-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QuePhZfWd1A0CLuEhsrHzWOab/0D/zAXq0XVpRWxAz/HRNaEq9tFCaDqjcDyxUvx yZcvvO5/8ZmOHW2mKjIafw== 0000893877-99-000127.txt : 19990217 0000893877-99-000127.hdr.sgml : 19990217 ACCESSION NUMBER: 0000893877-99-000127 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRAEGITZER INDUSTRIES INC CENTRAL INDEX KEY: 0001007519 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 930790158 STATE OF INCORPORATION: OR FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27932 FILM NUMBER: 99540136 BUSINESS ADDRESS: STREET 1: 1270 SE MONMOUTH CUT OFF RD CITY: DALLAS STATE: OR ZIP: 97338 BUSINESS PHONE: 5036239273 MAIL ADDRESS: STREET 1: 1270 SE MONMOUTH CUT OFF RD CITY: DALLAS STATE: OR ZIP: 97338 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q {x} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1998 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 Number: 0-27932 PRAEGITZER INDUSTRIES, INC. (Exact name of registrant as specified in its charter) OREGON 93-0790158 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 1270 S.E. Monmouth Cut-Off Road Dallas, Oregon 97338-9532 (503) 623-1000 (Address, including zip code, and telephone number, including area code, of principal executive offices) 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 last 90 days. Yes {x} No { } Number of shares of Common Stock outstanding as of February 8, 1999: 12,907,442 1 PRAEGITZER INDUSTRIES, INC. Table of Contents Page No. Part I Financial Information Condensed Consolidated Balance Sheet- December 31, 1998 and June 30, 1998 ...............................3 Condensed Consolidated Statement of Operations- Three months and six months ended December 31, 1998 and 1997 ........................................4 Condensed Consolidated Statement of Cash Flows- Six months ended December 31, 1998 and 1997 .......................5 Notes to Condensed Consolidated Financial Statements ..........................................6 Management's Discussion and Analysis of Financial Condition and Results of Operations .........................................8 Part II Other Information Item 4 Submission of Matters to a Vote of Security Holders ......12 Item 6 Exhibits and Reports on Form 8-K .........................12 Signatures.................................................................13 2
PRAEGITZER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In Thousands) ASSETS December 31, June 30, 1998 1998 ------------ ------------ CURRENT ASSETS Cash $ 220 $ 1,170 Accounts receivable, net 32,929 28,562 Inventories 18,120 16,491 Prepaid expenses 4,088 2,913 ------------ ------------ Total current assets 55,357 49,136 Property, plant and equipment 126,258 124,801 Less: Accumulated depreciation and amortization (40,772) (35,975) ------------ ------------ 85,486 88,826 Other assets 15,310 13,532 ------------ ------------ $ 156,153 $ 151,494 ============ ============ LIABILITIES CURRENT LIABILITIES Bank overdraft 8,010 3,709 Accounts payable 16,549 13,930 Accrued payroll and related expenses 4,168 3,955 Other current liabilities 3,988 1,852 Current portion of long-term obligations 6,364 6,394 ------------ ------------ Total current liabilities 39,079 29,840 Long-term obligations 54,951 73,413 Deferred tax liability 5,353 4,197 Other liabilities 49 64 Convertible subordinated notes 10,000 - Common stock 43,173 42,325 Accumulated other comprehensive income 68 - Retained Earnings 3,480 1,655 ------------ ------------ Total shareholders' equity 46,721 43,980 ------------ ------------ $ 156,153 $ 151,494 ============ ============ The accompanying notes are an integral part of these condensed financial statements.
3
PRAEGITZER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In Thousands, Except Per Share Data) Three Months Ended Six Months Ended December 31, December 31, ---------------------------- ---------------------------- 1998 1997 1998 1997 ------------ ------------ ------------ ------------ Revenue $ 55,293 $ 46,032 $ 110,689 $ 88,626 Cost of sales 45,476 35,998 91,678 70,582 ------------ ------------ ------------ ------------ Gross profit 9,817 10,034 19,011 18,044 Selling, general and administrative expenses 7,105 6,015 14,117 11,779 ------------ ------------ ------------ ------------ Income from operations 2,712 4,019 4,894 6,265 Interest expense 1,167 725 2,634 1,451 Other income 426 85 634 166 ------------ ------------ ------------ ------------ Income before income taxes 1,971 3,379 2,894 4,980 Income taxes 739 1,110 1,069 1,604 ------------ ------------ ------------ ------------ Net income $ 1,232 $ 2,269 $ 1,825 $ 3,376 ============ ============ ============ ============ Basic net income per share $ 0.10 $ 0.18 $ 0.14 $ 0.27 ============ ============ ============ ============ Diluted net income per share $ 0.10 $ 0.18 $ 0.14 $ 0.26 ============ ============ ============ ============ The accompanying notes are an integral part of these condensed financial statements.
