CPII » Topics » Overview

This excerpt taken from the CPII 10-Q filed Feb 6, 2008.

Overview

 

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements, including debt service and internal growth, through a combination of cash flows from our operations and borrowings under our senior credit facilities. Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

 

We believe that we have the financial resources to meet our business requirements for the next 12 months, including capital expenditures and working capital requirements.

 

Cash and Working Capital

 

The following summarizes our cash and cash equivalents and working capital (in thousands):

 

 

 

December 28,

 

September 28,

 

 

 

2007

 

2007

 

Cash and cash equivalents

 

$

27,410

 

$

20,474

 

Working capital

 

84,269

 

81,547

 

 

We invest cash balances in excess of operating requirements in overnight U.S. Government securities and money market accounts. In addition to the above cash and cash equivalents, we had restricted cash of $2.5 million as of December 28, 2007, consisting primarily of bank guarantees from customer advance payments to our international subsidiaries. The bank guarantees become unrestricted cash when performance under the sales or supply contract is complete.

 

The significant factors underlying the net increase in cash and cash equivalents during the first quarter of fiscal year 2008 were the net cash provided by our operating activities of $9.6 million, partially offset by capital expenditures of $1.7 million and a repayment of our senior term loan in the amount of $1.0 million.

 

As of December 28, 2007, we had $245.75 million in total principal amount of debt outstanding, compared to $246.75 million as of September 28, 2007. As of December 28, 2007, we had borrowing availability of $56.0 million under the revolver under our senior credit facilities.

 

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This excerpt taken from the CPII 10-K filed Dec 12, 2007.

Overview

        Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements including debt service and internal growth, through a combination of cash flows from our operations and borrowings under our senior credit facilities. Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

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        We believe that we have the financial resources to meet our business requirements for the next 12 months, including capital expenditures and working capital requirements.

Cash and Working Capital

        The following summarizes our cash and cash equivalents and working capital (in thousands):

 
  Year Ended
 
  September 28,
2007

  September 29,
2006

  September 30,
2005

Cash and cash equivalents   $ 20,474   $ 30,153   $ 26,511
Working capital   $ 81,547   $ 77,113   $ 65,400

        We invest cash balances in excess of operating requirements in overnight U.S. Government securities and money market accounts. In addition to the above cash and cash equivalents, we have restricted cash of $2.3 million as of September 28, 2007, consisting primarily of bank guarantees from customer advance payments to our international subsidiaries. The bank guarantees become unrestricted cash when performance under the sales or supply contract is complete.

        The significant factors underlying the net decrease in cash and cash equivalents during fiscal year 2007 were the acquisition of Malibu for $22.2 million, net of cash acquired, and capital acquisitions of $8.2 million, partially offset by the net cash provided by our operating activities of $21.7 million.

        As of September 28, 2007, we had $246.75 million in total principal amount of debt outstanding, compared to $247.5 million as of September 29, 2006. As of September 28, 2007, we had borrowing availability of $56.3 million under the revolver under our senior credit facilities.

This excerpt taken from the CPII 10-Q filed Aug 13, 2007.

Overview

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements, including debt service and internal growth, through a combination of cash flows from our operations and borrowings under our senior credit facilities. Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

Pro forma for our recent refinancing discussed below (including the redemption of a portion of CPI International’s floating rate senior notes (the “FR Notes”) expected on September 5, 2007), we will have $247.0 million in total principal amount of debt outstanding, compared to $247.5 million as of September 29, 2006. As of June 29, 2007, we had cash and equivalents of $39.4 million compared to $30.2 million as of September 29, 2006. Cash balances in excess of operating requirements are invested daily in overnight U.S. Government securities and money market accounts.

This excerpt taken from the CPII 10-Q filed May 14, 2007.

Overview

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements, including debt service and internal growth, through a combination of cash flows from our operations and borrowings under our senior credit facilities. Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

As of March 30, 2007, we had $242.5 million in total principal amount of debt outstanding, compared to $247.5 million as of September 29, 2006. In addition, as of March 30, 2007, we had borrowing availability of $36.2 million under the revolver under our senior credit facilities. As of March 30, 2007, we had cash and equivalents of $27.6 million compared to $30.2 million as of September 29, 2006. Cash balances in excess of operating requirements are invested daily in overnight U.S. Government securities.

