PALO ALTO, Calif., Dec. 6, 2012 /PRNewswire/ -- CPI International
Holding Corp., the parent company of CPI International, Inc. (CPI),
today announced financial results for its fourth quarter and fiscal
year 2012 ended September 28,
2012. In fiscal 2012, CPI maintained the strong orders, sales
and adjusted EBITDA results of the previous year and significantly
improved its net income results. The company also achieved a
healthy backlog as of the end of the most recent fiscal year.
(Logo: http://photos.prnewswire.com/prnh/20060426/CPILOGO)
"CPI's business was stable and strong in fiscal 2012, and our
sound financial performance met our expectations," said
Joe Caldarelli, chief executive of
CPI. "Within our defense markets, demand was strong for radar
applications, particularly for large, long-lived programs for which
we have provided products for many years. In fact,
approximately 56 percent of our defense market sales were for spare
and repair products for existing 'sockets.' In the medical
market, the pace of economic recovery has picked up, and we enjoyed
an appreciable increase in activity for x-ray imaging applications
in the U.S. and abroad. In the communications market,
conditions have remained healthy within both military and
commercial communications, and once again our milcom business
contributed more than 10 percent of our total sales for the
year. Our recent acquisition of the Codan Satcom business has
been well received by our customers, and we are looking forward to
it being fully integrated into CPI's solid-state communications
business in fiscal 2013."
In fiscal 2012, CPI generated total sales of $391 million, a slight increase from the
$389 million generated in the prior
year notwithstanding the absence in fiscal 2012 of the
non-recurring counter-improvised explosive device (counter-IED)
program that had contributed $18.0
million in sales in fiscal 2011. Excluding that
one-time program, CPI's sales increased by five percent in fiscal
2012.
In comparison to the previous year, CPI's fiscal 2012 sales in
its largest end markets were as follows:
- In the defense markets, sales decreased three percent to
$147 million due to the absence of
the non-recurring, large program for counter-IED products.
Excluding that program, sales in the defense market increased 10
percent as a result of higher sales to support radar
applications.
- In the medical market, sales increased 11 percent to
$75.7 million due to higher sales for
x-ray imaging and radiation therapy applications. Fiscal 2012
included notably higher sales for x-ray imaging programs in
Russia as a result of the timing
of those programs.
- In the communications market, sales decreased three percent to
$130 million due to the expected
completion of CPI's involvement in Increment One of the Warfighter
Information Network-Tactical (WIN-T) military communications
program in fiscal 2011.
During the most recent fiscal year, CPI booked total orders of
$383 million, resulting in a
book-to-bill ratio of 0.98. Orders decreased two percent from
fiscal 2011 as a result of the absence of the aforementioned
non-recurring counter-IED program that had provided $18.0 million in orders in fiscal 2011.
Excluding that one-time program, orders rose two percent in fiscal
2012. As of September 28, 2012,
CPI's order backlog was $242
million.
In comparison to fiscal 2011, CPI's fiscal 2012 orders in its
largest end markets were as follows:
- In the defense markets, orders decreased four percent to
$149 million due to the expected
absence of the large, one-time counter-IED program. Excluding
that program, defense orders rose eight percent as a result of
higher orders to support radar applications.
- In the medical market, orders increased one percent to
$72.6 million due to higher orders
for x-ray imaging applications.
- In the communications market, orders increased three percent to
$129 million due to higher orders to
support military communications applications.
CPI's fiscal 2012 net income totaled $3.7
million, a significant improvement from the $11.2 million net loss recorded in the previous
year. CPI was acquired by The Veritas Capital Fund IV, L.P.
in February 2011, and the company's
fiscal 2011 financial results included substantial expenses related
to that acquisition, including non-recurring transaction costs,
non-cash expenses related to the revaluation of CPI's inventory and
intangible assets, and stock compensation expenses. The
absence of the non-recurring transaction costs and notable
decreases in amortization related to the revaluations and in stock
compensation expenses were the primary reasons for the improvement
in net income in fiscal 2012.