4
PRAEGITZER INDUSTRIES, INC CONDENSED STATEMENT OF CASH FLOWS (Unaudited) (In Thousands) Six Months Ended December 31, ---------------------------- 1998 1997 ------------ ------------ Cash Flows from Operating Activities: Net cash provided by operating activities $ 9,984 $ 6,982 Cash Flows from Investing Activities: Capital expenditures (28,696) (11,245) Proceeds from sale of property, plant and equipment 22,361 832 Business acquisitions - (477) Other (828) (171) ------------ ------------ Net cash used in investing activities (7,163) (11,061) ------------ ------------ Cash Flows from Financing Activities: (Decrease) increase in short-term borrowings (13,433) 1,449 Issuance of convertible subordinated notes 10,000 - Borrowings of long-term debt 395 4,581 Payments on long-term debt and capital leases (5,325) (1,855) Increase (decrease) in bank overdrafts 4,300 (596) Issuances of common stock 328 295 ------------ ------------ Net cash (used in) provided by financing activities (3,735) 3,874 ------------ ------------ Effect of foreign currency (36) - ------------ ------------ Decrease in Cash and Cash Equivalents $ (950) $ (205) Cash and Cash Equivalents at Beginning of Period 1,170 442 ------------ ------------ Cash and Cash Equivalents at End of Period $ 220 $ 237 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the respective periods for: Interest $ 3,284 $ 1,419 Income Taxes 140 1,629 The accompanying notes are an integral part of these condensed financial statements.
5 PRAEGITZER INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1: Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Praegitzer Industries, Inc. (the "Company") contain all adjustments necessary to present fairly the financial position of the Company as of December 31, 1998, and the results of operations for the three months ended December 31, 1998 and 1997 and the results of operations and cash flows for the six months ended December 31, 1998 and 1997. The results of operations for the three and six months ended December 31, 1998 are not necessarily indicative of the results expected for the entire fiscal year ending June 30, 1999. These financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations, although the Company believes the disclosures provided are adequate to prevent the information presented from being misleading. This report on Form 10-Q for the quarter ended December 31, 1998, should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998. Portions of the accompanying financial statements are derived from the audited year-end financial statements of the Company dated June 30, 1998. Note 2: Earnings per share In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings per Share, which specifies new standards for computing and disclosing earnings per share and is effective for periods ending after December 15, 1997. The Company has adopted this standard. The basic EPS has been computed by dividing net income by the weighted average number of shares outstanding during each period. Diluted EPS has been computed by dividing net income by the weighted average common and common equivalent shares outstanding during each period using the treasury stock method, if the common equivalent shares were not anti-dilutive. The difference between the basic and diluted weighted average shares is due to common stock equivalent shares resulting from outstanding stock options and warrants. Net income for the calculation of both basic and diluted EPS is the same for all periods presented. The calculation of the weighted average outstanding shares is as follows: 6
(In Thousands) Three Months Ended Six Months Ended December 31, December 31, 1998 1997 1998 1997 ------------ ------------ ------------ ------------ Weighted average shares outstanding-basic 12,808,529 12,663,088 12,793,678 12,655,449 Common stock equivalents 23,185 242,615 20,573 263,339 ------------ ------------ ------------ ------------ Weighted average shares outstanding-diluted 12,831,714 12,905,703 12,814,251 12,918,788 ============ ============ ============ ============
Note 3: Inventories Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and consist of the following: (in thousands) December 31, June 30, 1998 1998 ----------- ----------- Raw materials and supplies $ 7,253 $ 6,430 Work-in-progress 10,867 10,061 ----------- ----------- Total inventory $ 18,120 $ 16,491 =========== =========== Note 4: Comprehensive Income The Company has adopted SFAS No. 130, Reporting Comprehensive Income, in the first quarter of fiscal year 1999. SFAS No. 130 establishes new rules for the reporting of comprehensive income and its components, but has no impact on the Company's net earnings or total shareholders' equity. Comprehensive income and its components, net of tax, are as follows: (in thousands)
Three Months Ended Six Months Ended December 31, December 31, 1998 1997 1998 1997 ------------ ------------ ------------ ------------ (unaudited) (unaudited) Net income $ 1,232 $ 2,269 $ 1,825 $ 3,376 Other comprehensive income: Currency translation adjustment 68 - 68 - ------------ ------------ ------------ ------------ Total comprehensive income $ 1,300 $ 2,269 $ 1,893 $ 3,376 ============ ============ ============ ============
