-----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, CCmQ4B6G/+Peis62jEZxzNpO7dOE2i0CEmQ9fUIh3XKw2EYKJ079riPHLc3KwVUR imRyLdnE7qr99bXJe6FW5A== 0000894579-98-000224.txt : 19981113 0000894579-98-000224.hdr.sgml : 19981113 ACCESSION NUMBER: 0000894579-98-000224 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL KNIFE & SAW INC CENTRAL INDEX KEY: 0001027909 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 570697252 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-17305 FILM NUMBER: 98744038 BUSINESS ADDRESS: STREET 1: 1299 COX AVENUE CITY: ERLANGER STATE: KY ZIP: 41018 BUSINESS PHONE: 6063710333 MAIL ADDRESS: STREET 1: 1299 COX AVENUE CITY: ERLANGER STATE: KY ZIP: 41018 10-Q 1 FORM 10-Q ================================================================================ UNITED STATES 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 September 30, 1998 [ ] 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: 333-17305 International Knife & Saw, Inc. (Exact name of registrant as specified in its charter) Delaware 57-0697252 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1299 Cox Avenue Erlanger, Kentucky 41018 (Address of principal executive offices) (606) 371-0333 (Registrant's telephone number, including area code) 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 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 __ As of October 31, 1998, there were 481,971 shares of the registrant's common stock outstanding, all of which were owned by an affiliate of the registrant. ================================================================================ International Knife & Saw, Inc. and Subsidiaries Index Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets 3 Consolidated Condensed Statements of Income 5 Consolidated Condensed Statements of Cash Flows 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II. Other Information Item 1. Legal Proceedings 14 Item 2. Change in Securities 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. (a) Exhibits 14 (b) Reports on 8-K 14 Signatures 15 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements International Knife & Saw, Inc. and Subsidiaries Consolidated Condensed Balance Sheets (Unaudited)
(in thousands) September 30, December 31, 1998 1997 ----------------------------------- Assets Current assets: Cash and cash equivalents $ 2,903 $ 2,349 Accounts receivable, trade, less allowances for doubtful accounts of $1,568 and $1,480 23,856 24,253 Inventories 30,607 29,335 Other current assets 4,386 3,738 ------------------------------------ Total current assets 61,752 59,675 Other assets: Goodwill 13,065 12,442 Debt issuance costs 3,320 3,670 Other noncurrent assets 2,738 2,356 ------------------------------------ 19,123 18,468 Property, plant and equipment-net 41,317 37,131 ==================================== Total assets $ 122,192 $ 115,274 ==================================== See accompanying notes.
3 International Knife & Saw, Inc. and Subsidiaries Consolidated Condensed Balance Sheets (Unaudited)
(in thousands) September 30, December 31, 1998 1997 ------------------------------------ Liabilities and Shareholder's deficit Current liabilities: Notes payable $ 3,882 $ 5,683 Current portion of long-term debt 2,163 2,218 Accounts payable 9,241 9,707 Accrued liabilities 13,460 8,596 Due to parent 499 561 ------------------------------------ Total current liabilities 29,245 26,765 Long-term debt, less current portion 103,802 102,314 Other liabilities 4,864 3,415 ------------------------------------ Total liabilities 137,911 132,494 Minority interest 2,223 2,387 Shareholder's deficit: Common stock, no par value - authorized-580,000 shares; issued - 526,904 shares; outstanding - 481,971 shares 5 5 Additional paid-in capital 10,153 10,153 Retained deficit (22,513) (24,098) Accumulated other comprehensive loss: Cumulative foreign currency translation adjustment (2,155) (2,235) Treasury stock, at cost (3,432) (3,432) ------------------------------------ Total shareholder's deficit (17,942) (19,607) ==================================== Total liabilities and shareholder's deficit $ 122,192 $ 115,274 ==================================== See accompanying notes.