Adjusted EBITDA in fiscal 2012 totaled $64.4 million, or 16.5 percent of sales, as
compared to the $62.4 million, or
16.0 percent of sales, generated in the prior year. The
improvement in adjusted EBITDA was due in part to higher sales
volume and the related improvements in operating efficiencies, as
well as higher profit margins from CPI's advanced antenna products,
as more of these products moved from development into production in
fiscal year 2012.
As of September 28, 2012, CPI's
cash and cash equivalents totaled $43.0
million. In fiscal 2012, cash flow from operating
activities equaled $25.1 million,
free cash flow totaled $17.5 million
and adjusted free cash flow was $17.3
million.
Fiscal 2013 Outlook
"While CPI's performance in our
major markets continued to be quite strong and resilient in fiscal
2012, particularly in light of the difficult global environment in
the past year, we remain cognizant of the challenges facing global
economies and government funding in the U.S. and around the world
in the coming year. We will continue to monitor the situation
diligently in order to maintain our customary agility necessary to
respond rapidly to changes in global market conditions," said
Caldarelli. "Nevertheless, our business remains healthy, and
we expect CPI to continue to perform quite well in fiscal year
2013."
For fiscal 2013, CPI expects:
- Total sales of between $410 million and
$425 million;
- Adjusted EBITDA of between $66 million
and $68 million; and
- Adjusted free cash flow of more than $17
million.
CPI expects that its effective tax rate for fiscal 2013 will be
approximately 42 percent.
Financial Community Conference Call
In conjunction
with this announcement, CPI will hold a conference call on
Friday, December 7, 2012 at
11:00 a.m. (EST) that simultaneously
will be broadcast live over the Internet on the company's Web
site. To participate in the conference call, please dial
(800) 649-5127, or (253) 237-1144 for international callers, enter
conference ID 73407109 and ask for the CPI International Fiscal
2012 Financial Results Conference Call. To access the call
via the Internet, please visit http://investor.cpii.com and click
"Events."
About CPI International Holding Corp.
CPI
International Holding Corp., headquartered in Palo Alto, California, is the parent company
of CPI International, Inc., which is the parent company of
Communications & Power Industries LLC, a leading provider of
microwave, radio frequency, power and control solutions for
critical defense, communications, medical, scientific and other
applications. Communications & Power Industries LLC
develops, manufactures and distributes products used to generate,
amplify, transmit and receive high-power/high-frequency microwave
and radio frequency signals and/or provide power and control for
various applications. End-use applications of these systems
include the transmission of radar signals for navigation and
location; transmission of deception signals for electronic
countermeasures; transmission and amplification of voice, data and
video signals for broadcasting, Internet and other types of
commercial and military communications; providing power and control
for medical diagnostic imaging; and generating microwave energy for
radiation therapy in the treatment of cancer and for various
industrial and scientific applications.
Non-GAAP Supplemental Information
EBITDA, adjusted
EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and
adjusted free cash flow presented here are non-generally accepted
accounting principles (GAAP) financial measures. EBITDA
represents earnings before net interest expense, provision for
income taxes and depreciation and amortization. Adjusted
EBITDA represents EBITDA further adjusted to exclude certain
non-recurring, non-cash, unusual or other items. EBITDA
margin represents EBITDA divided by sales. Adjusted EBITDA
margin represents adjusted EBITDA divided by sales. Free cash
flow represents net cash provided by operating activities minus
capital expenditures and patent application fees. Adjusted
free cash flow represents free cash flow further adjusted to
exclude certain non-recurring, unusual or other items.
CPI believes that GAAP-based financial information for leveraged
businesses, such as the company's business, should be supplemented
by EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin,
free cash flow and adjusted free cash flow so that investors better
understand the company's operating performance in connection with
their analysis of the company's business. In addition, CPI's
management team uses EBITDA and adjusted EBITDA to evaluate the
company's operating performance, to monitor compliance with its
senior credit facility, to make day-to-day operating decisions and
as a component in the calculation of management bonuses.
