x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
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)
|
|
Not
Applicable
(Former
name, former address and former fiscal year, if changed since last
report)
|
Yes |
x
|
No | ¨ |
Large accelerated filer | ¨ | Accelerated filer | x |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 28,045 | $ | 28,670 | ||||
Restricted
cash
|
1,323 | 776 | ||||||
Accounts
receivable, net
|
42,040 | 47,348 | ||||||
Inventories
|
65,867 | 65,488 | ||||||
Deferred
tax assets
|
13,556 | 11,411 | ||||||
Prepaid
and other current assets
|
4,171 | 3,823 | ||||||
Total
current assets
|
155,002 | 157,516 | ||||||
Property,
plant, and equipment, net
|
61,411 | 62,487 | ||||||
Deferred
debt issue costs, net
|
4,689 | 4,994 | ||||||
Intangible
assets, net
|
77,779 | 78,534 | ||||||
Goodwill
|
162,293 | 162,611 | ||||||
Other
long-term assets
|
3,856 | 806 | ||||||
Total
assets
|
$ | 465,030 | $ | 466,948 | ||||
Liabilities
and stockholders’ equity
|
||||||||
Current
Liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 3,000 | $ | 1,000 | ||||
Accounts
payable
|
18,033 | 21,109 | ||||||
Accrued
expenses
|
28,786 | 23,044 | ||||||
Product
warranty
|
3,990 | 4,159 | ||||||
Income
taxes payable
|
1,794 | 7,766 | ||||||
Advance
payments from customers
|
11,208 | 12,335 | ||||||
Total
current liabilities
|
66,811 | 69,413 | ||||||
Deferred
income taxes
|
26,851 | 27,321 | ||||||
Long-term
debt, less current portion
|
217,913 | 224,660 | ||||||
Other
long-term liabilities
|
4,714 | 1,689 | ||||||
Total
liabilities
|
316,289 | 323,083 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock ($0.01 par value, 90,000 shares authorized;
16,690 and 16,538 shares issued; 16,484
and 16,332 shares outstanding)
|
167 | 165 | ||||||
Additional
paid-in capital
|
72,916 | 71,818 | ||||||
Accumulated
other comprehensive loss
|
(5,688 | ) | (1,809 | ) | ||||
Retained
earnings
|
84,146 | 76,491 | ||||||
Treasury
stock, at cost (206 shares)
|
(2,800 | ) | (2,800 | ) | ||||
Total
stockholders’ equity
|
148,741 | 143,865 | ||||||
Total
liabilities and stockholders' equity
|
$ | 465,030 | $ | 466,948 |
Quarter Ended
|
||||||||
January 2,
2009
|
December 28,
2007
|
|||||||
Sales
|
$ | 77,146 | $ | 85,910 | ||||
Cost
of sales
|
57,230 | 61,774 | ||||||
Gross
profit
|
19,916 | 24,136 | ||||||
Operating
costs and expenses:
|
||||||||
Research
and development
|
2,183 | 2,724 | ||||||
Selling
and marketing
|
4,989 | 5,172 | ||||||
General
and administrative
|
5,204 | 6,153 | ||||||
Amortization
of acquisition-related intangible assets
|
694 | 781 | ||||||
Net
loss on disposition of fixed assets
|
20 | 34 | ||||||
Total
operating costs and expenses
|
13,090 | 14,864 | ||||||
Operating
income
|
6,826 | 9,272 | ||||||
Interest
expense, net
|
4,455 | 4,812 | ||||||
Income
before income taxes
|
2,371 | 4,460 | ||||||
Income
tax (benefit) expense
|
(5,284 | ) | 1,950 | |||||
Net
income
|
$ | 7,655 | $ | 2,510 | ||||
Other
comprehensive income, net of tax
|
||||||||
Net
unrealized loss on cash flow hedges
|
(3,879 | ) | (1,201 | ) | ||||
Comprehensive
income
|
$ | 3,776 | $ | 1,309 | ||||
Earnings
per share - Basic
|
$ | 0.47 | $ | 0.15 | ||||
Earnings
per share - Diluted
|
$ | 0.44 | $ | 0.14 | ||||
Shares
used to compute earnings per share - Basic
|
16,269 | 16,371 | ||||||
Shares
used to compute earnings per share - Diluted
|
17,388 | 17,832 |
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
cash provided by operating activities
|
$ | 4,599 | $ | 9,560 | ||||
Cash
flows from investing activities
|
||||||||
Capital
expenditures
|
(904 | ) | (1,687 | ) | ||||
Payment
of patent application fees
|
- | (147 | ) | |||||
Net
cash used in investing activities
|
(904 | ) | (1,834 | ) | ||||
Cash
flows from financing activities
|
||||||||
Repayments
of debt
|
(4,750 | ) | (1,000 | ) | ||||
Proceeds
from issuance of common stock to employees
|
423 | 210 | ||||||
Proceeds
from exercise of stock options
|
7 | - | ||||||
Net
cash used in financing activities
|
(4,320 | ) | (790 | ) | ||||
Net
(decrease) increase in cash and cash equivalents
|
(625 | ) | 6,936 | |||||
Cash
and cash equivalents at beginning of period
|
28,670 | 20,474 | ||||||
Cash
and cash equivalents at end of period
|
$ | 28,045 | $ | 27,410 | ||||
Supplemental
cash flow disclosures
|
