174 | ) | - | ||||||||
Payment
of patent application fees
|
(147 | ) | - | - | ||||||||
Net cash used in investing activities
|
(2,794 | ) | (30,343 | ) | (156 | ) | ||||||
Cash
flows from financing activities
|
||||||||||||
Proceeds
from issuance of debt
|
- | 100,000 | 10,000 | |||||||||
Proceeds
from issuance of common stock
|
- | - | 52,940 | |||||||||
Proceeds
from stock purchase plan and exercises of stock options
|
891 | 1,436 | 55 | |||||||||
Repayments
of debt
|
(21,000 | ) | (100,750 | ) | (47,500 | ) | ||||||
Debt
issuance costs
|
- | (2,462 | ) | - | ||||||||
Common
stock issuance costs
|
- | - | (5,641 | ) | ||||||||
Purchase
of treasury stock
|
(2,800 | ) | - | - | ||||||||
Stockholder
distribution payments
|
- | - | (17,000 | ) | ||||||||
Excess
tax benefit on stock option exercises
|
18 | 781 | 47 | |||||||||
Net cash used in financing activities
|
(22,891 | ) | (995 | ) | (7,099 | ) | ||||||
Net
increase (decrease) in cash and cash equivalents
|
8,196 | (9,679 | ) | 3,642 | ||||||||
Cash
and cash equivalents at beginning of year
|
20,474 | 30,153 | 26,511 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 28,670 | $ | 20,474 | $ | 30,153 | ||||||
Supplemental
cash flow disclosures
|
||||||||||||
Cash
paid for interest
|
$ | 18,720 | $ | 22,255 | $ | 23,549 | ||||||
Cash
paid for income taxes, net of refunds
|
$ | 13,099 | $ | 13,631 | $ | 6,157 |
|
Year Ended
|
|||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
CPI
Sponsored
|
$ | 10,789 | $ | 8,558 | $ | 8,550 | ||||||
Customer
Sponsored
|
12,028 | 7,738 | 6,227 | |||||||||
$ | 22,817 | $ | 16,296 | $ | 14,777 |
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Weighted
average shares outstanding - Basic
|
16,356 | 16,242 | 14,311 | |||||||||
Effect
of dilutive stock options and
nonvested restricted
stock shares and units
|
1,341 | 1,479 | 1,478 | |||||||||
Weighted
average shares outstanding - Diluted
|
17,697 | 17,721 | 15,789 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Accounts
receivable
|
$ | 47,437 | $ | 52,678 | ||||
Less:
Allowance for doubtful accounts
|
(89 | ) | (89 | ) | ||||
Accounts
receivable, net
|
$ | 47,348 | $ | 52,589 |
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Balance
at beginning of period
|
$ | 89 | $ | 494 | $ | 723 | ||||||
Provision
(recoveries) for doubtful accounts charged
to general and
administrative expense
|
19 | (329 | ) | 11 | ||||||||
Write-offs
against allowance
|
(19 | ) | (76 | ) | (240 | ) | ||||||
Balance
at end of period
|
$ | 89 | $ | 89 | $ | 494 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Raw
material and parts
|
$ | 40,187 | $ | 40,725 | ||||
Work
in process
|
17,622 | 18,168 | ||||||
Finished
goods
|
7,679 | 8,554 | ||||||
$ | 65,488 | $ | 67,447 |
Year Ended
|
||||||||
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Balance
at beginning of period
|
$ | 9,784 | $ | 8,822 | ||||
Malibu
acquisition
|
- | 601 | ||||||
Inventory
provision, charged to cost of sales
|
1,908 | 1,191 | ||||||
Inventory
write-offs
|
(1,832 | ) | (830 | ) | ||||
Balance
at end of period
|
$ | 9,860 | $ | 9,784 |
Year Ended
|
||||||||
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Balance
at beginning of period
|
$ | 2,700 | $ | 1,702 | ||||
Malibu
acquisition
|
- | 1,984 | ||||||
Provision
for loss contracts, charged
to cost of
sales
|
2,810 | 1,196 | ||||||
Credit
to cost of sales upon revenue
recognition
|
(3,582 | ) | (2,182 | ) | ||||
Balance
at end of period
|
$ | 1,928 | $ | 2,700 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Inventories
|
$ | 1,640 | $ | 1,123 | ||||
Accrued
expenses
|
288 | 1,577 | ||||||
$ | 1,928 | $ | 2,700 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Land
and land leaseholds
|
$ | 4,775 | $ | 4,715 | ||||
Buildings
|
40,068 | 39,496 | ||||||
Machinery
and equipment
|
43,501 | 39,233 | ||||||
Construction
in progress
|
638 | 1,806 | ||||||
88,982 | 85,250 | |||||||
Less:
accumulated depreciation and amortization
|
(26,495 | ) | (19,202 | ) | ||||
Property,
plant, and equipment, net
|
$ | 62,487 | $ | 66,048 |
Weighted Average
|
October 3, 2008
|
September 28, 2007
|
||||||||||||||||||||||||||
Useful Life
(in years)
|
Cost
|
Accumulated Amortization
|
Net
|
Cost
|
Accumulated Amortization
|
Net
|
||||||||||||||||||||||
VED
Core Technology
|
50
|
$ | 30,700 | $ | (2,887 | ) | $ | 27,813 | $ | 30,700 | $ | (2,273 | ) | $ | 28,427 | |||||||||||||
VED
Application Technology
|
25
|
19,800 | (3,713 | ) | 16,087 | 19,800 | (2,921 | ) | 16,879 | |||||||||||||||||||
X-ray
Generator and Satcom
Application
Technology
|
15
|
8,000 | (2,508 | ) | 5,492 | 8,000 | (1,974 | ) | 6,026 | |||||||||||||||||||
Antenna
and Telemetry
Technology
|
25
|
5,300 | (241 | ) | 5,059 | 5,300 | (29 | ) | 5,271 | |||||||||||||||||||
Customer
backlog
|
1
|
580 | (580 | ) | - | 580 | (78 | ) | 502 | |||||||||||||||||||
Land
lease
|
46
|
11,810 | (1,181 | ) | 10,629 | 11,810 | (928 | ) | 10,882 | |||||||||||||||||||
Tradename
|
20
- Indefinite
|
7,600 | (55 | ) | 7,545 | 7,600 | - | 7,600 | ||||||||||||||||||||
Customer
list and programs
|
25
|
6,280 | (950 | ) | 5,330 | 6,280 | (684 | ) | 5,596 | |||||||||||||||||||
Noncompete
agreement
|
5
|
640 | (208 | ) | 432 | 640 | (80 | ) | 560 | |||||||||||||||||||
Patent
application fees
|
-
|
147 | - | 147 | - | - | - | |||||||||||||||||||||
$ | 90,857 | $ | (12,323 | ) | $ | 78,534 | $ | 90,710 | $ | (8,967 | ) | $ | 81,743 |
Fiscal Year
|
Amount
|
|||
2009
|
3,028 | |||
2010
|
3,006 | |||
2011
|
3,006 | |||
2012
|
2,992 | |||
2013
|
2,900 | |||
Thereafter
|
60,402 | |||
$ | 75,334 |
Reportable Segments
|
||||||||||||||||
VED
|
Satcom
|
Other
|
Total
|
|||||||||||||
Balance
at September 29, 2006
|
$ | 133,637 | $ | 13,852 | $ | - | $ | 147,489 | ||||||||
Malibu
acquisition
|
- | - | 14,856 | 14,856 | ||||||||||||
Other
adjustments
|
(740 | ) | (22 | ) | (10 | ) | (772 | ) | ||||||||
Balance
at September 28, 2007
|
132,897 | 13,830 | 14,846 | 161,573 | ||||||||||||
Malibu
purchase price and allocation adjustment
|
- | - | 1,028 | 1,028 | ||||||||||||
Other
adjustment
|
- | - | 10 | 10 | ||||||||||||
Balance
at October 3, 2008
|
$ | 132,897 | $ | 13,830 | $ | 15,884 | $ | 162,611 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Payroll
and employee benefits