Other companies may define EBITDA, adjusted EBITDA, EBITDA margin,
adjusted EBITDA margin, free cash flow and adjusted free cash flow
differently and, as a result, the company's measures may not be
directly comparable to EBITDA, adjusted EBITDA, EBITDA margin,
adjusted EBITDA margin, free cash flow and adjusted free cash flow
of other companies. Because EBITDA, adjusted EBITDA, EBITDA
margin, adjusted EBITDA margin, free cash flow and adjusted free
cash flow do not include certain material costs, such as interest
and taxes in the case of EBITDA-based measures, necessary to
operate the company's business, when analyzing the company's
business, these non-GAAP measures should be considered in addition
to, and not as a substitute for, net income (loss), net cash
provided by (used in) operating activities, net income margin or
other statements of income or statements of cash flows data
prepared in accordance with GAAP.
Certain statements included above constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended and Section 21E of the Securities Exchange Act
of 1934, as amended. Forward-looking statements provide our
current expectations, beliefs or forecasts of future events.
Forward-looking statements are subject to known and unknown risks
and uncertainties, which could cause actual events or results to
differ materially from the results projected, expected or implied
by these forward-looking statements. These factors include,
but are not limited to, competition in our end markets; our
significant amount of debt; changes or reductions in the U.S.
defense budget; currency fluctuations; goodwill impairment
considerations; customer cancellations of sales contracts; U.S.
Government contracts; export restrictions and other laws and
regulations; international laws; changes in technology; the impact
of unexpected costs; the impact of a general slowdown in the global
economy; the impact of environmental laws and regulations; and
inability to obtain raw materials and components.
These and other risks are described in more detail in our periodic
filings with the Securities and Exchange Commission. As a
result of these uncertainties, you should not place undue reliance
on these forward-looking statements. All future written and
oral forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this
section. New risks and uncertainties arise from time to time,
and it is impossible for us to predict these events or how they may
affect us. We undertake no duty or obligation to publicly
revise any forward-looking statement to reflect circumstances or
events occurring after the date hereof or to reflect the occurrence
of unanticipated events or changes in our expectations.
CPI
International Holding Corp.
|
and
Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
|
OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
Period
|
|
|
Period
|
|
|
|
|
|
Year Ended
|
|
February 11 to
|
|
|
October 2, 2010 to
|
|
Year Ended
|
|
|
|
September 28, 2012
|
|
September 30, 2011
|
|
|
February 10, 2011
|
|
September 30, 2011
|
|
|
|
Successor (1)
|
|
Successor (1)
|
|
|
Predecessor (1)
|
|
Combined (2)
|
Sales
|
|
$
391,150
|
|
$
264,498
|
|
|
$
124,223
|
|
$
388,721
|
Cost of sales, including $248; $7,703; $0
and $7,703 of utilization of net increase
in cost basis of inventory due to purchase
accounting
|
|
282,391
|
|
195,001
|
|
|
91,404
|
|
286,405
|
Gross profit
|
|
108,759
|
|
69,497
|
|
|
32,819
|
|
102,316
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
13,499
|
|
9,798
|
|
|
4,994
|
|
14,792
|
|
Selling and marketing
|
|
21,738
|
|
13,618
|
|
|
8,264
|
|
21,882
|
|
General and administrative
|
|
25,209
|
|
15,093
|
|
|
11,853
|
|
26,946
|
|
Amortization of acquisition-related intangible
assets
|
|
13,983
|
|
12,140
|
|
|
999
|
|
13,139
|
|
Strategic alternative transaction
expenses
|
|
-
|
|
9,555
|
|
|
4,668
|
|
14,223
|
Total operating costs and
expenses
|
|
74,429
|
|
60,204
|
|
|
30,778
|
|
90,982
|
Operating income
|
|
34,330
|
|
9,293
|
|
|
2,041
|
|
11,334
|
Interest expense, net
|
|
27,230
|
|
17,708
|
|
|
5,788
|
|
23,496
|
Loss
on debt extinguishment
|
|
-
|
|
134
|
|
|
-
|
|
134
|
Income (loss) before income
taxes
|
|
7,100
|
|
(8,549)
|
|
|
(3,747)
|
|
(12,296)
|
Income tax expense (benefit)
|
|
3,415
|
|
(2,066)
|
|
|
983
|
|
(1,083)
|
Net income
(loss)
|
|
3,685
|
|
(6,483)
|
|
|
(4,730)
|
|
(11,213)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of
tax
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on cash flow hedges, net of tax
|
|
1,677
|
|
(890)
|
|
|
284
|
|
(606)
|
Unrealized actuarial (loss) gain and
amortization of prior service cost for pension liability,
net of tax
|
|
(43)
|
|
(295)
|
|
|
175
|
|
(120)
|
Total
other comprehensive income (loss), net of tax
|
|
1,634
|
|
(1,185)
|
|
|
459
|
|
(726)
|
Comprehensive income (loss)
|
|
$
5,319
|
|
$
(7,668)
|
|
|
$
(4,271)
|
|
$
(11,939)
|
(1)
|
"Successor" refers to CPI International Holding Corp.