||||||||
Cash
paid for interest
|
$ | 1,503 | $ | 155 | ||||
Cash
paid for income taxes, net of refunds
|
$ | 819 | $ | 2,533 |
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
Accounts
receivable
|
$ | 42,224 | $ | 47,437 | ||||
Less:
Allowance for doubtful accounts
|
(184 | ) | (89 | ) | ||||
Accounts
receivable, net
|
$ | 42,040 | $ | 47,348 |
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
Raw
material and parts
|
$ | 40,094 | $ | 40,187 | ||||
Work
in process
|
18,284 | 17,622 | ||||||
Finished
goods
|
7,489 | 7,679 | ||||||
$ | 65,867 | $ | 65,488 |
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Balance
at beginning of period
|
$ | 9,860 | $ | 9,784 | ||||
Inventory
provision, charged to cost of sales
|
259 | 200 | ||||||
Inventory
write-offs
|
(161 | ) | (33 | ) | ||||
Balance
at end of period
|
$ | 9,958 | $ | 9,951 |
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Balance
at beginning of period
|
$ | 1,928 | $ | 2,700 | ||||
Provision
for loss contracts, charged to cost
of sales
|
479 | 746 | ||||||
Credit
to cost of sales upon revenue recognition
|
(685 | ) | (1,012 | ) | ||||
Balance
at end of period
|
$ | 1,722 | $ | 2,434 |
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Inventories
|
$ | 1,581 | $ | 1,342 | ||||
Accrued
expenses
|
141 | 1,092 | ||||||
$ | 1,722 | $ | 2,434 |
Weighted Average
|
January 2, 2009
|
October 3, 2008
|
||||||||||||||||||||||||||
Useful Life
(in years)
|
Cost
|
Accumulated Amortization
|
Net
|
Cost
|
Accumulated Amortization
|
Net
|
||||||||||||||||||||||
VED
Core Technology
|
50 | $ | 30,700 | $ | (3,040 | ) | $ | 27,660 | $ | 30,700 | $ | (2,887 | ) | $ | 27,813 | |||||||||||||
VED
Application Technology
|
25 | 19,800 | (3,911 | ) | 15,889 | 19,800 | (3,713 | ) | 16,087 | |||||||||||||||||||
X-ray
Generator and Satcom
|
||||||||||||||||||||||||||||
Application
Technology
|
15 | 8,000 | (2,641 | ) | 5,359 | 8,000 | (2,508 | ) | 5,492 | |||||||||||||||||||
Antenna
and Telemetry Technology
|
25 | 5,300 | (294 | ) | 5,006 | 5,300 | (241 | ) | 5,059 | |||||||||||||||||||
Customer
backlog
|
1 | 580 | (580 | ) | - | 580 | (580 | ) | - | |||||||||||||||||||
Land
lease
|
46 | 11,810 | (1,244 | ) | 10,566 | 11,810 | (1,181 | ) | 10,629 | |||||||||||||||||||
Tradename
|
20
- Indefinite
|
7,600 | (110 | ) | 7,490 | 7,600 | (55 | ) | 7,545 | |||||||||||||||||||
Customer
list and programs
|
25 | 6,280 | (1,017 | ) | 5,263 | 6,280 | (950 | ) | 5,330 | |||||||||||||||||||
Noncompete
agreement
|
5 | 640 | (241 | ) | 399 | 640 | (208 | ) | 432 | |||||||||||||||||||
Patent
application fees
|
- | 147 | - | 147 | 147 | - | 147 | |||||||||||||||||||||
$ | 90,857 | $ | (13,078 | ) | $ | 77,779 | $ | 90,857 | $ | (12,323 | ) | $ | 78,534 |
Fiscal Year
|
Amount
|
|||
2009
(remaining nine months)
|
2,271 | |||
2010
|
3,006 | |||
2011
|
3,006 | |||
2012
|
2,992 | |||
2013
|
2,900 | |||
Thereafter
|
60,402 | |||
$ | 74,577 |
Reportable Segments
|
||||||||||||||||
VED
|
Satcom
|
Other
|
Total
|
|||||||||||||
Balance
at October 3, 2008
|
$ | 132,897 | $ | 13,830 | $ | 15,884 | $ | 162,611 | ||||||||
Purchase
accounting adjustment
|
(215 | ) | (103 | ) | - | (318 | ) | |||||||||
Balance
at January 2, 2009
|
$ | 132,682 | $ | 13,727 | $ | 15,884 | $ | 162,293 |
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Beginning
accrued warranty
|
$ | 4,159 | $ | 5,578 | ||||
Actual
costs of warranty claims
|
(1,183 | ) | (1,074 | ) | ||||
Estimates
for product warranty, charged to cost of sales
|
1,014 | 872 | ||||||
Ending
accrued warranty
|
$ | 3,990 | $ | 5,376 |
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
Unrealized
loss on cash flow hedges, net of tax
|
$ | 5,466 | $ | 1,587 | ||||
Unrealized
actuarial loss and prior service credit for pension
liability, net of tax
|
222 | 222 | ||||||
$ | 5,688 | $ | 1,809 |
Level
1
|
Observable
inputs that reflect quoted prices (unadjusted) for identical assets or
liabilities in active markets.
|
Level
2
|
Inputs
reflect quoted prices for identical assets or liabilities in markets that
are not active; quoted prices for similar assets or liabilities in active
markets; inputs other than quoted prices that are observable for the asset
or the liability; or inputs that are derived principally from or
corroborated by observable market data by correlation or other
means.
