Commission File
|
Registrant; State of Incorporation;
|
IRS Employer
|
||
Number
|
Address and Telephone Number
|
Identification No.
|
||
001-34974
|
Aeroflex Holding Corp.
|
01-0899019
|
||
Delaware
|
||||
35 South Service Road
|
||||
P.O. Box 6022
|
||||
Plainview, NY 11803-0622
|
||||
(516) 694-6700
|
||||
033-88878
|
Aeroflex Incorporated
|
11-1974412
|
||
Delaware
|
||||
35 South Service Road
|
||||
P.O. Box 6022
|
||||
Plainview, NY 11803-0622
|
||||
(516) 694-6700
|
Large accelerated
|
Accelerated
|
Non-accelerated
|
Smaller reporting
|
|||||||||||||
filer
|
filer
|
filer
|
company
|
|||||||||||||
Aeroflex Holding Corp.
|
o | o | x | o | ||||||||||||
Aeroflex Incorporated
|
o | o | x | o |
·
|
Repurchased an aggregate of $186.6 million of its senior unsecured notes and senior subordinated unsecured term loans and paid the tender premiums and expenses related thereto;
|
·
|
Paid a $16.9 million termination fee to affiliates of the Sponsors to terminate the advisory agreement with them, which, including the related write-off of prepaid advisory fees, resulted in an $18.1 million expense (“Termination Fee”); and
|
·
|
Amended its senior secured credit facility, for which a $3.3 million fee was paid to the lenders.
|
PAGE
|
|||
PART I: FINANCIAL INFORMATION
|
|||
Item 1
|
FINANCIAL STATEMENTS OF AEROFLEX HOLDING CORP. AND SUBSIDIARIES
|
||
Unaudited Condensed Consolidated Balance Sheets
|
|||
March 31, 2011 and June 30, 2010
|
2
|
||
Unaudited Condensed Consolidated Statements Of Operations
|
|||
Three Months Ended March 31, 2011 and 2010
|
3
|
||
Nine Months Ended March 31, 2011 and 2010
|
4
|
||
Unaudited Condensed Consolidated Statement Of Stockholders’ Equity and Comprehensive Income (Loss)
|
|||
Nine Months Ended March 31, 2011
|
5
|
||
Unaudited Condensed Consolidated Statements Of Cash Flows
|
|||
Nine Months Ended March 31, 2011 and 2010
|
6
|
||
FINANCIAL STATEMENTS OF AEROFLEX INCORPORATED AND SUBSIDIARIES
|
|||
Unaudited Condensed Consolidated Balance Sheets
|
|||
March 31, 2011 and June 30, 2010
|
7
|
||
Unaudited Condensed Consolidated Statements Of Operations
|
|||
Three Months Ended March 31, 2011 and 2010
|
8
|
||
Nine Months Ended March 31, 2011 and 2010
|
9
|
||
Unaudited Condensed Consolidated Statement Of Stockholder’s Equity and Comprehensive Income (Loss)
|
|||
Nine Months Ended March 31, 2011
|
10
|
||
Unaudited Condensed Consolidated Statements Of Cash Flows
|
|||
Nine Months Ended March 31, 2011 and 2010
|
11
|
||
COMBINED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
12 – 36
|
||
Item 2
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
||
Three and Nine Months Ended March 31, 2011 and 2010
|
36 – 51
|
||
Item 3
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
51
|
|
Item 4
|
CONTROLS AND PROCEDURES
|
52
|
|
PART II: OTHER INFORMATION
|
|||
Item 1
|
LEGAL PROCEEDINGS
|
52
|
|
Item 1A
|
RISK FACTORS
|
53
|
|
Item 2
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
53
|
|
Item 3
|
DEFAULTS UPON SENIOR SECURITIES
|
53
|
|
Item 4
|
[REMOVED AND RESERVED]
|
53
|
|
Item 5
|
OTHER INFORMATION
|
53
|
|
Item 6
|
EXHIBITS
|
53
|
|
SIGNATURE
|
55
|
||
EXHIBIT INDEX
|
56
|
||
CERTIFICATIONS
|
57 - 66
|
Aeroflex Holding Corp. and Subsidiaries
|
Unaudited Condensed Consolidated Balance Sheets
|
(In thousands, except share and per share data )
|
March 31,
|
June 30,
|
|||||||
2011
|
2010
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
67,152
|
$
|
100,663
|
||||
Accounts receivable, less allowance for doubtful accounts of $1,213 and $1,821
|
158,382
|
141,595
|
||||||
Inventories
|
171,212
|
126,568
|
||||||
Deferred income taxes
|
25,903
|
28,018
|
||||||
Prepaid expenses and other current assets
|
13,212
|
10,983
|
||||||
Total current assets
|
435,861
|
407,827
|
||||||
Property, plant and equipment, net of accumulated depreciation of $71,672 and $60,755
