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 BOCA RATON, Fla., Oct. 22 /PRNewswire/ -- Computer Products, Inc. (NASDAQ:CPRD) today reported net income for the third quarter ended Oct. 1, 1993, of $552,000, or $0.03 per share, on sales of $30.5 million, vs. net income of $771,000, or $0.04 per share, on sales of $29.9 million in the third quarter of 1992.
 Net income for the 39 weeks ended Oct. 1, 1993, was $4.0 million, or $0.19 per share, on sales of $89.9 million, vs. net income of $952,000, or $0.05 per share, on sales of $84.9 million in the first nine months of 1992. Results for the first nine months of 1993 included a favorable impact of $2.3 million, or $0.11 per share, from the cumulative effect of changes in accounting principles that occurred during the first quarter.
 Orders in the third quarter were up 4.8 percent over the same period a year ago, but down 7.5 percent from the level at the end of the second quarter of 1993. Power Conversion orders were about even with the same period a year ago, but off 14.3 percent from the second quarter due to distributors adjusting their inventory levels and rescheduling of orders by certain OEMs in the U.S. and Europe. Year-to-date orders for Power Conversion represent 22.2 percent growth over the first 39 weeks of 1992. Process Automation orders, as expected, were off significantly from both the second quarter and year ago levels due to continued lack of demand from the industrial process industry; however, bidding activity has increased and there are signs that order patterns may soon begin to improve. Computer Systems improved significantly during the quarter, with orders up over 50 percent from both prior quarter and year ago levels.
 Total company sales were up slightly from the third quarter of 1992, and roughly even with the second quarter of this year. The slow down in sales growth was primarily due to weakness in demand during the summer from domestic distributors in Power Conversion and continued weakness in utility and simulation projects affecting Process Automation.
 Gross margins dropped to 38.3 percent from 44.3 percent a year ago and from 40.1 percent in the second quarter of 1993. The decline reflects a continuation of the shift in mix from higher margin real-time business to lower margin Power Conversion sales, a strategic shift in mix within Power Conversion towards OEM customers, and planned start up costs of new products.
 The decrease in selling, general and administrative expenses from a year ago is a result of downsizing activities in the real-time systems businesses and continued spending controls. The decrease from the second quarter reflects the impact of ongoing cost reduction efforts.
 Research and development expenses were at roughly the same level as a year ago, but decreased from the high levels of the second quarter.
 The second quarter of 1993 included a positive impact from foreign currency gains of $152,000 which declined to $20,000 in the third quarter due to the strengthening of the Irish punt and other European currencies against the dollar.
 Commenting on the quarter, John N. Lemasters, chairman and chief executive officer, stated, "We believe that the weakness in orders from certain segments of the Power Conversion business is due to temporary factors, mainly the realignment of customer inventories, and does not represent a fundamental change in the business climate or in the primary trend in demand for our products. We have already seen signs of improving order rates from domestic distributors, and OEM orders are expected to catch up in the fourth quarter. Volume production of Basix has begun and we are shipping to our first customer, with additional orders expected during the fourth quarter."