We believe that we have the financial resources to meet our business requirements for the next twelve months, including capital expenditures and working capital requirements, and to comply with the financial covenants in the documents governing our debt.

This excerpt taken from the CPII 10-Q filed Feb 12, 2007.

Overview

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements including debt service and internal growth, through a combination of cash flows from our operations and borrowings under our senior credit facilities. Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

As of December 29, 2006, we had $242.5 million in total principle amount of debt outstanding, compared to $247.5 million as of September 29, 2006. In addition, as of December 29, 2006, we had borrowing availability of $36.2 million under the revolver under our senior credit facilities. As of December 29, 2006, we had cash and equivalents of $32.6 million compared to $30.2 million as of September 29, 2006. Cash balances in excess of operating requirements are invested daily in overnight U.S. Government securities.

We believe that we have the financial resources to meet our business requirements for the next twelve months, including capital expenditures, working capital requirements and to comply with our financial covenants.

This excerpt taken from the CPII 10-K filed Dec 12, 2006.

Overview

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements including debt service and internal growth, through a combination of cash flows from our operations and borrowings under our senior credit facilities. Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

As of September 29, 2006, we had $248 million in total principal amount of debt outstanding, compared to $284 million as of September 30, 2005. In addition, as of September 29, 2006, we had borrowing availability of $36.0 million under the revolver under our senior credit facilities. As of September 29, 2006, we had cash and equivalents of $30.2 million compared to $26.5 million as of September 30, 2005. Cash balances in excess of operating requirements are invested daily in overnight U.S. Government securities. We believe that cash and cash equivalents on hand and cash expected to be generated from operations will be sufficient to meet our currently anticipated cash requirements for fiscal year 2007.

This excerpt taken from the CPII 10-Q filed Aug 14, 2006.

Overview

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements including debt service and internal growth, through a combination of cash flows from our operations and borrowings under CPI’s senior credit agreement (the “Senior Credit Facility”), which consists of a $40.0 million revolving commitment, with a sub-facility of $15.0 million for letters of credit

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and $5.0 million for swingline loans (“Revolver”), and a $90.0 million term loan (the “Term Loan”). Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

As of June 30, 2006, we had no borrowings outstanding and borrowing availability of $35.8 million under the Revolver and $42.5 million outstanding under the Term Loan, after the $47.5 million aggregate Term Loan repayments in May 2006 using proceeds from our initial public offering of CPI International’s common stock (the “IPO”).  Upon certain specified conditions, including compliance on a pro forma basis with the covenants in the Senior Credit Facility, CPI may seek commitments for a new class of term loans, not to exceed $65.0 million. We believe that cash and cash equivalents on hand and cash expected to be generated from operations will be sufficient to meet our currently anticipated cash requirements for the remainder of this fiscal year. Thereafter, our ability to fund our cash requirements and to comply with the financial covenants under our debt agreements will depend on our results of future operations, performance and cash flows and will be subject to uncertainties in the markets in which we compete and other factors, many of which are beyond our control.

As of June 30, 2006, we had cash and equivalents of $12.6 million compared to $26.5 million as of September 30, 2005. Cash balances in excess of operating requirements are invested daily in overnight U.S. Government securities.

This excerpt taken from the CPII 10-Q filed May 15, 2006.

Overview

 

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and others that are related to uncertainties in the markets in which we compete and other global economic factors. We have historically financed, and intend to continue to finance, our capital and working capital requirements including debt service and internal growth, through a combination of cash flows from our operations and borrowings under CPI’s senior credit agreement (the “Senior Credit Facility”), which consists of a $40.0 million revolving commitment, with a sub-facility of $15.0 million for letters of credit and $5.0 million for swingline loans (“Revolver”), and a $90.0 million term loan (the “Term Loan”). Our primary uses of cash are cost of sales, operating expenses, debt service and capital expenditures.