|
101,776
|
101,662
|
||||||
Non-current marketable securities, net
|
-
|
9,769
|
||||||
Deferred financing costs, net
|
16,298
|
20,983
|
||||||
Other assets
|
28,516
|
21,818
|
||||||
Intangible assets with definite lives, net
|
199,449
|
238,313
|
||||||
Intangible assets with indefinite lives
|
114,689
|
109,894
|
||||||
Goodwill
|
460,664
|
445,874
|
||||||
Total assets
|
$
|
1,357,253
|
$
|
1,356,140
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt
|
$
|
360
|
$
|
21,817
|
||||
Accounts payable
|
47,240
|
28,803
|
||||||
Advance payments by customers and deferred revenue
|
31,519
|
30,741
|
||||||
Income taxes payable
|
1,323
|
4,615
|
||||||
Accrued payroll expenses
|
22,717
|
23,082
|
||||||
Accrued expenses and other current liabilities
|
43,616
|
58,817
|
||||||
Total current liabilities
|
146,775
|
167,875
|
||||||
Long-term debt
|
695,908
|
880,030
|
||||||
Deferred income taxes
|
92,511
|
138,849
|
||||||
Defined benefit plan obligations
|
5,526
|
5,763
|
||||||
Other long-term liabilities
|
12,830
|
12,639
|
||||||
Total liabilities
|
953,550
|
1,205,156
|
||||||
Stockholders’ equity:
|
||||||||
Preferred stock $.01 par value; 50,000,000 shares authorized, no shares issued and outstanding
|
-
|
-
|
||||||
Common stock, par value $.01 per share; 300,000,000 shares authorized; 84,789,180 and 65,000,000 shares issued and outstanding
|
848
|
650
|
||||||
Additional paid-in capital
|
643,600
|
398,291
|
||||||
Accumulated other comprehensive income (loss)
|
(33,270
|
)
|
(53,575
|
)
|
||||
Accumulated deficit
|
(207,475
|
)
|
(194,382
|
)
|
||||
Total stockholders’ equity
|
403,703
|
150,984
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,357,253
|
$
|
1,356,140
|
Aeroflex Holding Corp. and Subsidiaries
|
Unaudited Condensed Consolidated Statements of Operations
|
(In thousands, except per share data)
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Net sales
|
$ | 193,219 | $ | 168,435 | ||||
Cost of sales
|
86,861 | 78,135 | ||||||
Gross profit
|
106,358 | 90,300 | ||||||
Selling, general and administrative costs
|
38,265 | 31,285 | ||||||
Research and development costs
|
24,663 | 20,844 | ||||||
Amortization of acquired intangibles
|
15,900 | 15,408 | ||||||
Restructuring charges
|
2,698 | 105 | ||||||
81,526 | 67,642 | |||||||
Operating income
|
24,832 | 22,658 | ||||||
Other income (expense):
|
||||||||
Interest expense
|
(13,852 | ) | (20,815 | ) | ||||
Other income (expense), net
|
(119 | ) | 222 | |||||
Total other income (expense)
|
(13,971 | ) | (20,593 | ) | ||||
Income before income taxes
|
10,861 | 2,065 | ||||||
Provision (benefit) for income taxes
|
6,734 | (791 | ) | |||||
Net income
|
$ | 4,127 | $ | 2,856 | ||||
Net income per common share - Basic
|
$ | 0.05 | $ | 0.04 | ||||
Weighted average number of common shares outstanding - Basic
|
84,789 | 65,000 |
Aeroflex Holding Corp. and Subsidiaries
|
Unaudited Condensed Consolidated Statements of Operations
|
(In thousands, except per share data)
|
Nine Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Net sales
|
$ | 530,729 | $ | 465,290 | ||||
Cost of sales
|
249,705 | 223,259 | ||||||
Gross profit
|
281,024 | 242,031 | ||||||
Selling, general and administrative costs
|
113,234 | 92,988 | ||||||
Research and development costs
|
68,477 | 55,286 | ||||||
Amortization of acquired intangibles
|
47,706 | 46,527 | ||||||
Termination of Sponsor Advisory Agreement
|
18,133 | - | ||||||
Restructuring charges
|
10,790 | 356 | ||||||
Loss on liquidation of foreign subsidiary
|
- | 7,696 | ||||||
258,340 | 202,853 | |||||||
Operating income
|
22,684 | 39,178 | ||||||
Other income (expense):
|
||||||||
Interest expense
|
(55,803 | ) | (63,272 | ) | ||||
Loss on extinguishment of debt
|
(25,178 | ) | - | |||||
Gain from a bargain purchase of a business