 "Despite continuing weakness in the utility sector, we still expect Process Automation to reach the breakeven point by year end and are encouraged by the recent increase in bidding activity. We expect Process Automation to continue at about breakeven during the first half of next year, with the prospect of a return to solid profitability in the second half based on the planned release of additional new products and a renewed bidding activity for large utility and simulation projects. Computer Systems has definitely turned the corner and is expected to make a greater contribution to profits as its revenues continue to grow."
 "Despite lower than anticipated orders during the third quarter, we continue to expect a strong fourth quarter, similar to the pattern of last year, and our positive outlook for 1994 remains unchanged."
 Computer Products, Inc., headquartered in Boca Raton, Fla., is a multinational manufacturer of standard and custom-designed electronic products and subsystems for power conversion, industrial automation, and other real-time systems applications. The company has operations in Pompano Beach, Fla.; Madison, Wis.; Boston; Fremont, Calif.; Hong Kong and the Republic of Ireland.
 (Dollars In Thousands)
 Oct. 1, Jan. 1,
 1993 1993
 (Unaudited) (Audited)
 Current Assets:
 Cash and equivalents $ 11,522 $ 15,561
 Accounts receivable, net 20,261 20,683
 Inventories 19,906 17,445
 Prepaid expenses 1,247 1,200
 Deferred income taxes, net 1,066 ---
 Total current assets 54,002 54,889
 Property, Net 24,172 23,949
 Other assets:
 Goodwill, net 16,660 19,034
 Deferred income taxes, net 4,157 ---
 Other assets, net 3,533 4,790
 Total other assets 24,350 23,824
 Total Assets $ 102,524 $ 102,662
 Current Liabilities $ 22,823 $ 25,365
 Long-Term Liabilities:
 Long-Term debt 4,999 5,573
 Lease liabilities 6,761 7,023
 Convertible subordinated debentures 33,895 33,895
 Total long-term liabilities 45,655 46,491
 Total liabilities 68,478 71,856
 Stockholders' Equity 34,046 30,806
 Total Liabilities and
 Stockholders' Equity $ 102,524 $ 102,662
 (In Thousands Except Per Share Amounts)
 13 Weeks Ended 39 Weeks Ended
 Oct. 1, Oct. 2, Oct. 1, Oct. 2,
 1993 1992 1993 1992
 Orders $ 31,362 $ 29,924 $ 97,394 $ 88,267
 Conversion $ 23,219 $ 20,432 $ 67,985 $ 56,252
 Automation 3,280 5,176 10,381 14,953
 Systems 4,023 4,312 11,527 13,728
 Sales 30,522 29,920 89,893 84,933
 Cost of Sales 18,823 16,674 54,349 47,304
 Gross Profit 11,699 13,246 35,544 37,629
 Selling, general
 and adminis-
 trative 7,914 9,211 24,448 26,981
 Research and
 development 2,185 2,165 6,798 6,803
 Total Expenses 10,099 11,376 31,246 33,784
 Operating Income 1,600 1,870 4,298 3,845
 Other Income
 Interest expense (935) (1,044) (2,769) (3,287)
 Interest income 99 245 424 831
 Foreign exchange
 gain (loss) 20 (132) 478 (153)
 Total Other Income
 (Expense) (816) (931) (1,867) (2,609)
 Income before
 Income Taxes 784 939 2,431 1,236
 Provision for
 Income Taxes 232 326 729 493
 Income before Extra-
 ordinary Credit and
 Cumulative Effect
 of a Change in
 Accounting Prin-
 ciples 552 613 1,702 743
 Extraordinary credit-
 utilization of net
 operating loss
 carryforwards --- 158 --- 209
 Cumulative effect of
 a change in account-
 ing principles --- --- 2,270 ---
 Net Income $ 552 $ 771 $ 3,972 $ 952
 Earnings Per Common
 and Equivalent
 Income before extra-
 ordinary credit
 and cumulative
 effect of a change
 in accounting
 principles $ 0.03 $ 0.03 $ 0.08 $ 0.04
 of net operating
 loss carryforwards --- 0.01 --- 0.01
 Cumulative effect
 of a change in
 accounting prin-
 ciples --- --- 0.11 ---
 Net income $ 0.03 $ 0.04 $ 0.19 $ 0.05
 Weighted average
 number of common
 and equivalent shares
 outstanding 20,681 20,358 20,788 20,909
 -0- 10/22/93
 /CONTACT: Claudia Gatlin, 212-830-9080, for Computer Products; or John Lemasters of Computer Products, 407-451-1000/

CO: Computer Products, Inc. ST: Florida IN: CPR SU: ERN

JB-RK -- FL001 -- 5586 10/22/93 08:59 EDT
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Publication:PR Newswire
Date:Oct 22, 1993

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