Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal year ended December 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) |
59-1205269 (I.R.S. Employer Identification No.) |
| 7900 Glades Road, Suite 500, Boca Raton, FL (Address of principal executive offices) |
33434-4105 (Zip Code) |
(561) 451-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
Common Stock Purchase Rights
(Title of each class)
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 periods 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 is not contained herein, and will not be contained, to the best of 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 [ ].
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [x] No [ ].
The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $116.2 million. Both the number of shares outstanding held by non-affiliates and the market price of the stock, which was reported on the Nasdaq National Market, were determined as of March 17, 2003.
As of March 17, 2003, 38,684,600 shares of the Registrant’s common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Artesyn’s proxy statement for the annual meeting of shareholders to be held on May 8, 2003 are incorporated by reference into Part III hereof.
This Form 10-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. We caution readers that a number of important factors, including those identified in the section entitled “Risk Factors that May Affect Future Results” as well as factors discussed in our other reports filed with the Securities and Exchange Commission, could affect our actual results and cause them to differ materially from those expressed in the forward-looking statements. Many forward-looking statements included in this Form 10-K are made only as of the date hereof, based on information available as of the date hereof, and subject to applicable law to the contrary, we assume no obligation to update any forward-looking statements.
PART I
ITEM 1. Business
We provide advanced power conversion equipment and real-time subsystems to the computing, storage and communications industries. We are headquartered in Boca Raton, Florida, and are primarily engaged in the design, development, manufacture, and sale of electronic products, power supplies, power conversion products and power subsystems. We operate in two segments, Power Conversion and Communications Products. With one of the broadest product portfolios available, our Power Conversion business offers customers a wide range of high efficiency AC/DC power supplies, as well as advanced DC/DC and isolated and non-isolated Point of Load, or POL, converters for distributed power architectures. The Communications Products business offers its customers CPU boards, WAN interfaces, and protocol software solutions that are at work on many of today’s leading Teledatacom networks. Our customers include worldwide market leaders in each of their chosen market sectors such as Alcatel, Ciena, Cisco Systems, Dell Computer, EMC, Ericsson, Hewlett-Packard, IBM, Lucent Technologies, Motorola, Nortel, Nokia, and Sun Microsystems. We also provide products to many other companies in the computing and communications industry and maintain a worldwide network of well-regarded distributors including Arrow Electronics and Avnet.
Founded in March, 1968 as Computer Products, Inc., we have provided components and service solutions to the electronics industry throughout our history. In late 1997, we merged with Zytec Corporation and changed our name to Artesyn Technologies, Inc. Since that time, we have focused on power conversion and single board computing solutions for the computing and telecommunications industries. We have also made several strategic acquisitions to add technologies and new products for our chosen markets and we have disposed of businesses and lines of products that were outside our chosen market focus. More recently, due to the significant downturn in demand in our end markets, we have restructured the company to ensure that our supply capacity matches market demands and that our cost structure is competitive. Despite the difficulties our end markets experienced in the last two years, we believe the industry in which we compete and the markets we have chosen to serve will provide us with significant growth opportunities for many years to come.
If you would like additional information on our business, please visit our website at http://www.artesyn.com. All annual reports, quarterly reports, current reports and all amendments to these reports are available free of charge as soon as reasonably practicable after such material is electronically filed with or furnished to the Commission through our website.
Products and Services
Industry and Market Overview
As a provider of electronic products, subsystems and services to Original Equipment Manufacturers, or OEMs, the producers of electronic equipment, we have chosen to focus on those sectors of the computing and communications industries that we believe offer us the strongest prospects for sustained growth.
Fiscal year 2002 was very difficult for the markets we serve, especially the telecommunications industry. Following the sudden and unexpected decrease in demand in 2001 resulting in decreased sales, cancelled orders, and excess inventory, we found the prospects for 2002 equally as challenging. The decrease in end-user demand continued, resulting in downsizing and industry contraction. Many of the markets we serve, especially the telecommunications markets, are still experiencing uncertain demand levels. We believe, however, that the communications marketplace still holds significant long-term growth opportunities, and this will continue to be our focus as we move ahead.
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The leading companies in the communications industry typically value quality, reliability, technical support, continuous and rapid technological development and flexible manufacturing, which are all qualities we believe we are capable of providing. In addition, we believe we benefit from a number of strategic advantages as described below.
