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Artesyn Technologies Inc · 10-Q · For 7/4/97

Filed On 8/8/97 · SEC File 0-04466 · Accession Number 23071-97-13

  As Of               Filer                 Filing     On/For/As Docs:Pgs

 8/08/97  Artesyn Technologies Inc          10-Q        7/04/97    5:61

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Second Quarter 1997                                   16±    78K 
 2: EX-10       Amendment to Firstar Loan Agreement                    2     13K 
 3: EX-10       Sale of Rtp Corp. Agreement                           40±   171K 
 4: EX-11       Eps Calculation                                        2      8K 
 5: EX-27       Financial Data Schedule                                1      6K

10-Q · Second Quarter 1997
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Condensed Consolidated Financial Statements: Exhibits and Reports on Form 8-K Management's Discussion and Analysis of Financial Condition and Results of Operations 11-15 Submission of Matters to a Vote of Submission of Matters to a Vote of Security Holders
1	1st Page
2	Item 1. Condensed Consolidated Financial Statements:
"	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-15
"	Item 4. Submission of Matters to a Vote of
8	Item 4. Submission of Matters to a Vote of Security Holders
9	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st "Page" of 10 TOC Top Previous Next Bottom Just 1st
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SECURITIES AND EXCHANGE COMMISSION  

WASHINGTON, D.C. 20549  

FORM 10-Q   

(MARK ONE)                                                                      

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

For the quarterly period ended JULY 4, 1997                                     

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  

COMPUTER PRODUCTS, INC.   

------------------------------------------------------------------------------  
(Exact name of registrant as specified in its charter)  

FLORIDA   

------------------------------------------------------------------------------  
(State or other jurisdiction of incorporation or organization)  

59-1205269  

------------------------------------------------------------------------------  
(I.R.S. Employer Identification No.)  

7900 Glades Road, Suite 500, Boca Raton, Florida                   33434        
------------------------------------------------------------------------------  
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code    (561) 451-1000            
                                            ------------------

NOT APPLICABLE  
------------------------------------------------------------------------------  
Former name, address and fiscal year if changed since last report   

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                                     

The number of shares of Common Stock,  $.01 par value, of the Registrant  issued
and outstanding as of August 1, 1997, was 24,171,160 shares.                    

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10-Q 2nd "Page" of 10 TOC 1st Previous Next Bottom Just 2nd

COMPUTER PRODUCTS, INC. 

INDEX TO FORM 10-Q  

                                                                Page

                                                                Number

PART I.           FINANCIAL INFORMATION                                         

Item 1.           Condensed Consolidated Financial Statements:                  

Statements of Operations - For the Thirteen 
and Twenty-Six Weeks Ended July 4, 1997 and 
           June 28, 1996                                         3

    Statements of Financial Condition - July 4, 1997
           and January 3, 1997                                   4

Statements of Cash Flows - For the          
Twenty-Six Weeks Ended July 4, 1997 and     
           June 28, 1996                                         5

Notes to Condensed Consolidated Financial   
            Statements                                          6-10

Item 2.           Management's Discussion and Analysis of Financial             
             Condition and Results of Operations                 11-15

PART II.          OTHER INFORMATION                                             

Item 4.           Submission of Matters to a Vote of                            

           Security Holders                                     16

Item 6.           Exhibits and Reports on Form 8-K                     17       

Exhibit No 10.33                            

Exhibit No 10.34                            

Exhibit No. 11                              

Exhibit No. 27                              

SIGNATURE                                                                       

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 PART I. FINANCIAL INFORMATION
COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except Per Share Data)
 (Unaudited)

                                                        · Enlarge/Download Table

                                                  THIRTEEN WEEKS ENDED   TWENTY-SIX WEEKS ENDED
                                                   JULY 4,     JUNE 28,     JULY 4,    JUNE 28,
                                                    1997        1996         1997        1996  
                                                   -------     ------     --------    -------- 

                                                                                               
SALES                                              $59,544     $48,066    $116,409     $95,432 
COST OF SALES                                       37,502      30,332      74,760      60,596 
                                                   -------     -------    --------     ------- 
GROSS PROFIT                                        22,042      17,734      41,649      34,836 
                                                   -------     ------     --------     ------- 
EXPENSES:                                                                                      
  Selling, general & administrative                 8,860       7,388       17,572      14,780 
  Research & development                            5,223       3,925        9,694       7,414 
                                                   -------     ------       ------      ------ 
                                                   14,083      11,313       27,266      22,194 
                                                   -------     ------       ------      ------ 
OPERATING INCOME                                    7,959       6,421       14,383      12,642 
                                                   -------     ------       ------     ------- 
OTHER INCOME (EXPENSE):                                                                        
  Interest expense                                   (570)       (654)      (1,160)     (1,363)
  Interest income                                     347         258          674         475 
  Foreign exchange gain (loss)                        111        (320)          77        (326)
                                                   -------     ------      --------     -------
                                                     (112)       (716)       (409)      (1,214)
                                                   -------     ------      --------     -------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME                                                
   TAXES                                            7,847       5,705      13,974       11,428 
PROVISION FOR INCOME TAXES                          2,119       1,487       3,773        3,032 
                                                   -------     ------     --------     ------- 
INCOME FROM CONTINUING OPERATIONS                   5,728       4,218      10,201        8,396 
DISCONTINUED OPERATIONS                                                                        
  Profit (loss)from operations, net of income                                                  
   taxes of $58, ($222) and $41, respectively           -         164       (333)        (102) 