and its subsidiaries following the February 11, 2011 merger with
Veritas Capital. "Predecessor" refers to CPI International, Inc.
and its subsidiaries prior to the February 11, 2011
merger.
|
(2)
|
Represents
the combined results of Successor for the period February 11, 2011
through September 30, 2011 and Predecessor for the period October
2, 2010 through February 10, 2011. This presentation of the
combined results of operations for the year ended September 30,
2011 does not comply with generally accepted accounting principles
in the United States or with the rules for pro forma presentation.
CPI believes that this presentation facilitates the ability of its
investors to more meaningfully compare its combined operating
results for fiscal year 2011 with past and future
periods.
|
CPI
International Holding Corp.
|
and
Subsidiaries
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
|
INCOME
AND COMPREHENSIVE INCOME
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
September 28, 2012
|
|
September 30, 2011
|
Sales
|
$
104,519
|
|
$
100,488
|
Cost
of sales, including $278 and $229 of utilization of net increase in
cost basis of inventory due to purchase
accounting
|
75,756
|
|
73,928
|
Gross profit
|
28,763
|
|
26,560
|
Operating costs and expenses:
|
|
|
|
|
Research and development
|
3,102
|
|
4,366
|
|
Selling and marketing
|
5,393
|
|
5,616
|
|
General and administrative
|
6,726
|
|
5,541
|
|
Amortization of acquisition-related intangible
assets
|
2,731
|
|
4,858
|
|
Strategic alternative transaction
expenses
|
-
|
|
426
|
Total operating costs and
expenses
|
17,952
|
|
20,807
|
Operating income
|
10,811
|
|
5,753
|
Interest expense, net
|
6,793
|
|
6,759
|
Income (loss) before income
taxes
|
4,018
|
|
(1,006)
|
Income tax expense (benefit)
|
1,322
|
|
(3,528)
|
Net
income
|
2,696
|
|
2,522
|
|
|
|
|
|
Other comprehensive income (loss), net of
tax
|
|
|
|
Unrealized
gain (loss) on cash flow hedges, net of tax
|
989
|
|
(1,115)
|
Unrealized actuarial loss and amortization of
prior service cost, for pension liability, net of
tax
|
(43)
|
|
(295)
|
Total other comprehensive income (loss), net of
tax
|
946
|
|
(1,410)
|
Comprehensive income
|
$
3,642
|
|
$
1,112
|
CPI
International Holding Corp.