4 International Knife & Saw, Inc. and Subsidiaries Consolidated Condensed Statements of Income (Unaudited)
(in thousands, except per share amounts) Quarter ended Nine months ended September 30, September 30, 1998 1997 1998 1997 ---------------------------------------------------------- Net sales $ 35,844 $ 37,172 $ 111,881 $ 105,076 Cost of sales 25,242 26,276 78,023 73,486 ---------------------------------------------------------- Gross profit 10,602 10,896 33,858 31,590 Selling, general and administrative expenses 7,123 7,421 22,015 20,342 ---------------------------------------------------------- Operating income 3,479 3,475 11,843 11,248 Other expenses (income): Interest income (37) (17) (77) (215) Interest expense 3,026 2,901 9,037 8,948 Minority interest 5 54 28 138 ---------------------------------------------------------- 2,994 2,938 8,988 8,871 ---------------------------------------------------------- Income before income taxes 485 537 2,855 2,377 Provision for income taxes 215 240 1,270 1,070 ---------------------------------------------------------- Net income $ 270 $ 297 $ 1,585 $ 1,307 ========================================================== Net income per common share $ .56 $ .62 $ 3.29 $ 2.71 See accompanying notes.
5 International Knife & Saw, Inc. and Subsidiaries Consolidated Condensed Statements of Cash Flows (Unaudited)
(in thousands) Nine months ended September 30, 1998 1997 ---------------------------- Operating activities Net income $ 1,585 $ 1,307 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,391 4,052 Loss (gain) on sale of fixed assets 40 (4) Minority interest in income of subsidiary 29 138 Changes in operating assets and liabilities net of effects from purchases of operations: Accounts receivable 543 (2,816) Inventories (1,239) 512 Accounts payable 265 1,912 Accrued liabilities 3,607 488 Other 438 (313) ---------------------------- Net cash provided by operating activities 9,659 5,276 Investing activities Purchases of operations, net of cash acquired (1,288) (14,842) Purchases of property, plant and equipment (6,290) (4,567) Proceeds from sale of property, plant and equipment 137 85 Decrease in notes receivable and other assets 42 102 ---------------------------- Net cash used in investing activities (7,399) (19,222) Financing activities Decrease in amounts due to parent (86) (1,739) Increase in notes payable and long-term debt 7,370 13,367 Repayment of notes payable and long-term debt (9,000) (4,966) Cash received from investees 4 24 ---------------------------- Net cash (used) provided by financing activities (1,712) 6,686 Effect of exchange rate on cash and cash equivalents 5 (100) ---------------------------- Increase (decrease) in cash and cash equivalents 553 (7,360) Cash and cash equivalents at beginning of period 2,350 11,701 ---------------------------- Cash and cash equivalents at end of period $ 2,903 $ 4,341 ============================ See accompanying notes.
6 International Knife & Saw, Inc. and Subsidiaries Notes to Consolidated Condensed Financial Statements (Unaudited) (in thousands) 1. Basis of Presentation The unaudited interim consolidated condensed financial statements contain all adjustments, consisting of normal recurring adjustments, which are, in the opinion of the management of International Knife & Saw, Inc. and its consolidated subsidiaries, ("the Company"), necessary to present fairly the consolidated financial position and consolidated results of operations and cash flows of the Company. Results of operations for the periods presented are not necessarily indicative of the results for the full fiscal year. As of January 1, 1998, the Company adopted Statement 130, Reporting Comprehensive Income. Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or shareholder's deficit. Statement 130 requires foreign currency translation adjustments, which prior to adoption were reported separately in shareholder's deficit to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of Statement 130. For the nine months ended September 30, 1998 and 1997, total comprehensive income (losses) amounted to $1,665 and $(205), including $80 and $(1,512) of other comprehensive gains (losses) related to foreign currency translation adjustments, net of tax benefits of $64 and $(1,237), respectively. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 1997. The consolidated condensed Balance Sheet at December 31, 1997 has been derived from the audited consolidated financial statements at that date. 2. Acquisitions In June, 1998, the Company completed the acquisition of the assets of Valiquet, Inc., Des Plaines, IL, for approximately $800 in cash, $29 in assumed debt, and a $40 promissory note to the seller subject to post-closing entries. This service center acquisition was financed from available cash balances. The above acquisition generates annual sales of approximately $1,200 and was accounted for by the purchase method. Goodwill totaled $528 on this acquisition. In February, 1998, the Company completed the acquisitions of the assets of the Atlanta, GA division of K.S.W. Corporation and Sheridan Saw Works, Sheridan, OR for approximately $400 in cash, post closing contingent payments of $55 for achieving certain annualized earnings levels and a $100 promissory note to one of the sellers, subject to post-closing adjustments. These service center acquisitions were financed from available cash balances. The above acquisitions generate annual sales of approximately $500 and were accounted for by the purchase method. Goodwill totaled $300 on these acquisitions. The consolidated financial statements include the results of operations generated by and financial position of the above acquisitions from the dates of acquisition. 7 International Knife & Saw, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) (Unaudited) (in thousands) 3. Foreign Currency Risk The Company's operating results are subject to fluctuations in foreign currency exchange rates as well as the currency translation of its foreign operations into U.S. dollars. The Company manufactures products in the U.S., Germany, Canada and China and exports products to more than 75 countries. The Company's foreign sales, the majority of which occur in European countries, are subject to exchange rate volatility. The Company has not historically hedged its foreign currency risk. 4. Notes Payable and Long-Term Debt
September 30, December 31, 1998 1997 ---------------------------------------- Notes payable: Notes payable on demand in Deutsche Marks to German banks, issued under revolving credit agreements, interest payable quarterly $ 1,528 $ 1,140 Notes payable on demand in Chinese Renminbi to Chinese banks, issued under revolving credit agreements, interest payable monthly 2,132 2,468 Notes payable on demand in U.S. Dollars to a German bank, issued under revolving credit agreements, interest payable quarterly - 2,000 Other 222 75 ---------------------------------------- $ 3,882 $ 5,683 ======================================== Long-term debt: 11-3/8% Senior Subordinated Notes due 2006 $90,000 $90,000 Notes payable in Deutsche Marks to a German bank 11,253 10,371 Notes payable in Chinese Renminbi to Chinese banks 2,221 1,777 Capitalized lease obligations in U.S. dollars to a U.S. bank 855 950 Promissory note payable in Deutsche Marks to a former shareholder of the Rolf Meyer Company 1,636 1,434 ---------------------------------------- 105,965 104,532 Less current portion 2,163 2,218 ======================================== $ 103,802 $ 102,314 ========================================
At September 30, 1998, the Company had revolving credit facilities of $20,000 (all unused), DM 7,500 (all used) and DM 8,500 (DM 3,256 unused). A facility fee of 0.25% per annum is charged on the unused portion of the U.S. dollar facility. 8 International Knife & Saw, Inc. and Subsidiaries Notes to Consolidated Condensed Financial Statements (continued) (Unaudited) (in thousands) 5. Income Taxes IKS Corporation, of which the Company is a wholly-owned subsidiary, files a consolidated Federal income tax return which includes the Company. The Company's provision for income taxes includes U.S. Federal, state, and local income taxes as well as non-U.S. income taxes in certain jurisdictions. The current and deferred tax expense and benefit for the Company are recorded as if it filed on a stand-alone basis. All participants in the consolidated income tax return are separately liable for the full amount of the taxes, including penalties and interest, if any, which may be assessed against the consolidated group. The current provision for United States income taxes is recorded to the intercompany account with IKS Corporation. 6. Inventories September 30, December 31, 1998 1997 -------------------------------------- Finished goods $ 18,721 $ 18,118 Work in process 4,826 4,036 Raw materials and supplies 7,060 7,181 -------------------------------------- $ 30,607 $ 29,335 ====================================== 7. Organization The Company's operations are principally in North America representing 73% of net sales for the nine months ended September 30, 1998. 