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Table of Contents
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 27, 2002
 
Commission File No. 0-4466
 

 
ARTESYN TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
 
FLORIDA
(State or other jurisdiction of incorporation or organization)
 
59-1205269
 
7900 Glades Road, Suite 500, Boca Raton, FL
(I.R.S. Employer Identifications Number)
 
(Address of principal executive offices)
(561) 451-1000
 
33434
(Registrant’s phone number, including area code)
 
(Zip Code)
 

 
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  ¨
 
The number of shares of Common Stock, $.01 par value, of the Registrant issued and outstanding as of October 25, 2002 was 38,382,133 shares.
 


Table of Contents
 
ARTESYN TECHNOLOGIES, INC.
 
Index to Form 10-Q
 
        
Page Number

PART I.    Financial Information
    
Item 1.
 
Condensed Consolidated Financial Statements (unaudited):
    
      
3
      
4
      
5
      
6
      
7-14
Item 2
    
15-25
Item 3.
    
26
Item 4.
    
26
PART II.    Other Information
    
Item 6.
    
27
  
28
  
29
 


Table of Contents
 
PART I.    FINANCIAL INFORMATION
 
Item 1.    Condensed Consolidated Financial Statements
 
ARTESYN TECHNOLOGIES, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
 
    
Thirteen Weeks Ended

    
Thirty-Nine Weeks Ended

 
    
September 27,
2002

    
September 28,
2001

    
September 27,
2002

    
September 28,
2001

 
Sales
  
$
86,020
 
  
$
108,572
 
  
$
267,420
 
  
$
386,563
 
Cost of sales
  
 
76,599
 
  
 
102,269
 
  
 
234,724
 
  
 
346,019
 
    


  


  


  


Gross profit
  
 
9,421
 
  
 
6,303
 
  
 
32,696
 
  
 
40,544
 
    


  


  


  


Expenses:
                                   
Selling, general & administrative
  
 
8,002
 
  
 
10,907
 
  
 
26,596
 
  
 
42,274
 
Research & development
  
 
8,537
 
  
 
9,561
 
  
 
25,399
 
  
 
33,272
 
Restructuring and related charges
  
 
1,449
 
  
 
4,967
 
  
 
9,574
 
  
 
13,168
 
Amortization of goodwill
  
 
—  
 
  
 
2,048
 
  
 
—  
 
  
 
6,006
 
Impairment of goodwill
  
 
51,856
 
  
 
—  
 
  
 
51,856
 
  
 
—  
 
    


  


  


  


    
 
69,844
 
  
 
27,483
 
  
 
113,425
 
  
 
94,720
 
    


  


  


  


Operating loss
  
 
(60,423
)
  
 
(21,180
)
  
 
(80,729
)
  
 
(54,176
)
    


  


  


  


Other income (expense):
                                   
Interest expense
  
 
(1,864
)
  
 
(1,719
)
  
 
(6,095
)
  
 
(5,803
)
Interest income
  
 
360
 
  
 
188
 
  
 
914
 
  
 
773
 
    


  


  


  


    
 
(1,504
)
  
 
(1,531
)
  
 
(5,181
)
  
 
(5,030
)
    


  


  


  


Loss before income taxes
  
 
(61,927
)
  
 
(22,711
)
  
 
(85,910
)
  
 
(59,206
)
Benefit from income taxes
  
 
(6,256
)
  
 
(6,133
)
  
 
(12,732
)
  
 
(15,986
)
    


  


  


  


Net loss
  
$
(55,671
)
  
$
(16,578
)
  
$
(73,178
)
  
$
(43,220
)
    


  


  


  


Basic and diluted loss per share
  
$
(1.45
)
  
$
(0.43
)
  
$
(1.91
)
  
$
(1.13
)
    


  


  


  


Common and common equivalent shares outstanding
  
 
38,382
 
  
 
38,225
 
  
 
38,366
 
  
 
38,223
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3


Table of Contents
 
ARTESYN TECHNOLOGIES, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands Except Share Data)
 
    
September 27,
2002

    
December 28,
2001

 
    
