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 March 26, 2004
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 Identification 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 April 23, 2004 was 38,930,751 shares.
Index to Form 10-Q
Condensed Consolidated Balance Sheets
(Amounts in Thousands)
| March 26, 2004 |
December 26, 2003 |
|||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 95,503 | $ | 94,215 | ||||
| Accounts receivable, net of allowances of $2,180 in 2004 and $2,831 in 2003 |
50,885 | 54,196 | ||||||
| Inventories |
49,663 | 44,047 | ||||||
| Prepaid expenses and other current assets |
3,187 | 2,753 | ||||||
| Deferred income taxes |
11,526 | 11,526 | ||||||
| Total current assets |
210,764 | 206,737 | ||||||
| Property, Plant & Equipment, Net |
64,885 | 64,210 | ||||||
| Other Assets |
||||||||
| Goodwill |
21,318 | 20,806 | ||||||
| Deferred income taxes |
18,957 | 19,211 | ||||||
| Other assets |
5,488 | 5,712 | ||||||
| Total other assets |
45,763 | 45,729 | ||||||
| Total Assets |
$ | 321,412 | $ | 316,676 | ||||
| Liabilities and Shareholders’ Equity |
||||||||
| Current Liabilities |
||||||||
| Accounts payable |
$ | 52,103 | $ | 47,994 | ||||
| Accrued and other current liabilities |
47,734 | 49,224 | ||||||
| Total current liabilities |
99,837 | 97,218 | ||||||
| Long-Term Liabilities |
||||||||
| Convertible subordinated debt |
90,000 | 90,000 | ||||||
| Deferred income taxes |
5,672 | 5,693 | ||||||
| Other long-term liabilities |
8,307 | 9,728 | ||||||
| Total long-term liabilities |
103,979 | 105,421 | ||||||
| Total liabilities |
203,816 | 202,639 | ||||||
| Commitments and Contingencies |
||||||||
| Shareholders’ Equity |
||||||||
| Preferred stock, par value $0.01; 1,000,000 shares authorized; none issued or outstanding |
— | — | ||||||
| Common stock, par value $0.01; 80,000,000 shares authorized; 38,925,101 shares issued and outstanding in 2004 (38,755,365 shares in 2003) |
389 | 387 | ||||||
| Additional paid-in capital |
130,415 | 129,169 | ||||||
| Retained earnings (accumulated deficit) |
(6,124 | ) | (8,041 | ) | ||||
| Accumulated other comprehensive loss |
(7,084 | ) | (7,478 | ) | ||||
| Total shareholders’ equity |
117,596 | 114,037 | ||||||
| Total Liabilities and Shareholders’ Equity |
$ | 321,412 | $ | 316,676 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Condensed Consolidated Statements of Operations
(unaudited)
(Amounts in Thousands Except Per Share Data)
| Thirteen Weeks Ended |
||||||||
| March 26, 2004 |
March 28, 2003 |
|||||||
| Sales |
$ | 96,513 | $ | 81,856 | ||||
| Cost of sales |
72,040 | 68,466 | ||||||
| Gross profit |
24,473 | 13,390 | ||||||
| Operating expenses |
||||||||
| Selling, general and administrative |
10,447 | 9,817 | ||||||
| Research and development |
10,154 | 8,286 | ||||||
| Restructuring and related charges |
— | 2,081 | ||||||
| Total operating expenses |
20,601 | 20,184 | ||||||
| Operating income (loss) |
3,872 | (6,794 | ) | |||||
| Other income (expense) |
||||||||
| Loss on debt extinguishment |
— | (627 | ) | |||||
| Interest expense, net |
(1,247 | ) | (1,066 | ) | ||||
| Income (loss) before for income taxes |
2,625 | (8,487 | ) | |||||
| Provision (benefit) for income taxes |
708 | (1,028 | ) | |||||
| Net income (loss) |
$ | 1,917 | $ | (7,459 | ) | |||
| Earnings (loss) per share |
||||||||
| Basic |
$ | 0.05 | $ | (0.19 | ) | |||
| Diluted |
$ | 0.05 | $ | (0.19 | ) | |||
| Weighted average common and common equivalent shares outstanding |
||||||||
| Basic |
38,845 | 38,560 | ||||||
| Diluted |
39,886 | 38,560 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Condensed Consolidated Statements of Cash Flows
(unaudited)
(amounts in thousands)
| Thirteen Weeks Ended |
||||||||
| March 26, 2004 |
March 28, 2003 |
|||||||
| Operating Activities |
||||||||
| Net income (loss) |