|
$ | 12,758 | $ | 15,164 | ||||
Accrued
interest
|
2,001 | 2,073 | ||||||
Other
accruals
|
8,285 | 9,112 | ||||||
$ | 23,044 | $ | 26,349 |
Year Ended
|
||||||||
|
October
3,
|
September
28,
|
||||||
2008
|
2007
|
|||||||
Beginning
accrued warranty
|
$ | 5,578 | $ | 5,958 | ||||
Malibu
acquisition
|
- | 273 | ||||||
Actual
costs of warranty claims
|
(4,329 | ) | (5,328 | ) | ||||
Estimates
for product warranty, charged to cost of sales
|
2,910 | 4,675 | ||||||
Ending
accrued warranty
|
$ | 4,159 | $ | 5,578 |
Net
current liabilities
|
$ | (3,727 | ) | |
Property,
plant and equipment
|
719 | |||
Deferred
tax liabilities
|
(933 | ) | ||
Identifiable
intangible assets
|
8,790 | |||
Goodwill
|
15,884 | |||
$ | 20,733 |
Weighted Average Useful Life
(in years)
|
Amount
|
|||||||
Non
compete agreements
|
5 | $ | 530 | |||||
Tradename
|
Indefinite
|
1,800 | ||||||
Antenna
and Telemetry technology
|
25 | 5,300 | ||||||
Backlog
|
1 | 580 | ||||||
Customer
relationships
|
15 | 580 | ||||||
$ | 8,790 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Term
loan, expiring 2014
|
$ | 88,750 | $ | 99,750 | ||||
8%
Senior subordinated notes due 2012
|
125,000 | 125,000 | ||||||
Floating
rate senior notes due 2015, net of issue discount of $90 and
$183
|
11,910 | 21,817 | ||||||
225,660 | 246,567 | |||||||
Less: Current
portion
|
1,000 | 1,000 | ||||||
Long-term
portion
|
$ | 224,660 | $ | 245,567 | ||||
Standby
letters of credit
|
$ | 4,609 | $ | 3,725 |
Year
|
Optional
Redemption Price
|
|||
2008
|
104 | % | ||
2009
|
102 | % | ||
2010
and thereafter
|
100 | % |
Year
|
Optional
Redemption Price
|
|||
2008
|
102 | % | ||
2009
|
101 | % | ||
2010
and thereafter
|
100 | % |
Fiscal Year
|
Term
Loan
|
8% Senior
Subordinated Notes
|
Floating Rate
Senior Notes
|
Total
|
||||||||||||
2009
|
$ | 1,000 | $ | - | $ | - | $ | 1,000 | ||||||||
2010
|
- | - | - | - | ||||||||||||
2011
|
87,750 | - | - | 87,750 | ||||||||||||
2012
|
- | 125,000 | - | 125,000 | ||||||||||||
2013
|
- | - | - | - | ||||||||||||
Thereafter
|
- | - | 12,000 | 12,000 | ||||||||||||
$ | 88,750 | $ | 125,000 | $ | 12,000 | $ | 225,750 |
Fiscal
Year
|
Operating
Leases
|
|||
2009
|
$ | 2,037 | ||
2010
|
1,756 | |||
2011
|
676 | |||
2012
|
530 | |||
2013
|
377 | |||
Thereafter
|
2,896 | |||
$ | 8,272 |
Fiscal
Year
|
Purchase
Contracts
|
|||
2009
|
$ | 28,148 | ||
2010
|
955 | |||
2011
|
279 | |||
2012
|
12 | |||
2013 | - | |||
$ | 29,394 |
Number of Shares
|
Weighted-Average Price
|
Weighted-Average Remaining Contractual Term
(Years)
|
Aggregate Intrinsic Value
|
|||||||||||||
Vested
|
2,556,762 | $ | 3.83 | 5.2 | $ | 23,052 | ||||||||||
Expected
to vest
|
768,756 | 13.98 | 7.7 | 1,271 | ||||||||||||
Total
|
3,325,518 | 6.17 | 5.8 | $ | 24,323 |
Outstanding Options
|
Exercisable Options
|
|||||||||||||||||||||||||||||||
Number of Shares
|
Weighted-Average Exercise
Price
|
Weighted-Average Remaining Contractual Term
(Years)
|
Aggregate Intrinsic Value
|
Number of Shares
|
Weighted-Average Exercise
Price
|
Weighted-Average Remaining Contractual Term
(Years)
|
Aggregate Intrinsic Value
|
|||||||||||||||||||||||||
Balance
at September 28, 2007
|
3,171,081 | $ | 5.61 | 6.58 | $ | 42,513 | 2,259,528 | $ | 3.00 | 5.98 | $ | 36,184 | ||||||||||||||||||||
Granted
|
208,750 | 16.79 | ||||||||||||||||||||||||||||||
Exercised
|
(8,906 | ) | 4.32 | |||||||||||||||||||||||||||||
Forfeited
or cancelled
|
(21,631 | ) | 17.75 | |||||||||||||||||||||||||||||
Balance
at October 3, 2008
|
3,349,294 | $ | 6.23 | 5.77 | $ | 24,363 | 2,556,762 | $ | 3.83 | 5.16 | $ | 23,052 |
Options Outstanding
|
Exercisable Options
|
|||||||||||||||
Exercise
Price
|
Number of
Options
Outstanding
|
Weighted-Average Remaining
Contractual Term
(Years)
|
Number of
Options
Exercisable
|
Weighted-Average Remaining
Contractual Term
(Years)
|
||||||||||||
$ | 0.20 | 621,287 | 4.4 | 621,287 | 4.4 | |||||||||||
$ | 0.74 | 164,327 |
1.9
|
164,327 | 1.9 | |||||||||||
$ | 1.08 | 8,000 | 5.3 | 8,000 | 5.3 | |||||||||||
$ | 4.32 | 1,701,442 | 5.5 | 1,546,557 | 5.5 | |||||||||||
$ | 6.61 | 49,032 | 6.0 | 49,032 | 6.0 | |||||||||||
$ | 6.98 | 23,706 | 6.5 | 19,884 | 6.5 | |||||||||||
$ | 14.22 | 283,000 | 8.2 | 71,875 | 8.2 | |||||||||||
$ | 16.79 | 200,625 | 9.2 | 425 | 9.2 | |||||||||||
$ | 16.94 | 1,500 | 9.2 | - | - | |||||||||||
$ | 17.09 | 6,000 | 8.4 | 2,000 | 8.4 | |||||||||||
$ | 18.00 | 274,875 | 7.6 | 71,875 | 7.6 | |||||||||||
$ | 19.53 | 9,500 | 9.0 | - | - | |||||||||||
$ | 19.80 | 6,000 | 8.6 | 1,500 | 8.6 | |||||||||||
Total
|
3,349,294 | 5.8 | 2,556,762 | 5.2 |
Number of Shares
|
Weighted-Average Grant-Date
Fair Value
Per Share
|
Aggregate
Fair Value*
|
|||||||||||
Nonvested
at September 28, 2007
|
11,466 | $ | 17.44 | ||||||||||
Granted
|
114,461 | $ | 15.22 | ||||||||||
Vested
|
(5,848 | ) | $ | 17.60 | $ | 62 | |||||||
Forfeited
|
(2,925 | ) | $ | 16.79 | |||||||||
Nonvested
at October 3, 2008
|
117,154 | $ | 15.28 | ||||||||||
|
|
|
|||||||||||
*
Based on the value of the Company's stock on the date that the restricted
stock units vest.
|
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Expected
term (in years)
|
6.25 | 6.25 | 6.47 | |||||||||
Expected
volatility
|
41.20 | % | 49.33 | % | 53.57 | % | ||||||
Dividend
yield
|
0.0 | % | 0.0 | % | 0.0 | % | ||||||
Risk-free
rate
|
3.8 | % | 4.7 | % | 4.7 | % |
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Share-based
compensation cost recognized in the income statement by
caption:
|
||||||||||||
Cost
of sales
|
$ | 425 | $ | 274 | $ | 36 | ||||||
Research
and development
|
153 | 94 | 15 | |||||||||
Selling
and marketing
|
229 | 122 | 27 | |||||||||
General
and administrative
|
1,328 | 749 | 196 | |||||||||
$ | 2,135 | $ | 1,239 | $ | 274 | |||||||
Share-based
compensation cost capitalized in inventory
|
$ | 453 | $ | 297 | $ | 25 | ||||||
Share-based
compensation cost remaining in inventory at end of
period
|
$ | 76 | $ | 48 | $ | 25 | ||||||
Share-based
compensation expense by type of award:
|
||||||||||||
Stock
options
|
$ | 1,544 | $ | 1,006 | $ | 224 | ||||||
Restricted
stock and restricted stock units
|
438 | 110 | 50 | |||||||||
Stock
purchase plan
|
153 | 123 | - | |||||||||
$ | 2,135 | $ | 1,239 | $ | 274 |
Year
Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
U.S.