|
Level
3
|
Unobservable
inputs reflecting the Company’s own assumptions incorporated in valuation
techniques used to determine fair value. These assumptions are required to
be consistent with market participant assumptions that are reasonably
available.
|
Fair
Value Measurements at Reporting Date Using
|
||||||||||||||||
Quoted
Prices in Active Markets for Identical Assets
|
Significant
Other Observable Inputs
|
Significant
Unobservable Inputs
|
||||||||||||||
Total
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Money
market and overnight U.S. Government securities1
|
$ | 22,837 | $ | 22,837 | $ | - | $ | - | ||||||||
Certificates
of deposit2
|
1,090 | - | 1,090 | |||||||||||||
Mutual
funds3
|
133 | 133 | - | |||||||||||||
Foreign
exchange forward derivatives4
|
274 | - | 274 | - | ||||||||||||
Total
assets at fair value
|
$ | 24,334 | $ | 22,970 | $ | 1,364 | - | |||||||||
Liabilities:
|
||||||||||||||||
Interest
rate swap derivative5
|
$ | 3,167 | $ | - | $ | 3,167 | $ | - | ||||||||
Foreign
exchange forward derivatives4
|
4,719 | - | 4,719 | - | ||||||||||||
Total
liabilities at fair value
|
$ | 7,886 | $ | - | $ | 7,886 | $ | - |
|
|
|
||||||||||||||
1
The money market and overnight U.S. Government securities are
classified as part of cash and cash equivalents in the condensed
consolidated balance sheet.
|
||||||||||||||||
2
The certificates of deposit are classified as part of restricted
cash in the condensed consolidated balance
sheet.
|
||||||||||||||||
3 The
mutual funds are classified as part of other long-term assets in the
condensed consolidated balance sheet.
|
||||||||||||||||
4 The
foreign currency derivatives are classified as part of other long-term
assets and accrued expenses in the condensed consolidated balance
sheet.
|
||||||||||||||||
5 The
interest rate swap derivatives are classified as part of accrued expenses
and other long-term liabilities in the condensed consolidated balance
sheet.
|
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
Term
loan, expiring 2014
|
$ | 84,000 | $ | 88,750 | ||||
8%
Senior subordinated notes due 2012
|
125,000 | 125,000 | ||||||
Floating
rate senior notes due 2015, net
of issue discount of
$87 and $90
|
11,913 | 11,910 | ||||||
220,913 | 225,660 | |||||||
Less: Current
portion
|
3,000 | 1,000 | ||||||
Long-term
portion
|
$ | 217,913 | $ | 224,660 | ||||
Standby
letters of credit
|
$ | 4,753 | $ | 4,609 |
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
(remaining nine months)
|
$ | - | $ | 3,000 | $ | - | $ | 3,000 | ||||||||
2010
|
- | - | - | - | ||||||||||||
2011
|
84,000 | - | - | 84,000 | ||||||||||||
2012
|
- | 122,000 | - | 122,000 | ||||||||||||
2013
|
- | - | - | - | ||||||||||||
Thereafter
|
- | - | 12,000 | 12,000 | ||||||||||||
$ | 84,000 | $ | 125,000 | $ | 12,000 | $ | 221,000 |
Fiscal
Year
|
Operating
Leases
|
|||
2009
(remaining nine months)
|
$ | 1,532 | ||
2010
|
1,756 | |||
2011
|
676 | |||
2012
|
488 | |||
2013
|
419 | |||
Thereafter
|
2,896 | |||
Total
future minimum lease payments
|
$ | 7,767 |
Fiscal
Year
|
Purchase
Contracts
|
|||
2009
(remaining nine months)
|
$ | 25,970 | ||
2010
|
2,234 | |||
2011
|
158 | |||
2012
|
12 | |||
2013
|
- | |||
Total
purchase commitments
|
$ | 28,374 |
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 October 3, 2008
|
3,349,294 | $ | 6.23 | 5.77 | $ | 24,363 | 2,556,762 | $ | 3.83 | 5.16 | $ | 23,052 | ||||||||||||||||||||
Granted
|
108,000 | 10.00 | ||||||||||||||||||||||||||||||
Exercised
|
(1,526 | ) | 4.32 | |||||||||||||||||||||||||||||
Forfeited
or cancelled
|
(3,349 | ) | 15.81 | |||||||||||||||||||||||||||||
Balance
at January 2, 2009
|
3,452,419 | $ | 6.34 | 5.66 | $ | 13,569 | 2,675,544 | $ | 4.34 | 5.06 | $ | 12,928 |
Number of
Shares
|
Weighted-Average Grant-Date Fair Value Per
Share
|
|||||||
Nonvested
at October 3, 2008
|
117,154 | $ | 15.28 | |||||
Granted
|
138,900 | 8.89 | ||||||
Vested
|
(20,175 | ) | 16.79 | |||||
Forfeited
|
- | - | ||||||
Nonvested
at January 2, 2009
|
235,879 | $ | 11.39 |
Contractual
term (in years)
|
10.00 | |||
Expected
volatility
|
51.50 | % | ||
Risk-free
rate
|
3.53 | % | ||
Dividend
yield
|
0 | % |
Expected
term (in years)
|
6.25 | |||
Expected
volatility
|
41.20 | % | ||
Risk-free
rate
|
3.82 | % | ||
Dividend
yield
|
0 | % |
Expected
volatility
|
51.50 | % | ||
Risk-free
rate
|