Continued Investment in Research and Development — While we reduced our resources throughout the company during 2002 to more closely match our cost structure with our current level of demand, we maintained our level of investment in research and development. As a percent of revenue, research and development was 10% in 2002 in as compared to 8% in 2001. As part of a rapidly changing industry, companies that are able to offer their customers continuing innovation and timely product development will emerge from the industry downturn as stronger competitors.
New Products — During 2002 as a result of our continued commitment to research and development, we introduced several new products that provide our customers with the technical innovation required to manufacture smaller and more capable products. The Power Conversion segment introduced several new, high efficiency DC/DC quarter and eighth bricks, and we continue to develop and record program wins for our isolated and non-isolated Point-of-Load (“POL”) products. Our product portfolio is one of the broadest in the Power Conversion industry, specializing in products for Distributed Power Architectures, or DPAs. In the Communications Products segment, our products include WAN interfaces, CPU boards and hardware/software subsystems for many of the key OEMs in the telecommunications industry.
Our commitment to research and development, we believe, ensures our continued leadership in the introduction and commercialization of new technologies. We believe our ability to introduce new products positions us to expand the available markets we serve.
Market-Focused Commercial Organization — During 2002, not only did we initiate organizational changes to reduce our cost structure, but sales channels were reorganized along customer and product lines to allow us to better identify technology trends, understand our end market customers and provide improved coverage of second tier customers. The new organization should provide faster and more accurate information on the product and technology requirements of our customers. We believe this, in combination with our continued commitment to research and development, uniquely qualifies us to serve customers in a rapidly changing technology environment.
Power Conversion
The Power Conversion segment designs, manufactures and services power supplies and systems for industry-leading OEMs and premier distributors worldwide. It covers both AC/DC and DC/DC products and offers one of the broadest ranges of power conversion products in the industry, spanning a 1W to 6KW power range.
The Power Conversion segment specializes in developing products for DPAs, with emphasis on high efficiency, high power density DC/DC converters and POL, converters for high-end processors and leading-edge AC/DC front-end power supplies.
All electronic systems require a steady supply of electrical power at one or more voltage levels. AC/DC power supplies convert alternating electric current, or AC, from a primary power source, such as a wall outlet, into the direct current, or DC, required to operate solid state electronic equipment. DC/DC power supplies are used to convert a particular direct current voltage into another (higher or lower) direct current voltage. Power supplies can also be designed to perform diagnostic functions, protect equipment from power surges, power outages, or even the equipment’s own malfunction.
We provide standard products, modified-standard products and custom products. Standard products, which are manufactured based on standard platforms and are offered to customers “off-the-shelf”, provide for rapid time-to-market and minimal risk due to proven design. They are ideal for low to moderate volume applications or for application specific requirements. Modified-standard products are slightly customized from an existing product platform to meet a particular customer’s special requirement. Custom products are developed specifically for a single customer to their own specification. We maintain a group of custom power supply designers and focus these resources on carefully selected long-term opportunities with companies
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that are either leaders or emerging as leaders in high growth market segments. Whether standard, modified-standard or custom, our power conversion products fall into one of the following categories:
• AC/DC Power Supplies — These products represent the majority of our product sales. Standard AC/DC power supplies include open-frame, closed-frame and external units, as well as a series of rack-mountable front-end power supplies for distributed power systems. Most are advanced switch mode designs ranging in power from a few watts to several kilowatts.
• DC/DC Power — Due to the emergence of low-voltage, high performance silicone, the demand for DC/DC converters has grown rapidly in recent years. Our product portfolio includes both isolated and non-isolated converters with power outputs from 2W to 264W with output voltages as low as 1.1V and models with output currents as high as 80A.
“Isolation” in DC/DC converters references design safety features that allow separation of the output of the converter from direct connection to the input. The input and output are separated (isolated) by a transformer and therefore protects the users from hazardous voltages.
“Non-Isolated” converters do not need an isolation boundary because the isolation is provided by a converter upstream from this device. Most, if not all, electrical systems require isolation for safety reasons as mentioned above. However, isolation boundaries are expensive, thus the simple bus converters (lower cost isolated products) followed by less expensive non-isolated voltage regulators provide a less costly power system solution.