|
$ | 20,405 | $ | 20,466 | $ | 16,432 | ||||||
Foreign
|
10,848 | 13,785 | 9,845 | |||||||||
$ | 31,253 | $ | 34,251 | $ | 26,277 |
Year
Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Current
|
||||||||||||
Federal
|
$ | 6,904 | $ | 4,946 | $ | 5,447 | ||||||
State
|
1,980 | 2,320 | 1,967 | |||||||||
Foreign
|
3,035 | 4,693 | 7,571 | |||||||||
11,919 | 11,959 | 14,985 | ||||||||||
Deferred
|
||||||||||||
Federal
|
(934 | ) | 117 | (3,598 | ) | |||||||
State
|
(208 | ) | (143 | ) | (397 | ) | ||||||
Foreign
|
27 | (185 | ) | (1,932 | ) | |||||||
(1,115 | ) | (211 | ) | (5,927 | ) | |||||||
Income
tax expense
|
$ | 10,804 | $ | 11,748 | $ | 9,058 |
Unrecognized
tax benefits at September 29, 2007
|
$ | 4,954 | ||
Increase
in tax provisions for current year
|
1,183 | |||
Expiration
of statutes of limitations
|
(235 | ) | ||
Changes
due to translation of foreign currency
|
(293 | ) | ||
Unrecognized
tax benefits at October 3, 2008
|
$ | 5,609 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Inventory
and other reserves
|
$ | 6,347 | $ | 5,642 | ||||
Accrued
vacation
|
2,120 | 2,064 | ||||||
Deferred
compensation and other accruals
|
4,263 | 4,179 | ||||||
Other
comprehensive income
|
1,102 | - | ||||||
Debt
issuance costs
|
684 | 790 | ||||||
Foreign
jurisdictions, net
|
558 | 472 | ||||||
Land
lease amortization
|
663 | 681 | ||||||
State
taxes
|
521 | 561 | ||||||
Gross
deferred tax assets
|
16,258 | 14,389 | ||||||
Valuation
allowance
|
- | - | ||||||
Total
deferred tax assets
|
$ | 16,258 | $ | 14,389 | ||||
Deferred
tax liabilities:
|
||||||||
Accelerated
depreciation
|
$ | (7,491 | ) | $ | (7,536 | ) | ||
Acquisition-related
intangibles
|
(23,450 | ) | (23,950 | ) | ||||
Other
comprehensive income
|
- | (480 | ) | |||||
Foreign
jurisdictions, net
|
(1,091 | ) | (973 | ) | ||||
Total
deferred tax liabilities
|
$ | (32,032 | ) | $ | (32,939 | ) | ||
Net
deferred tax liabilities
|
$ | (15,774 | ) | $ | (18,550 | ) |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Current
deferred tax assets
|
$ | 11,411 | $ | 9,744 | ||||
Long-term
deferred tax assets (other long-term assets)
|
136 | 100 | ||||||
Long-term
deferred tax liabilities
|
(27,321 | ) | (28,394 | ) | ||||
Net
deferred tax liabilities
|
$ | (15,774 | ) | $ | (18,550 | ) |
Year
Ended
|
||||||||||||
October
3,
2008
|
September
28,
2007
|
September
29,
2006
|
||||||||||
Statutory
federal income tax rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
Domestic
manufacturing deduction
|
(1.5 | ) | (0.7 | ) | (1.0 | ) | ||||||
Extraterritorial
income exclusion benefit
|
- | (0.1 | ) | (0.8 | ) | |||||||
Foreign
tax rate differential
|
- | 1.4 | (3.4 | ) | ||||||||
State
taxes
|
3.7 | 3.8 | 3.9 | |||||||||
Foreign
tax credits
|
(2.3 | ) | (3.2 | ) | (2.1 | ) | ||||||
Change
in foreign filing position
|
- | (5.3 | ) | (4.9 | ) | |||||||
Change
in state apportionment factors
|
- | - | (2.7 | ) | ||||||||
Tax
contingency reserve accrual
|
0.5 | 0.1 | 8.9 | |||||||||
Non-deductible
expenses
|
0.3 | 0.3 | 0.2 | |||||||||
Correction
of error from prior year
|
(1.4 | ) | 2.6 | 1.1 | ||||||||
Other
differences
|
0.3 | 0.4 | 0.3 | |||||||||
Effective
tax rate
|
34.6 | % | 34.3 | % | 34.5 | % |
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Sales
from external customers
|
||||||||||||
VED
|
$ | 279,364 | $ | 280,010 | $ | 275,254 | ||||||
Satcom
equipment
|
74,264 | 67,965 | 64,463 | |||||||||
Other
|
16,386 | 3,115 | - | |||||||||
$ | 370,014 | $ | 351,090 | $ | 339,717 | |||||||
Intersegment
product transfers
|
||||||||||||
VED
|
$ | 27,462 | $ | 22,898 | $ | 23,220 | ||||||
Satcom
equipment
|
116 | 23 | 34 | |||||||||
$ | 27,578 | $ | 22,921 | $ | 23,254 | |||||||
Capital
expenditures
|
||||||||||||
VED
|
$ | 2,659 | $ | 7,649 | $ | 5,407 | ||||||
Satcom
equipment
|
692 | 341 | 559 | |||||||||
Other
|
911 | 179 | 4,947 | |||||||||
$ | 4,262 | $ | 8,169 | $ | 10,913 | |||||||
EBITDA
|
||||||||||||
VED
|
$ | 69,923 | $ | 75,230 | $ | 70,366 | ||||||
Satcom
equipment
|
5,997 | 6,056 | 4,967 | |||||||||
Other
|
(14,649 | ) | (16,998 | ) | (16,237 | ) | ||||||
$ | 61,271 | $ | 64,288 | $ | 59,096 |
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Total
assets
|
||||||||||||
VED
|
$ | 324,483 | $ | 335,926 | $ | 328,211 | ||||||
Satcom
equipment
|
48,219 | 49,266 | 43,604 | |||||||||
Other
|
94,246 | 91,030 | 69,944 | |||||||||
$ | 466,948 | $ | 476,222 | $ | 441,759 |
|
•
|
EBITDA
is a component of the measures used by the Company’s board of directors
and management team to evaluate the Company’s operating
performance;
|
|
•
|
the
Senior Credit Facilities contain a covenant that requires the Company to
maintain a senior secured leverage ratio that contains EBITDA as a
component, and the Company’s management team uses EBITDA to monitor
compliance with this covenant;
|
|
•
|
EBITDA
is a component of the measures used by the Company’s management team to
make day-to-day operating
decisions;
|
|
•
|
EBITDA
facilitates comparisons between the Company’s operating results and those
of competitors with different capital structures and therefore is a
component of the measures used by the Company’s management to facilitate
internal comparisons to competitors’ results and the Company’s industry in
general; and
|
|
•
|
the
payment of management bonuses is contingent upon, among other things, the
satisfaction by the Company of certain targets that contain EBITDA as a
component.