|
173 | - | ||||||
Other income (expense), net
|
(526 | ) | 701 | |||||
Total other income (expense)
|
(81,334 | ) | (62,571 | ) | ||||
Income (loss) before income taxes
|
(58,650 | ) | (23,393 | ) | ||||
Provision (benefit) for income taxes
|
(45,557 | ) | 4,908 | |||||
Net income (loss)
|
$ | (13,093 | ) | $ | (28,301 | ) | ||
Net income (loss) per common share - Basic
|
$ | (0.18 | ) | $ | (0.44 | ) | ||
Weighted average number of common shares outstanding - Basic
|
74,608 | 65,000 |
Aeroflex Holding Corp. and Subsidiaries
|
Unaudited Condensed Consolidated Statement of Stockholders' Equity
|
and Comprehensive Income (Loss)
|
(In thousands)
|
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Comprehensive
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||||
Total
|
Shares
|
Par Value
|
Capital
|
Income(Loss)
|
Deficit
|
Income (Loss)
|
||||||||||||||||||||||
Balance, June 30, 2010
|
$ | 150,984 | 65,000 | $ | 650 | $ | 398,291 | $ | (53,575 | ) | $ | (194,382 | ) | |||||||||||||||
Proceeds from issuance of common stock
|
244,021 | 19,789 | 198 | 243,823 | - | - | ||||||||||||||||||||||
Share-based compensation
|
1,655 | - | - | 1,655 | - | - | ||||||||||||||||||||||
Other changes
|
(169 | ) | - | - | (169 | ) | - | - | ||||||||||||||||||||
Other comprehensive income (loss)
|
20,305 | - | - | - | 20,305 | - | $ | 20,305 | ||||||||||||||||||||
Net income (loss)
|
(13,093 | ) | - | - | - | - | (13,093 | ) | (13,093 | ) | ||||||||||||||||||
Balance, March 31, 2011
|
$ | 403,703 | 84,789 | $ | 848 | $ | 643,600 | $ | (33,270 | ) | $ | (207,475 | ) | $ | 7,212 |
Aeroflex Holding Corp. and Subsidiaries
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
(In thousands)
|
Nine Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | (13,093 | ) | $ | (28,301 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
62,426 | 62,178 | ||||||
Gain from a bargain purchase of a business
|
(173 | ) | - | |||||
Acquisition related adjustment to cost of sales
|
998 | 246 | ||||||
Loss on liquidation of foreign subsidiary
|
- | 7,696 | ||||||
Loss on extinguishment of debt
|
25,178 | - | ||||||
Deferred income taxes
|
(52,317 | ) | (1,286 | ) | ||||
Share-based compensation
|
1,655 | 1,563 | ||||||
Non - cash restructuring charges
|
4,860 | - | ||||||
Amortization of deferred financing costs
|
3,976 | 3,579 | ||||||
Paid in kind interest
|
2,434 | 13,377 | ||||||
Other, net
|
496 | 758 | ||||||
Change in operating assets and liabilities, net of effects from purchases of businesses:
|
||||||||
Decrease (increase) in accounts receivable
|
(10,890 | ) | 10,754 | |||||
Decrease (increase) in inventories
|
(39,936 | ) | 4,450 | |||||
Decrease (increase) in prepaid expenses and other assets
|
(8,142 | ) | (2,711 | ) | ||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities
|
4,430 | (20,053 | ) | |||||
Net cash provided by (used in) operating activities
|
(18,098 | ) | 52,250 | |||||
Cash flows from investing activities:
|
||||||||
Payments for purchase of businesses, net of cash acquired
|
(23,593 | ) | (4,000 | ) | ||||
Capital expenditures
|
(17,132 | ) | (13,176 | ) | ||||
Proceeds from sale of marketable securities
|
10,357 | 8,580 | ||||||
Proceeds from the sale of property, plant and equipment
|
819 | 1,021 | ||||||
Other, net
|
- | (12 | ) | |||||
Net cash provided by (used in) investing activities
|
(29,549 | ) | (7,587 | ) | ||||
Cash flows from financing activities:
|
||||||||
Net proceeds from issuance of common stock
|
244,021 | - | ||||||
Repurchase of senior unsecured notes and senior subordinated unsecured term loans, including premiums and fees
|
(207,690 | ) | - | |||||
Debt repayments
|
(21,458 | ) | (4,012 | ) | ||||
Debt financing costs
|
(3,332 | ) | - | |||||
Net cash provided by (used in) financing activities
|
11,541 | (4,012 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents
|
2,595 | (2,051 | ) | |||||
Net increase (decrease) in cash and cash equivalents
|
(33,511 | ) | 38,600 | |||||
Cash and cash equivalents at beginning of period
|
100,663 | 57,748 | ||||||
Cash and cash equivalents at end of period
|
$ | 67,152 | $ | 96,348 |
Aeroflex Incorporated and Subsidiaries
|
Unaudited Condensed Consolidated Balance Sheets
|
(In thousands, except share and per share data )
|
March 31,
|
June 30,
|
|||||||
2011
|
2010
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 67,152 | $ | 100,663 | ||||
Accounts receivable, less allowance for doubtful accounts of $1,213 and $1,821
|
158,382 | 141,595 | ||||||
Inventories
|
171,212 | 126,568 | ||||||
Deferred income taxes
|
25,903 | 28,018 | ||||||
Prepaid expenses and other current assets
|
13,212 | 10,983 | ||||||
Total current assets
|
435,861 | 407,827 | ||||||
Property, plant and equipment, net of accumulated depreciation of $71,672 and $60,755
|
101,776 | 101,662 | ||||||
Non-current marketable securities, net
|
- | 9,769 | ||||||
Deferred financing costs, net
|
16,298 | 20,983 | ||||||
Other assets
|
28,516 | 21,818 | ||||||
Intangible assets with definite lives, net
|
199,449 | 238,313 | ||||||
Intangible assets with indefinite lives
|
114,689 | 109,894 | ||||||
Goodwill
|
460,664 | 445,874 | ||||||
Total assets
|
$ | 1,357,253 | $ | 1,356,140 | ||||
Liabilities and Stockholder’s Equity
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt
|
$ | 360 | $ | 21,817 | ||||
Accounts payable
|
47,240 | 28,803 | ||||||
Advance payments by customers and deferred revenue
|
31,519 | 30,741 | ||||||
Income taxes payable
|
1,323 | 4,615 | ||||||
Accrued payroll expenses
|
22,717 | 23,082 | ||||||
Accrued expenses and other current liabilities
|
43,616 | 58,817 | ||||||
Total current liabilities
|
146,775 | 167,875 | ||||||
Long-term debt
|
695,908 | 880,030 | ||||||
Deferred income taxes
|
92,511 | 138,849 | ||||||
Defined benefit plan obligations
|
5,526 | 5,763 | ||||||
Other long-term liabilities
|
12,830 | 12,639 | ||||||
Total liabilities
|
953,550 | 1,205,156 | ||||||
Stockholder’s equity:
|
||||||||
Common stock, par value $.10 per share; 1,000 shares authorized, issued and outstanding
|
- | - | ||||||
Additional paid-in capital
|
644,448 | 398,941 | ||||||
Accumulated other comprehensive income (loss)
|
(33,270 | ) | (53,575 | ) | ||||
Accumulated deficit
|
(207,475 | ) | (194,382 | ) | ||||
Total stockholder’s equity
|
403,703 | 150,984 | ||||||
Total liabilities and stockholder’s equity
|
$ | 1,357,253 | $ | 1,356,140 |
Aeroflex Incorporated and Subsidiaries
|
Unaudited Condensed Consolidated Statements of Operations
|
(In thousands)
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Net sales
|
$ | 193,219 | $ | 168,435 | ||||
Cost of sales
|
86,861 | 78,135 | ||||||
Gross profit
|
106,358 | 90,300 | ||||||
Selling, general and administrative costs
|
38,265 | 31,285 | ||||||
Research and development costs
|
24,663 | 20,844 | ||||||
Amortization of acquired intangibles
|
15,900 | 15,408 | ||||||
Restructuring charges
|
2,698 | 105 | ||||||
81,526 | 67,642 | |||||||
Operating income
|
24,832 | 22,658 | ||||||
Other income (expense):
|
||||||||
Interest expense
|
(13,852 | ) | (20,815 | ) | ||||
Other income (expense), net
|
(119 | ) | 222 | |||||
Total other income (expense)
|
(13,971 | ) | (20,593 | ) | ||||
Income before income taxes
|
10,861 | 2,065 | ||||||
Provision (benefit) for income taxes
|
6,734 | (791 | ) | |||||
Net income
|
$ | 4,127 | $ | 2,856 |
Aeroflex Incorporated and Subsidiaries
|
Unaudited Condensed Consolidated Statements of Operations
|
(In thousands)
|
Nine Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Net sales
|
$ | 530,729 | $ | 465,290 | ||||
Cost of sales
|
249,705 | 223,259 | ||||||
Gross profit
|
281,024 | 242,031 | ||||||