The latest trend in DC/DC power converters toward smaller, highly efficient low voltage converters has resulted in our newest line of DC/DC bricks. During 2002, we introduced a new line of ultra low profile, high power DC/DC converters for DPAs. These products include both eighth brick and dual-output quarter brick configurations, and are capable of delivering an industry leading 40 amps of output current.
• Point of Load Power — One of the fastest growing DC/DC product areas is used to provide power in close physical proximity to the point of use and is referred to as POL power supplies. Advanced processors, Digital Signal Processors and memory chips can go from zero to a full load in millionths of a second, and the power supply must keep pace. In order to provide the low voltages, high currents and fast response time necessary, the power converter must be placed in close proximity to the point of use. We recently introduced one of the first dual-output, non-isolated POL converters designed for the memory market. This special purpose converter further extends our position in the growing POL market.
• External Power Supplies — These products, commonly referred to as adapters, are a special type of AC/DC power supply. External power supplies are provided in their own housing outside of the equipment being powered. Typically, these products range from a few watts of power to as much as 130W and are commonly used for mobile applications. We provide these products in high volume to makers of various types of terminals, modems, and storage systems.
Many of our products are also used extensively in modular systems employing a scheme known as Distributed Power Architecture. This architecture, which uses several power supplies in order to provide an integrated power solution to an end product, is commonly employed in larger networking and communication systems. Typically, multiple power processing or conversion locations and several power conversions are required to deliver the most efficient use of power in the end product. DC/DC converters are employed along side other products such as an AC/DC front end, a POL converter or a centralized DC/DC power supply. This type of architecture makes for very reliable end products due to the efficient distribution of heat and lower voltage levels.
Currently, an area of significant opportunity for us is the utilization of our products in wireless applications. Typically, high efficiency DC/DC converters, high density AC/DC front ends, POL designs for switching current at low voltages and external power supplies are utilized in wireless base stations for communications networks and wireless access systems, such as wireless internet providers. The technology in the market is changing so rapidly, our customers in this arena need a highly capable, design oriented partner to provide
4
low cost and highly automated solutions. We believe that our standard product offerings, low total cost of ownership, automated manufacturing techniques and semiconductor integration technology make us a preferred provider to wireless customers.
We currently own approximately 35 technology patents. However, we do not believe that any of these patents provides us with a significant market position. Most of our sales are related to custom applications, which are primarily utilizing public technology. The oldest of these patents is set to expire in approximately five years. Due to the rapidly changing technological environment, we do not believe that the expiration of our older patents puts our competitive position or material revenue at risk.
Communications Products
We also provide the core communications technology and building blocks for today’s converging telecommunications networks. Product lines include high performance CPU boards, telecom interfaces, protocol software, and bundled subsystems that have been delivered to many of the top names in the telecom industry. Based on worldwide industry standards and open systems technology such as PMC, PCI and CompactPCI™ for communication between computer boards, these solutions can be used off-the-shelf or customized to meet specific cost and performance requirements.
Our CPU boards typically function as embedded controllers in telecommunications systems such as high-speed routers and switches, fiber optic transport systems and cable headends.
Our primary product line is communications interfaces, such as T1 or E1, which are able to carry either voice or data. Integrated with our Spider™ protocol software, these interfaces are employed in a wide range of worldwide telecom and datacom systems, such as gateway/routers, switching, call processing, and wireless communications infrastructure.
During 2002, our Communications Products segment’s new product offerings included SpiderWareNP, an integrated hardware/software bundle designed to bridge the ATM and IP networks used in 3G wireless applications. SpiderWareNP won Internet Telephony Magazine’s New Product of the Year in 2002. We believe that these products will provide us with significant opportunities in the telecommunications industry as the newest technology gains market and consumer acceptance.
Marketing and Distribution
Our products are sold directly to OEM customers and through manufacturer representatives and stocking distributors. Sales and engineering personnel in both segments supervise and provide technical assistance to independent foreign and domestic sales representatives and to domestic and foreign distributors. During 2002, the Power Conversion segment established a new pan-European network of independent manufacturers representative organizations to complement and enhance our direct sales force. We believe that we are the first power conversion company to do this.
Although we seek to diversify both our customer and market application bases, sales to Hewlett-Packard, Dell Computer and Sun Microsystems represented 17%, 15% and 13%, respectively, of fiscal year 2002 sales.