|
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
income
|
$ | 20,449 | $ | 22,503 | $ | 17,219 | ||||||
Depreciation
and amortization
|
10,963 | 9,098 | 9,013 | |||||||||
Interest
expense, net
|
19,055 | 20,939 | 23,806 | |||||||||
Income
tax expense
|
10,804 | 11,748 | 9,058 | |||||||||
EBITDA
|
$ | 61,271 | $ | 64,288 | $ | 59,096 |
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
United
States
|
$ | 48,593 | $ | 51,704 | $ | 53,306 | ||||||
Canada
|
13,843 | 14,308 | 10,475 | |||||||||
Other
|
51 | 36 | 70 | |||||||||
Total
|
$ | 62,487 | $ | 66,048 | $ | 63,851 |
October
3,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Geographic
areas:
|
||||||||
United
States
|
$ | 114,297 | $ | 113,310 | ||||
Canada
|
48,314 | 48,263 | ||||||
$ | 162,611 | $ | 161,573 |
Year Ended
|
||||||||||||
October
3,
|
September
28,
|
September
29,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
United
States
|
$ | 237,909 | $ | 208,682 | $ | 214,650 | ||||||
All
foreign countries
|
132,105 | 142,408 | 125,067 | |||||||||
Total
sales
|
$ | 370,014 | $ | 351,090 | $ | 339,717 |
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|||||||||||||
Year
ended October 3, 2008
|
||||||||||||||||
Sales
|
$ | 85,910 | $ | 94,804 | $ | 90,734 | $ | 98,566 | ||||||||
Gross
profit
|
24,136 | 28,066 | 27,232 | 29,494 | ||||||||||||
Net
income
|
2,510 | 6,154 | 5,824 | 5,961 | ||||||||||||
Basic
earnings per share
|
$ | 0.15 | $ | 0.38 | $ | 0.36 | $ | 0.37 | ||||||||
Diluted
earnings per share
|
$ | 0.14 | $ | 0.35 | $ | 0.33 | $ | 0.34 | ||||||||
Year
ended September 28, 2007
|
||||||||||||||||
Sales
|
$ | 83,723 | $ | 88,444 | $ | 87,318 | $ | 91,605 | ||||||||
Gross
profit
|
26,581 | 27,705 | 28,651 | 30,364 | ||||||||||||
Net
income
|
5,835 | 5,760 | 8,131 | 2,777 | ||||||||||||
Basic
earnings per share
|
$ | 0.36 | $ | 0.35 | $ | 0.50 | $ | 0.17 | ||||||||
Diluted
earnings per share
|
$ | 0.33 | $ | 0.32 | $ | 0.46 | $ | 0.16 |
CONDENSED
CONSOLIDATING BALANCE SHEET
|
||||||||||||||||||||||||
As
of October 3, 2008
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 84 | $ | 26,272 | $ | 493 | $ | 1,821 | $ | - | $ | 28,670 | ||||||||||||
Restricted
cash
|
- | - | 629 | 147 | - | 776 | ||||||||||||||||||
Accounts
receivable, net
|
- | 22,453 | 12,353 | 12,542 | - | 47,348 | ||||||||||||||||||
Inventories
|
- | 42,066 | 6,759 | 17,653 | (990 | ) | 65,488 | |||||||||||||||||
Deferred
tax assets
|
- | 10,853 | 2 | 556 | - | 11,411 | ||||||||||||||||||
Intercompany
receivable
|
- | 8,523 | 5,135 | 13,454 | (27,112 | ) | - | |||||||||||||||||
Prepaid
and other current assets
|
- | 2,370 | 632 | 821 | - | 3,823 | ||||||||||||||||||
Total
current assets
|
84 | 112,537 | 26,003 | 46,994 | (28,102 | ) | 157,516 | |||||||||||||||||
Property,
plant and equipment, net
|
- | 45,556 | 3,047 | 13,884 | - | 62,487 | ||||||||||||||||||
Deferred
debt issue costs, net
|
392 | 4,602 | - | - | - | 4,994 | ||||||||||||||||||
Intangible
assets, net
|
- | 56,700 | 14,168 | 7,666 | - | 78,534 | ||||||||||||||||||
Goodwill
|
- | 93,375 | 20,973 | 48,263 | - | 162,611 | ||||||||||||||||||
Other
long-term assets
|
- | 383 | 287 | 136 | - | 806 | ||||||||||||||||||
Intercompany
notes receivable
|
- | 1,035 | - | - | (1,035 | ) | - | |||||||||||||||||
Investment
in subsidiaries
|
182,869 | 101,193 | - | - | (284,062 | ) | - | |||||||||||||||||
Total
assets
|
$ | 183,345 | $ | 415,381 | $ | 64,478 | $ | 116,943 | $ | (313,199 | ) | $ | 466,948 | |||||||||||
Liabilities
and stockholders' equity
|
||||||||||||||||||||||||
Current
portion of long-term debt
|
$ | - | $ | 1,000 | $ | - | $ | - | $ | - | $ | 1,000 | ||||||||||||
Accounts
payable
|
272 | 10,893 | 2,116 | 7,828 | - | 21,109 | ||||||||||||||||||
Accrued
expenses
|
186 | 14,905 | 3,143 | 4,810 | - | 23,044 | ||||||||||||||||||
Product
warranty
|
- | 2,002 | 538 | 1,619 | - | 4,159 | ||||||||||||||||||
Income
taxes payable
|
- | 1,280 | 213 | 6,273 | - | 7,766 | ||||||||||||||||||
Advance
payments from customers
|
- | 7,624 | 3,132 | 1,579 | - | 12,335 | ||||||||||||||||||
Intercompany
payable
|
27,112 | - | - | - | (27,112 | ) | - | |||||||||||||||||
Total
current liabilities
|
27,570 | 37,704 | 9,142 | 22,109 | (27,112 | ) | 69,413 | |||||||||||||||||
Deferred
income taxes
|
- | 21,922 | - | 5,399 | - | 27,321 | ||||||||||||||||||
Intercompany
notes payable
|
- | - | - | 1,035 | (1,035 | ) | - | |||||||||||||||||
Long-term
debt, less current portion
|
11,910 | 212,750 | - | - | - | 224,660 | ||||||||||||||||||
Other
long-term liabilities
|
- | 1,213 | - | 476 | - | 1,689 | ||||||||||||||||||
Total
liabilities
|
39,480 | 273,589 | 9,142 | 29,019 | (28,147 | ) | 323,083 | |||||||||||||||||
Common
stock
|
165 | - | - | - | - | 165 | ||||||||||||||||||
Parent
investment
|
- | 50,020 | 43,167 | 58,114 | (151,301 | ) | - | |||||||||||||||||
Additional
paid-in capital
|
71,818 | - | - | - | - | 71,818 | ||||||||||||||||||
Accumulated
other comprehensive loss
|
(1,809 | ) | (1,809 | ) | - | (283 | ) | 2,092 | (1,809 | ) | ||||||||||||||
Retained
earnings
|
76,491 | 93,581 | 12,169 | 30,093 | (135,843 | ) | 76,491 | |||||||||||||||||
Treasury
stock
|
(2,800 | ) | - | - | - | - | (2,800 | ) | ||||||||||||||||
Total
stockholders’ equity
|
143,865 | 141,792 | 55,336 | 87,924 | (285,052 | ) | 143,865 | |||||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 183,345 | $ | 415,381 | $ | 64,478 | $ | 116,943 | $ | (313,199 | ) | $ | 466,948 |
CONDENSED
CONSOLIDATING BALANCE SHEET
|
||||||||||||||||||||||||
As
of September 28, 2007
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 1,378 | $ | 16,518 | $ | 958 | $ | 1,620 | $ | - | $ | 20,474 | ||||||||||||
Restricted
cash
|
- | - | 1,945 | 310 | - | 2,255 | ||||||||||||||||||
Accounts
receivable, net
|
- | 25,857 | 10,816 | 15,916 | - | 52,589 | ||||||||||||||||||
Inventories
|
- | 43,949 | 7,092 | 17,084 | (678 | ) | 67,447 | |||||||||||||||||
Deferred
tax assets
|
- | 9,272 | 3 | 469 | - | 9,744 | ||||||||||||||||||
Intercompany
receivable
|
- | 23,312 | 2,076 | 2,736 | (28,124 | ) | - | |||||||||||||||||
Prepaid
and other current assets
|
- | 3,250 | 545 | 844 | - | 4,639 | ||||||||||||||||||
Total
current assets
|
1,378 | 122,158 | 23,435 | 38,979 | (28,802 | ) | 157,148 | |||||||||||||||||
Property,
plant and equipment, net
|
- | 48,327 | 3,382 | 14,339 | - | 66,048 | ||||||||||||||||||
Deferred
debt issue costs, net
|
795 | 5,738 | - | - | - | 6,533 | ||||||||||||||||||
Intangible
assets, net
|
- | 67,008 | 6,465 | 8,270 | - | 81,743 | ||||||||||||||||||
Goodwill
|
- | 107,462 | 5,848 | 48,263 | - | 161,573 | ||||||||||||||||||
Other
long-term assets
|
- | 3,077 | - | 100 | - | 3,177 | ||||||||||||||||||
Intercompany
notes receivable
|
- | 1,035 | - | - | (1,035 | ) | - | |||||||||||||||||
Investment
in subsidiaries