(Unaudited)
        
ASSETS
                 
Current Assets
                 
Cash and cash equivalents
  
$
89,009
 
  
$
54,083
 
Accounts receivable, net
  
 
53,240
 
  
 
72,580
 
Inventories, net
  
 
78,223
 
  
 
103,556
 
Deferred income taxes, net
  
 
18,829
 
  
 
12,398
 
Prepaid expenses and other current assets
  
 
2,776
 
  
 
2,690
 
    


  


Total current assets
  
 
242,077
 
  
 
245,307
 
Property, plant and equipment, net
  
 
87,555
 
  
 
103,291
 
Goodwill, net
  
 
18,346
 
  
 
64,573
 
Deferred income taxes, net
  
 
18,694
 
  
 
10,103
 
Other assets
  
 
3,416
 
  
 
3,209
 
    


  


    
$
370,088
 
  
$
426,483
 
    


  


LIABILITIES AND SHAREHOLDERS’ EQUITY
                 
Current Liabilities
                 
Current maturities of long-term debt
  
$
11
 
  
$
207
 
Accounts payable and accrued liabilities
  
 
100,547
 
  
 
92,324
 
    


  


Total current liabilities
  
 
100,558
 
  
 
92,531
 
Long-term debt
  
 
56,007
 
  
 
100,399
 
Convertible subordinated debt
  
 
46,171
 
  
 
—  
 
Other long-term liabilities
  
 
11,014
 
  
 
14,308
 
    


  


Total liabilities
  
 
213,750
 
  
 
207,238
 
    


  


Commitments and contingencies
                 
Shareholders’ Equity
                 
Preferred stock, par value $0.01; 1,000,000 shares authorized; none issued and outstanding
  
 
—  
 
  
 
—  
 
Common stock, par value $0.01; 80,000,000 shares authorized; 38,382,133 shares issued and outstanding in 2002 (38,252,770 shares issued and outstanding in 2001)
  
 
384
 
  
 
383
 
Additional paid-in capital
  
 
127,887
 
  
 
122,041
 
Accumulated other comprehensive loss
  
 
(15,157
)
  
 
(19,582
)
Retained earnings
  
 
43,224
 
  
 
116,403
 
    


  


Total shareholders’ equity
  
 
156,338
 
  
 
219,245
 
    


  


    
$
370,088
 
  
$
426,483
 
    


  


 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 

4


Table of Contents
 
ARTESYN TECHNOLOGIES, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
 
    
Thirty-Nine Weeks Ended

 
    
September 27,
2002

    
September 28,
2001

 
OPERATING ACTIVITIES
                 
Net loss
  
$
(73,178
)
  
$
(43,220
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                 
Depreciation and amortization
  
 
20,555
 
  
 
25,456
 
Provision for inventory write-down
  
 
9,149
 
  
 
28,459
 
Deferred income tax benefit
  
 
(12,732
)
  
 
(11,759
)
Accretion of convertible subordinated debt
  
 
1,279
 
  
 
—  
 
(Gain) loss on foreign currency transactions
  
 
(4,335
)
  
 
15
 
Impairment of goodwill
  
 
51,856
 
  
 
—  
 
Other non-cash charges
  
 
5,282
 
  
 
7,935
 
Changes in operating assets and liabilities, net of effects of acquisitions:
                 
Accounts receivable
  
 
20,853
 
  
 
42,399
 
Inventories
  
 
19,749
 
  
 
(8,213
)
Prepaid expenses and other current assets
  
 
4
 
  
 
2,399
 
Accounts payable and accrued liabilities
  
 
(2,142
)
  
 
(53,735
)
    


  


Net cash provided by (used in) operating activities
  
 
36,340
 
  
 
(10,264
)
INVESTING ACTIVITIES
                 
Purchases of property, plant and equipment
  
 
(4,275
)
  
 
(25,658
)
Proceeds from sale of property, plant and equipment
  
 
400
 
  
 
183
 
Acquisitions, net of cash acquired
  
 
(3,325
)
  
 
(6,187
)
    


  


Net cash used in investi