3.54 | % | ||
Dividend
yield
|
0 | % |
Quarter Ended
|
||||||||
January 2,
2009
|
December 28,
2007
|
|||||||
Share-based
compensation cost recognized in the income
statement by caption:
|
||||||||
Cost
of sales
|
$ | 117 | $ | 80 | ||||
Research
and development
|
42 | 31 | ||||||
Selling
and marketing
|
68 | 45 | ||||||
General
and administrative
|
394 | 268 | ||||||
$ | 621 | $ | 424 | |||||
Share-based
compensation cost capitalized in inventory
|
$ | 124 | $ | 96 | ||||
Share-based
compensation cost remaining in inventory at
end of period
|
$ | 83 | $ | 64 | ||||
Share-based
compensation expense by type of award:
|
||||||||
Stock
options
|
$ | 418 | $ | 337 | ||||
Stock
purchase plan
|
35 | 37 | ||||||
Restricted
stock and units
|
168 | 50 | ||||||
$ | 621 | $ | 424 |
Quarter Ended
|
||||||||
January 2,
2009
|
December 28,
2007
|
|||||||
Weighted
average common shares outstanding -- Basic
|
16,269 | 16,371 | ||||||
Effect
of dilutive stock options and nonvested restricted stock awards and
units
|
1,119 | 1,461 | ||||||
Weighted
average common shares outstanding -- Diluted
|
17,388 | 17,832 |
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Sales
from external customers
|
||||||||
VED
|
$ | 55,628 | $ | 63,990 | ||||
Satcom
equipment
|
17,451 | 17,575 | ||||||
Other
|
4,067 | 4,345 | ||||||
$ | 77,146 | $ | 85,910 | |||||
Intersegment
product transfers
|
||||||||
VED
|
$ | 5,365 | $ | 5,861 | ||||
Satcom
equipment
|
9 | 49 | ||||||
$ | 5,374 | $ | 5,910 | |||||
Capital
expenditures
|
||||||||
VED
|
$ | 865 | $ | 842 | ||||
Satcom
equipment
|
11 | 444 | ||||||
Other
|
28 | 401 | ||||||
$ | 904 | $ | 1,687 | |||||
EBITDA
|
||||||||
VED
|
$ | 10,351 | $ | 13,640 | ||||
Satcom
equipment
|
1,363 | 1,721 | ||||||
Other
|
(2,190 | ) | (3,439 | ) | ||||
$ | 9,524 | $ | 11,922 |
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
Total
assets
|
||||||||
VED
|
$ | 327,520 | $ | 324,483 | ||||
Satcom
equipment
|
47,580 | 48,219 | ||||||
Other
|
89,930 | 94,246 | ||||||
$ | 465,030 | $ | 466,948 |
|
•
|
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.
|
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Net
income
|
$ | 7,655 | $ | 2,510 | ||||
Depreciation
and amortization
|
2,698 | 2,650 | ||||||
Interest
expense, net
|
4,455 | 4,812 | ||||||
Income
tax (benefit) expense
|
(5,284 | ) | 1,950 | |||||
EBITDA
|
$ | 9,524 | $ | 11,922 |
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
United
States
|
$ | 47,736 | $ | 48,593 | ||||
Canada
|
13,631 | 13,843 | ||||||
Other
|
44 | 51 | ||||||
$ | 61,411 | $ | 62,487 |
January
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
United
States
|
$ | 114,297 | $ | 114,297 | ||||
Canada
|
47,996 | 48,314 | ||||||
$ | 162,293 | $ | 162,611 |
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
United
States
|
$ | 49,096 | $ | 54,523 | ||||
All
foreign countires
|
28,050 | 31,387 | ||||||
Total
sales
|
$ | 77,146 | $ | 85,910 |
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 136 | $ | 15,164 | $ | 1,998 | $ | 10,747 | $ | - | $ | 28,045 | ||||||||||||
Restricted
cash
|
- | - | 1,190 | 133 | - | 1,323 | ||||||||||||||||||
Accounts
receivable, net
|
- | 15,672 | 12,804 | 13,564 | - | 42,040 | ||||||||||||||||||
Inventories
|
- | 43,471 | 6,966 | 16,496 | (1,066 | ) | 65,867 | |||||||||||||||||
Deferred
tax assets
|
- | 12,709 | 2 | 845 | - | 13,556 | ||||||||||||||||||
Intercompany
receivable
|
- | 21,743 | 2,474 | 2,723 | (26,940 | ) | - | |||||||||||||||||
Prepaid
and other current assets
|
18 | 2,937 | 328 | 888 | - | 4,171 | ||||||||||||||||||
Total
current assets
|
154 | 111,696 | 25,762 | 45,396 | (28,006 | ) | 155,002 | |||||||||||||||||
Property,
plant and equipment, net
|
- | 44,790 | 2,954 | 13,667 | - | 61,411 | ||||||||||||||||||
Deferred
debt issue costs, net
|
380 | 4,309 | - | - | - | 4,689 | ||||||||||||||||||
Intangible
assets, net
|
- | 56,248 | 14,015 | 7,516 | - | 77,779 | ||||||||||||||||||
Goodwill
|
- | 93,375 | 20,973 | 47,945 | - | 162,293 | ||||||||||||||||||
Other
long-term assets
|
- | 3,428 | 292 | 136 | - | 3,856 | ||||||||||||||||||
Intercompany
notes receivable
|
- | 1,035 | - | - | (1,035 | ) | - | |||||||||||||||||
Investment
in subsidiaries
|
187,520 | 105,275 | - | - | (292,795 | ) | - | |||||||||||||||||
Total
assets
|
