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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

(Mark one)

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 27, 2003

 

OR

 

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934

 

For the transition period from                     to                     

 

Commission File 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  ¨

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes  x  No  ¨

 

The number of shares of Common Stock, $.01 par value, of the Registrant issued and outstanding as of July 25, 2003 was 38,704,600 shares.

 

 

Table of Contents

Artesyn Technologies, Inc.

 

Index to Form 10-Q

 

         

Page

Number

PART I.    Financial Information     
Item 1.    Condensed Consolidated Financial Statements:     
     Condensed Consolidated Balance Sheets – As of June 27, 2003 (unaudited) and December 27, 2002    3
     Condensed Consolidated Statements of Operations – For the Thirteen and Twenty-Six Weeks Ended June 27, 2003 and June 28, 2002 (unaudited)    4
     Condensed Consolidated Statement of Shareholders’ Equity and Comprehensive Loss – For the Twenty-Six Weeks Ended June 27, 2003 (unaudited)    5
     Condensed Consolidated Statements of Cash Flows – For the Twenty Six-Weeks Ended June 27, 2003 and June 28, 2002 (unaudited)    6
     Notes to Condensed Consolidated Financial Statements (unaudited)    7-14
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations    15-21
Item 3.    Quantitative and Qualitative Disclosures About Market Risk    21
Item 4.    Controls and Procedures    21
PART II.    Other Information     
Item 4.    Submission of Matters to a Vote of Security Holders    23
Item 6.    Exhibits and Reports on Form 8-K    23
Signatures          

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements

 

ARTESYN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

     June 27,
2003
    December 27,
2002
     (Unaudited)     

ASSETS

              

Current Assets:

              

Cash and cash equivalents

    $ 52,462    $ 65,001

Accounts receivable, net

      44,057      44,235

Inventories, net

      53,713      55,588

Prepaid expenses and other

      3,487      1,926

Deferred income taxes, net

      15,791      16,234
    
  

Total current assets

      169,510      182,984
    
  

Property, Plant & Equipment, Net

      69,351      78,631
    
  

Other Assets

              

Goodwill

      19,335      18,676

Deferred income taxes, net

      18,335      18,803

Other assets, net

      4,436      4,493
    
  

Total other assets

      42,106      41,972
    
  

Total Assets

    $ 280,967    $ 303,587
    
  

LIABILITIES AND SHAREHOLDERS’ EQUITY

              

Current Liabilities

              

Accounts payable

    $ 42,849    $ 37,451

Accrued and other current liabilities

      50,754      56,508
    
  

Total current liabilities

      93,603      93,959
    
  

Long-Term Liabilities

              

Long-term debt and capital leases

      10,000      23,004

Subordinated convertible debt

      47,368      46,517

Other long-term liabilities

      14,718      16,661
    
  

Total long-term liabilities

      72,086      86,182
    
  

Total liabilities

      165,689      180,141
    
  

Shareholders’ Equity

      115,278      123,446
    
  

Total Liabilities and Shareholders’ Equity

    $ 280,967    $ 303,587
    
  

 

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

 

3

Table of Contents

ARTESYN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in Thousands Except Per Share Data)

(Unaudited)

 

    

Thirteen Weeks

Ended

     Twenty-Six Weeks
Ended
  
     June 27,
2003
     June 28,
2002
     June 27,
2003
     June 28,
2002
  

Sales

    $ 87,644     $ 90,895     $ 169,499     $ 181,400  

Cost of Sales

      72,298       78,861       140,763       158,124  
    
 
 
 

Gross Profit

      15,346       12,034       28,736       23,276  
    
 
 
 

Operating Expenses

                                 

Selling, general and administrative

      9,169       8,831       18,987       18,594  

Research and development

      8,487       8,276       16,773       16,863  

Restructuring charges

      1,521       7,075       3,602       8,124  
    
 
 
 

Total Operating Expenses

      19,177       24,182       39,362       43,581  
    
 
 
 

Operating Loss

      (3,831 )     (12,148 )     (10,626 )     (20,305 )
    
 
 
 

Interest Expense, net

      (897 )     (1,757 )     (2,589 )     (3,677 )
    
 
 
 

Loss Before Income taxes

      (4,728 )     (13,905 )     (13,215 )     (23,982 )

Benefit for Income Taxes

      573       3,756       1,601       6,475  
    
 
 
 

Net Loss

    $ (4,155 )   $ (10,149 )   $ (11,614 )   $ (17,507 )
    
 
 
 

Basic and Diluted Loss per Share

    $ (0.11 )   $ (0.26 )   $ (0.30 )   $ (0.46 )
    
 
 
 

Weighted Average Common and Common Equivalent Shares Outstanding

      38,700       38,382       38,514       38,358  
    
 
 
 

 

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

 

4

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ARTESYN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE LOSS

For the Twenty-Six Weeks Ended June 27, 2003

(Amounts in Thousands)

(Unaudited)

 

     Common Stock
   

Additional

Paid-In
Capital

   

Retained

Earnings
(Deficit)

    

Foreign

Currency
Translation

Adjustment

    

Compre-
hensive

Loss

  
     Shares
    Amount
          

Balance, December 27, 2002

    38,389    $ 384    $ 127,887    $ 7,581     $ (12,406 )        

Issuance of common stock

    316      3      947      —         —            

Net loss

    —        —        —        (11,614 )     —       $ (11,614 )

Foreign currency translation adjustment, net of tax benefit of $(344)

    —        —        —        —         2,496       2,496  
                                       

Comprehensive loss

    —        —        —        —         —       $ (9,118 )
    
  
  
  
 
 

Balance, June 27, 2003

    38,705    $ 387    $ 128,834    $ (4,033 )   $ (9,910 )        
    
  
  
  
 
       

 

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

 

 

5

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ARTESYN TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

(Unaudited)

 

    

Twenty-Six

Weeks Ended

  
    

June 27,

2003

    

June 28,

2002

  

Operating Activities:

                 

Net loss

    $ (11,614 )   $ (17,507 )

Adjustments to reconcile net loss to net cash provided by operating activities:

                 

Depreciation and amortization

      11,955       13,595  

Deferred income tax benefit

      (1,601 )     (6,475 )

Provision for inventory write-down

      1,249       5,615  

Accretion of convertible subordinated debt

      851       854  

(Gain)/loss on foreign currency transactions

      (686 )     (2,747 )

Other non-cash charges

      1,943       1,691  

Changes in operating assets and liabilities, net of the effects of acquisitions:

                 

Accounts receivable

      1,189       16,556  

Inventories

      2,042       15,168  

Prepaid expenses and other

      (1,229 )     (1,215 )

Accounts payable and accrued liabilities

      1,891       (417 )
    
 

Net Cash Provided by Operating Activities

      5,990       25,118  
    
 

Investing Activities:

                 

Capital expenditures

      (2,393 )     (2,725 )

Proceeds from sale of property, plant & equipment

      418       431  

Payments related to acquisitions

      (4,259 )     (2,828 )
    
 

Net Cash Used in Investing Activities

      (6,234 )     (5,122 )
    
 

Financing Activities:

                 

Principal payments on debt and capital leases

      (23,506 )     (38,803 )

Proceeds from issuance of long-term debt