-----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, RTnIYucC6isuPh7rd4sk7FNSFMDK3i0ClcObBrhkf6qGAxEphtka8lV5fzfqo9Ux OFHCeyyOUgp6U5jGBOLixw== 0000920049-95-000092.txt : 19951119 0000920049-95-000092.hdr.sgml : 19951119 ACCESSION NUMBER: 0000920049-95-000092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BETZ LABORATORIES INC CENTRAL INDEX KEY: 0000011884 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 231503731 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11558 FILM NUMBER: 95590430 BUSINESS ADDRESS: STREET 1: 4636 SOMERTON RD CITY: TREVOSE STATE: PA ZIP: 19053 BUSINESS PHONE: 2153553300 MAIL ADDRESS: STREET 1: 4636 SOMERTON ROAD CITY: TREVOSE STATE: PA ZIP: 19053 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 _____________________________________ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 _____________________________________ For Quarter Ended September 30, 1995 Commission File Number: 0-2085 BETZ LABORATORIES, INC. (Exact name of registrant as specified in its charter) Pennsylvania 23-1503731 - ---------------------------------------- ------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4636 Somerton Road, Trevose, PA 19053 - ---------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (215) 355-3300 -------------- 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 report(s)], and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 27,720,840 Common Shares outstanding as of November 7, 1995. ---------- ------------------ BETZ LABORATORIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 - ------------------------------------------------------------------------------- Net Sales $195,790 $180,398 $562,620 $533,033 Operating Costs and Expenses: Cost of products sold 71,225 64,555 202,894 188,980 Selling, research and administrative expenses 91,603 84,367 264,910 252,089 -------- -------- -------- -------- 162,828 148,922 467,804 441,069 OPERATING EARNINGS 32,962 31,476 94,816 91,964 Other Income (Expense): Investment and other income 809 354 2,517 2,324 Interest expense (377) (80) (503) (182) -------- -------- -------- -------- 432 274 2,014 2,142 -------- -------- -------- -------- EARNINGS BEFORE INCOME TAXES 33,394 31,750 96,830 94,106 Income Taxes 12,857 12,382 37,597 37,324 -------- -------- -------- -------- NET EARNINGS $ 20,537 $ 19,368 $ 59,233 $ 56,782 ======== ======== ======== ======== Net earnings per Common Share: Primary $.69 $.65 $1.99 $1.90 ======== ======== ======== ======== Fully diluted $.65 $.61 $1.88 $1.79 ======== ======== ======== ======== Cash dividends declared per Common Share $.37 $.36 $1.10 $1.07 ======== ======== ======== ======== Average number of Common Shares: Primary 27,859 27,995 27,915 28,135 ======== ======== ======== ======== Fully diluted 30,594 30,808 30,678 30,916 ======== ======== ======== ======== See notes to consolidated financial statements. BETZ LABORATORIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands) ASSETS September 30, 1995 December 31, 1994 - ------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash equivalents $ 22,414 $ 43,926 Trade accounts receivable, less allowances: 1995--$2,844; 1994--$2,693 135,573 121,660 Inventories: Finished products and goods purchased for resale 24,748 19,491 Raw materials 26,479 20,133 -------- -------- 51,227 39,624 Prepaid expenses and other 27,444 24,666 -------- -------- TOTAL CURRENT ASSETS 236,658 229,876 PROPERTY, PLANT AND EQUIPMENT-- at cost Buildings 177,547 172,833 Machinery and equipment 417,099 396,074 Allowance for depreciation (deduction) (327,039) (291,588) -------- -------- 267,607 277,319 Land 26,839 22,056 Construction in progress 30,881 9,573 -------- -------- 325,327 308,948 OTHER ASSETS Investments and other 14,188 10,256 Intangibles -- at cost, less amortization: 1995 -- $3,920; 1994 -- $2,855 14,047 6,418 -------- -------- 28,235 16,674 -------- -------- $590,220 $555,498 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 1995 December 31, 1994 - ------------------------------------------------------------------------------- CURRENT LIABILITIES Trade accounts payable $30,366 $30,740 Payroll and related taxes 24,076 24,010 Accrued expenses 23,559 20,305 Income taxes 15,328 12,587 Dividends payable 0 10,031 Current portion of ESOP debt 1,000 1,000 -------- -------- TOTAL CURRENT LIABILITIES 94,329 98,673 ESOP DEBT--less portion classified as current 95,500 96,500 DEFERRED CREDITS Income taxes 20,794 20,765 Other deferred credits 25,056 15,602 -------- -------- 45,850 36,367 SHAREHOLDERS' EQUITY Preferred Shares -- Authorized - 1,000,000 shares, $.10 par value, voting Series A ESOP Convertible, 8% Cumulative, stated at aggregate liquidation preference; Issued: 1995 -- 488,768 shares; 1994 -- 492,167 shares 97,754 98,433 Guarantee of related ESOP debt (91,763) (92,834) -------- -------- 5,991 5,599 Common Shareholders' Equity Common Shares -- Authorized - 90,000,000 shares, $.10 par value; Issued (including treasury shares): 1995 -- 33,644,488 shares; 1994 -- 33,649,527 shares 3,364 3,365 Capital in excess of par value of shares 82,148 81,802 Retained earnings 456,411 423,519 Cost of Common Shares in treasury: 1995 -- 5,930,174 shares; 1994 -- 5,784,899 shares (195,011) (187,523) Unearned compensation (3,605) (5,521) Foreign currency translation adjustments 5,243 2,717 -------- -------- COMMON SHAREHOLDERS' EQUITY 348,550 318,359 -------- -------- TOTAL SHAREHOLDERS' EQUITY 354,541 323,958 -------- -------- $590,220 $555,498 ======== ======== See notes to consolidated financial statements. BETZ LABORATORIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended September 30, 1995 1994 - ------------------------------------------------------------------------------- OPERATING ACTIVITIES Net earnings $59,233 $56,782 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 36,824 33,810 Compensation and employee benefit plans 8,976 3,356 Other, net (395) (118) Changes in operating assets and liabilities: Accounts receivable (11,159) (17,426) Inventories (9,992) (4,557) Prepaid expenses and other (2,712) (2,127) Accounts payable and accrued expenses 1,452 11,995 ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 82,227 81,715 INVESTING ACTIVITIES Expenditures for property, plant and equipment (43,686) (35,641) Proceeds from sales of long-term assets 1,390 5,075 Purchases of long-term investments and businesses (15,989) - Other, net (935) 2,290 -------- -------- NET CASH USED IN INVESTING ACTIVITIES (59,220) (28,276) FINANCING ACTIVITIES Dividends paid (36,150) (35,499) Proceeds from issuance of common shares, including treasury shares 461 1,400 Purchase of treasury shares (8,622) (19,995) Principal payments on ESOP debt (1,000) (500) Retirement of ESOP preferred shares - (515) -------- -------- NET CASH USED IN FINANCING ACTIVITIES (45,311) (55,109) Effect of exchange rate changes on cash 792 1,771 -------- -------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (21,512) 101 Cash and Cash Equivalents at Beginning of Year 43,926 43,921 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $22,414 $44,022 ======= ======= See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, consolidated results of operations and consolidated cash flows in conformity with generally accepted accounting principles. The foregoing consolidated financial statements do include all adjustments, consisting only of normal recurring accruals which, in the opinion of management, are necessary for a fair statement of the results of the interim period. Note 2 - Common Shares Reserved for Stock Plans At September 30, 1995, 4,447,117 and 633,420 Common Shares were reserved for possible issuance pursuant to the exercise of stock options and grants under the Company's Stock Option and Incentive Plans, respectively. Further, 2,741,000 Common Shares were reserved and kept available for possible conversion of the Series A ESOP Convertible preferred stock. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS Third quarter 1995 net sales increased $15.4 million from $180.4 million to $195.8 million. This 9 percent increase was approximately composed of a 5 percent improvement in volume-mix, a 2 percent gain resulting from the changes in the value of foreign currencies relative to the U.S. dollar and a 2 percent increase resulting from the acquisition of Taiwan Pietz Company, Ltd. on May 1, 1995. Net earnings increased $1.1 million, or 6 percent, from $19.4 million to $20.5 million. Primary earnings per Common Share rose 6 percent from $.65 to $.69 and fully diluted earnings per Common Share increased 7 percent from $.61 to $.65. Net sales for the nine month period ending September 30, 1995 increased 6 percent from $533.0 million to $562.6 million. The percentage increase in sales was approximately comprised of a 3 percent improvement in volume-mix, a 1 percent net increase in selling prices and a 2 percent increase from currency fluctuations. Sales gains resulting from the acquisition of Taiwan Pietz on May 1, 1995 were mainly offset by lost sales resulting from the sale of Betz Energy Chemicals, Inc. (EnChem) on June 30, 1994. Operating