  Loss on disposal of RTP  including  provision of                                             
   $1,000 for operating losses during phase-out                                                
    period, net of tax benefit of $1,152                -           -     (1,729)           -  
                                                   -------     ------     -------      ------- 
NET INCOME                                         $5,728      $4,382     $8,139       $8,294  
                                                   =======     ======    ========      ======= 

EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:                                               
PRIMARY-                                                                                       
  Income from Continuing Operations                $ 0.23      $ 0.17     $ 0.41       $ 0.34  
  Discontinued Operations                               -        0.01      (0.08)           -  
                                                   ------      ------     ------      -------  
  Net Income                                       $ 0.23      $ 0.18     $ 0.33       $ 0.34  
                                                   ======      ======     ======      =======  

ASSUMING FULL DILUTION-                                                                        
  Income from Continuing Operations                $ 0.23      $ 0.17     $ 0.40       $ 0.33  
  Discontinued Operations                               -        0.01      (0.08)           -  
                                                   ------      ------    -------      -------  
  Net Income                                       $ 0.23      $ 0.18     $ 0.32       $ 0.33  
                                                   ======      ======     ======      =======  

COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING:                                               
  Primary                                          24,882      24,508     24,776       24,331  
  Fully Diluted                                    25,161      24,691     25,146       24,760  

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

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COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands Except Share Data)

                                                                · Download Table

                                                         JULY 4,     JANUARY 3,
                                                          1997         1997    
                                                      (UNAUDITED)    (AUDITED) 
                                                      ------------   ----------
ASSETS                                                                         
CURRENT ASSETS                                                                 

                                                                               
  Cash and equivalents                                 $ 32,639     $ 26,141   
  Accounts receivable, net                               38,881       35,989   
  Inventories                                            34,255       28,726   
  Prepaid expenses                                        3,626        2,038   
  Deferred income taxes, net                              1,304          965   
  Current assets of discontinued operations               5,681        7,646   
                                                        --------    ---------  
   Total current assets                                 116,386      101,505   
                                                        --------     --------  
PROPERTY, PLANT & EQUIPMENT, NET                         30,052       28,686   
                                                        --------     --------  
OTHER ASSETS                                                                   
  Goodwill, net                                          19,328       20,022   
  Deferred income taxes, net                              1,241          863   
  Other assets, net                                       1,211        1,171   
  Long-term assets of discontinued operations             1,356        1,594   
                                                        --------     --------  
   Total other assets                                    23,136       23,650   
                                                        --------     --------  
                                                        $169,754     $153,841  
                                                        ========     ========  
LIABILITIES AND SHAREHOLDERS' EQUITY                                           
CURRENT LIABILITIES                                                            
  Current maturities of long-term debt                  $ 4,861      $ 4,155   
  Accounts payable and accrued liabilities               42,928       34,210   
  Current liabilities of discontinued operations          1,244        2,055   
                                                        --------     --------  
   Total current liabilities                             49,033       40,420   

LONG-TERM DEBT                                           21,161       23,408   
LEASE LIABILITIES                                         5,889        5,994   
                                                        --------     --------  
   TOTAL LIABILITIES                                     76,083       69,822   
                                                        --------     --------  
SHAREHOLDERS' EQUITY                                                           
  Preferred  stock, par value $.01; 1,000,000 shares                           
   authorized;  none issued                                                    

  Common  stock, par value $.01; 80,000,000 shares                             
   authorized; 24,036,076  shares  issued and                                  
   outstanding at July 4, 1997 (23,849,759                                     
   at January 3, 1997)                                      240          239   
  Additional paid-in capital                             47,743       44,724   
  Retained earnings                                      46,922       38,783   
  Foreign currency translation adjustment                (1,414)         273   
                                                        --------     --------  
   TOTAL SHAREHOLDERS' EQUITY                            93,491       84,019   
                                                        --------     --------  
                                                        $169,574     $153,841  
                                                        ========     ========  

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

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COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
 (Unaudited)

                                                                · Download Table


                                                       TWENTY-SIX WEEKS ENDED
                                                        JULY 4,      JUNE 28,
                                                         1997          1996  
                                                       --------      --------
OPERATING ACTIVITIES:                                                        