Selling, general and administrative costs
|
113,234 | 92,988 | ||||||
Research and development costs
|
68,477 | 55,286 | ||||||
Amortization of acquired intangibles
|
47,706 | 46,527 | ||||||
Termination of Sponsor Advisory Agreement
|
18,133 | - | ||||||
Restructuring charges
|
10,790 | 356 | ||||||
Loss on liquidation of foreign subsidiary
|
- | 7,696 | ||||||
258,340 | 202,853 | |||||||
Operating income
|
22,684 | 39,178 | ||||||
Other income (expense):
|
||||||||
Interest expense
|
(55,803 | ) | (63,272 | ) | ||||
Loss on extinguishment of debt
|
(25,178 | ) | - | |||||
Gain from a bargain purchase of a business
|
173 | - | ||||||
Other income (expense), net
|
(526 | ) | 701 | |||||
Total other income (expense)
|
(81,334 | ) | (62,571 | ) | ||||
Income (loss) before income taxes
|
(58,650 | ) | (23,393 | ) | ||||
Provision (benefit) for income taxes
|
(45,557 | ) | 4,908 | |||||
Net income (loss)
|
$ | (13,093 | ) | $ | (28,301 | ) |
Aeroflex Incorporated and Subsidiaries
|
Unaudited Condensed Consolidated Statement of Stockholder's Equity
|
and Comprehensive Income (Loss)
|
(In thousands)
|
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Comprehensive
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||||
Total
|
Shares
|
Par Value
|
Capital
|
Income(Loss)
|
Deficit
|
Income (Loss)
|
||||||||||||||||||||||
Balance, June 30, 2010
|
$ | 150,984 | 1 | $ | - | $ | 398,941 | $ | (53,575 | ) | $ | (194,382 | ) | |||||||||||||||
Proceeds from capital contribution from Aeroflex Holding
|
244,021 | - | - | 244,021 | - | - | ||||||||||||||||||||||
Share-based compensation
|
1,655 | - | - | 1,655 | - | - | ||||||||||||||||||||||
Other changes
|
(169 | ) | - | - | (169 | ) | - | - | ||||||||||||||||||||
Other comprehensive income (loss)
|
20,305 | - | - | - | 20,305 | - | $ | 20,305 | ||||||||||||||||||||
Net income (loss)
|
(13,093 | ) | - | - | - | - | (13,093 | ) | (13,093 | ) | ||||||||||||||||||
Balance, March 31, 2011
|
$ | 403,703 | 1 | $ | - | $ | 644,448 | $ | (33,270 | ) | $ | (207,475 | ) | $ | 7,212 |
Aeroflex Incorporated and Subsidiaries
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
(In thousands)
|
Nine Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | (13,093 | ) | $ | (28,301 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
62,426 | 62,178 | ||||||
Gain from a bargain purchase of a business
|
(173 | ) | - | |||||
Acquisition related adjustment to cost of sales
|
998 | 246 | ||||||
Loss on liquidation of foreign subsidiary
|
- | 7,696 | ||||||
Loss on extinguishment of debt
|
25,178 | - | ||||||
Deferred income taxes
|
(52,317 | ) | (1,286 | ) | ||||
Share-based compensation
|
1,655 | 1,563 | ||||||
Non - cash restructuring charges
|
4,860 | - | ||||||
Amortization of deferred financing costs
|
3,976 | 3,579 | ||||||
Paid in kind interest
|
2,434 | 13,377 | ||||||
Other, net
|
496 | 758 | ||||||
Change in operating assets and liabilities, net of effects from purchases of businesses:
|
||||||||
Decrease (increase) in accounts receivable
|
(10,890 | ) | 10,754 | |||||
Decrease (increase) in inventories
|
(39,936 | ) | 4,450 | |||||
Decrease (increase) in prepaid expenses and other assets
|
(8,142 | ) | (2,711 | ) | ||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities
|
4,430 | (20,053 | ) | |||||
Net cash provided by (used in) operating activities
|
(18,098 | ) | 52,250 | |||||
Cash flows from investing activities:
|
||||||||
Payments for purchase of businesses, net of cash acquired
|
(23,593 | ) | (4,000 | ) | ||||
Capital expenditures
|
(17,132 | ) | (13,176 | ) | ||||
Proceeds from sale of marketable securities
|
10,357 | 8,580 | ||||||
Proceeds from the sale of property, plant and equipment
|
819 | 1,021 | ||||||
Other, net
|
- | (12 | ) | |||||
Net cash provided by (used in) investing activities
|
(29,549 | ) | (7,587 | ) | ||||