|
174,333 | 64,641 | - | - | (238,974 | ) | - | |||||||||||||||||
Total
assets
|
$ | 176,506 | $ | 419,446 | $ | 39,130 | $ | 109,951 | $ | (268,811 | ) | $ | 476,222 | |||||||||||
Liabilities
and stockholders' equity
|
||||||||||||||||||||||||
Current
portion of long-term debt
|
$ | - | $ | 1,000 | $ | - | $ | - | $ | - | $ | 1,000 | ||||||||||||
Accounts
payable
|
224 | 10,421 | 2,430 | 8,719 | - | 21,794 | ||||||||||||||||||
Accrued
expenses
|
404 | 16,684 | 3,991 | 5,270 | - | 26,349 | ||||||||||||||||||
Product
warranty
|
- | 3,141 | 481 | 1,956 | - | 5,578 | ||||||||||||||||||
Income
taxes payable
|
- | 1,888 | 562 | 6,298 | - | 8,748 | ||||||||||||||||||
Advance
payments from customers
|
- | 5,926 | 4,933 | 1,273 | - | 12,132 | ||||||||||||||||||
Intercompany
payable
|
28,124 | - | - | - | (28,124 | ) | - | |||||||||||||||||
Total
current liabilities
|
28,752 | 39,060 | 12,397 | 23,516 | (28,124 | ) | 75,601 | |||||||||||||||||
Deferred
income taxes
|
31 | 22,833 | - | 5,530 | - | 28,394 | ||||||||||||||||||
Intercompany
notes payable
|
- | - | - | 1,035 | (1,035 | ) | - | |||||||||||||||||
Long-term
debt, less current portion
|
21,817 | 223,750 | - | - | - | 245,567 | ||||||||||||||||||
Other
long-term liabilities
|
- | 547 | - | 207 | - | 754 | ||||||||||||||||||
Total
liabilities
|
50,600 | 286,190 | 12,397 | 30,288 | (29,159 | ) | 350,316 | |||||||||||||||||
Common
stock
|
164 | - | - | - | - | 164 | ||||||||||||||||||
Parent
investment
|
- | 60,705 | 19,167 | 57,746 | (137,618 | ) | - | |||||||||||||||||
Additional
paid-in capital
|
68,763 | - | - | - | - | 68,763 | ||||||||||||||||||
Accumulated
other comprehensive income
|
937 | 886 | - | 155 | (1,041 | ) | 937 | |||||||||||||||||
Retained
earnings
|
56,042 | 71,665 | 7,566 | 21,762 | (100,993 | ) | 56,042 | |||||||||||||||||
Total
stockholders’ equity
|
125,906 | 133,256 | 26,733 | 79,663 | (239,652 | ) | 125,906 | |||||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 176,506 | $ | 419,446 | $ | 39,130 | $ | 109,951 | $ | (268,811 | ) | $ | 476,222 |
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
|
||||||||||||||||||||||||
For
the Year Ended October 3, 2008
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Sales
|
$ | - | $ | 228,215 | $ | 81,065 | $ | 140,420 | $ | (79,686 | ) | $ | 370,014 | |||||||||||
Cost
of sales
|
- | 163,032 | 69,153 | 108,275 | (79,374 | ) | 261,086 | |||||||||||||||||
Gross
profit
|
- | 65,183 | 11,912 | 32,145 | (312 | ) | 108,928 | |||||||||||||||||
Operating
costs and expenses:
|
||||||||||||||||||||||||
Research
and development
|
- | 3,108 | 444 | 7,237 | - | 10,789 | ||||||||||||||||||
Selling
and marketing
|
- | 7,724 | 4,494 | 8,926 | - | 21,144 | ||||||||||||||||||
General
and administrative
|
- | 14,399 | 4,167 | 4,180 | - | 22,746 | ||||||||||||||||||
Amortization
of acquisition-related intangible assets
|
- | 1,391 | 1,108 | 604 | - | 3,103 | ||||||||||||||||||
Net
loss on disposition of fixed assets
|
- | 173 | 13 | 19 | - | 205 | ||||||||||||||||||
Total
operating costs and expenses
|
- | 26,795 | 10,226 | 20,966 | - | 57,987 | ||||||||||||||||||
Operating
income
|
- | 38,388 | 1,686 | 11,179 | (312 | ) | 50,941 | |||||||||||||||||
Interest
expense (income), net
|
1,734 | 17,355 | (53 | ) | 19 | - | 19,055 | |||||||||||||||||
Loss
on debt extinguishment
|
633 | - | - | - | - | 633 | ||||||||||||||||||
(Loss)
income before income tax expense
|
||||||||||||||||||||||||
and
equity in income of subsidiaries
|
(2,367 | ) | 21,033 | 1,739 | 11,160 | (312 | ) | 31,253 | ||||||||||||||||
Income
tax (benefit) expense
|
(900 | ) | 8,689 | 186 | 2,829 | - | 10,804 | |||||||||||||||||
Equity
in income of subsidiaries
|
21,916 | 9,572 | - | - | (31,488 | ) | - | |||||||||||||||||
Net
income
|
$ | 20,449 | $ | 21,916 | $ | 1,553 | $ | 8,331 | $ | (31,800 | ) | $ | 20,449 |
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
|
||||||||||||||||||||||||
For
the Year Ended September 28, 2007
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Sales
|
$ | - | $ | 221,150 | $ | 64,375 | $ | 140,808 | $ | (75,243 | ) | $ | 351,090 | |||||||||||
Cost
of sales
|
- | 151,825 | 53,419 | 108,493 | (75,948 | ) | 237,789 | |||||||||||||||||
Gross
profit
|
- | 69,325 | 10,956 | 32,315 | 705 | 113,301 | ||||||||||||||||||
Operating
costs and expenses:
|
||||||||||||||||||||||||
Research
and development
|
- | 2,729 | 95 | 5,734 | - | 8,558 | ||||||||||||||||||
Selling
and marketing
|
- | 7,958 | 3,398 | 7,902 | - | 19,258 | ||||||||||||||||||
General
and administrative
|
- | 14,801 | 1,644 | 5,074 | - | 21,519 | ||||||||||||||||||
Amortization
of acquisition-related intangible
assets
|
- | 1,462 | 250 | 604 | - | 2,316 | ||||||||||||||||||
Net
loss on disposition of fixed assets
|
- | 70 | - | 59 | - | 129 | ||||||||||||||||||
Total
operating costs and expenses
|
- | 27,020 | 5,387 | 19,373 | - | 51,780 | ||||||||||||||||||
Operating
income
|
- | 42,305 | 5,569 | 12,942 | 705 | 61,521 | ||||||||||||||||||
Interest
expense (income), net
|
7,301 | 13,833 | (57 | ) | (138 | ) | - | 20,939 | ||||||||||||||||
Loss
on debt extinguishment
|
4,279 | 2,052 | - | - | - | 6,331 | ||||||||||||||||||
(Loss)
income before income tax expense
|
||||||||||||||||||||||||
and
equity in income of subsidiaries
|
(11,580 | ) | 26,420 | 5,626 | 13,080 | 705 | 34,251 | |||||||||||||||||
Income
tax (benefit) expense
|
(4,390 | ) | 11,630 | 323 | 4,185 | - | 11,748 | |||||||||||||||||
Equity
in income of subsidiaries
|
29,693 | 14,903 | - | - | (44,596 | ) | - | |||||||||||||||||
Net
income
|
$ | 22,503 | $ | 29,693 | $ | 5,303 | $ | 8,895 | $ | (43,891 | ) | $ | 22,503 |
CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS
|
||||||||||||||||||||||||
For
the Year Ended September 29, 2006
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Sales
|
$ | - | $ | 223,154 | $ | 57,214 | $ | 130,439 | $ | (71,090 | ) | $ | 339,717 | |||||||||||
Cost
of sales
|
- | 160,646 | 46,993 | 99,147 | (70,723 | ) | 236,063 | |||||||||||||||||
Gross
profit
|
- | 62,508 | 10,221 | 31,292 | (367 | ) | 103,654 | |||||||||||||||||
Operating
costs and expenses:
|
||||||||||||||||||||||||
Research
and development
|
- | 3,561 | - | 4,989 | - | 8,550 | ||||||||||||||||||
Selling
and marketing
|
- | 8,388 | 3,678 | 7,761 | - | 19,827 | ||||||||||||||||||
General
and administrative
|
- | 13,508 | 1,289 | 7,621 | - | 22,418 | ||||||||||||||||||
Amortization
of acquisition-related intangible assets
|
- | 1,336 | 250 | 604 | - | 2,190 | ||||||||||||||||||
Net
loss on disposition of fixed assets
|
- | 509 | 2 | 75 | - | 586 | ||||||||||||||||||
Total
operating costs and expenses
|
- | 27,302 | 5,219 | 21,050 | - | 53,571 | ||||||||||||||||||
Operating
income
|
- | 35,206 | 5,002 | 10,242 | (367 | ) | 50,083 | |||||||||||||||||
Interest