                                                                             
  Net income                                           $8,139         $8,294 
  Adjustments to reconcile net income to net                                 
   cash provided by operating activities:                                    
   Depreciation and amortization                        3,390          2,831 
   Provision for discontinued operations                1,636              - 
   Other non-cash charges                                  52          1,756 
  Changes in operating assets and liabilities:                               
  Increase in accounts receivable                      (3,872)        (1,166)
   (Increase) decrease in inventories and                                    
     prepaid expenses                                  (7,536)           115 
   Increase (decrease) in accounts payable                                   
     and accrued liabilities                            9,115         (5,658)
  Net cash provided by (used in) discontinued                                
     operations                                         1,423            (11)
                                                      --------       --------
NET CASH PROVIDED BY OPERATING ACTIVITIES              12,347          6,161 
                                                      --------       --------
INVESTING ACTIVITIES:                                                        
  Purchases of property, plant and equipment           (4,688)        (2,792)
  Proceeds from sale of property, plant and equipment      25             70 
  Investing activities of discontinued operations         (32)          (667)
  (Increase) decrease in other assets                    (162)            78 
                                                      --------       --------
NET CASH USED IN INVESTING ACTIVITIES                  (4,857)        (3,311)
                                                      --------       --------
FINANCING ACTIVITIES:                                                        
  Principal payments on debt and capital leases        (1,660)        (1,979)
  Proceeds from exercises of stock options                979          2,217 
  Repurchases of common stock                               -         (2,032)
                                                       --------      --------
NET CASH USED IN FINANCING ACTIVITIES                    (681)        (1,794)
                                                       --------      --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND                                  
  EQUIVALENTS                                            (311)           (47)
                                                       --------      --------
INCREASE IN CASH AND EQUIVALENTS                        6,498          1,009 

CASH AND EQUIVALENTS, BEGINNING OF PERIOD              26,141         26,650 
                                                      --------       --------
CASH AND EQUIVALENTS, END OF PERIOD                   $32,639        $27,659 
                                                      ========       ========


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

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COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
JULY 4, 1997

1.    BASIS OF PRESENTATION                                                     

The accompanying unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  reporting  and with the  instructions  to Form 10-Q and Article 10 of
Regulation  S-X.  Certain  information  and  footnote  disclosures  required  by
generally accepted accounting  principles for complete financial statements have
been condensed or omitted.                                                      

In the opinion of management,  the accompanying financial statements include all
adjustments  (consisting of normal recurring accruals)  considered  necessary to
present fairly the financial position,  results of operations, and cash flows of
Computer  Products,  Inc. (the  "Company").  The results of  operations  for the
thirteen and twenty-six weeks ended July 4, 1997 are not necessarily  indicative
of the  results  that  may  be  expected  for  fiscal  year  1997.  For  further
information, these Condensed Consolidated Financial Statements should be read in
conjunction  with the financial  statements  and notes  thereto  included in the
Company's 1996 Annual Report to Shareholders and Form 10-Q for the thirteen week
period ended April 4, 1997.                                                     

Certain  prior year  amounts  have been  reclassified  to  reflect  discontinued
operations as described in Note 6.                                              

2.    INVENTORIES                                                               

The components of inventory are as follows ($000s):                             

                                     July 4,    January 3,
                                   1997         1997
                                   --------     --------
Raw materials                             $18,720     $14,953       
Work in process                             5,828       4,424       
Finished goods                              9,707       9,349       
                                   --------     --------
                                   $34,255     $28,726
                                   ========     ========

3.    PROPERTY, PLANT & EQUIPMENT, NET                                          

Related  accumulated  depreciation  was  $28,125,000  and  $26,064,000          
at July 4,  1997 and January 3, 1997, respectively.                             

4.    ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                                  

The components of accounts payable and accrued liabilities are ($000s):         

                                      July 4,     January 3,
                                     1997         1997
                                    -------      -------

Accounts payable                           $21,288      $16,136     
Accrued liabilities:                                                
Compensation and benefits                   6,028        5,793    
Income taxes payable                        6,247        5,080    
Accrued loss on disposal of subsidiary      1,560            -    
Other                                       7,805        7,201    
                                     --------      -------
                                      $42,928      $34,210
                                      =======      =======

5.    INCOME TAXES                                                              

The provision for income taxes reflects  federal,  state, and foreign taxes. The
effective  income tax rate on pretax earnings  differs from that computed at the
United States federal statutory rate for the following reasons:                 

                                      Twenty-Six Weeks Ended
                                       July 4,      June 28,
                                       1997           1996
                                        -------       --------
Provision computed at United States                                 
federal statutory rate                     35.0%         35.0%    
Effect of state income taxes                 4.8           4.2      
Amortization of goodwill                     0.2           0.2      
Foreign tax effects                         (7.2)         (4.1)     
Change in the valuation allowance           (5.9)         (9.0)     
Other                                        0.1           0.2      
                                       -------       -------
Effective tax rate                          27.0%         26.5%     
                                        =======       ========

6.    DISCONTINUED OPERATIONS                                                   

On April 17, 1997,  the Company  announced its intention to sell its  Industrial
Automation  division,  RTP Corp. ("RTP") pursuant to a plan of disposal approved
by the Board of Directors.                                                      

At April  4,  1997,  the  estimated  loss on the  disposal  of the  discontinued
operations of $1,729,000  (net of income tax benefit of $1,152,000)  represented
the estimated  loss on the disposal of RTP's net assets and a pre-tax  provision
of $1,000,000 for expected operating losses during the phase-out period.        