We have derived a significant portion of our sales in recent years from products manufactured in international locations, primarily China, Ireland, Hungary and Austria. During 2002, we announced that our manufacturing locations in Austria and Ireland would be closed during 2003, with their production being shifted to low-cost operations in China and Hungary. Thus, our future operations and financial results could be significantly affected by international factors, such as changes in foreign currency exchange rates or political instability. Our operating strategy and pricing take into account changes in exchange rates over time. However, our future results of operations may be significantly affected in the short term by fluctuations in foreign currency exchange rates. See Note 15, “Business Segments and Geographic Information,” of the Notes to Consolidated Financial Statements for additional information.
5
Customers and Applications
The targeted customers and applications are generally the same in the Power Conversion and Communication Products groups. These include market leaders and emerging companies in the computing and communications markets. The applications and key customers for our products can be grouped as follows:
| Computing/Mass Storage |
|
Carrier/Enterprise Solutions |
|
Wireless Infrastructure |
|
| — Brocade |
|
— Agilent |
|
— Alcatel |
|
| — Crossroads |
|
— Alcatel |
|
— Ericsson |
|
| — Dell |
|
— Ciena |
|
— Lucent |
|
| — EMC |
|
— Cisco |
|
— Motorola |
|
| — Extreme Networks |
|
— Ericsson |
|
— Nokia |
|
| — Fujitsu Siemens |
|
— Juniper |
|
— Nortel |
|
| — Hewlett-Packard |
|
— Lucent |
|
— Siemens |
|
| — IBM |
|
— Nortel |
|
|
|
| — Sun Microsystems |
|
— Siemens |
|
|
|
Materials and Components
The manufacture of our products requires a wide variety of materials and components. We have multiple external sources for most of the materials and components used in the production of off-the-shelf standard products. As a result of the custom nature of many of our products, components used in the manufacture of these products are currently obtained from a limited number of suppliers. Additionally, we manufacture some of our components. We will continue to design component flexibility into our manufacturing process, including identifying alternative parts and suppliers.
We participate in an industry in which customers are constantly expecting price reductions and increased capability for our products due to the rapidly changing technological environment in which we compete. As a result, we must continue to secure adequate price reductions from our suppliers in order to keep our products price competitive. It is important that the level of price reductions on raw materials maintain the same pace of price reductions as is expected of our end products. Maintaining these reductions and forecasting the expectations of our end markets is a key component to the cost structure of our business.
Manufacturing
We maintain a number of manufacturing facilities around the world. Most of our products, especially those for our Computing and Storage customers, are manufactured in our facility in Zhongshan, China. During 2002, we announced that our current manufacturing facilities in Kindberg, Austria and Youghal, Ireland would be closed in response to the downturn in revenue we have experienced over the last two years. The Kindberg plant, which is scheduled for closure in the second quarter of 2003, manufactured products primarily for the wireless market. The Youghal plant, which is scheduled to be closed in the third quarter of 2003, primarily manufactures highly automated DC/DC products. Manufacture of the wireless products will be transferred to our facility in Tatabanya, Hungary, while the production from Youghal will be moved to both Hungary and China. We also will continue to operate facilities in Redwood Falls, Minnesota, which manufactures higher value products in the low to moderate volume range, and Einsiedel, Germany, which primarily manufactures AC/DC products. Communications products are manufactured exclusively in Madison, Wisconsin.
Intellectual Property Matters
We believe that our future success is primarily dependent upon the technical competence and creative skills of our personnel, rather than upon any patent or other proprietary rights. However, we have protected certain products with patents where appropriate and have defended, and will continue to defend, our rights under these patents. We currently maintain approximately 35 patents related to technology included in the products we sell.
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We do not believe that the patents currently in place provide us with a significant competitive position in any market. The oldest of these patents expires in approximately five years. Due to the rapidly changing technology in our industry, none of these patents is associated with a significant amount of current revenue. Therefore, we do not believe there is significant risk associated with the expiration of our patents.
Backlog
Sales are generally made pursuant to purchase orders rather than long-term contracts. Backlog consists of purchase orders on hand having delivery dates scheduled within the next six months, although the majority of our orders remain cancellable by the customer. Order backlog at December 27, 2002 was $72.7 million as compared to $92.4 million at December 28, 2001. The level of backlog is considerably less at the end of 2002 compared to the end of 2001 due to the continued decrease in demand we have experienced throughout our end markets. The decrease in demand resulted in unfulfilled commitments from customers and shortened lead times from order to delivery. We expect to ship substantially all the December 27, 2002 backlog in the first six months of 2003.