expense (income), net
|
8,150 | 15,640 | (14 | ) | 30 | - | 23,806 | |||||||||||||||||
(Loss)
income before income tax expense
|
||||||||||||||||||||||||
and
equity in income of subsidiaries
|
(8,150 | ) | 19,566 | 5,016 | 10,212 | (367 | ) | 26,277 | ||||||||||||||||
Income
tax (benefit) expense
|
(3,260 | ) | 5,225 | 1,454 | 5,639 | - | 9,058 | |||||||||||||||||
Equity
in income of subsidiaries
|
22,109 | 7,768 | - | - | (29,877 | ) | - | |||||||||||||||||
Net
income
|
$ | 17,219 | $ | 22,109 | $ | 3,562 | $ | 4,573 | $ | (30,244 | ) | $ | 17,219 |
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||||||||
For
the Year Ended October 3, 2008
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Cash
flows from operating activities
|
||||||||||||||||||||||||
Net
cash (used in) provided by operating activities
|
$ | (2,985 | ) | $ | 26,023 | $ | (78 | ) | $ | 10,921 | $ | - | $ | 33,881 | ||||||||||
Cash
flows from investing activities
|
||||||||||||||||||||||||
Capital
expenditures
|
- | (3,302 | ) | (240 | ) | (720 | ) | - | (4,262 | ) | ||||||||||||||
Acquisitions,
net of cash acquired
|
- | 1,615 | - | - | - | 1,615 | ||||||||||||||||||
Payment
of patent application fees
|
- | - | (147 | ) | - | - | (147 | ) | ||||||||||||||||
Net
cash used in investing activities
|
- | (1,687 | ) | (387 | ) | (720 | ) | - | (2,794 | ) | ||||||||||||||
Cash
flows from financing activities
|
||||||||||||||||||||||||
Proceeds
from stock purchase plan and exercises of stock options
|
891 | - | - | - | - | 891 | ||||||||||||||||||
Repayments
of debt
|
(10,000 | ) | (11,000 | ) | - | - | - | (21,000 | ) | |||||||||||||||
Purchase
of treasury stock
|
(2,800 | ) | - | - | - | - | (2,800 | ) | ||||||||||||||||
Intercompany
dividends / debt
|
13,600 | (3,600 | ) | - | (10,000 | ) | - | - | ||||||||||||||||
Excess
tax benefit on stock option exercises
|
- | 18 | - | - | - | 18 | ||||||||||||||||||
Net
cash provided by (used in) financing activities
|
1,691 | (14,582 | ) | - | (10,000 | ) | - | (22,891 | ) | |||||||||||||||
Net
(decrease) increase in cash and cash equivalents
|
(1,294 | ) | 9,754 | (465 | ) | 201 | - | 8,196 | ||||||||||||||||
Cash
and cash equivalents at beginning of year
|
1,378 | 16,518 | 958 | 1,620 | - | 20,474 | ||||||||||||||||||
Cash
and cash equivalents at end of year
|
$ | 84 | $ | 26,272 | $ | 493 | $ | 1,821 | $ | - | $ | 28,670 |
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||||||||
For
the Year Ended September 28, 2007
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Cash
flows from operating activities
|
|
|||||||||||||||||||||||
Net cash (used in) provided by operating activities
|
$ | (8,497 | ) | $ | 24,520 | $ | 710 | $ | 4,926 | $ | - | $ | 21,659 | |||||||||||
Cash
flows from investing activities
|
||||||||||||||||||||||||
Capital
expenditures
|
- | (3,396 | ) | (42 | ) | (4,731 | ) | - | (8,169 | ) | ||||||||||||||
Acquisitions,
net of cash acquired
|
- | (22,174 | ) | - | - | - | (22,174 | ) | ||||||||||||||||
Net
cash used in investing activities
|
- | (25,570 | ) | (42 | ) | (4,731 | ) | - | (30,343 | ) | ||||||||||||||
Cash
flows from financing activities
|
||||||||||||||||||||||||
Proceeds
from issuance of debt
|
- | 100,000 | - | - | - | 100,000 | ||||||||||||||||||
Proceeds
from stock purchase plan and exercises of stock options
|
1,436 | - | - | - | - | 1,436 | ||||||||||||||||||
Repayments
of debt
|
(58,000 | ) | (42,750 | ) | - | - | - | (100,750 | ) | |||||||||||||||
Debt
issuance costs
|
- | (2,462 | ) | - | - | - | (2,462 | ) | ||||||||||||||||
Intercompany
dividends
|
66,300 | (66,300 | ) | - | - | - | - | |||||||||||||||||
Excess
tax benefit on stock option exercises
|
- | 781 | - | - | - | 781 | ||||||||||||||||||
Net
cash provided by (used in) financing activities
|
9,736 | (10,731 | ) | - | - | - | (995 | ) | ||||||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
1,239 | (11,781 | ) | 668 | 195 | - | (9,679 | ) | ||||||||||||||||
Cash
and cash equivalents at beginning of year
|
139 | 28,299 | 290 | 1,425 | - | 30,153 | ||||||||||||||||||
Cash
and cash equivalents at end of year
|
$ | 1,378 | $ | 16,518 | $ | 958 | $ | 1,620 | $ | - | $ | 20,474 |
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||||||||
For
the Year Ended September 29, 2006
|
||||||||||||||||||||||||
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Cash
flows from operating activities
|
||||||||||||||||||||||||
Net cash (used in) provided by operating activities
|
$ | (7,714 | ) | $ | 14,612 | $ | 94 | $ | 3,905 | $ | - | $ | 10,897 | |||||||||||
Cash
flows from investing activities
|
||||||||||||||||||||||||
Proceeds
from sale of property, plant and equipment
|
- | 11,334 | - | - | - | 11,334 | ||||||||||||||||||
Expenses
relating to sale of San Carlos property
|
- | (577 | ) | (577 | ) | |||||||||||||||||||
Capital
expenditures
|
- | (7,679 | ) | (127 | ) | (3,107 | ) | - | (10,913 | ) | ||||||||||||||
Investment
in subsidiary
|
(47,500 | ) | 47,500 | - | - | - | - | |||||||||||||||||
Net
cash (used in) provided by investing activities
|
(47,500 | ) | 50,578 | (127 | ) | (3,107 | ) | - | (156 | ) | ||||||||||||||
Cash
flows from financing activities
|
||||||||||||||||||||||||
Proceeds
from issuance of debt
|
- | 10,000 | - | - | - | 10,000 | ||||||||||||||||||
Proceeds
from issuance of common stock
|
52,940 | - | - | - | - | 52,940 | ||||||||||||||||||
Proceeds
from exercise of stock options
|
55 | - | - | - | - | 55 | ||||||||||||||||||
Repayments
of debt
|
- | (47,500 | ) | - | - | - | (47,500 | ) | ||||||||||||||||
Common
stock issuance costs
|
(5,641 | ) | - | - | - | - | (5,641 | ) | ||||||||||||||||
Stockholder
distribution payments
|
(17,000 | ) | - | - | - | - | (17,000 | ) | ||||||||||||||||
Intercompany
dividends
|
24,919 | (24,919 | ) | - | - | - | - | |||||||||||||||||
Excess
tax benefit on stock option exercises
|
47 | - | - | - | - | 47 | ||||||||||||||||||
Net
cash provided by (used in) financing activities
|
55,320 | (62,419 | ) | - | - | - | (7,099 | ) | ||||||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
106 | 2,771 | (33 | ) | 798 | - | 3,642 | |||||||||||||||||
Cash
and cash equivalents at beginning of year
|
33 | 25,528 | 323 | 627 | - | 26,511 | ||||||||||||||||||
Cash
and cash equivalents at end of year
|
$ | 139 | $ | 28,299 | $ | 290 | $ | 1,425 | $ | - | $ | 30,153 |
CPI International, Inc. | ||||
By: | /s/ O. JOE CALDARELLI | |||
O. Joe Caldarelli | ||||
Chief Executive Officer | ||||
Date: December 15, 2008 | ||||
By: | /s/ JOEL A. LITTMAN | |||
Joel A. Littman | ||||
Chief Financial Officer, Treasurer and Secretary | ||||
(Principal Financial and Accounting Officer) | ||||
Date: December 15, 2008 |
Signature
|
Title | Date | ||||
/s/ O. JOE CALDARELLI
|
Chief
Executive Officer and Director
|
December
15, 2008
|
||||
O.