$ | 188,054 | $ | 420,156 | $ | 63,996 | $ | 114,660 | $ | (321,836 | ) | $ | 465,030 | |||||||||||
Liabilities
and stockholders' equity
|
||||||||||||||||||||||||
Current
portion of long-term debt
|
$ | - | $ | 3,000 | $ | - | $ | - | $ | - | $ | 3,000 | ||||||||||||
Accounts
payable
|
11 | 9,966 | 2,334 | 5,722 | - | 18,033 | ||||||||||||||||||
Accrued
expenses
|
449 | 22,260 | 2,380 | 3,697 | - | 28,786 | ||||||||||||||||||
Product
warranty
|
- | 1,914 | 538 | 1,538 | - | 3,990 | ||||||||||||||||||
Income
taxes payable
|
- | 82 | 186 | 1,526 | - | 1,794 | ||||||||||||||||||
Advance
payments from customers
|
- | 7,111 | 2,661 | 1,436 | - | 11,208 | ||||||||||||||||||
Intercompany
payable
|
26,940 | - | - | - | (26,940 | ) | - | |||||||||||||||||
Total
current liabilities
|
27,400 | 44,333 | 8,099 | 13,919 | (26,940 | ) | 66,811 | |||||||||||||||||
Deferred
income taxes
|
- | 21,789 | - | 5,062 | - | 26,851 | ||||||||||||||||||
Intercompany
notes payable
|
- | - | - | 1,035 | (1,035 | ) | - | |||||||||||||||||
Long-term
debt, less current portion
|
11,913 | 206,000 | - | - | - | 217,913 | ||||||||||||||||||
Other
long-term liabilities
|
- | 1,592 | - | 3,122 | - | 4,714 | ||||||||||||||||||
Total
liabilities
|
39,313 | 273,714 | 8,099 | 23,138 | (27,975 | ) | 316,289 | |||||||||||||||||
Common
stock
|
167 | - | - | - | - | 167 | ||||||||||||||||||
Parent
investment
|
- | 50,721 | 43,167 | 58,222 | (152,110 | ) | - | |||||||||||||||||
Additional
paid-in capital
|
72,916 | - | - | - | - | 72,916 | ||||||||||||||||||
Accumulated
other comprehensive loss
|
(5,688 | ) | (5,688 | ) | - | (1,053 | ) | 6,741 | (5,688 | ) | ||||||||||||||
Retained
earnings
|
84,146 | 101,409 | 12,730 | 34,353 | (148,492 | ) | 84,146 | |||||||||||||||||
Treasury
stock
|
(2,800 | ) | - | - | - | - | (2,800 | ) | ||||||||||||||||
Total
stockholders’ equity
|
148,741 | 146,442 | 55,897 | 91,522 | (293,861 | ) | 148,741 | |||||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 188,054 | $ | 420,156 | $ | 63,996 | $ | 114,660 | $ | (321,836 | ) | $ | 465,030 |
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 |
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Sales
|
$ | - | $ | 46,215 | $ | 19,707 | $ | 31,723 | $ | (20,499 | ) | $ | 77,146 | |||||||||||
Cost
of sales
|
- | 36,267 | 16,613 | 24,773 | (20,423 | ) | 57,230 | |||||||||||||||||
Gross
profit
|
- | 9,948 | 3,094 | 6,950 | (76 | ) | 19,916 | |||||||||||||||||
Operating
costs and expenses:
|
||||||||||||||||||||||||
Research
and development
|
- | 684 | - | 1,499 | - | 2,183 | ||||||||||||||||||
Selling
and marketing
|
- | 1,742 | 1,247 | 2,000 | - | 4,989 | ||||||||||||||||||
General
and administrative
|
- | 3,714 | 1,023 | 467 | - | 5,204 | ||||||||||||||||||
Amortization
of acquisition-related intangible assets
|
- | 390 | 153 | 151 | - | 694 | ||||||||||||||||||
Net
loss on disposition of assets
|
- | 16 | - | 4 | - | 20 | ||||||||||||||||||
Total
operating costs and expenses
|
- | 6,546 | 2,423 | 4,121 | - | 13,090 | ||||||||||||||||||
Operating
income
|
- | 3,402 | 671 | 2,829 | (76 | ) | 6,826 | |||||||||||||||||
Interest
expense (income), net
|
278 | 4,153 | (5 | ) | 29 | - | 4,455 | |||||||||||||||||
(Loss)
income before income tax expense
|
||||||||||||||||||||||||
and
equity in income of subsidiaries
|
(278 | ) | (751 | ) | 676 | 2,800 | (76 | ) | 2,371 | |||||||||||||||
Income
tax (benefit) expense
|
(105 | ) | (3,834 | ) | 115 | (1,460 | ) | - | (5,284 | ) | ||||||||||||||
Equity
in income of subsidiaries
|
7,828 | 4,745 | - | - | (12,573 | ) | - | |||||||||||||||||
Net
income
|
$ | 7,655 | $ | 7,828 | $ | 561 | $ | 4,260 | $ | (12,649 | ) | $ | 7,655 |
Parent
|
Issuer
|
Guarantor
|
Non-Guarantor
|
Consolidating
|
Consolidated
|
|||||||||||||||||||
(CPI
Int'l)
|
(CPI)
|
Subsidiaries
|
Subsidiaries
|
Eliminations
|
Total
|
|||||||||||||||||||
Sales
|
$ | - | $ | 49,763 | $ | 19,826 | $ | 34,838 | $ | (18,517 | ) | $ | 85,910 | |||||||||||
Cost
of sales
|
- | 37,432 | 16,585 | 26,227 | (18,470 | ) | 61,774 | |||||||||||||||||
Gross
profit
|
- | 12,331 | 3,241 | 8,611 | (47 | ) | 24,136 | |||||||||||||||||
Operating
costs and expenses:
|
||||||||||||||||||||||||
Research
and development
|
- | 892 | 149 | 1,683 | - | 2,724 | ||||||||||||||||||
Selling
and marketing
|
- | 1,923 | 1,012 | 2,237 | - | 5,172 | ||||||||||||||||||
General
and administrative
|