7 Note 5: Convertible Subordinated Notes On December 29, 1998 the Company completed an offering of $10.0 million principal amount of convertible subordinated notes ("Notes"). Interest on the Notes accrues at a rate of 9% and is payable semi-annually, commencing July 15, 1999. The Notes are convertible into shares of Common Stock at the conversion price of $8.325 per share. The holders have the option to covert the Notes any time on or before the close of business on the last trading day prior to maturity, unless previously redeemed. The Notes mature on December 29, 2008. Note 6: Future Accounting Pronouncements In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. SFAS No. 131 establishes standards for disclosure about operating segments in annual financial statements and selected information in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The new standard becomes effective for the Company's fiscal year ending June 30, 1999. Adoption of this statement may result in additional disclosures but will have no material impact on the Company's results of operations or financial position. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The new statement will require recognition of all derivatives as either assets or liabilities on the balance sheet at fair value. The new statement becomes effective for the first quarter of the fiscal year ending June 30, 2000. Management has not completed an evaluation of the effects this standard will have on the Company's financial position or results of operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview - -------- The Company is a leader in providing electronics OEMs and contract manufacturers with a full range of printed circuit board ("PCB") and interconnect solutions, including schematic capture and design, quick-turnaround, prototyping and pre-production, and large volume production. The Company's design division provides schematic capture and design services. The Fremont facility specializes in quick-turnaround prototype production, the Redmond facility specializes in high technology and low volume production, the Huntsville facility specializes in low volume production and quick-turnaround prototype production, the Malaysia facility specializes in low technology and medium to high volume production, the White City facility specializes in medium volume production and the Dallas facility specializes in medium to high volume production. This discussion and analysis is designed to be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in the Company's Form 10-K for the fiscal year ended June 30, 1998. 8 Results of Operations - --------------------- Three Months Ended December 31, 1998 Compared to Three Months Ended December 31, 1997 Revenue for the three months ended December 31, 1998 was $55.3 million, an increase of $9.3 million, or 20%, from the three months ended December 31, 1997. The increase in revenue resulted from several factors including record sales volumes in the White City facility, in part due to the new fully automated Inner Layer Line, acquisitions of the Malaysian and Huntsville facilities and better performing sales and operations groups. The cost of goods sold includes direct labor, materials and manufacturing overhead costs. The costs of goods sold for the three months ended December 31, 1998 was $45.5 million, or 82.2% of revenue, compared to $36.0 million, or 78.2% of revenue for the three months ended December 31, 1997. This increase was due primarily to increased costs at the Malaysia and Huntsville facilities. Gross profit for the three months ended December 31, 1998 was $9.8 million or 17.8% of revenue, compared to $10.0 million or 21.8% of revenue for the three months ended December 31, 1997. The decrease in margin was the result of pricing pressures related to diminishing market demand and increased offshore competition. Selling, general and administrative expense for the three months ended December 31, 1998 was $7.1 million or 12.8% of revenue, compared to $6.0 million or 13.1% of revenue for the three months ended December 31, 1997. The increase in expenses was due to the increased personnel and fixed costs associated with the acquisitions of the Huntsville and Malaysian operations, as well as the expansion of the Company's corporate sales force required to support the Company's growth. Interest expense for the three months ended December 31, 1998 increased to $1.2 million, or 2.1% of revenue, from $725,000 in the prior year. The increase was the result of increased borrowings to finance recent acquisitions, equipment purchases and working capital needs. The effective income tax rate for the quarter ended December 31, 1998 was 37.5%, compared to a 32.8% effective rate for the quarter ended December 31, 1997. This increase was a result of losses at the Malaysia facility, which do not result in a tax benefit to the Company. Net income for the three months ended December 31, 1998 was $1.2 million, a decrease of $1.0 million from net income of $2.3 million for the three months ended December 31, 1997. This decrease was primarily due to higher costs associated with acquisitions and expansions as well as lower margins resulting from weaker customer demand and increased offshore competition. Six Months Ended December 31, 1998 Compared to Six Months Ended December 31, 1997 Revenue for the six months ended December 31, 1998 increased 24.9% to $110.7 million from $88.6 million for the six months ended December 31, 1997. The revenue growth was a result of several factors, including record sales at various facilities, acquisitions of the Malaysian and Huntsville facilities, increased capacity and improved technological capabilities. 