Cash flows from financing activities:
|
||||||||
Capital contribution from Aeroflex Holding
|
244,021 | - | ||||||
Repurchase of senior unsecured notes and senior subordinated unsecured term loans, including premiums and fees
|
(207,690 | ) | - | |||||
Debt repayments
|
(21,458 | ) | (4,012 | ) | ||||
Debt financing costs
|
(3,332 | ) | - | |||||
Net cash provided by (used in) financing activities
|
11,541 | (4,012 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents
|
2,595 | (2,051 | ) | |||||
Net increase (decrease) in cash and cash equivalents
|
(33,511 | ) | 38,600 | |||||
Cash and cash equivalents at beginning of period
|
100,663 | 57,748 | ||||||
Cash and cash equivalents at end of period
|
$ | 67,152 | $ | 96,348 |
|
·
|
Repurchased an aggregate of $186.6 million of its senior unsecured notes and senior subordinated unsecured term loans and paid the tender premiums and expenses related thereto;
|
|
·
|
Paid a $16.9 million termination fee to affiliates of the Sponsors to terminate the advisory agreement with them, which, including the related write-off of prepaid advisory fees, resulted in an $18.1 million expense (“Termination Fee”); and
|
|
·
|
Amended its senior secured credit facility, for which a $3.3 million fee was paid to the lenders.
|
(In thousands)
|
||||
Current assets (excluding cash of $15)
|
$ | 4,899 | ||
Property, plant and equipment
|
1,156 | |||
Other assets
|
60 | |||
Customer related intangibles
|
5,680 | |||
Non-compete arrangements
|
30 | |||
Tradenames
|
3,010 | |||
Goodwill
|
10,057 | |||
Total assets acquired
|
24,892 | |||
Current liabilities
|
(2,895 | ) | ||
Deferred taxes
|
(3,576 | ) | ||
Total liabilities assumed
|
(6,471 | ) | ||
Net assets acquired
|
$ | 18,421 |
March 31, 2011
|
June 30, 2010
|
|||||||||||||||
(In thousands)
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Developed technology
|
$ | 200,791 | $ | 121,997 | $ | 197,422 | $ | 94,672 | ||||||||
Customer related intangibles
|
229,297 | 115,342 | 222,026 | 94,656 | ||||||||||||
Non-compete arrangements
|
10,443 | 5,942 | 10,087 | 4,420 | ||||||||||||
Tradenames
|
3,396 | 1,197 | 3,184 | 658 | ||||||||||||
Total
|
$ | 443,927 | $ | 244,478 | $ | 432,719 | $ | 194,406 |
Balance
June 30,
2010
|
Nine Months Ended March 31, 2011
|
Balance
March 31,
2011
|
||||||||||||||||||
Restructuring
Liability
|
Net
Additions
|
Cash
Payments
|
Effect of
foreign
currency
|
Restructuring
Liability
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Work force reduction
|
$ | 172 | $ | 4,936 | $ | (3,140 | ) | $ | 64 | $ | 2,032 | |||||||||
Closure of facilities
|
632 | 994 | (1,181 | ) | 50 | 495 | ||||||||||||||
Total
|
$ | 804 | $ | 5,930 | $ | (4,321 | ) | $ | 114 | $ | 2,527 |
March 31,
|
June 30,
|
|||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Raw materials
|
$ | 93,272 | $ | 61,278 | ||||
Work in process
|
55,858 | 44,022 | ||||||
Finished goods
|
22,082 | 21,268 | ||||||
$ | 171,212 | $ | 126,568 |
Asset (Liability) Derivatives
|
||||||||||
March 31, 2011
|
June 30, 2010
|
|||||||||
Balance Sheet
|
Fair |
Balance Sheet
|
Fair | |||||||
(In thousands)
|
Location
|
Value(1) |
Location
|
Value(1) | ||||||
Derivatives designated as hedging
|
||||||||||
instruments:
|
||||||||||
Interest rate swap contracts
|
Accrued expenses and
|
Accrued expenses and
|
||||||||
other current liabilities
|
$ |
-
|
other current liabilities
|
$ |
(6,613)
|
|||||
Derivatives not designated as
|
||||||||||
hedging instruments:
|
||||||||||
Foreign currency forward contracts
|
Prepaid expenses and
|
Accrued expenses and
|
||||||||
other current assets
|
3
|
other current liabilities
|
(293)
|
|||||||
Total derivatives, net
|
$ |
3
|
$ |
(6,906)
|
(1) See Note 8 for further information about how the fair values of derivative assets and liabilities are determined.