|
and
Subsidiaries
|
|
CONSOLIDATED BALANCE SHEETS
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28,
|
September 30,
|
|
|
|
2012
|
2011
|
Assets
|
|
|
Current
Assets:
|
|
|
|
Cash and
cash equivalents
|
$
43,006
|
$
34,955
|
|
Restricted
cash
|
1,926
|
2,370
|
|
Accounts
receivable, net
|
51,076
|
45,610
|
|
Inventories
|
83,937
|
78,296
|
|
Deferred
tax assets
|
14,186
|
14,414
|
|
Prepaid
and other current assets
|
10,400
|
6,486
|
|
|
Total
current assets
|
204,531
|
182,131
|
Property,
plant, and equipment, net
|
81,601
|
81,675
|
Deferred
debt issue costs, net
|
11,954
|
14,073
|
Intangible
assets, net
|
248,877
|
262,232
|
Goodwill
|
178,934
|
178,983
|
Other
long-term assets
|
1,105
|
5,205
|
|
|
Total
assets
|
$
727,002
|
$
724,299
|
|
|
|
|
|
Liabilities and stockholders'
equity
|
|
|
Current
Liabilities:
|
|
|
|
Current
portion of long-term debt
|
$
3,200
|
$
1,500
|
|
Accounts
payable
|
26,331
|
27,188
|
|
Accrued
expenses
|
26,707
|
27,301
|
|
Product
warranty
|
4,066
|
5,607
|
|
Income
taxes payable
|
2,852
|
2,912
|
|
Advance
payments from customers
|
14,434
|
14,661
|
|
|
Total
current liabilities
|
77,590
|
79,169
|
Deferred
tax liabilities
|
88,879
|
87,268
|
Long-term
debt, less current portion
|
358,613
|
361,697
|
Other
long-term liabilities
|
5,704
|
6,269
|
|
|
Total
liabilities
|
530,786
|
534,403
|
Commitments and contingencies
|
|
|
Stockholders' equity
|
|
|
|
Common stock ($0.01 par value, 2
shares
authorized: 1 share issued and
outstanding)
|
-
|
-
|
|
Additional
paid-in capital
|
198,565
|
197,564
|
|
Accumulated other comprehensive income
(loss)
|
449
|
(1,185)
|
|
Accumulated deficit
|
(2,798)
|
(6,483)
|
|
|
Total
stockholders' equity
|
196,216
|
189,896
|
|
|
Total
liabilities and stockholders' equity
|
$
727,002
|
$
724,299
|
CPI
International Holding Corp.
|
and
Subsidiaries
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
|
|
2012
|
|
2011
|
|
|
|
|
Period
|
|
|
Period
|
|
|
|
|
Year Ended
|
|
February 11 to
|
|
|
October 2, 2010 to
|
|
Year Ended
|
|
|
September 28, 2012
|
|
September 30, 2011
|
|
|
February 10, 2011
|
|
September 30, 2011
|
Cash
flows from operating activities
|
Successor (1)
|
|
Successor (1)
|
|
|
Predecessor (1)
|
|
Combined (2)
|
Net cash
provided by operating activities
|
$
25,050
|
|
$
13,567
|
|
|
$
4,277
|
|
$
17,844
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(7,584)
|
|
(4,918)
|
|
|
(2,434)
|
|
(7,352)
|
Acquisitions, net of cash acquired
|
(7,915)
|
|
(370,490)
|
|
|
-
|
|
(370,490)
|
Payment of
patent application fees
|
-
|
|
(4)
|
|
|
(6)
|
|
(10)
|
Net cash
used in investing activities
|
(15,499)
|
|
(375,412)
|
|
|
(2,440)
|
|
(377,852)
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
Equity
investment, net
|
-
|
|
197,144
|
|
|
-
|
|
197,144
|
Proceeds
from issuance of Successor's senior subordinated notes
|
-
|
|
208,550
|
|
|
-
|
|
208,550
|
Borrowings
under Successor's term loan facility
|
-
|
|
143,815
|
|
|
-
|
|
143,815
|
Debt issue
costs
|
-
|
|
(3,453)
|
|
|
-
|
|
(3,453)
|
Redemption
and repurchase of Predecessor's senior subordinated notes and
floating rate notes
|
-
|
|
(129,000)
|
|
|
-
|
|
(129,000)
|
Repayment
of borrowings under Predecessor's term loan facility
|
-
|
|
(66,000)
|
|
|
-
|
|
(66,000)
|
Repayment
of borrowings under Successor's term loan facility
|
(1,500)
|
|
(1,125)
|
|
|
-
|
|
(1,125)
|
Payment
for Predecessor's senior credit facilities agreement
amendment
|
-
|
|
-
|
|
|
(379)
|
|
(379)
|
Proceeds
from stock purchase plan and exercises of stock options
|
-
|
|
-
|
|
|
391
|
|
391
|
Excess tax
benefit on stock option exercises
|
-
|
|
-
|
|
|
2,191
|
|
2,191
|
Net cash
(used in) provided by financing activities
|
(1,500)
|
|
349,931
|
|
|
2,203
|
|
352,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
8,051
|
|
(11,914)
|
|
|
4,040
|
|
(7,874)
|
Cash and
cash equivalents at beginning of year
|
34,955
|
|
46,869
|
|
|
42,829
|
|
42,829
|
Cash and
cash equivalents at end of year
|
$
43,006
|
|
$
34,955
|
|
|
$
46,869
|
|
$
34,955
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures
|
|
|
|
|
|
|
|
|
Cash paid
for interest
|
$
25,410
|
|
$
14,295
|
|
|
$
6,451
|
|
$
20,746
|
Cash paid
for income taxes, net of refunds
|
$
877
|
|
$
804
|
|
|
$
6,284
|
|
$
7,088
|
(1)
|
"Successor" refers to CPI International Holding Corp.