RTP's  sales for the  thirteen  and  twenty-six  weeks  ended  July 4, 1997 were
$2,541,000  and  $4,793,000,  respectively.  Prior  year's  RTP  sales  for  the
comparable periods were $3,607,000 and $6,677,000, respectively. RTP's operating
results  for the  second  quarter of 1997 and 1996 are shown  separately  in the
accompanying consolidated statements of operation.                              

Assets and  liabilities  of the  discontinued  operations  have been  separately
classified in the accompanying  statements of financial condition and consist of
the following ($000s):                                                          

                           July 4,      January 3,
                        1997          1997
                       ----------    ---------

Accounts receivable, net                 $2,526       $4,129                
Inventories                               3,144        3,494                
Prepaid expenses and other                   51          100                
Property, Plant & Equipment, net          1,316        1,517                
                      ----------    --------
Total assets                         $7,037       $9,240            
                       ==========    =========

Accounts payable and other accruals      $1,244       $2,055                
                     ==========    =========

All prior year amounts have been  restated for the  discontinued  operations  to
conform with the current year's presentation.                                   

7.    DERIVATIVE FINANCIAL INSTRUMENTS                                          

FOREIGN EXCHANGE  INSTRUMENTS --The Company enters into foreign currency forward
contracts  to minimize its exposure to  potentially  adverse  changes in foreign
currency  exchange rates on anticipated  but not firmly  committed  purchases or
sales denominated in foreign currencies made by its international  subsidiaries.
The foreign  exchange  contracts on receivables  require the Company to exchange
European ECU for Irish Punts. The foreign exchange contracts on payables require
the Company to exchange Japanese Yen to receive US dollars. At July 4, 1997, the
Company had $5.9 million of forward currency exchange  contracts maturing in one
to three months. No contracts were outstanding as of January 3, 1997. The amount
of any gain or loss on these contracts  during the period was not material.  The
Company does not hold or issue financial instruments for trading purposes.      

INTEREST RATE INSTRUMENTS -- The Company  periodically enters into interest rate
swaps,  cap and collar  agreements  to reduce the impact of changes in  interest
rates on its floating  rate debt.  The swap  agreement is a contract to exchange
floating  rate for fixed  interest  payments  periodically  over the life of the
agreement without the exchange of the underlying notional amounts.  The notional
amounts of interest rate  agreements are used to measure  interest to be paid or
received  and do not  represent  the  amount of  exposure  to credit  loss.  The
differential  paid or received on interest  rate  agreements is recognized as an
adjustment to interest expense. See Note 9 - Subsequent Events.                 

8.    NEW ACCOUNTING PRONOUNCEMENT                                              

On March 3, 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings Per Share".  This
statement  simplifies  the standards for computing and  presenting  earnings per
share ("EPS") and makes them comparable to international EPS standards. SFAS 128
replaces the  presentation  of primary EPS with a presentation  of basic EPS. It
also  requires  dual  presentation  of basic and  diluted EPS on the face of the
income statement for all entities with complex capital structures. SFAS 128 will
be effective beginning with the fourth quarter of 1997 and, upon adoption,  will
require  restatement of all prior periods presented.  The Company has quantified
the impact of applying the new standard to the second quarter results. Pro forma
information is as follows:                                                      

                                  Thirteen Weeks      Twenty-Six Weeks
                                  Ended                Ended
                                   July 4,  June 28,    July 4,   June 28,
                                  1997      1996       1997       1996
                                    --------  --------- ---------- -----------
EARNINGS PER COMMON SHARE                                                       

Income from Continuing Operations      $0.24     $0.18      $0.43      $0.36    
Discontinued Operations, net of tax        -      0.01      (0.09)         -    
                                 -------   --------   --------  --------
Net Income                             $0.24     $0.19      $0.34      $0.36    
                                 ========  ========   ========  ========

EARNINGS PER COMMON SHARE - ASSUMING DILUTION                                   

Income from Continuing Operations      $0.23     $0.17      $0.41      $0.34    
Discontinued Operations, net of tax        -      0.01      (0.08)         -    
                                  -------   -------   --------   -------
Net Income                             $0.23     $0.18      $0.33      $0.34    
                                  ========  ========   ========= =========

9.    SUBSEQUENT EVENTS                                                         

SALE OF SUBSIDIARY                                                              

Effective July 5, 1997, the Company sold its industrial automation division, RTP
Corp., to RT Acquisition Florida Corp. Proceeds from the sale, which are subject
to adjustment, included $2.0 million cash and a subordinated unsecured five-year
note in the aggregate  principal  amount of  approximately  $2.5 million bearing
interest at the prime rate.  The  estimated  after-tax  loss on the sale of $1.7
million was recorded in the first quarter of 1997.                              