|
Derivatives in Cash Flow
Hedging Relationships
|
Amount of Gain or (Loss)
Recognized on Derivatives in
Other Comprehensive Income
(Effective Portion) (1)
|
|||||||||||||||
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Interest rate swap contracts
|
$ | - | $ | (1,279 | ) | $ | (612 | ) | $ | (5,550 | ) |
Location of Gain or (Loss)
Reclassified from Accumulated
Other Comprehensive Income
into Income (Effective Portion)
|
Amount of Gain or (Loss)
Reclassified from
Accumulated Other Comprehensive Income
into Income (Effective Portion) (1)
|
|||||||||||||||
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Interest expense
|
$ | (1,033 | ) | $ | (3,666 | ) | $ | (7,225 | ) | $ | (10,848 | ) |
(1) See Note 11 for additional information on changes to accumulated other comprehensive income (loss).
|
Derivatives Not
Designated as
Hedging Instruments
|
Location of Gain or (Loss)
Recognized in Earnings on
Derivative
|
Amount of Gain or (Loss)
Recognized in Earnings on
Derivative
|
||||||||||||||||
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
|||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||
(In thousands)
|
||||||||||||||||||
Foreign currency forward contracts
|
Other income (expense)
|
$ | (15 | ) | $ | 410 | $ | 296 | $ | 641 |
|
Level 1:
|
Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date.
|
|
Level 2:
|
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
Level 3:
|
Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instruments’ valuation.
|
As of March 31, 2011
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
||||||||||||
(In thousands)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Foreign currency forward contracts
|
$ | - | $ | 3 | $ | - | $ | 3 |
As of June 30, 2010
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
||||||||||||
(In thousands)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Non-current marketable securities
|
$ | - | $ | - | $ | 9,769 | $ | 9,769 | ||||||||
Liabilities:
|
||||||||||||||||
Foreign currency forward contracts
|
$ | - | $ | 293 | $ | - | $ | 293 | ||||||||
Interest rate swap contracts
|
- | 6,613 | - | 6,613 | ||||||||||||
Total Liabilities
|
$ | - | $ | 6,906 | $ | - | $ | 6,906 |
Fair Value Measurements
Using Significant
Unobservable Inputs
(Level 3)
|
||||
Auction
Rate
Securities
|
||||
(In thousands)
|
||||
Balance at June 30, 2010
|
$ | 9,769 | ||
Sold at par
|
(2,000 | ) | ||
Transfer to Level 2
|
(9,045 | ) | ||
Transfer of unrealized loss from accumulated other comprehensive income (loss) to realized loss recorded in other expense
|
688 | |||
Unrealized gain (loss) in accumulated other comprehensive income (loss)
|
588 | |||
Balance at March 31, 2011
|
$ | - |
|
·
|
an 11% premium paid on the debt repurchased, which amounted to $20.5 million;
|
|
·
|
the write-off of the related deferred financing costs of $4.0 million; and
|
|
·
|
professional fees of $614,000.
|
|
·
|
increase the amount of cash it can spend for acquisitions of businesses from $20 million per year and a $100 million aggregate amount, to $200 million in the aggregate (with no annual limit), from the effective date of the amendment to the credit facility maturity date, August 15, 2014;
|
|
·
|
pay certain fees to affiliates of our Sponsors upon the completion of the Aeroflex Holding IPO. These fees were paid on November 24, 2010, and consisted of the $2.5 million Transaction Fee for services directly attributable to the equity offering, which was recorded as a reduction of additional paid-in capital, and the $16.9 million Termination Fee. The Termination Fee, when combined with the related write-off of prepaid advisory fees, amounted to an $18.1 million expense which is reported in the statement of operations as Termination of Sponsor Advisory Agreement; and
|
|
·
|
base its interest rate margin above LIBOR on a grid, with reference to its current credit rating. This increased the interest rate margin by 75 basis points for all tranches of debt within the secured credit facility.