9 International Knife & Saw, Inc. and Subsidiaries Notes to Consolidated Condensed Financial Statements (continued) (Unaudited) (in thousands) 7. Organization (continued) The following table summarizes the Company's North American operations and other international operations. Nine months ended September 30, -------------------------------------- 1998 1997 ----------------- ----------------- North American Operations Net sales - Customers $ 81,201 $ 76,403 Interarea transfers 65 384 ----------------- ----------------- Total $ 81,266 $ 76,787 Operating income 8,284 9,308 Other International Operations Net sales - Customers $ 30,680 $ 28,673 Interarea transfers 5,689 5,118 ----------------- ----------------- Total $ 36,369 $ 33,791 Operating income 3,559 2,204 Eliminations Net sales $ (5,754) $ (5,502) Operating income - (264) Consolidated Net sales $ 111,881 $ 105,076 Operating income 11,843 11,248 8. Subsequent Events On October 6, 1998 the Company executed an agreement to purchase the shares of Buland company ("Buland S.A.") for 10,000 French Francs (approximately $1,800) in cash and 2,400 French Francs (approximately $200) in assumed debt, subject to post-closing adjustments. Headquartered in France, Buland is a reseller and regrinder of industrial knives for the printing industry and reseller of rotary and flexible dies, with annual sales of 36,000 French Francs (approximately $6,500). The acquisition will be accounted for under the purchase method and was financed from borrowings under the Company's existing revolving credit facilities. Additional consideration is contingent upon Buland achieving certain annual earnings and is payable in 2002. 10 The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward looking statements. Certain matters discussed in this filing could be characterized as forward looking statements, such as statements relating to plans for future expansion, other capital spending, financing sources and effects of regulation and competition. Such forward looking statements involve important risks and uncertainties that could cause actual results to differ materially from those expressed in such forward looking statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company's Form 10-K as of and for each of the three years in the period ended December 31, 1997. General The Company is a global leader in the manufacturing, servicing and marketing of industrial and commercial machine knives and saws. Together with its predecessor, the Company has been manufacturing knives and saws for nearly 100 years, beginning in Europe and expanding its presence to the United States in the 1960s. The Company operates on an international basis with facilities in North America, Europe, Asia and Latin America and products sold in over 75 countries. The Company offers a broad range of products, used for various applications in numerous markets. Presence outside the U.S. The Company's North American operations account for 73% of its net sales and 76% of its operating income. Its other international operations account for the remainder and are located primarily in Europe, 23% of first nine months sales, and to a lesser extent in Asia. The Company's operating results are subject to fluctuations in foreign currency exchange rates as well as the currency translation of its foreign operations into U.S. dollars. The Company manufactures products in the U.S., Germany, Canada and China and exports products to more than 75 countries. The Company's foreign sales, the majority of which occur in European countries, are subject to exchange rate volatility. In addition, the Company consolidates German, Canadian and Asian operations and changes in exchange rates relative to the U.S. dollar have impacted financial results. As a result, a decline in the value of the dollar relative to these other currencies can have a favorable effect on the profitability of the Company and an increase in the value of the dollar relative to these other currencies can have a negative effect on the profitability of the Company. Comparing exchange rates for the first nine months of 1998 to the first nine months of 1997, the weaker German Mark, Canadian Dollar and Indonesian Rupiah had the translation effect of decreasing first nine months 1998 sales by $2.7 million with minimal effect on net earnings. The Company has not historically hedged its foreign currency risk. Subsequent to December 31, 1997, the Indonesian Rupiah has significantly declined in value relative to the U.S. dollar. At December 31, 1997, the exchange rate was 5,444 Rupiah to one U.S. dollar. At September 30, 1998 the rate had increased to 10,724 Rupiah to one U.S. dollar, but at November 10, 1998 the rate had decreased to 8,000 Rupiah to one U.S. dollar. In 1998, the Company has limited its currency exposure by billing the majority of its sales to Indonesian customers in U.S. dollars. Results of Operations As used in the following discussion of the Company's results of operations, (i) the term "gross profit" means the dollar difference between the Company's net sales and cost of sales and (ii) the term "gross margin" means the Company's gross profit divided by its net sales. 