ACQUISITION                                                                     

Effective July 22, 1997, the Company  acquired the Elba Group, a  privately-held
European  designer,  manufacturer and marketer of a wide range of both AC/DC and
DC/DC  power  conversion   products.   Computer  Products   purchased  Elba  for
approximately  $29 million in cash provided by two seven-year  term loans from a
financial institution. Elba has design, sales and manufacturing organizations in
Oberhausen  and Einsiedel,  Germany;  Chomutov,  Czech Republic and  Etten-Leur,
Netherlands.  The  Company  also has sales  offices in  Pfaffikon,  Switzerland;
Vaulx-Milieu, France; and Chesterfield, United Kingdom.                         

The  acquisition  will be accounted for under the purchase method of accounting.
Accordingly,  the excess of the purchase  price over the estimated fair value of
the net assets  acquired will be recorded as goodwill and will be amortized on a
straight line basis over a period of 20 years.                                  

LOAN AGREEMENTS                                                                 

Effective July 15, 1997, the Company amended and restated its existing revolving
and term loan agreement to reprice its outstanding term loan and to provide for 
a new $20 million  three-year  multi-currency  revolving working capital line of
credit. The new multi-currency  revolving facility, which expires in April 2000,
replaces the Company's previous $20 million credit line which would have expired
on April 1, 1998.  The interest rate on the revolver is at the London  Interbank
Offering  Rate  "Libor"  plus .50%.  No  borrowings  are  outstanding  under the
existing line. The Company's 1995 seven-year term loan, which has an outstanding
balance  of $22  million,  was  repriced  to bear  interest  at Libor  plus .75%
compared to the previous rate set at Libor plus 1.5%.                           

In addition,  effective July 15, 1997,  the Company and one of its  subsidiaries
entered into two separate unsecured  seven-year term loans with a bank providing
an aggregate of 52 million Deutsche marks. The term loans bear interest at Libor
plus .75%,  or  approximately  5.6%.  Proceeds  from the term loans were used to
finance the Elba Group acquisition on July 22, 1997.                            

Effective  July 14,  1997,  the  Company  entered  into two  interest  rate swap
agreements with a bank pursuant to which it exchanged its floating rate interest
obligations on the aggregate 52 million Deutsche marks notional principal amount
for a fixed rate payment  obligation of 5.58% per annum for a seven-year  period
beginning July 22, 1997.                                                        

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COMPUTER PRODUCTS, INC. AND SUBSIDIARIES
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
 AND RESULTS OF OPERATIONS

ACQUISITION                                                                     

On July 22, 1997, pursuant to an Agreement on the Sale, Purchase and Transfer of
Shares, the Company acquired all the outstanding  capital stock of the following
affiliated  companies:  Elba Electric GmbH, Elba Modul GmbH, Elba Elektronik AG,
Elba  Electronics  Ltd., Elba  Electric-Produktion  s. r. o., Elba  Electronique
S.A.R.L., and KRP Power Source B.V., collectively referred to as the Elba Group.

The Elba Group is engaged in the design,  manufacture  and  marketing  of a wide
range of both  AC/DC and DC/DC  power  conversion  products  in  Europe.  Elba's
fastest growing product  segment is its medium power AC/DC  converters  (150-750
watts) sold to OEM communications  customers under the Elba and KRP Power Source
labels. The Elba Group's customers include major multinational corporations such
as Ericsson,  Kodak,  Krone AG and Siemens among others.  Elba currently has 375
employees.  Management  believes  that the  acquisition  of the Elba  Group adds
significant  design expertise along with a strong product offering and important
relationships with the world's leading Wireless and Telecommunications equipment
manufacturers.  The acquisition  also expands the Company's  European  presence,
adds low cost manufacturing capacity in the Czech Republic and is expected to be
accretive to Computer Products' earnings.                                       

The purchase price of 52 million Deutsche marks  (approximately $29 million) was
paid in cash with  proceeds  from two  seven-year  term loans  from First  Union
National Bank, London Branch.  The loans bear interest at Libor plus .75%. It is
the intention of the Company,  subject to a review of each acquired company,  to
continue to use the acquired assets in substantially the same manner as prior to
the acquisition with certain changes to operating  procedures and upgrades to or
changes of existing equipment.                                                  