Joe Caldarelli
|
(Principal
Executive Officer)
|
|||||
/s/ JOEL A. LITTMAN
|
Chief
Financial Officer, Treasurer
|
December
15, 2008
|
||||
Joel
A. Littman
|
and
Secretary (Principal Financial
|
|||||
and
Accounting Officer)
|
||||||
MICHAEL TARGOFF*
|
Chairman
of the Board of Directors
|
December
15, 2008
|
||||
Michael
Targoff
|
||||||
MICHAEL F. FINLEY*
|
Director
|
December
15, 2008
|
||||
Michael
F. Finley
|
||||||
JEFFREY P. HUGHES*
|
Director
|
December
15, 2008
|
||||
Jeffrey
P. Hughes
|
||||||
STEPHEN R. LARSON*
|
Director
|
December
15, 2008
|
||||
Stephen
R. Larson
|
||||||
WILLIAM P. RUTLEDGE*
|
Director
|
December
15, 2008
|
||||
William
P. Rutledge
|
||||||
By: |
/s/ JOEL A. LITTMAN
|
|||||
Joel
A. Littman
|
||||||
Attorney-in-fact
|
Exhibit
Number
|
Exhibit
Description
|
||
2.1
|
Agreement
and Plan of Merger, dated as of November 17, 2003, by and among the
Registrant, CPI Merger Sub Corp., Communications & Power Industries
Holding Corporation (“Holding”) and Green Equity Investors II, L.P., as
Securityholders’ Representative (Exhibit 2.4)(6)
|
||
2.2
|
Stock
Sale Agreement (“Stock Sale Agreement”), dated as of June 9, 1995, by and
between Communications & Power Industries, Inc. (“CPI”) (as successor
by merger to CPII Acquisition Corp., then known as Communications &
Power Industries Holding Corporation) and Varian Associates, Inc. (“Varian
Associates”) (Exhibit 2.1)(1)
|
||
2.3
|
First
Amendment to Stock Sale Agreement, dated as of August 11, 1995, by and
among Holding, CPI (as successor by merger to CPII Acquisition) and Varian
Associates (Exhibit 2.2)(1)
|
||
2.4
|
Second
Amendment to Stock Sale Agreement, dated as of August 11, 1995, by and
among Holding, CPI (as successor by merger to CPII Acquisition) and Varian
Associates (Exhibit 2.3)(1)
|
||
2.5
|
Modification
Agreement to Stock Sale Agreement, dated June 18, 2004, by and between CPI
and Varian Medical Systems, Inc. (Exhibit 10.2)(9)
|
||
3.1
|
Restated
Certificate of Incorporation of CPI, filed with the Delaware Secretary of
State on December 10, 2004 (Exhibit 3.1)(10)
|
||
3.2
|
Amended
and Restated Bylaws of CPI, dated March 19, 2002 (Exhibit
3.2)(4)
|
||
3.3
|
Amended
and Restated Certificate of Incorporation of the Registrant, filed with
the Delaware Secretary of State on April 7, 2006 (Exhibit
3.3)(15)
|
||
3.4
|
Amended
and Restated Bylaws of the Registrant, effective April 7, 2006 (Exhibit
3.4) (15)
|
||
4.1
|
Indenture,
dated as of January 23, 2004, by and among CPI, as Issuer, the Guarantors
named therein, as Guarantors, and The Bank of New York Trust Company, N.A.
(as successor to BNY Western Trust Company), as Trustee (Exhibit
4.1)(7)
|
||
4.2
|
Amended
and Restated Management Stockholders Agreement, dated as of April 27,
2006, by and among the Registrant, Cypress Merchant Banking Partners II
L.P., Cypress Merchant B II C.V., 55th Street Partners II L.P., Cypress
Side-by-Side LLC, and certain management stockholders named therein
(Exhibit 4.1)(16)
|
||
4.3
|
Indenture,
dated as of February 22, 2005, by and between the Registrant, as Issuer,
and The Bank of New York Trust Company, N.A., as Trustee (Exhibit
10.2)(11)
|
||
4.4
|
Amended
and Restated Registration Rights Agreement, dated as of April 27, 2006, by
and among CPI International, Inc., Cypress Merchant Banking Partners II
L.P., Cypress Merchant B II C.V., 55th Street Partners II L.P. and Cypress
Side-by-Side LLC (Exhibit 4.1)(16)
|
Exhibit
Number
|
Exhibit
Description
|
||
4.5 |
Specimen
common stock certificate of the Registrant (Exhibit
4.5)(15)
|
||
10.1 |
Credit
Agreement (“Credit Agreement”), dated as of January 23, 2004, amended and
restated as of November 29, 2004, by and among CPI, as Borrower, the
Guarantors named therein, the Lenders from time to time party thereto, UBS
Securities LLC, Bear, Stearns & Co. Inc., UBS Loan Finance LLC, UBS
AG, Stamford Branch, Bear Stearns Corporate Lending Inc., Wachovia Bank,
National Association, and Wachovia Capital Markets, LLC (Exhibit
10.1)(10)
|
||
10.2 |
Amendment
No. 1, dated as of February 16, 2005, to the Credit Agreement (Exhibit
10.1)(11)
|
||
10.3 |
Amendment
No. 2, dated as of April 13, 2005, to the Credit Agreement (Exhibit
10.1)(13)
|
||
10.4 |
Amendment
No. 3, dated as of December 15, 2005, to the Credit Agreement (Exhibit
10.1)(14)
|
||
10.5 |
Security
Agreement, dated as of January 23, 2004, among CPI, the Guarantors party
thereto, and UBS AG, Stamford Branch (Exhibit 10.2)(7)
|
||
10.6 |
Cross
License Agreement, dated as of August 10, 1995, between CPI and Varian
Associates (Exhibit 10.11)(1)
|
||
10.7 |
Agreement
of Purchase and Sale (San Carlos Property), dated February 7, 2003, by and
between CPI (as successor to Holding) and Palo Alto Medical Foundation;
Seventh Amendment, dated November 12, 2003; and Ninth Amendment, dated
June 16, 2004 (Exhibit 10.1)(9)
|
||
10.8 |
Agreement
re: Environmental Matters, dated June 18, 2004, by and between 301 Holding
LLC, CPI, Varian Medical Systems, Inc. and Palo Alto Medical Foundation
(Exhibit
10.3)(9)
|
||
10.9 |
Assignment
and Assumption of Lessee’s Interest in Lease (Units 1-4, Palo Alto) and
Covenants, Conditions and Restrictions on Leasehold Interests (Units 1-12,
Palo Alto), dated as of August 10, 1995, by and among Varian Realty Inc.,
Varian Associates and CPI (Exhibit 10.13)(1)
|
||
10.10 |
Fourth
Amendment of Lease, dated December 15, 2000, by and between The Board of
Trustees of the Leland Stanford Junior University and CPI (Exhibit
10.10)(3)
|
||
10.11 |
Sublease
(Unit 8, Palo Alto), dated as of August 10, 1995, by and between Varian
Realty Inc. and CPI (Exhibit 10.15)(1)
|
||
10.12 |
Sublease
(Building 4, Palo Alto), dated as of August 10, 1995, by and between CPI,
as Sublessee, Varian, as Sublessor, and Varian Realty Inc., as Adjacent
Property Sublessor (Exhibit
10.16)(1)
|
Exhibit
Number
|
Exhibit
Description
|
||
10.13 |
First
Amendment to Sublease, Subordination, Non-Disturbance and Attornment
Agreement, dated as of April 2, 1999, by and among Varian, Inc., CPI,
Varian, and Varian Realty Inc. (Exhibit 10.15)(12)
|
||
10.14 |
Second
Amendment to Sublease, dated as of April 28, 2000, by and between Varian,
Inc. and CPI (Exhibit 10.16) (12)
|
||
10.15 |
Communications
& Power Industries 2000 Stock Option Plan (Exhibit
10.32)(2)
|
||
10.16 |
First
Amendment to Communications and Power Industries 2000 Stock Option Plan
(Exhibit 10.32.1)(5)
|
||
10.17 |
Form
of Stock Option Agreement 2000 Stock Option Plan (Exhibit
10.33)(2)
|
||
10.18 |
Form
of Option Rollover Agreement (U.S. Employees) (Exhibit
10.3)(7)
|
||
10.19 |
Form
of Option Rollover Agreement (Canadian Employees) (Exhibit
10.5)(12)
|
||
10.20 |
Conformed
copy of 2004 Stock Incentive Plan reflecting amendments adopted on
September 24, 2004 and December 7, 2006 (Exhibit
10.20)(17)
|
||
10.21 |
Form
of Option Agreement (Employees) under the 2004 Stock Incentive Plan
(Exhibit 10.2)(8)
|
||
10.22 |
Form
of Option Agreement (Directors) under the 2004 Stock Incentive Plan
(Exhibit 10.3)(8)
|
||
10.23 |
Conformed
copy of 2006 Equity and Performance Incentive Plan reflecting amendments
adopted on December 7, 2006 and December 9, 2008