Competition
The industry in which we compete is highly competitive and characterized by customer expectations for continually improved product performance, shorter manufacturing cycles and lower prices. These trends result in frequent introductions of new products with added capabilities and features and continuous improvements in the relative price/performance of the products. Increased competition could result in price reductions, reduced profit margins and loss of market share, each of which could adversely affect our results of operations and financial condition. Poor market conditions during 2002 intensified this level of competition. Many of our competitors, especially those smaller than us, face a difficult environment where survival cannot be assured. Our principal competitors include Ascom, Celestica, Delta Electronics, Emerson Electric, Power-One and Tyco International. If our competitors consolidate, the resulting combinations would likely result in entities with increased market share, customer bases, proprietary technology, marketing expertise and an expanded sales force. These developments may adversely affect our ability to compete in such markets. Our broad strategies to deal with such competition include, but are not limited to, a continued commitment to investment in research and development, continually lowering our product costs, and maintaining and expanding our relationships with customers in the growth sectors of our industry.
Research and Development
We maintain an active research and development department, which is engaged in the modification and improvement of existing products and the development of new products. Expenditures for research and development during fiscal years 2002, 2001, and 2000 were approximately $34.3 million, $41.5 million, and $44.9 million, respectively. These amounts represented 9.8%, 8.4%, and 6.5% of revenue in the respective periods presented. Research and development spending decreased in absolute dollars during 2001 and 2002 due to the restructuring initiatives announced in 2001 and carried out in 2002. It was necessary to reduce the total amount spent in order to properly match our cost structure with our levels of revenue. We believe, however, that the percentage of spending for research and development is among the highest in our industry, reflecting our commitment to maintaining our level of timely introduction of new technology and products.
Employees
We presently employ approximately 2,400 people full-time. In addition, we presently have approximately 2,300 temporary employees and contractors, the majority of which are at our facility in China. Our ability to conduct our present and proposed activities would be impaired if we lost the services of a significant number of our engineers and technicians and could not readily replace them with comparable personnel. Although there is demand for qualified technical personnel, we have not, to date, experienced difficulty in attracting and retaining sufficient engineering and technical personnel to meet our needs and business objectives. None of our domestic employees is covered by collective bargaining agreements.
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Environmental Matters
Compliance with federal, state, local and foreign laws and regulations regulating the discharge of materials into the environment has not had and, under present conditions, we do not anticipate that such laws and regulations will have a material effect on our results of operations, capital expenditures, financial condition or competitive position.
ITEM 2. Properties
We currently occupy approximately 1.3 million square feet of office and manufacturing space worldwide, some of which we own and maintain. All facilities are in good condition and are adequate for their current intended use. We maintain the following facilities:
| Facility |
|
Primary Activity |
|
Approximate |
|
Owned vs |
|
| |
|
|
|
|
|
|
|
| Boca Raton, FL |
|
Corporate Headquarters |
|
8,700 |
|
Leased |
|
| Eden Prairie, MN |
|
Engineering, Administration |
|
28,000 |
|
Leased |
|
| Einsiedel, Germany |
|
Manufacturing |
|
28,400 |
|
Owned |
|
| Framingham, MA |
|
Engineering, Administration |
|
26,000 |
|
Leased |
|
| Hong Kong, China |
|
Engineering, Administration |
|
144,900 |
|
Owned |
|
| Madison, WI |
|
Manufacturing/Administration |
|
45,000 |
|
Owned |
|
| Redwood Falls, MN |
|
Manufacturing |
|
117,000 |
|
Owned |
|
| Tatabanya, Hungary |
|
Manufacturing |
|
118,000 |
|
Owned |
|
| Vienna, Austria |
|
Engineering, Administration |
|
20,600 |
|
Leased |
|
| Zhongshan, China |
|
Manufacturing |
|
800,000 |
|
Leased |
|
In addition to the above locations we have leased sales/engineering offices located in or near Tucson, Arizona; Westminster, Colorado; Edinburgh, Scotland, and Paris, France. All facilities operate within the Power Conversion segment except the facilities in Boca Raton, Florida (Corporate) and in Madison, Wisconsin and Edinburgh, Scotland (Communications Products). At this point we are still operating manufacturing facilities in Kindberg, Austria (leased) and Youghal, Ireland (owned) that will be closed in 2003. The remaining facilities described in this Item provide us with enough capacity to meet our current needs.