9 The costs of goods sold for the six months ended December 31, 1998 was $91.7 million, or 82.8% of revenue, compared to $70.6 million, or 79.6% of revenue for the six months ended December 31, 1997. This increase was due primarily to increased costs associated with the Malaysia and Huntsville acquisitions. Gross profit for the six months ended December 31, 1998 was $19.0 million or 17.2% of revenue, compared to $18.0 million or 20.4% of revenue for the six months ended December 31, 1997. This decrease was due primarily to reduced demand caused by market pressures and offshore competition, and changes in the production mix in the Huntsville facility. Selling, general and administrative expense for the six months ended December 31, 1998 was $14.1 million or 12.8% of revenue, compared to $11.8 million or 13.3% of revenue for the six months ended December 31, 1997. The increase in expenses was due to the increased personnel and fixed costs associated with the acquisitions of the Huntsville and Malaysian operations, as well as the expansion of the Company's corporate sales force required to support the Company's growth. Interest expense for the six months ended December 31, 1998 increased to $2.6 million, or 2.4% of revenue, from $1.2 million, or 1.6% of revenue for the six months ended December 31, 1997. The increase was the result of increased borrowings to finance recent acquisitions, equipment purchases and working capital needs. Income taxes for the six months ended December 31, 1998 were $1.1 million compared to an income tax provision of $1.6 million for the six months ended December 31, 1997. The effective income tax rates were 36.9% and 32.2% respectively. This effective income tax rate increase was a result of losses at the Malaysia facility, which does not result in a tax benefit to the Company. Net income for the six months ended December 31, 1998 was $1.8 million, a decrease of $1.6 million from net income of $3.4 million for the six months ended December 31, 1997. This decrease was primarily due to higher costs associated with acquisitions and expansions as well as lower margins resulting from weaker customer demand and increased offshore competition. Liquidity and Capital Resources - ------------------------------- As of December 31, 1998, the Company had cash of $220,000, compared to $1.2 million as of June 30, 1998, and working capital of $16.3 million at December 31, 1998, compared to $19.3 million at June 30, 1998. Principal sources of liquidity in the first six months of fiscal 1999 were cash from operations, the issuance of $10.0 million principal amount of 9% convertible subordinated notes due 2008, and the sale of assets to leasing companies. Principal uses of liquidity during the six months ended December 31, 1998 were property, plant and equipment expenditures of $28.7 million related to expansions and capacity improvements of the Company's manufacturing operations and the paydown of the Company's bank line of credit. At December 31, 1998 borrowings of $24.1 million were outstanding on the Company's $40 million bank line of credit and $8.2 million was available for borrowing based on eligible receivables and inventory. Amounts outstanding under the line of credit bear interest at the bank's prime rate (8.5% per annum at December 31, 1998). Under the line of credit, the 10 Company must maintain certain financial ratios and other covenants. As of December 31, 1998 the Company was in compliance with all loan covenants. As of December 31, 1998 the Company had $32.2 million of outstanding notes payable to Heller Financial bearing interest at annual rates ranging from 7.8% to 9.8125% and secured by real property and miscellaneous equipment at the Company's Dallas and White City, Oregon and Huntsville, Alabama facilities. Although the Company has no commitments in material amounts, it expects total capital expenditures for the fiscal year to range from 8% to 12% of revenue for facilites expansion and equipment. The Company believes that its existing cash and cash equivalents, funds generated from operations, and funds available under its credit facility with the bank and equipment financings will be sufficient to fund its operations for the remainder of the fiscal year. To enhance its ability to fund its operations, the Company is actively exploring additional and alternative sources of financing to supplement or replace its existing credit agreements. Year 2000 Compliance Certain computer hardware and software use two-digit data fields to store and recognize years, assuming the first two digits of the year are "19" (e.g., the number "98" is recognized as "1998"). This and certain similar protocols give rise to possible problems related to the recognition of dates in years after 1999--so-called "Year 2000" issues. The Company continues to assess and address the business risks associated with Year 2000 issues. Some of the Company's systems include hardware and packaged software recently purchased from vendors who have represented that these systems are Year 2000 compliant. Other hardware and software used by