$ | 1,917 | $ | (7,459 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
5,430 | 6,074 | ||||||
| Loss on debt extinguishment |
— | 627 | ||||||
| Other non-cash items |
662 | 643 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
2,968 | (1,855 | ) | |||||
| Inventories |
(5,709 | ) | 1,582 | |||||
| Prepaid expenses and other assets |
(447 | ) | (1,422 | ) | ||||
| Accounts payable and accrued liabilities |
2,753 | 3,219 | ||||||
| Net Cash Provided by Operating Activities |
7,574 | 1,409 | ||||||
| Investing Activities |
||||||||
| Purchases of property, plant & equipment |
(5,713 | ) | (1,127 | ) | ||||
| Proceeds from sale of property, plant & equipment |
15 | 94 | ||||||
| Earn-out payments related to acquisitions |
(715 | ) | (1,006 | ) | ||||
| Net Cash Used in Investing Activities |
(6,413 | ) | (2,039 | ) | ||||
| Financing Activities |
||||||||
| Principal payments on debt and capital leases |
— | (23,003 | ) | |||||
| Proceeds from issuance of long-term debt, net of financing costs |
— | 9,647 | ||||||
| Proceeds from exercises of stock options and other financing activities |
377 | — | ||||||
| Net Cash Provided by (Used in) Financing Activities |
377 | (13,356 | ) | |||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(250 | ) | 841 | |||||
| Increase (Decrease) in Cash and Cash Equivalents |
1,288 | (13,145 | ) | |||||
| Cash and Cash Equivalents, Beginning of Period |
94,215 | 65,001 | ||||||
| Cash and Cash Equivalents, End of Period |
$ | 95,503 | $ | 51,856 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
5
Notes to Condensed Consolidated Financial Statements
March 26, 2004
(Unaudited)
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements have been condensed or omitted.
In the opinion of management, the accompanying Condensed Consolidated Financial Statements include all adjustments (consisting of normal recurring items) considered necessary to present fairly the consolidated financial position, results of operations and cash flows of Artesyn Technologies, Inc. The results of operations for the thirteen weeks ended March 26, 2004 are not necessarily indicative of the results that may be expected for the entire fiscal year 2004. In addition, these Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our 2003 Annual Report on Form 10-K.
For purposes of clarity, as used herein, the terms “we,” “us,” “our,” and “Artesyn” refer to Artesyn Technologies, Inc. and its subsidiaries (unless the context indicates another meaning).
2. Inventories
The components of inventories are as follows ($000s):
| March 26, 2004 |
December 26, 2003 | |||||
| Raw materials |
$ | 20,201 | $ | 17,184 | ||
| Work-in-process |
9,602 | 8,446 | ||||
| Finished goods |
19,860 | 18,417 | ||||
| $ | 49,663 | $ | 44,047 | |||
3. Accrued Liabilities
The components of accrued and other current liabilities are as follows ($000s):
| March 26, 2004 |
December 26, 2003 | |||||
| Accrued and other current liabilities: |
||||||
| Compensation and benefits |
$ | 13,676 | $ | 14,780 | ||
| Income taxes payable |
10,380 | 9,949 | ||||
| Warranty reserve |
7,988 | 7,854 | ||||
| Restructuring reserve (current portion) |
5,463 | 5,552 | ||||
| Other |
10,227 | 11,089 | ||||
| $ | 47,734 | $ | 49,224 | |||
6
Artesyn Technologies, Inc.
Notes to Condensed Consolidated Financial Statements
March 26, 2004
(Unaudited)
At March 26, 2004 and December 26, 2003, other accrued liabilities consisted primarily of accruals for professional fees, consulting, commissions, interest, deferred income and other taxes.
The components of other long-term liabilities are as follows ($000s):
| March 26, 2004 |
December 26, 2003 | |||||
| Other long-term liabilities: |
||||||
| Restructuring reserve |
$ | 7,085 | $ | 8,662 | ||
| Directors’ pension plan |
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