- | 3,718 | 1,070 | 1,365 | - | 6,153 | ||||||||||||||||||
Amortization
of acquisition-related intangible assets
|
- | 568 | 62 | 151 | - | 781 | ||||||||||||||||||
Net
loss on disposition of assets
|
- | 22 | 2 | 10 | - | 34 | ||||||||||||||||||
Total
operating costs and expenses
|
- | 7,123 | 2,295 | 5,446 | - | 14,864 | ||||||||||||||||||
Operating
income
|
- | 5,208 | 946 | 3,165 | (47 | ) | 9,272 | |||||||||||||||||
Interest
expense (income), net
|
545 | 4,285 | (20 | ) | 2 | - | 4,812 | |||||||||||||||||
(Loss)
income before income tax expense
|
||||||||||||||||||||||||
and
equity in income of subsidiaries
|
(545 | ) | 923 | 966 | 3,163 | (47 | ) | 4,460 | ||||||||||||||||
Income
tax (benefit) expense
|
(207 | ) | 741 | 254 | 1,162 | - | 1,950 | |||||||||||||||||
Equity
in income of subsidiaries
|
2,848 | 2,666 | - | - | (5,514 | ) | - | |||||||||||||||||
Net
income
|
$ | 2,510 | $ | 2,848 | $ | 712 | $ | 2,001 | $ | (5,561 | ) | $ | 2,510 |
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
|
$ | (378 | ) | $ | 2,477 | $ | 1,505 | $ | 995 | $ | - | $ | 4,599 | |||||||||||
Cash
flows from investing activities
|
||||||||||||||||||||||||
Capital
expenditures
|
- | (835 | ) | - | (69 | ) | - | (904 | ) | |||||||||||||||
Payment
of patent application fees
|
- | - | - | - | - | - | ||||||||||||||||||
Net
cash used in investing activities
|
- | (835 | ) | - | (69 | ) | - | (904 | ) | |||||||||||||||
Cash
flows from financing activities
|
||||||||||||||||||||||||
Repayments
of debt
|
- | (4,750 | ) | - | - | - | (4,750 | ) | ||||||||||||||||
Proceeds
from issuance of common stock to employees
|
423 | - | - | - | - | 423 | ||||||||||||||||||
Proceeds
from exercise of stock options
|
7 | - | - | - | - | 7 | ||||||||||||||||||
Intercompany dividends | - | (8,000 | ) | - | 8,000 | - | - | |||||||||||||||||
Net
cash provided by (used in) financing activities
|
430 | (12,750 | ) | - | 8,000 | - | (4,320 | ) | ||||||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
52 | (11,108 | ) | 1,505 | 8,926 | - | (625 | ) | ||||||||||||||||
Cash
and cash equivalents at beginning of period
|
84 | 26,272 | 493 | 1,821 | - | 28,670 | ||||||||||||||||||
Cash
and cash equivalents at end of period
|
$ | 136 | $ | 15,164 | $ | 1,998 | $ | 10,747 | $ | - | $ | 28,045 |
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
|
$ | (198 | ) | $ | 7,103 | $ | 421 | $ | 2,234 | $ | - | $ | 9,560 | |||||||||||
Cash
flows from investing activities
|
||||||||||||||||||||||||
Capital
expenditures
|
- | (1,384 | ) | (34 | ) | (269 | ) | - | (1,687 | ) | ||||||||||||||
Payment
of patent application fees
|
- | - | (147 | ) | - | - | (147 | ) | ||||||||||||||||
Net
cash used in investing activities
|
- | (1,384 | ) | (181 | ) | (269 | ) | - | (1,834 | ) | ||||||||||||||
Cash
flows from financing activities
|
||||||||||||||||||||||||
Repayments
of debt
|
- | (1,000 | ) | - | - | - | (1,000 | ) | ||||||||||||||||
Proceeds
from issuance of common stock to employees
|
210 | - | - | - | - | 210 | ||||||||||||||||||
Net
cash provided by (used in) financing activities
|
210 | (1,000 | ) | - | - | - | (790 | ) | ||||||||||||||||
Net
increase in cash and cash equivalents
|
12 | 4,719 | 240 | 1,965 | - | 6,936 | ||||||||||||||||||
Cash
and cash equivalents at beginning of period
|
1,378 | 16,518 | 958 | 1,620 | - | 20,474 | ||||||||||||||||||
Cash
and cash equivalents at end of period
|
$ | 1,390 | $ | 21,237 | $ | 1,198 | $ | 3,585 | $ | - | $ | 27,410 |
Quarter
Ended
|
||||||||||||||||||||||||
January
2, 2009
|
December
28, 2007
|
Increase
(Decrease)
|
||||||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||||||
Amount
|
Orders
|
Amount
|
Orders
|
Amount
|
Percent
|
|||||||||||||||||||
Radar
and Electronic Warfare
|
$ | 32.0 | 47 | % | $ | 33.9 | 38 | % | $ | (1.9 | ) | (6 | ) % | |||||||||||
Medical
|
10.4 | 16 | 11.7 | 13 | (1.3 | ) | (11 | ) | ||||||||||||||||
Communications
|
17.4 | 26 | 30.0 | 33 | (12.6 | ) | (42 | ) | ||||||||||||||||
Industrial
|
6.4 | 10 | 7.6 | 9 | (1.2 | ) | (16 | ) | ||||||||||||||||
Scientific
|
0.8 | 1 | 6.7 | 7 | (5.9 | ) | (88 | ) | ||||||||||||||||
Total
|
$ | 67.0 | 100 | % | $ | 89.9 | 100 | % | $ | (22.9 | ) | (25 | ) % |
·
|
Radar and Electronic
Warfare: The majority of our products in the radar and