11 Third quarter and nine months ended September 30, 1998 compared to second quarter and nine months ended September 30, 1997 Net Sales: Net sales decreased 3.6% to $35.8 million and increased 6.5% to $111.9 million for the third quarter and first nine months of 1998, respectively from $37.2 and $105.1 million for the same periods in 1997. Softness in the wood, paper and metal industries caused by pricing pressures from Asian, South American, Russian and domestic competitors and a reduction in production capacity resulting from decreased demand in the Asian, South American, U.S. and Canadian markets contributed to the reduced third quarter sales and partially offset the first nine months 1998 increase in net sales attributable to the second quarter 1997 acquisitions. In addition, the effects of a weaker German Mark, Canadian Dollar and Indonesian Rupiah in the first nine months of 1998 compared to the same period in 1997 resulted in a translation effect that reduced third quarter and first nine months 1998 sales by $1.0 and $2.7 million, respectively. The Company experienced a sales decline in its North American operations of 5.4% and an increase of 6.3% to $26.0 million and $81.2 million for the third quarter and first nine months of 1998, respectively, from $27.5 and $76.4 million for the same periods in 1997. In its other operations, the Company experienced a sales improvement of 2.1% and 7.0% to $9.9 million and $30.7 million for the third quarter and first nine months of 1998, respectively, from $9.7 and $28.7 million for the same periods in 1997. Gross Profit: Gross profit decreased 2.7% and increased 7.3% to $10.6 and $33.9 million for the third quarter and first nine months of 1998 compared to $10.9 and $31.6 million for the same periods in 1997. Softness in the wood, paper and metal industries caused by pricing pressures from Asian, South American, Russian and domestic competitors and a reduction in production capacity resulting from decreased demand in the Asian, South American, U.S. and Canadian markets contributed to the reduced third quarter sales and partially offset the first nine months 1998 increase in net sales attributable to the second quarter 1997 acquisitions. Gross margin increased to 29.6% and 30.3% for the third quarter and first nine months of 1998 compared to 29.3% and 30.1% for the same periods in 1997. The Company experienced gross profit decline of 9.4% and improvement of 6.3% to $7.7 and $25.3 million in its North American operations for the third quarter and first nine months of 1998, respectively, from $8.5 and $23.8 million for the same periods in 1997, primarily attributable to the factors noted above. Gross profit for the Company's other operations increased 20.8% and 10.3% to $2.9 and $8.6 million for the third quarter and first nine months of 1998, respectively, from $2.4 and $7.8 million for the same periods in 1997. Selling, General and Administrative Expenses: Selling, general and administrative expenses were $7.1 and $22.0 million for the third quarter and first nine months of 1998 compared to $7.4 and $20.3 million for the same periods in 1997. Selling, general and administrative expenses as a percent of sales decreased and increased slightly to 19.9% and 19.7% from 20.0% and 19.4% for the third quarter and first nine months of 1998 compared to the same periods in 1997. Interest Expense, net: Net interest expense increased to $3.0 and $9.0 million for the third quarter and first nine months of 1998 compared to $2.9 and $8.7 million for the same periods in 1997. Income Taxes: The Company's effective tax rate remained constant at 44.5% for the third quarter and first nine months of 1998 compared to 44.7% and 45.0% for the same periods in 1997. Liquidity and Capital Resources The Company's principal capital requirements are to fund working capital needs to meet required debt and interest payments, and to complete planned maintenance and expansion expenditures. The Company anticipates that its operating cash flow, together with available borrowings of $20,000 and DM 3,256 under existing credit facilities, will be sufficient to meet its capital requirements. As of September 30, 1998, the Company's total debt and shareholder's deficit was $109.8 million and $18.0 million, respectively. 12 Net cash flow provided by operations aggregated $9.7 million for the first nine months of 1998 compared to $5.3 million for the same period in 1997. The increase was primarily attributable to a $3.9 million decrease in working capital needs. Cash used in investing activities for the first nine months of 1998 was $7.4 million compared to $19.2 million for the same period in 1997. The decreased use of cash is primarily due to the acquisitions in the second quarter of 1997, partially offset by increased purchases of property, plant and equipment in 1998. Cash used in financing activities for the first nine months of 1998 was $1.7 million compared to $6.7 million provided for the same period in 1997. The decrease in cash provided compared to the prior year is primarily due to increased borrowings in 1997 to fund the second quarter 1997 acquisitions. Year 2000 The Year 2000 problem exists because many computer systems and applications use two-digit fields to designate a year. As the century date change occurs, date sensitive systems