SALE OF SUBSIDIARY                                                              

On April 17, 1997,  the Company  announced its intention to sell its  Industrial
Automation  division,  RTP Corp. ("RTP") pursuant to a plan of disposal approved
by  the  Board  of  Directors.  Accordingly,  the  Company  classified  RTP as a
discontinued  operation and recorded an after-tax  non-recurring  charge of $2.1
million, or $0.08 per share, against first quarter 1997 earnings. Effective July
5, 1997, the Company sold its industrial  automation division,  RTP Corp., to RT
Acquisition  Florida  Corp.  Proceeds  from  the  sale,  which  are  subject  to
adjustment,  included $2.0 million cash and a subordinated  unsecured  five-year
note in the aggregate  principal  amount of  approximately  $2.5 million bearing
interest at the prime rate.                                                     

RESULTS OF OPERATIONS                                                           

For the second quarter of 1997, income from continuing  operations increased 36%
to $5.7 million,  or $0.23 per share, from the $4.2 million, or $0.17 per share,
reported for the comparable year-ago quarter.  Sales from continuing  operations
for the quarter  increased  24% to a record $59.5  million from $48.1  million a
year ago. For the first six months,  sales from  continuing  operations  totaled
$116.4  million,  up 22% from $95.4  million  in 1996.  Income  from  continuing
operations  increased  21% to $10.2  million,  or $0.41 per share,  up from $8.4
million, or $0.34 per share, in 1996.                                           

The following table displays sales by product  category for the twenty-six weeks
ended July 4, 1997 and June 28, 1996:                                           

                                    (DOLLARS IN THOUSANDS)
                                     JULY 4,      JUNE 28,
                                   1997         1996
                                   ---------    --------

Power Conversion                         $105,543     $87,205       
                                     90.7%       91.4%
Computer Systems                           10,866       8,227       
                                      9.3%        8.6%
                                  --------     -------
Total                                    $116,409     $95,432       
                                  ========     =======

Sales from  continuing  operations for the thirteen and  twenty-six  weeks ended
July 4, 1997 increased $11.5 million (24%) and $21 million (22%),  respectively,
over the  comparable  prior year periods as a result of a wider range of product
offerings,  the  continued  foreign  expansion  and the  increase of service and
support programs. Specifically, year-to-date Power Conversion sales improved 21%
while Computer  Systems sales  increased 32% compared to the six-month  period a
year ago.                                                                       

Sales to customers in Asia and the Pacific Rim increased  224% from $4.5 million
in the six-month  period of 1996 to $14.7 million for the  comparable  period in
1997 mainly due to the award of a significant  Original  Equipment  Manufacturer
("OEM")  program  with  shipments  beginning  in the  second  quarter  of  1996.
Likewise,  the  Company's  European  Power  Conversion  business  recorded a 32%
increase  in sales  for the  second  quarter  of 1997  compared  to the year ago
quarter again due to increased  demand from OEM  communications  customers.  The
Company  anticipates  additional  sales  growth in Power  Conversion  during the
remainder  of this fiscal year and will  continue  to consider  acquisition  and
partnership opportunities to increase market share and expand product range.    

As mentioned  above,  Computer  Systems  sales were 32% higher than the year ago
period as this division  continues to transition  from the computer  industry to
the communications  sector.  Similar to the Power Conversion division,  Computer
Systems has concentrated its marketing efforts on the high-growth communications
industry,  where it provides networking,  telecommunications and video-on-demand
solutions for a variety of customers,  including  OEMs.  With its  initiative to
develop new  products  aimed at customers in the  communications  industry,  the
Company expects this division to increase its sales volume through the remainder
of the fiscal year                                                              

Orders for the second quarter of 1997 increased to $64.5 million  representing a
33%  improvement  compared to the year ago  quarter.  The large  increase is the
result of entering the production  phase of new OEM programs awarded to both the
Power  Conversion and Computer  Systems  divisions during 1996. At July 4, 1997,
order backlog was $58.5 million compared to $45.9 million at January 3, 1997.   

Although gross profit for the thirteen and  twenty-six  weeks ended July 4, 1997
increased by $4.3 million and $6.8 million,  respectively,  over the  comparable
prior year periods,  gross margin for the second  quarter of 1997 was level with
prior  year's  at 37% while the  current  year-to-date  margin of 35.8% was down
compared to the 36.5%  reported  for the  six-month  period a year ago.  Margins
continue to be  adversely  impacted  by the shift in sales mix to the  Company's
high-volume,  lower-margin  OEM customers  coupled with lower  standard  product
sales to the distribution sales channel. Although the Company continues to focus
on reducing  manufacturing  costs and improving overall  processes,  the Company
does not  anticipate  that gross margins will increase  significantly  from 1996
levels due to continuing  competitive  pricing  pressures and changes in product
mix, especially as more OEM programs are awarded.                               