and its subsidiaries following the February 11, 2011 merger with
Veritas Capital. "Predecessor" refers to CPI International, Inc.
and its subsidiaries prior to the February 11, 2011
merger.
|
(2)
|
Represents
the combined results of Successor for the period February 11, 2011
through September 30, 2011 and Predecessor for the period October
2, 2010 through February 10, 2011. This presentation of the
combined cash flows for the year ended September 30, 2011 does not
comply with generally accepted accounting principles in the United
States or with the rules for pro forma presentation. CPI believes
that this presentation facilitates the ability of its investors to
more meaningfully compare its combined cash flows for fiscal year
2011 with past and future periods.
|
CPI
International Holding Corp.
|
and
Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP SUPPLEMENTAL INFORMATION
|
EBITDA
and Adjusted EBITDA
|
(in
thousands - unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
|
September 28,
|
|
September 30,
|
|
September 28,
|
|
September 30,
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
(1)
|
Net income
(loss)
|
|
|
$
2,696
|
|
$
2,522
|
|
$
3,685
|
|
$
(11,213)
|
|
Depreciation and amortization
|
|
|
5,800
|
|
7,519
|
|
25,317
|
|
22,745
|
|
Interest
expense, net
|
|
|
6,793
|
|
6,759
|
|
27,230
|
|
23,496
|
|
Income tax
expense (benefit)
|
|
|
1,322
|
|
(3,528)
|
|
3,415
|
|
(1,083)
|
EBITDA
|
|
|
16,611
|
|
13,272
|
|
59,647
|
|
33,945
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to exclude certain non-recurring,
non-cash or other unusual items:
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense (credit)
|
(2)
|
|
255
|
|
(172)
|
|
1,001
|
|
4,929
|
|
Loss on
debt extinguishment
|
(3)
|
|
-
|
|
-
|
|
-
|
|
134
|
|
Merger
expenses
|
(4)
|
|
-
|
|
426
|
|
-
|
|
14,223
|
|
Acquisition-related expenses
|
(5)
|
|
767
|
|
-
|
|
1,489
|
|
-
|
|
Write-off
of inventory step-up
|
(6)
|
|
228
|
|
229
|
|
248
|
|
7,703
|
|
Veritas
Capital management fee
|
(7)
|
|
626
|
|
524
|
|
2,031
|
|
1,424
|
Total
adjustments
|
|
|
1,876
|
|
1,007
|
|
4,769
|
|
28,413
|
Adjusted
EBITDA
|
|
|
$
18,487
|
|
$
14,279
|
|
$
64,416
|
|
$
62,358
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
margin
|
(8)
|
|
15.9%
|
|
13.2%
|
|
15.2%
|
|
8.7%
|
|
Adjusted
EBITDA margin
|
(9)
|
|
17.7%
|
|
14.2%
|
|
16.5%
|
|
16.0%
|
|
Net income
(loss) margin
|
(10)
|
|
2.6%
|
|
2.5%
|
|
0.9%
|
|
(2.9%)
|
1)
|
For the 12
months ended September 30, 2011, based on the combined results of
CPI International Holding Corp. for the period February 11, 2011
through September 30, 2011, and the predecessor, CPI International,
Inc. (the "Predecessor"), for the period October 2, 2010 through
February 10, 2011. This presentation of the combined results
of operations for the 12 months ended September 30, 2011 does not
comply with generally accepted accounting principles in the United
States or with the rules for pro forma presentation. CPI believes
that this presentation facilitates the ability of its investors to
more meaningfully compare its combined operating results for fiscal
year 2012 with its results for fiscal year 2011.