may recognize the year 2000 as 1900, or not at all. This inability to recognize or properly treat the year 2000 may cause systems to process financial and operational information incorrectly. In 1996, the Company began to develop a plan to upgrade its information systems to enable it to realize cost savings through centralization of functions that would result in reductions in working capital items such as inventory and accounts receivable. This plan also was developed to assess and resolve Year 2000 compliance issues potentially affecting the Company, both with respect to internal systems and systems on which the Company's major vendors, suppliers, and distributors are reliant. To date, the Company has completed the assessment phase of its internal information systems and an implementation plan to resolve potential problems has been developed. The Company is currently in the process of converting, modifying, and upgrading its systems and software to Year 2000 compliant systems and software, as necessary. The Company believes that about 50% of its critical systems are Year 2000 compliant, and that the remaining critical systems will be compliant by April 1999. The Company has also assessed the embedded systems that operate such items as manufacturing, phone, security, heating and air conditioning systems. This assessment was completed by September 30, 1998. Non-compliant embedded systems will be replaced or modified as necessary by April 1999. The Company has incurred approximately $1.9 million in costs primarily to upgrade its systems, and to a lesser extent to address Year 2000 issues. The Company estimates costs associated with scheduled system upgrades for the remainder of 1998 and 1999 will approximate $2.0 million, including minor upgrades to address Year 2000 compliance issues. The company anticipates that it will be able to achieve Year 2000 compliance with respect to internal systems and software and embedded systems and does not currently anticipate any material disruption in its business operations to achieve this goal. The Company has begun the process of making inquiries and gathering information regarding Year 2000 compliance exposures faced by its principal vendors and suppliers and its major dealers and distributors. The Company has insufficient information at this time to fully assess the degree to which such vendors, suppliers, dealers, and distributors have addressed or are addressing Year 2000 compliance issues, and to fully evaluate the risk of disruption to operations that those businesses might face relating to Year 2000 compliance issues. However, no major part or critical operation of any segment of the Company's business is reliant on a single source for raw materials, supplies, or services, and the Company has multiple distribution channels for most of its products. In the event information presently being gathered indicates that certain vendors, suppliers, or distributors will not be Year 2000 compliant, the Company believes it will be able to find cost-competitive, alternative sources for raw materials, supplies, and services necessary to continue production and distribution. 13 The costs of the project and the completion dates are based on management's best estimates, which were derived utilizing numerous assumptions of future events including the availability of certain resources, third party year 2000 compliance modification plans, and other factors. There can be no guarantee that these estimates will be achieved and actual results could differ materially from these estimates. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is from time to time involved in legal proceedings arising in the normal course of business. The Company believes there is no outstanding litigation that could have a material impact on its financial position or results of operations. Item 2. Change in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Exhibit No. Description ------- ------------------------- 27 Financial Data Schedule (b) Reports on Form 8-K None. 14 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. INTERNATIONAL KNIFE & SAW, INC. By: /s/ John E. Halloran -------------------------------------- John E. Halloran President and Chief Executive Officer By: /s/ William M. Schult -------------------------------------- William M. Schult Vice President-Finance, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) November 11, 1998 15 EXHIBIT INDEX Exhibit No. Description ------- ----------------------- 27 Financial Data Schedule 16 EX-27 2 FINANCIAL DATA SCHEDULE
5 OTHER DEC-31-1998 JAN-01-1998 SEP-30-1998 2,903,000 0 25,424,000 1,568,000 30,607,000 61,752,000 71,778,000 (30,461,000) 122,192,000 29,245,000 0 0 0 5,000 (17,947,000) 122,192,000 111,881,000 111,881,000 78,023,000 78,023,000 22,015,000 0 9,037,000 2,855,000 1,270,000 1,585,000 0 0 0 1,585,000 3.29 3.29
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