ITEM 3. Legal Proceedings
On February 8, 2001, VLT, Inc. and Vicor Corporation filed a suit against Artesyn in the United States District Court of Massachusetts alleging that we have infringed and are infringing on U.S. Reissue Patent No. 36,098 entitled “Optimal Resetting of The Transformer’s Core in Single Ended Forward Converters”. VLT and Vicor have alleged that they are, respectively, the owner and licensee of such patent and that we have manufactured, used or sold electronic power converters with reset circuits that fall within the claims of the patent. The suit requests that we pay damages, including royalties, lost profits, interest, attorneys’ fees and increased damages under 35 U.S.C. (S) 284. We have challenged the validity of the patent and have denied the infringement claims. The parties are currently engaged in expert discovery regarding the validity of the patent, and will continue to engage in expert discovery regarding infringement and damages issues throughout 2003. The trial on our invalidity defenses is scheduled to begin on July 28, 2003 and, if the patent is not invalidated, December 8, 2003 for the beginning of trial on the remaining claims including VLT’s claim of infringement and damages.
The patent applies to sales of products that allegedly included the technology in question from the middle of 1996 through early 2002. The plaintiff is requesting a royalty to be paid related to the sales in question. The claims against us relating to the patent in dispute involve compensation for sales recorded prior to the expiration of the patent, which occurred in early February 2002. Management believes no future sales related to this patent are at risk. We continue to assert that the patent was not valid and that our technology included in the products sold did not infringe on the patent. The process has not progressed to the point where any determination of the outcome can be reasonably estimated. Although we believe that we have
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a strong defense to the claims asserted by VLT and Vicor, if we are found liable to pay all of the damages requested by Vicor and VLT such a payment could have a material adverse effect on our business, operating results and financial condition.
We are a party to various other legal proceedings, which have arisen in the ordinary course of business. While the results of these matters cannot be predicted with certainty, we believe that losses, if any, resulting from the ultimate resolution of these matters will not have a material adverse effect on our consolidated results of operations, cash flows or financial position.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 27, 2002.
ITEM 4A. Executive Officers
| Name |
|
Age |
|
Position(s) with the Company |
| |
|
|
|
|
| Robert J. Aebli |
|
67 |
|
President — Communications Products |
|
|
|
|
|
|
| Kenneth E. Blake |
|
48 |
|
President — Marketing and Standard Products Group |
|
|
|
|
|
|
| Ewald Braith |
|
39 |
|
President — Communications Infrastructure Group |
|
|
|
|
|
|
| D. Harvey Dewan |
|
63 |
|
President — Global Manufacturing |
|
|
|
|
|
|
| Richard F. Gerrity |
|
47 |
|
Corporate Treasurer |
|
|
|
|
|
|
| Joseph M. O’Donnell |
|
56 |
|
Co-Chairman of the Board of Directors; President and Chief Executive Officer |
|
|
|
|
|
|
| Richard J. Thompson |
|
53 |
|
Vice President — Finance; Chief Financial Officer and Secretary |
|
|
|
|
|
|
| Norman C. Wussow |
|
57 |
|
President — Enterprise Computing Group |
Robert J. Aebli has been President of Communications Products since November 1993.
Kenneth E. Blake has been President-Marketing and Development since August 2000, and was subsequently named President — Marketing and Standard Products Group in December 2002. Previously Mr. Blake was Vice President — Sales and Marketing for Arcom, Inc., a provider of design and installation services for network systems from February 1999 through August 2000. For more than five years prior to that, Mr. Blake was with us in the capacity of Vice President-Sales.
Ewald Braith has been President — Communications Infrastructure Group since January 2002. From January 2000 through December 2001, Mr. Braith served as Vice-President — Engineering for the Global Wireless and Communications Infrastructure divisions. Mr. Braith joined Zytec in 1991 and held various engineering positions, most recently Managing Director of Zytec Hungary, until December 1997.
D. Harvey Dewan has been President of Global Manufacturing since January 2000. From December 1997 to December 1999, Mr. Dewan served as President of our North American and Asian Manufacturing divisions. From February to December 1997, Mr. Dewan was Vice President of Operations for Communication Products.