 

As of March 31, 2006, we had no borrowings outstanding under the Revolver and had availability of $35.8 million under the Revolver under the Senior Credit Facility. We believe that cash and cash equivalents on hand and cash expected to be generated from operations will be sufficient to meet our currently anticipated cash requirements for the remainder of this fiscal year. Thereafter, our ability to fund our cash requirements and to comply with the financial covenants under our debt agreements will depend on our results of future operations, performance and cash flows and will be subject to uncertainties in the markets in which we compete and other factors, many of which are beyond our control.

 

As of March 31, 2006, we had cash and equivalents of $7.8 million compared to $26.5 million as of September 30, 2005. Cash balances in excess of operating requirements are invested daily in overnight U.S. Government securities.

 

This excerpt taken from the CPII 10-Q filed Aug 12, 2005.

Overview

 

The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included elsewhere within this report and the Annual Report on Form 10-K of CPI Holdco, Inc. (“CPI Holdco” or the “Successor”) for the fiscal year ended October 1, 2004.  References to the “Company” refer to Communications & Power Industries Holding Corporation (“Holding or the “Predecessor”) and its subsidiaries prior to the Merger (defined below) and to the Successor and its subsidiaries post-Merger.

 

The Company is a leading designer, manufacturer and global marketer of vacuum electron devices (“VEDs”), satellite communications amplifiers, medical x-ray generators and other related products for critical defense and commercial applications. The Company’s defense applications include radar, electronic warfare and communications end markets and its commercial applications include communications, medical, industrial and scientific end markets. Communications applications consist of applications for military and commercial satellite communications uses and broadcast uses. The Company defines and discusses its recorded orders and sales trends by these end markets in order to more clearly relate its business to outside investors. Internally, however, the Company is organized into six operating divisions that are differentiated based on products operating in two segments.  The Company’s VED segment consists of five operating divisions.  The Company also has a satellite communications equipment segment that has one operating division.  Segment data is included in Note 8 of the Notes to Condensed Consolidated Financial Statements.

 

Floating Rate Senior Notes

 

On February 22, 2005, CPI Holdco issued $80 million in principal amount of Floating Rate Senior Notes due 2015 (the “FR Notes”).  The FR Notes were issued at a 1% discount; the gross cash proceeds from the issuance of FR Notes were $79.2 million.   The proceeds from the issuance of FR Notes were used to make a distribution to stockholders of CPI Holdco of approximately $75.8 million and to pay fees and expenses of approximately $3.5 million associated with the issuance of FR Notes.

 

The FR Notes require interest payments at an annual interest rate, reset at the beginning of each semi-annual period, equal to the then six-month LIBOR plus 5.75%, payable semiannually. CPI Holdco may, at its option, elect to pay interest through the issuance of additional FR Notes for any interest payment date on or after August 1, 2006 and on or before February 1, 2010. If CPI Holdco elects to pay interest through the issuance of additional FR Notes, the annual interest rate on the FR Notes will increase by an additional 1% step-up, with the step-up increasing by an additional 1% for each interest payment made through the issuance of additional FR Notes (up to a maximum of 4%).

 

The FR Notes are general unsecured obligations of CPI Holdco.  The FR Notes are not guaranteed by any of CPI Holdco’s subsidiaries and are structurally subordinated to all existing and future indebtedness and other liabilities of CPI Holdco’s subsidiaries.  The FR Notes are senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the FR Notes.  See Note 6 to the Condensed Consolidated Financial Statements.

 

The Company’s registration statement filed with the Securities and Exchange Commission relating to the offer to exchange all outstanding FR Notes due 2015 for FR Notes due 2015 that have been registered under the Securities Act of 1933, as amended, was declared effective on April 21, 2005.

 

Econco Acquisition

 

On October 8, 2004, the Company purchased all of the outstanding stock of Econco Broadcast Service, Inc. (“Econco”) of Woodland, California for cash consideration of approximately $18.3 million.  Econco is a provider of rebuilding service for VEDs, allowing broadcasters and other users of these critical products to extend the life of their devices at a cost that is lower than buying a new VED.  See Note 10 to the Condensed Consolidated Financial Statements for additional information about the Econco acquisition.