|
||
10.24 |
Form
of Stock Option Agreement (IPO Grant) under 2006 Equity and Performance
Incentive Plan (Exhibit 10.25)(15)
|
||
10.25 |
Form
of Stock Option Agreement (Senior Executives) (IPO Grant) under 2006
Equity and Performance Incentive Plan (Exhibit
10.26)(15)
|
||
10.26 |
Form
of Stock Option Agreement (Directors) under 2006 Equity and Performance
Incentive Plan (Exhibit 10.27)(15)
|
||
10.27 |
Form
of Restricted Stock Agreement (Directors) under 2006 Equity and
Performance Incentive Plan (Exhibit 10.28)(15)
|
||
10.28 |
Conformed
copy of 2006 Employee Stock Purchase Plan reflecting amendments adopted on
July 1, 2006 and December 7, 2006 (Exhibit 10.28)(17)
|
||
10.29 |
Pension
Plan for Executive Employees of CPI Canada, Inc. (as applicable to O. Joe
Caldarelli) effective January 1, 2002 (Exhibit
10.43)(6)
|
||
10.30 |
First
Amendment and Restatement of the CPI Non-Qualified Deferred Compensation
Plan effective as of December 1, 2004 (Exhibit
10.3)(22)
|
Exhibit
Number
|
Exhibit
Description
|
||
10.31 |
Employment
Agreement, dated as of April 27, 2006, by and between Communications &
Power Industries Canada Inc. and O. Joe Caldarelli (Exhibit
10.1)(16)
|
||
10.32 |
Amended
and Restated Employment Agreement, dated as of January 17, 2008, by and
between CPI and Robert A. Fickett (Exhibit 10.1)(22)
|
||
10.33 |
Amended
and Restated Employment Agreement, dated as of January 17, 2008, by and
between CPI and Joel A. Littman (Exhibit 10.2)(22)
|
||
10.34 |
Employment
Agreement, dated November 2, 2002, by and between CPI and Don Coleman
(Exhibit 10.41)(6)
|
||
10.35 |
Form
of Indemnification Agreement (Exhibit 10.36)(15)
|
||
10.36 |
Form
of Stock Option Agreement (Senior Executives) under 2006 Equity and
Performance Incentive Plan (Exhibit 10.1)(18)
|
||
10.37 |
Form
of Stock Option Agreement under 2006 Equity and Performance Incentive Plan
(Exhibit 10.2)(18)
|
||
10.38 |
Employment
Agreement, dated June 27, 2000, by and between CPI and John R. Beighley
(Exhibit 10.1)(19)
|
||
10.39 |
Amended
and Restated Credit Agreement, dated as of August 1, 2007, among CPI,
as Borrower, the Guarantors named therein, the Lenders from time to time
party thereto, UBS Securities LLC and Bear, Stearns & Co. Inc., UBS
Loan Finance LLC, UBS AG, Stamford Branch, , Bear Stearns Corporate
Lending Inc., The Royal Bank of Scotland PLC, and RBS Securities Corp
(Exhibit 10.1)(20)
|
||
10.40 |
Form
of Restricted Stock Agreement (Senior Executives) under 2006 Equity and
Performance Incentive Plan (Exhibit 10.1)(21)
|
||
10.41 |
Form
of Restricted Stock Agreement under 2006 Equity and Performance Incentive
Plan (Exhibit 10.2)(21)
|
||
10.42 |
Form
of Restricted Stock Unit Award Agreement (Senior Executives) under 2006
Equity and Performance Incentive Plan (Exhibit
10.3)(21)
|
||
10.43 |
Form
of Restricted Stock Unit Award Agreement under 2006 Equity and Performance
Incentive Plan (Exhibit 10.4)(21)
|
||
10.44 |
Employment
Agreement, dated June 21, 2004, by and between CPI and Andrew
Tafler
|
||
10.45 | New Form of Performance Stock Option Agreement (Senior Executives) under 2006 Equity and Performance Incentive Plan | ||
10.46 | New Form of Performance Stock Option Agreement under 2006 Equity and Performance Incentive Plan | ||
10.47 | New Form of Performance Restricted Stock Agreement (Senior Executives) under 2006 Equity and Performance Incentive Plan |
Exhibit
Number
|
Exhibit
Description
|
||
10.48 | New Form of Performance Restricted Stock Agreement under 2006 Equity and Performance Incentive Plan | ||
10.49 | New Form of Performance Restricted Stock Unit Award Agreement (Senior Executives) under 2006 Equity and Performance Incentive Plan | ||
10.50 | New Form of Performance Restricted Stock Unit Award Agreement under 2006 Equity and Performance Incentive Plan | ||
12 | Statement re: Computation of Ratio of Earnings to Fixed Charges | ||
21 |
Subsidiaries
of the Registrant
|
||
23.1 |
Consent
of KPMG LLP
|
||
24 |
Powers
of Attorney of the Board of Directors and Officers
|
||
31.1 |
Certification
of Chief Executive Officer pursuant to Rule 13a-15(e) and Rule 15d-15(e),
promulgated under the Securities Exchange Act of 1934, as
amended
|
||
31.2 |
Certification
of Chief Financial Officer pursuant to Rule 13a-15(e) and Rule 15d-15(e),
promulgated under the Securities Exchange Act of 1934, as
amended
|
||
32.1 |
Certifications
of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
||
32.2 |
Certifications
of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
(1)
|
Incorporated by reference to Communications & Power Industries Inc.’s Registration Statement on Form S-1 (Registration No. 033-96858) filed on September 12, 1995 | |
(2)
|
Incorporated
by reference to Communications & Power Industries Inc.’s Annual Report
on Form 10-K for the fiscal year ended September 29, 2000 (File No.
033-96858)
|
|
(3)
|
Incorporated by reference to Communications & Power Industries Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 29, 2000 (File No. 033-96858) | |
(4)
|
Incorporated
by reference to Communications & Power Industries Inc.’s Quarterly
Report on Form 10-Q for the quarter ended March 29,
2002
|
|
(5)
|
Incorporated
by reference to Communications & Power Industries Inc.’s Quarterly
Report on Form 10-Q for the quarter ended April 4, 2003
|
|
(6)
|
Incorporated
by reference to Communications & Power Industries Inc.’s Annual Report
on Form 10-K for the fiscal year ended October 3, 2003
|
|
(7)
|
Incorporated by reference to Communications & Power Industries Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 2, 2004 | |
(8)
|
Incorporated
by reference to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended April 2, 2004
|
(9)
|
Incorporated
by reference to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended July 2, 2004
|
|
(10)
|
Incorporated
by reference to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended October 1, 2004
|
|
(11)
|
Incorporated
by reference to the Registrant’s Form 8-K filed on February 23,
2005
|
|
(12)
|
Incorporated
by reference to the Registrant’s Registration Statement on Form S-4
(Registration No. 333-123917) filed on April 7, 2005
|
|
(13)
|
Incorporated
by reference to the Registrant’s Form 8-K filed on April 19,
2005
|
|
(14)
|
Incorporated
by reference to the Registrant’s Form 8-K filed on December 16,
2005
|
|
(15)
|
Incorporated
by reference to the Registrant’s Registration Statement on Form S-1/A
filed on April 11, 2006 (Commission File No.
333-130662)
|
(16)
|
Incorporated
by reference to the Registrant’s Form 10-Q filed on May 15,
2006
|
|
(17)
|
Incorporated
by reference to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended September 29, 2006
|
|
(18)
|
Incorporated
by reference to the Registrant’s Form 8-K filed on December 13,
2006
|
|
(19)
|
Incorporated
by reference to the Registrant’s Form 10-Q filed on February 12,
2007
|
|
(20)
|
Incorporated
by reference to the Registrant’s Form 8-K filed on August 6,
2007
|
|
(21)
|
Incorporated
by reference to the Registrant’s Form 8-K filed on December 11,
2007
|
|
(22)
|
Incorporated
by reference to the Registrant’s Form 10-Q filed on February 6,
2008
|