Richard F. Gerrity has been Corporate Treasurer since July 2000. From April 1996 to July 2000, Mr. Gerrity served as Director of Treasury at Hadco Corporation, a manufacturer of electronic components for the technology industry.
Joseph M. O’Donnell has been Chairman of the Board of Directors since February 1997 and Co-Chairman of the Board since our merger with Zytec. Mr. O’Donnell has served as President and Chief Executive Officer since July 1994.
Richard J. Thompson has been Vice President — Finance, Chief Financial Officer, and Secretary since June 1990.
Norman C. Wussow was appointed to the position of President — Enterprise Computing Group in June 2001. From June 1999 through June 2001, Mr. Wussow served as President of our North America-Commercial division. From January 1998 through June 1999, Mr. Wussow served as Vice
9
President — Custom Engineering of North America’s Commercial division. Mr. Wussow joined Zytec in 1993 and held various engineering positions, most recently Vice President — Engineering, until December 1997, when we merged with Zytec.
PART II
ITEM 5. Market for Registrant’s Common Equity and Related Stockholder Matters
Our common stock is traded on The NASDAQ Stock MarketSM under the symbol ATSN. High and low sales prices by quarter for the common stock appears in Note 21 of the Notes to Consolidated Financial Statements entitled “Selected Consolidated Quarterly Data” accompanying the annual report.
As of March 17, 2003, there were approximately 11,408 shareholders consisting of record holders and individual participants in security position listings.
To date, we have not paid any cash dividends on our capital stock. The Board of Directors presently intends to retain all of our earnings for use in our business and does not anticipate paying cash dividends in the foreseeable future. In addition, the payment of dividends is prohibited by our current credit agreement.
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ITEM 6. Selected Financial Information
The following table sets forth certain selected financial information.
| For the Fiscal Years |
|
2002 |
|
2001 |
|
2000 |
|
1999 |
|
1998 |
| |||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| (Dollars in Thousands |
|
|
|
|
|
|
|
|
|
|
| |||||
| Except Per Share Data) |
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Results of Operations |
|
|
|
|
|
|
|
|
|
|
| |||||
| Sales |
|
$ |
350,829 |
|
$ |
493,968 |
|
$ |
690,083 |
|
$ |
594,155 |
|
$ |
532,392 |
|
| Net income (loss) |
|
(108,822 |
) |
(31,763 |
) |
43,253 |
|
43,362 |
|
27,044 |
| |||||
| Per share – basic |
|
(2.84 |
) |
(0.83 |
) |
1.15 |
|
1.16 |
|
0.70 |
| |||||
| Per share – diluted |
|
(2.84 |
) |
(0.83 |
) |
1.10 |
|
1.11 |
|
0.67 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Financial Position |
|
|
|
|
|
|
|
|
|
|
| |||||
| Working capital |
|
$ |
89,025 |
|
$ |
152,776 |
|
$ |
176,113 |
|
$ |
127,637 |
|
$ |
120,970 |
|
| Property, plant & equipment, net |
|
78,631 |
|
103,291 |
|
105,059 |
|
88,468 |
|
75,032 |
| |||||
| Total assets |
|
303,587 |
|
426,483 |
|
497,815 |
|
359,050 |
|
325,392 |
| |||||
| Long-term debt and capital lease obligations |
|
69,521 |
|
100,399 |
|
73,301 |
|
44,154 |
|
50,283 |
| |||||
| Total debt |
|
69,533 |
|
100,606 |
|
74,813 |
|
46,110 |
|
52,990 |
| |||||
| Shareholders’ equity |
|
123,446 |
|
219,245 |
|
256,512 |
|
199,912 |
|
181,088 |
| |||||
| Total capitalization |
|
192,979 |
|
319,851 |
|
331,325 |
|
246,022 |
|
234,078 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Financial Statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
| Selling, general and administrative expenses (includes amortization of goodwill) |
|
$ |
36,593 |
|
$ |
62,138 |
|
$ |
68,979 |
|
$ |
52,404 |
|
$ |
54,548 |
|
| - as a % of sales |
|
10.4 |
% |
12.6 |
% |
10.0 |
% |
8.8 |
% |
10.2 |
% | |||||
| Research and development expenses |
|
34,341 |
|
|||||||||||||