the Company has been identified by the Company as not being Year 2000 compliant. The Company expects that Year 2000 upgrades to the software used in its manufacturing systems and replacement components for certain older hardware used in these systems will soon be available from vendors. The cost of these upgrades and replacements is not expected to be material. The Company relies on a number of vendors and suppliers, including banks, telecommunication providers, and other providers of goods and services. The inability of these third parties to conduct their business for a significant period of time due to the Year 2000 issue could have a material adverse impact on the Company's operations. The Company has not determined whether all of its vendors and suppliers are Year 2000 compliant. The Company's reliance on single vendor source suppliers, however, is minimal, and the Company seeks to limit sole source supply relationships. The Company is continuing to assess potential Year 2000 issues and is developing contingency plans. At this time, the Company believes costs incurred in responding to other parties' Year 2000 computer system deficiencies, together with the cost of any required modifications to the Company's systems, will not have a material impact on the Company's results of operations or financial condition. This analysis may be modified as the Company's assessment of potential Year 2000 issues progresses. 11 PART II - OTHER INFORMATION Item 4: Submission of Matters to a Vote of Security Holders On November 6, 1998, at the Annual Meeting of Sahreholders, the holders of the Company's outstanding Common Stock took the actions described below. On September 10, 1998 there were 12,807,442 shares of Common Stock issued and outstanding. The shareholders elected Robert L. Praegitzer, Matthew J. Bergeron, Daniel J. Barnett, Theodore L. Stebbins, General Merrill A. McPeak and Gordon B. Kuenster to the Company's Board of Directors, by the votes indicated below, to serve for the ensuing year. 11,119,373 shares in favor 397,407 shares against or withheld 0 abstentions 0 broker nonvotes The shareholders approved the amendment of the Company's 1995 Stock Incentive Plan (the "Plan") (i) to increase the total number of shares of the Company's Common Stock (the "Shares") reserved for issuance under the Plan from 1,500,000 Shares to 2,700,000 Shares, and (ii) to eliminate certain restrictions in the Plan that are no longer necessary or appropriate based on recent changes to the rules under Section 16 of the Securities Exchange Act of 1934, by the votes indicated below. 7,705,646 shares in favor 445,243 shares against or withheld 9,645 abstentions 0 broker nonvotes Item 6: Exhibits and Reports on Form 8-K (a) Exhibits 10 - Stock Purchase Agreement between the Company and Matthew J. Bergeron dated December 22, 1998 27 - Financial Data Schedule (b) Reports on Form 8-K During the three month period ending December 31, 1998, there were no reports on Form 8-K filed. 12 SIGNATURES 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. PRAEGITZER INDUSTRIES, INC Date: February 15, 1999 MATTHEW J. BERGERON ----------------------------------------- (Matthew J. Bergeron, President) (Duly Authorized Officer) WILLIAM J. THALE ----------------------------------------- (William J. Thale) (Principal Financial Officer) 13 EX-10 2 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "Agreement") is between MATTHEW BERGERON ("Buyer") and PRAEGITZER INDUSTRIES, INC., an Oregon corporation ("Seller"). Seller is prepared to issue 100,000 shares of its common stock (the "Shares"). Buyer desires to purchase from Seller and Seller desires to sell to Buyer the Shares on the terms and subject to the conditions set forth herein. The transactions contemplated in this Agreement are herein referred to as the "Purchase." SECTION 1. PURCHASE OF SHARES AND RELATED MATTERS 1.1 Purchase of Shares. Effective December 22, 1998, and subject to the terms and conditions set forth herein, at the Closing (as defined below) Seller will sell all of the Shares to Buyer and Buyer will purchase all of the Shares from Seller. 1.2 Purchase Price. Buyer will pay to Seller the fair market value for the Shares. Because of the restrictions on transfer of the shares, the parties have determined that a 25% discount from the public trading price is the fair market value. The closing price on December 22, 1998 was $6.9375 per share. Accordingly, the Purchase Price is $520,312.50. 1.3 Payment of Purchase Price. The entire Purchase Price, without interest, shall be paid to Seller on or before January 1, 2006. 1.4 Indemnity. As long as Buyer is employed by Seller, Seller shall pay Buyer an amount equal any federal or state income tax liability for which Buyer is liable on account of interest imputed because of the deferral of payment of the Purchase Price. Such sum shall be paid within 30 days of written request to Seller by Buyer, furnishing such evidence of liability as may reasonably be required by Seller. 