 

Merger

 

On January 23, 2004, CPI Holdco’s wholly-owned subsidiary, CPI Merger Sub Corp. (“Merger Sub”), merged with and into Holding pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of November 17, 2003, by and among Holding, CPI Holdco, Merger Sub and Green Equity Investors II, L.P., as the representative of the security holders of Holding, under which CPI Holdco, Merger Sub’s parent corporation and a corporation controlled by affiliates of The Cypress Group L.L.C. (“Cypress”), agreed to acquire Holding. In the Merger, each share of Holding’s common stock and stock options outstanding immediately prior to the Merger, other than a portion of stock options held by certain members of management (which were converted into options to purchase shares of CPI Holdco) and other than any shares of common stock owned by Holding or CPI Holdco, were converted into the right to receive a pro rata portion of the aggregate merger consideration of $131.7 million. In connection with the Merger, CPI Holdco received an equity contribution

 

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of $100.0 million before expenses from affiliates of Cypress in exchange for 4,251,122 shares of common stock of CPI Holdco. Members of management of Holding, as a result of rolling over their options to purchase common stock of Holding, received stock options to purchase 167,513 shares of common stock of CPI Holdco (“Rollover Options”).  The estimated fair value of Rollover Options was $5.0 million and was accounted for as Merger purchase price as of January 23, 2004.   Members of Holding management that were residents of Canada received 1,485 stock options to purchase shares of common stock of CPI Holdco as payment of Merger escrow proceeds in respect of their options to purchase shares of Holding.

 

Although the Merger, which essentially resulted in the recapitalization of the Company, triggered a change in the basis of many of the Company’s assets and liabilities, the underlying operations of the Company were not impacted by the Merger.

 

San Carlos Sale Agreement

 

The Company entered into an agreement to sell the land and close its facilities located in San Carlos, California.  The purchase price is $23.8 million.  Under the sale agreement, the buyer has paid the Company a $13.0 million deposit on the purchase price, which the Company is using to defray the costs of moving its San Carlos operations to its Palo Alto facility and to a new location in the Palo Alto area.   The $13.0 million deposit is nonrefundable unless the Company breaches the sale agreement.  In connection with the sale agreement, the Company entered into an agreement regarding environmental conditions at the property and was named as an additional insured on a pollution liability insurance policy obtained by the purchaser that is intended to fund the remediation of the contamination of the San Carlos property to permit hospital and other “unrestricted” uses under the direction of the applicable environmental regulatory agency.

 

The closing of the sale is subject to a number of conditions, including the requirement that the Company vacate its facilities and obtain regulatory closure of certain permitted equipment located on the property.  Although there can be no assurance that the sale of the San Carlos property will occur, the Company expects to close the sale of the property in the first quarter of fiscal year 2007.

 

Pursuant to the stock sale agreement by and between Varian Associates, Inc., the predecessor of Varian Medical Systems, Inc. (“Varian”), and the Company dated June 9, 1995, as amended, the Company had agreed to certain development restrictions affecting the San Carlos property.  In connection with the San Carlos property sale agreement, Varian agreed to waive certain of the development restrictions on the San Carlos property in the event that the sale closes, subject to certain conditions, and further agreed to pay the Company $1.0 million, of which $0.5 million was paid as of July 1, 2005. In addition, the Company has agreed to relieve Varian of certain of its indemnity obligations to the Company for certain environmental liabilities related to the San Carlos property relating to periods prior to August 1995, and to reimburse Varian for certain potential environmental costs related to the San Carlos property that are not covered by insurance. The Company and Varian have also agreed to certain use restrictions and environmental cost-sharing provisions related to the Company’s property in Beverly, Massachusetts, and the Company has relinquished its right to redevelop that property for residential or similar use.

 

As of July 1, 2005, the San Carlos land and building was classified as held for use in property, plant and equipment and the advance payments from the sale of the property, aggregating $13.5 million, are classified as a long-term liability in the accompanying Condensed Consolidated Balance Sheet.  As of July 1, 2005, the Company had deferred expenses of $0.7 million relating to the sale of the San Carlos property and classified these amounts as other long-term assets in the accompanying Condensed Consolidated Balance Sheet.  As of July 1, 2005, the San Carlos land and building had a net book value of $23.7 million and the building continues to be depreciated over its remaining useful life.  Based on current projections of costs, the Company does not expect to recognize a loss on the sale of the San Carlos property.

 

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