|
March 31, 2011
|
||||||||
Carrying
|
Estimated
|
|||||||
Amount
|
Fair Value
|
|||||||
(In thousands)
|
||||||||
Senior secured credit facility B-1 term loan
|
$ | 372,651 | $ | 374,515 | ||||
Senior secured B-2 term loan
|
116,454 | 116,454 | ||||||
Senior unsecured notes
|
192,845 | 209,237 | ||||||
Senior subordinated unsecured term loan
|
13,573 | 14,913 | ||||||
Other
|
745 | 745 | ||||||
Total debt
|
$ | 696,268 | $ | 715,864 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Net income (loss)
|
$ | 4,127 | $ | 2,856 | $ | (13,093 | ) | $ | (28,301 | ) | ||||||
Increase (decrease) in fair value of
|
||||||||||||||||
interest rate swap contracts, net of tax
|
||||||||||||||||
provision (benefit) of $401, $927,
|
||||||||||||||||
$2,567 and $2,013
|
632 | 1,460 | 4,046 | 3,285 | ||||||||||||
Valuation allowance against
|
||||||||||||||||
non-current marketable securities
|
- | 780 | 1,276 | 1,002 | ||||||||||||
Foreign currency translation adjustment,
|
||||||||||||||||
net of tax provision (benefit) of $0, $(1,033),
|
||||||||||||||||
$625 and $(416)
|
7,200 | (7,890 | ) | 14,983 | (1,877 | ) | ||||||||||
Total comprehensive income (loss)
|
$ | 11,959 | $ | (2,794 | ) | $ | 7,212 | $ | (25,891 | ) |
Unrealized
|
Valuation
|
|||||||||||||||||||
Gain (Loss)
|
Allowance |
Minimum
|
Foreign
|
|||||||||||||||||
on Interest
|
Against
|
Pension
|
Currency
|
|||||||||||||||||
Rate Swap
|
Non-Current
|
Liability
|
Translation
|
|||||||||||||||||
Contracts
|
Marketable
|
Adjustment
|
Adjustment
|
Total
|
||||||||||||||||
(net of tax)
|
Securities
|
(net of tax)
|
(net of tax)
|
(net of tax)
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Balance, June 30, 2010
|
$ | (4,046 | ) | $ | (1,276 | ) | $ | (773 | ) | $ | (47,480 | ) | $ | (53,575 | ) | |||||
Nine months' activity
|
4,046 | 1,276 | - | 14,983 | 20,305 | |||||||||||||||
Balance, March 31, 2011
|
$ | - | $ | - | $ | (773 | ) | $ | (32,497 | ) | $ | (33,270 | ) |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
United States of America
|
$ | 101,533 | $ | 94,700 | $ | 291,364 | $ | 267,089 | ||||||||
Europe and Middle East
|
40,623 | 40,975 | 105,281 | 103,684 | ||||||||||||
Asia and Australia
|
44,726 | 29,550 | 117,841 | 85,655 | ||||||||||||
Other regions
|
6,337 | 3,210 | 16,243 | 8,862 | ||||||||||||
$ | 193,219 | $ | 168,435 | $ | 530,729 | $ | 465,290 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Net sales
|
||||||||||||||||
Microelectronic solutions ("AMS")
|
$ | 97,856 | $ | 83,418 | $ | 264,386 | $ | 229,939 | ||||||||
Test solutions ("ATS")
|
95,363 | 85,017 | 266,343 | 235,351 | ||||||||||||
Net sales
|
$ | 193,219 | $ | 168,435 | $ | 530,729 | $ | 465,290 | ||||||||
Segment adjusted operating income
|
||||||||||||||||
- AMS
|
$ | 28,796 | $ | 23,029 | $ | 70,625 | $ | 59,940 | ||||||||
- ATS
|
18,996 | 19,005 | 43,024 | 47,156 | ||||||||||||
- General corporate expense
|
(3,233 | ) | (2,189 | ) | (8,496 | ) | (7,378 | ) | ||||||||
Adjusted operating income
|
44,559 | 39,845 | 105,153 | 99,718 | ||||||||||||
Amortization of acquired intangibles
|
||||||||||||||||
- AMS
|
(9,220 | ) | (8,733 | ) | (27,676 | ) | (26,312 | ) | ||||||||
- ATS
|
(6,680 | ) |