1.5 Repurchase of Shares. During January 2006 Buyer may demand of Seller that it repurchase the Shares from Buyer for $420,312.50. Upon receipt of such written demand, within 30 days Seller shall tender the repurchase price to Buyer who shall simultaneously deliver such certificates and other instruments as may reasonably be required by Seller to effectuate the transfer of the Shares, free and clear of any lien or encumbrance to Seller. PAGE 1 STOCK PURCHASE AGREEMENT SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER As a material inducement to Buyer to enter into this Agreement and purchase the Shares, Seller represents and warrants that: 2.1 Organization and Corporate Power. Seller is a corporation duly incorporated, validly existing, and in good standing under the laws of the state of Oregon. 2.2 Authorization; No Breach. The execution, delivery, and performance of this Agreement and all other agreements contemplated hereby to which Seller is a party have been duly authorized by Seller. This Agreement and each other agreement contemplated hereby, when executed and delivered by the parties thereto, will constitute the legal, valid, and binding obligation of Seller, enforceable against Seller, in accordance with its terms except as the enforceability thereof may be limited by the application of bankruptcy, insolvency, moratorium, or similar laws affecting the rights of creditors generally or judicial limits on the right of specific performance. SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER As a material inducement to Seller to enter into this Agreement and sell the Shares, Buyer hereby represents and warrants to Seller as follows: 3.1 Investment Representations 3.1.1 Buyer is acquiring the Shares for his own account with the present intention of holding such securities for purposes of investment, and Buyer has no intention of selling such securities in a public distribution in violation of the United States securities laws or any applicable state securities laws. During the course of the negotiation of this Agreement, Buyer has reviewed all information provided to it by Seller and has had the opportunity to ask questions of and receive answers from representatives of Seller concerning Seller, the securities offered and sold hereby, and the Purchase, and to obtain certain additional information requested by Buyer. 3.1.2 Buyer understands that the Shares cannot be resold in a transaction to which the Securities Act applies unless subsequently registered under the Securities Act or an exemption from such registration is available. Buyer is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions. 3.1.3 Buyer understands that the certificates for the Shares will bear the following legend: PAGE 2 STOCK PURCHASE AGREEMENT THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISPOSITION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE SELLER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. 3.2 Brokerage. There are no claims for brokerage commissions, finders' fees, or similar compensation in connection with the Purchase based on any arrangement or agreement entered into by Buyer and binding upon Seller. SECTION 4. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER Each and every obligation of Seller under this Agreement is subject to the satisfaction, at or before the Closing, of each of the following conditions: 4.1 Representations and Warranties; Performance. Each of the representations and warranties made by Buyer herein will be true and correct in all material respects as of the Closing with the same effect as though made at that time except for changes contemplated, permitted, or required by this Agreement; Buyer will have performed and complied with all agreements, covenants, and conditions required by this Agreement to be performed and complied with by it prior to the Closing. 4.2 No Proceeding or Litigation. No action, suit, or proceeding before any court or any governmental or regulatory authority will have been commenced and be continuing, and no investigation by any governmental or regulatory authority will have been commenced and be continuing, and no action, investigation, suit, or proceeding will be threatened at the time of Closing, against Seller or Buyer or any of their affiliates, associates, officers, or directors, seeking to restrain, prevent, or change the Purchase, questioning the validity or legality of the Purchase, or seeking damages in connection with the Purchase. SECTION 5. CLOSING 5.1 Time, Place, and Manner of Closing. Unless this Agreement has been terminated and the Purchase has been abandoned pursuant to the provisions of this Agreement, the closing (the "Closing") will be held at the offices of Greene & Markley, P.C. in Portland, Oregon, or such other place as the parties may agree, on February 18, 1999, or as soon as practicable after the satisfaction of the various conditions precedent to the Closing set forth herein. At the Closing the parties to this Agreement will exchange certificates and other instruments and documents in order to determine whether the terms and conditions of this PAGE 3 STOCK PURCHASE AGREEMENT Agreement have been satisfied. Upon the determination of each party that its conditions to consummate the Purchase have been satisfied or waived, Seller shall deliver to Buyer the certificates evidencing the Shares or a memorandum thereof, in a manner to be agreed upon by the parties. From time to time after the Closing, Seller will execute, deliver, and acknowledge all such further instruments of transfer and conveyance and will perform all such other acts as Buyer may reasonably request to more effectively transfer the Shares. 