For the thirteen and twenty-six weeks ended July 4, 1997,  selling,  general and
administrative   ("SG&A")  expenses  as  a  percentage  of  sales  decreased  to
approximately 15% from 15.5% for the comparable prior year periods.  In absolute
dollar terms,  SG&A  increased $1.5 million in the second quarter of 1997 mostly
due to higher sales and marketing  expenses.  Specific  factors  included higher
commission expense from increased sales volume, the cost of additional marketing
programs to support the launch of new products,  and  expansion of  distribution
channels.  The  Company  plans to invest  significant  resources  to expand  its
presence in Asia, the Pacific Rim and Europe; accordingly,  selling expenses are
expected to continue to increase in absolute  dollars  through the  remainder of
1997 while general and  administrative  expenses should continue to decline as a
percentage of sales.                                                            

Research and development ("R&D") spending increased  approximately $1.3 million,
or 33%,  compared to the second  quarter of 1996.  The higher  expense level was
primarily  attributable  to the cost of developing new products  consistent with
the Company's ongoing commitment to develop and produce high-quality, innovative
products targeted at the communications  industry. As a percentage of sales, R&D
expenses were 8.8% for the second quarter of 1997 versus 8.2% for the comparable
prior year period.  The Company  believes  that the timely  introduction  of new
technology and products is an important  component of its  competitive  strategy
and  anticipates  future R&D  spending  will not  significantly  differ from the
historical trend as a percentage of sales of approximately 8%.                  

The  provision  for  income  taxes as a  percentage  of  pretax  income  for the
twenty-six  weeks ended July 4, 1997 increased to 27% from 26.5% and 26% for the
comparable prior year period and prior fiscal year, respectively.  The effective
tax rate for 1997 increased primarily due to lower change in valuation allowance
offset by higher income from foreign operations which are taxed at a lower rate.
See Note 5 to the Condensed  Consolidated Financial Statements for the Company's
effective tax rate reconciliation.                                              

LIQUIDITY AND CAPITAL RESOURCES                                                 

At July 4, 1997, the Company's cash balance was $32.6 million  compared to $26.1
million at January 3, 1997 despite purchases of equipment and the long-term debt
principal  repayment of $1.5 million on the Company's  existing  seven-year term
loan.                                                                           

Inventories  increased  $5.5 million,  or 19%, from January 3, 1997 primarily in
the  Power  Conversion  division  as a result  of  production  planning  to meet
manufacturing lead times and anticipated demand for new product introductions.  

Accounts  receivable  increased $2.9 million, or 8%, from January 3, 1997 due to
sales growth, including the continued expansion in international operations that
typically have longer collections  cycles. Days sales outstanding in receivables
were 59 days at July 4, 1997 compared to 56 days at January 3, 1997.            

Accounts  payable  increased  $5.2 million,  or 32%, from January 3, 1997 due to
increases in capital expenditures, operating expenses, and material purchases to
support the growth in sales.                                                    

Cash provided by operations  increased to $12.3 million for the twenty-six weeks
ended July 4, 1997 from $6.2  million  for the  twenty-six  weeks ended June 28,
1996  primarily  as a result of an  increase  in  accounts  payable  and accrued
liabilities.                                                                    

Net  cash  used  in  investing  activities  increased  to $4.9  million  for the
twenty-six  weeks ended July 4, 1997 from $3.3 million for the twenty-six  weeks
ended June 28, 1996 due to higher equipment purchases.                          

Net cash used in financing  activities  for the  twenty-six  weeks ended July 4,
1997 reflects mainly long-term debt principal  repayments including $1.5 million
on the  Company's  seven-year  term  loan  partially  offset  by  proceeds  from
exercises of stock options.                                                     

The Company and one of its  subsidiaries  entered  into two  separate  unsecured
seven-year term loans with a bank providing an aggregate of 52 million  Deutsche
marks. The term loans bear interest at Libor plus .75%, or  approximately  5.6%.
Proceeds  from the term  loans  were used to finance  the  purchase  of the Elba
Group. In addition,  the Company amended and restated its existing revolving and
term loan  agreement to reprice its  outstanding  term loan and to provide for a
new $20 million  three-year  multi-currency  revolving  working  capital line of
credit.                                                                         

The new multicurrency revolving facility,  which expires in April 2000, replaces
the Company's previous $20 million credit line which would have expired on April
1, 1998.  The interest  rate on the revolver was reduced from Libor plus .75% to
Libor plus .50%. As of July 4, 1997,  the Company had made no  borrowings  under
the  existing  line  of  credit  and  was in  compliance  with  the  agreement's
covenants.                                                                      

Effective July 15, 1997, the Company's 1995 seven-year  term loan,  which has an
outstanding balance of $22 million,  was repriced to bear interest at Libor plus
.75% compared to the previous rate set at Libor plus 1.5%.                    

Based on current plans and business  conditions,  the Company  believes that its
cash and equivalents, its available credit line, cash generated from operations,
and other  financing  activities  are  expected to be  adequate to meet  capital
expenditures,  working capital  requirements,  debt  obligations and outstanding
lease commitments through the remainder of fiscal 1997.                         