|
2)
|
For the
periods ended September 30, 2011, represents a charge for stock
options, restricted stock awards, restricted stock unit awards and
the employee discount related to CPI's Employee Stock Purchase
Plan, including for the acceleration of vesting of stock options in
conjunction with the sale of the Predecessor, as well as
compensation expense for Class B membership interests by certain
members of management and independent directors in the company's
parent, CPI International Holding LLC. For the periods ended
September 28, 2012, represents compensation expense for Class B
membership interests by certain members of management and
independent directors in the company's parent, CPI International
Holding LLC. The $172 credit in the three months ended September
30, 2011 represents a credit related to purchase accounting of
$416, partially offset by a charge for compensation expense for
Class B membership interests of $244.
|
3)
|
Represents
bond tender fees and other related expenses related to the
retirement of debt obligations of the Predecessor, net of a gain
from debt repayment at less than fair value.
|
4)
|
Represents
non-recurring transaction costs, such as fees for investment
bankers, attorneys and other professional services rendered in
conjunction with the sale of the company. Also includes cash
payments for the unvested portion of restricted stock awards for
which vesting was accelerated.
|
5)
|
Represents
non-recurring transaction costs related to closing and integration
of the Codan Satcom acquisition, such as fees for attorneys and
other professional services, and expenses related to integration of
the Codan Satcom operations into those of CPI.
|
6)
|
Represents
a non-cash charge for utilization of the net increase in cost basis
of inventory that resulted from purchase accounting in connection
with the sale of the company for periods ended September 30, 2011,
and in connection with the purchase of Freeland Products, Inc. and
the Codan Satcom operations for the periods ended September 28,
2012.
|
7)
|
Represents
a management fee payable to Veritas Capital for advisory and
consulting services.
|
8)
|
Represents
EBITDA divided by sales.
|
9)
|
Represents
adjusted EBITDA divided by sales.
|
10)
|
Represents
net income divided by sales.
|
CPI
International Holding Corp.
|
and
Subsidiaries
|
|
NON-GAAP SUPPLEMENTAL INFORMATION
|
Free
Cash Flow and Adjusted Free Cash Flow
|
(in
thousands - unaudited)
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
|
|
|
September 28,
|
|
|
|
|
|
2012
|
|
Net cash
provided by operating activities
|
|
|
$
25,050
|
|
Capital
expenditures
|
|
|
(7,584)
|
|
Free cash
flow
|
|
|
17,466
|
|
|
|
|
|
|
|
Adjustments to exclude certain non-recurring or other
unusual items:
|
|
|
|
|
|
Cash paid
for merger expenses, net of taxes
|
(1)
|
|
398
|
|
|
Cash paid
for acquisition-related expenses, net of taxes
|
(2)
|
|
825
|
|
|
Cash paid
for Veritas Capital advisory fee, net of taxes
|
(3)
|
|
943
|
|
|
Cash
received for prior year transfer pricing audit
|
(4)
|
|
(2,380)
|
|
Total
adjustments
|
|
|
(214)
|
|
Adjusted
free cash flow
|
|
|
$
17,252
|
|
|
|
|
|
|
|
Free cash
flow
|
|
|
$
17,466
|
|
Net
income
|
|
|
$
3,685
|
|
1)
|
Represents
cash paid, net of income taxes, for attorneys and other
professional services and for transaction costs in connection with
the sale of the company.
|
2)
|
Represents
non-recurring transaction costs, net of income taxes, related to
closing and integration of the Codan Satcom acquisition, such as
fees for attorneys and other professional services, and expenses
related to integration of the Codan Satcom operations into those of
CPI.
|
3)
|
Represents
a management fee paid to Veritas Capital for advisory and
consulting services, net of income taxes.
|
4)
|
Represents
payments received with respect to an audit by the Canada Revenue
Agency ("CRA") of Communications & Power Industries Canada
Inc.'s ("CPI Canada") purchase of the Satcom Division in fiscal
years 2001 and 2002. The Company considers this a
non-recurring source of cash as it pertains to previous
years.
|
SOURCE CPI International Holding Corp.; CPI International,
Inc.