5.2 Consummation of Closing. All acts, deliveries, and confirmations comprising the Closing regardless of chronological sequence shall be deemed to occur contemporaneously and simultaneously upon the occurrence of the last act, delivery, or confirmation of the Closing and none of such acts, deliveries, or confirmations shall be effective unless and until the last of the same shall have occurred. SECTION 6. TERMINATION 6.1 Termination for Cause. If, pursuant to the provisions of this Agreement, Seller or Buyer is not obligated at the Closing to consummate this Agreement, then the party who is not so obligated may terminate this Agreement. 6.2 Termination Without Cause. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and abandoned at any time without further obligation or liability on the part of any party in favor of any other by mutual consent of Buyer and Seller. 6.3 Termination Procedure. Any party having the right to terminate this Agreement may terminate this Agreement by delivering to the other party written notice of termination, and thereupon, this Agreement will be terminated without obligation or liability of any party in favor of any other party. SECTION 7. MISCELLANEOUS PROVISIONS 7.1 Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified, or supplemented only by a written agreement signed by Buyer and Seller. 7.2 Waiver of Compliance; Consents 7.2.1 Any failure of any party to comply with any obligation, covenant, agreement, or condition herein may be waived by the party entitled to the performance of such obligation, covenant, or agreement or who has the benefit of such condition, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement, or PAGE 4 STOCK PURCHASE AGREEMENT condition will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 7.2.2 Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent will be given in a manner consistent with the requirements for a waiver of compliance as set forth above. 7.3 Assignment. This Agreement will not be assigned by a party hereto without the prior written consent of the other parties hereto. No permitted assignment will release the assignor from its obligations hereunder. Subject to the foregoing, this Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs, executors, and personal representatives. Nothing in the Agreement, express or implied, is intended to confer on any person other than the parties hereto, or their respective successors, any rights, remedies, obligations, or liabilities under or by reason of this Agreement. 7.4 Governing Law. All matters with respect to this Agreement, including but not limited to matters of validity, construction, effect, and performance, will be governed by the laws of the State of Oregon applicable to contracts made and to be performed therein between residents thereof, regardless of the laws that might be applicable under principles of conflicts of law. 7.5 Counterparts. This Agreement may be executed in two or more fully or partially executed counterparts, each of which will be deemed an original binding the signer thereof against the other signing parties, but all counterparts together will constitute one and the same instrument. 7.6 Certain Rules of Construction. The provisions of this Agreement have been examined, negotiated, and revised by counsel for each party, and no implication will be drawn against any party hereto by virtue of the drafting of this Agreement. 7.7 Entire Agreement. This Agreement and any other document to be furnished pursuant to the provisions hereof embody the entire agreement and understanding of the parties hereto as to the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings other than those expressly set forth or referred to in such documents. This Agreement and such documents supersede all prior agreements and understandings among the parties with respect to the subject matter hereof. 7.8 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to PAGE 5 STOCK PURCHASE AGREEMENT such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement, or affecting the validity or enforceability of any of the terms or provisions of this Agreement. 7.9 Attorney Fees. If any action is brought by any party to this Agreement to enforce or interpret its terms or provisions, the prevailing party will be entitled to reasonable attorney fees and costs incurred in connection with such action prior to and at trial and on any appeal therefrom. 7.10 Payment of Fees and Expenses. Each party to this Agreement will be responsible for, and will pay, all of its own fees and expenses, including those of its counsel and accountants, incurred in the negotiation, preparation, and consummation of the Agreement and the Purchase. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PRAEGITZER INDUSTRIES, INC. By ROBERT SCHMELZER DATE: ------------------------------- ------------------------------- ROBERT SCHMELZER SENIOR VICE PRESIDENT MATTHEW BERGERON DATE: ------------------------------- ------------------------------- MATTHEW BERGERON PAGE 6 STOCK PURCHASE AGREEMENT EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 220 0 33,329 (400) 18,120 55,357 126,258 (40,772) 156,153 39,079 64,951 0 0 43,173 3,548 156,153 110,689 110,689 91,678 91,678 14,117 0 2,634 2,894 1,069 1,825 0 0 0 1,825 .14 .14
-----END PRIVACY-ENHANCED MESSAGE-----