FORWARD LOOKING STATEMENTS                                                      

Certain  statements in this Form 10-Q  constitute  "forward-looking  statements"
within the meaning of the Private  Securities  Litigation Reform Act of 1995 and
are based on the Company's  current  expectations  with respect to future sales,
operating  efficiencies,  growth and  working  capital  needs.  Such  statements
involve  risks  and  uncertainties  which  may cause  actual  results  to differ
materially  from those set forth in these  forward-looking  statements.  Factors
that might affect such forward-looking statements include, among others, general
economic   conditions  and  growth  in  the  power  supply  and   communications
industries,  changes in customer mix, competitive factors and pricing pressures,
changes in product mix, the timely  development  and acceptance of new products,
ability to  integrate  the Elba  Group  operations  with  those of the  Company,
ability  to  attract  and  retain  customers  including  new OEM  communications
customers,  ability to  attract  and retain  personnel,  inventory  risks due to
shifts in market  demand,  changes  in  absorption  of  manufacturing  overhead,
domestic and foreign regulatory approvals particularly as it relates to the Elba
acquisition  and other risks  described in the Company's  various  reports filed
with the Securities and Exchange Commission.                                    

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PART II. OTHER INFORMATION

ITEM  4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 

(a)     The Company held its Annual Meeting of Shareholders on May 8, 1997.     

(c)     The following matters were voted upon at the Annual Meeting of          
Shareholders:                                                   

 1.    The  election of the nominees  for  Directors  who will serve for a
          term to expire at the  Annual  Meeting of  Shareholders  to be held in
          1998 was voted on by the shareholders.  The nominees, all of whom were
          elected,  were: Edward S. Croft, III, Joseph M. O'Donnell,  Stephen A.
          Ollendorff,  Phillip A. O'Reilly,  Bert Sager, and Lewis Solomon.  The
    Inspectors of Election certified the following vote tabulations:

                  FOR               WITHHELD

Edward S. Croft, III   20,685,845           762,950           
Joseph M. O'Donnell    20,715,547           733,248           
Stephen A. Ollendorff  20,704,205           744,590           
Phillip A. O'Reilly    20,777,007           671,788           
Bert Sager             20,674,024           774,771           
Lewis Solomon          20,781,144           677,651           

   2. A proposal  to amend the 1990  Performance  Equity  Plan to  increase  the
      authorized  shares of common  stock  currently  available  for grant  from
      4,450,000 to 5,950,000 was approved by the shareholders. The Inspectors of
Election certified the following vote tabulations:                  

             FOR           AGAINST           ABSTAIN

      14,798,315         2,709,784           108,350

   3. A proposal  to amend the 1990  Performance  Equity  Plan to  increase  the
      authorized  shares of common stock available for grant in future years was
      approved by the  shareholders.  The  Inspectors of Election  certified the
following vote tabulations:                                         

             FOR           AGAINST           ABSTAIN

       9,206,455         6,869,639            99,441

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PART II. OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                                    

(A)   EXHIBITS                                                                  

Exhibit No. 10.33 - Asset Purchase  Agreement among RT Acquisition  Florida     
Corp., RTP Corp. and Computer Products Inc. dated as of July 5, 1997.           

Exhibit No. 10.34 - Amendment to  Installment or Single Payment Note by and     
between Firstar Bank Madison,  N.A., Heurikon  Corporation and Computer Products
Inc. dated as of May 23, 1997.                                                  

Exhibit No. 11 --  Computation  of earnings per common and common  equivalent   
share for the thirteen weeks ended July 4, 1997 and June 28, 1996.              

Exhibit No. 27 -- Financial Data Schedule.                                      

(B)   REPORTS ON FORM 8-K                                                       

The Company did not file any reports on Form 8-K during the thirteen week period
ended July 4, 1997.                                                             

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 SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.                                          

                                       COMPUTER PRODUCTS, INC.

                                              (Registrant)

DATE:    August 8, 1997                         BY:   Richard J. Thompson       
                                               -------------------
                                               Richard J. Thompson
                                                  Vice President Finance
                                                   Chief Financial Officer

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-Q Filing	Date	First	Last	Other Filings

	6/28/96	7	9	10-Q
	1/3/97	4	7	10-K
	3/3/97	6
	4/4/97	6		10-Q
	4/17/97	6	7
	5/8/97	8		DEF 14A
	5/23/97	9
For The Period Ended	7/4/97	1	9	10-Q/A
	7/5/97	6	9
	7/14/97	6
	7/15/97	6	7
	7/22/97	6	7	8-K
	8/1/97	1
Filed On / Filed As Of	8/8/97	10
	4/1/98	6	7

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Artesyn Technologies Inc · 10-Q · For 7/4/97

Filed On 8/8/97 · SEC File 0-04466 · Accession Number 23071-97-13

Quarterly Report · Form 10-QFiling Table of Contents

10-Q · Second Quarter 1997Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Quarterly Report · Form 10-Q
Filing Table of Contents

10-Q · Second Quarter 1997
Document Table of Contents