electronic warfare markets are 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, and the timing of these orders may vary from year to year. On a
combined basis, orders for the radar and electronic warfare markets
decreased approximately 6% from an aggregate of $33.9 million in the first
quarter of fiscal year 2008 to an aggregate of $32.0 million in the first
quarter of fiscal year 2009. The decrease in orders for these combined
markets resulted primarily from a decrease in demand for products to
support various domestic radar programs and the timing of orders for
products to support electronic warfare programs; there were no significant
changes to any particular large defense program in comparison to the first
quarter of fiscal year 2008.
|
·
|
Medical: Orders for
our medical products consist of orders for medical imaging applications,
such as x-ray imaging, positron emission tomography (“PET”) and magnetic
resonance imaging (“MRI”) applications, and for radiation therapy
applications for the treatment of cancer. The 11% decrease in medical
orders resulted primarily from a decrease in demand from original
equipment manufacturers for products used in x-ray imaging applications.
We believe that this decrease is due to the weakening of global
economies.
|
·
|
Communications: The
42% decrease in communications orders was primarily attributable to
decreases in orders to support commercial communications applications,
including international satellite news gathering and direct-to-home
broadcast applications; we believe that these decreases were largely due
to the weakening of global economies. Delays in the timing of telemetry
orders received by our Malibu division also contributed to the decrease in
communications orders; we expect to receive a number of the delayed
telemetry orders in fiscal year 2009. These decreases were partially
offset by an increase in orders for military communications programs,
which is a relatively new sector of the overall communications market for
us. We expect our participation in military communications programs to
continue to grow.
|
·
|
Industrial: Orders in
the industrial market are cyclical and are often tied to the state of the
economy. The $1.2 million decrease in industrial orders was primarily
attributable to decreases in orders for products used in industrial
fabrication applications and industrial heating
applications.
|
·
|
Scientific: Orders in
the scientific market are historically one-time projects and can fluctuate
significantly from period to period. The $5.9 million decrease in
scientific orders was primarily the result of the receipt of a $5.6
million order in the first quarter of fiscal year 2008 for products to
support a new accelerator project for fusion research at an international
scientific institute. This order was not expected to, and did not, repeat
in the first quarter of fiscal year
2009.
|
Quarter
Ended
|
||||||||||||||||||||
January
2,
2009
|
December
28,
2007
|
Increase
(Decrease)
|
||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||
Amount
|
Sales
|
Amount
|
Sales
|
Amount
|
||||||||||||||||
Sales
|
$ | 77.1 | 100.0 | % | $ | 85.9 | 100.0 | % | $ | (8.8 | ) | |||||||||
Cost
of sales
|
57.2 | 74.2 | 61.8 | 71.9 | (4.6 | ) | ||||||||||||||
Gross
profit
|
19.9 | 25.8 | 24.1 | 28.1 | (4.2 | ) | ||||||||||||||
Research
and development
|
2.2 | 2.9 | 2.7 | 3.1 | (0.5 | ) | ||||||||||||||
Selling
and marketing
|
5.0 | 6.5 | 5.2 | 6.1 | (0.2 | ) | ||||||||||||||
General
and administrative
|
5.2 | 6.7 | 6.2 | 7.2 | (1.0 | ) | ||||||||||||||
Amortization
of acquisition-related
intangibles
|
0.7 | 0.9 | 0.8 | 0.9 | (1.0 | ) | ||||||||||||||
Net
loss on disposition of fixed assets
|
- | - | - | - | - | |||||||||||||||
Operating
income
|
6.8 | 8.8 | 9.3 | 10.8 | (2.5 | ) | ||||||||||||||
Interest
expense, net
|
4.5 | 5.8 | 4.8 | 5.6 | (0.3 | ) | ||||||||||||||
Income
before taxes
|
2.4 | 3.1 | 4.5 | 5.2 | (2.1 | ) | ||||||||||||||
Income
tax (benefit) expense
|
(5.3 | ) | (6.9 | ) | 1.9 | 2.2 | (7.2 | ) | ||||||||||||
Net
income
|
$ | 7.7 | 10.0 | % | $ | 2.5 | 2.9 | % | $ | 5.2 | ||||||||||
Other
Data:
|
||||||||||||||||||||
EBITDA
(a)
|
$ | 9.5 | 12.3 | % | $ | 11.9 | 13.9 | % | $ | (2.4 | ) |
|
Note: Totals
may not equal the sum of the component line items due to independent
rounding. Percentages are calculated based on rounded dollar amounts
presented.
|
(a)
|
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 covenants that require us to maintain
certain interest expense coverage and leverage ratios that contain EBITDA
as a component, and our management team uses EBITDA to monitor compliance
with such covenants;
|
|
•
|
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
unaudited condensed consolidated financial
statements.
|
Quarter
Ended
|
||||||||||||||||||||||||
January
2, 2009
|
December
28, 2007
|
Increase
(Decrease)
|
||||||||||||||||||||||
%
of
|
%
of
|
|||||||||||||||||||||||
Amount
|
Sales
|
Amount
|
Sales
|
Amount
|
Percent
|
|||||||||||||||||||
Radar
and Electronic Warfare
|
$ | 28.0 | 36 | % | $ | 33.9 | 39 | % | $ | (5.9 | ) | (17 | ) % | |||||||||||
Medical
|
15.8 | 21 | 15.6 | 18 | 0.2 | 1 | ||||||||||||||||||
Communications
|
26.2 | 34 | 28.3 | 33 | (2.1 | ) | (7 | ) | ||||||||||||||||
Industrial
|
5.5 | 7 | 5.6 | 7 | (0.1 | ) | (2 | ) | ||||||||||||||||
Scientific
|
1.6 | 2 | 2.5 | 3 | (0.9 | ) | (36 | ) | ||||||||||||||||
Total
|
$ | 77.1 | 100 | % | $ | 85.9 | 100 | % | $ | (8.8 | ) | (10 | ) % |
·
|
Radar and Electronic
Warfare: The majority of our products in the radar and
electronic warfare markets are for domestic and international defense and
government end uses. The timing of orders receipts and subsequent
shipments in these markets may vary from year to year. On a combined
basis, sales for these two markets decreased approximately 17% from $33.9
million in the first quarter of fiscal year 2008 to $28.0 million in the
first quarter of fiscal year 2009, primarily due to an expected $2.1
million decrease in shipments of products to support the Aegis weapons
system and decreases in sales of several other radar and electronic
warfare programs due to the timing of order receipts for those
programs.
|
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 funded new ship builds for the Aegis weapons program for U.S. and international military customers. We have now completed supplying our products required to support these funded new ship builds, and, as a result, we expect the near-term demand to be primarily for spare and repair products and the near-term sales to be roughly half of the approximately $20 million fiscal year 2008 sales level. 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. |
·
|
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. Sales of our medical products in
the first quarter of fiscal year 2009 were essentially unchanged in
comparison to the first quarter of fiscal year 2008. During the first
quarter of fiscal year 2009, decreases in sales of products to support PET
and MRI applications and decreases in sales of x-ray generators due, in
part, to the weakening of global economies, were partially offset by
increased sales of products to support radiation therapy
applications.
|
·
|
Communications: The
7% decrease in sales in the communications market was primarily
attributable to decreases in sales to support certain commercial
communications applications, including domestic and international
direct-to-home broadcast applications. These decreases were partially
offset by an increase in sales of products for military communications
programs, which is a relatively new sector of the overall communications
market for us. We expect our participation in military communications
programs to continue to grow.
|
·
|
Industrial: Sales in the
industrial market are cyclical are often tied to the state of the economy.
Sales of industrial products in the first quarter of fiscal year 2009 were
essentially unchanged in comparison to the first quarter of fiscal year
2008.
|
·
|
Scientific: Sales
in the scientific market are historically one-time projects and can
fluctuate significantly from period to period. The $0.9 million decrease
in scientific sales was primarily the result of decreased product
shipments for the Spallation Neutron Source at Oakridge National
Laboratory and certain other scientific programs due to the timing of
those programs. 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 fiscal year
2009.
|
Quarter Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Company
sponsored
|
$ | 2.2 | $ | 2.7 | ||||
Customer
sponsored, charged to cost of sales
|
3.2 | 3.8 | ||||||
$ | 5.4 | $ | 6.5 |
Janaury
2,
|
October
3,
|
|||||||
2009
|
2008
|
|||||||
Cash
and cash equivalents
|
$ | 28.0 | $ | 28.7 | ||||
Working
capital
|
$ | 88.2 | $ | 88.1 |
Quarter
Ended
|
||||||||
January
2,
|
December
28,
|
|||||||
2009
|
2007
|
|||||||
Net
cash provided by operating activities
|
$ | 4.6 | $ | 9.6 | ||||
Net
cash used in investing activities
|
(0.9 | ) | (1.9 | ) | ||||
Net
cash used in financing activities
|
(4.3 | ) | (0.8 | ) | ||||
Net
(decrease) increase in cash and cash equivalents
|
$ | (0.6 | ) | $ | 6.9 |
No.
|
Description
|
|
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.
|
Dated:
February 11, 2009
|
/s/ JOEL A. LITTMAN |
Joel
A. Littman
Chief
Financial Officer, Treasurer and Secretary
(Duly
Authorized Officer and Chief Financial
Officer)
|