earnings rose 3 percent from $92.0 million to $94.8 million. Net earnings increased 4 percent from $56.8 million to $59.2 million. Primary and fully diluted earnings per Common Share both increased 5 percent from $1.90 to $1.99 and from $1.79 to $1.88, respectively. The Company's third quarter results reflect another strong quarter by its non-U.S. operations, where net sales rose 23 percent in U.S. dollars and 17 percent in local currencies over the third quarter of 1994. Double- digit sales gains were recorded during the quarter in Canada, Southeast Asia, Korea and Australia. Performance in the Asia Pacific region also benefited from the results of Betz Taiwan. Sales of water treatment and paper process treatment programs reported by the Company's European subsidiaries were also up strongly over the third quarter of 1994. Non- U.S. sales for the first nine months of 1995 were 20 percent higher in U.S. dollars and 13 percent higher in local currencies than the comparable 1994 period. Third quarter net sales within the United States rose 4 percent over the 1994 third quarter. All major operating units posted positive sales gains. Sales reported by the Betz Water Management Group, which markets industrial water treatment programs in the U.S., were up at a rate less than the U.S. average, despite continuing weakness in sales to the hydrocarbon processing industry. The Betz Water Management Group continues to experience double- digit increases in sales of its wastewater treatment programs which include the Company's new Novus [registered trademark] polymers. United States net sales, excluding 1994 EnChem sales, for the first nine months of 1995 were 2 percent higher than the first nine months of 1994. The table below sets forth as a percent of sales cost of products sold, selling, research and administrative expenses and operating earnings for the respective periods. Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 - ------------------------------------------------------------------------------- Cost of products sold 36.4% 35.8% 36.1% 35.5% Selling, research and administrative expenses 46.8% 46.8% 47.0% 47.2% Operating earnings 16.8% 17.4% 16.9% 17.3% Cost of products sold, as a percentage of sales, increased when compared to the prior year periods. This increase is primarily caused by higher raw material costs and a less favorable product mix. Selling, research and administrative expenses, as a percentage of sales, remained constant when comparing third quarter 1995 with the same period in 1994, but declined from the prior year-to-date period due to reductions in administrative expenses resulting from restructuring actions. The net effect of the above resulted in a 0.6 percent decline in operating earnings, as a percent of sales, for the third quarter 1995 compared to the third quarter 1994 and a 0.4 percent decline when comparing the year-to-date periods. During the first nine months of 1995, the Company charged the restructuring reserve $3.1 million. The restructuring plan has been completed this year. Cash and cash equivalents were $22.4 million on September 30, 1995, a decrease of $21.6 million from December 31, 1994. The primary cause of this decline was $16.0 million of expenditures for long-term investments and businesses. The largest such expenditure was the cash acquisition of Taiwan Pietz Company, Ltd. on May 1, 1995. The new company, known as Betz Taiwan, Ltd., provides the company with excellent opportunities for growth in the Asia Pacific region, particularly in the paper and refinery process treatment businesses. The purchase price for Taiwan Pietz Company, Ltd. was not disclosed. During the period expenditures for property, plant and equipment were $43.7 million, an $8.0 million increase from the 1994 level. The Company anticipates that capital expenditures for 1995 will be approximately $65 to $70 million and will include improvements to the Company's production facilities in Belgium and commencement of expansion of its plant in Beaumont, Texas to increase the manufacturing capacity for the Novus [registered trademark] polymer line, which is used in both process and water treatment applications. Net cash used in financing activities decreased by $9.8 million from the prior year nine month period, principally due to the purchase of 200,000 treasury shares at a cost of $8.6 million in 1995 compared to the 1994 nine month purchase of 400,000 treasury shares at a cost of $20.0 million. On November 7, 1995, the Company announced the acquisition of the Misan Group (Misan), an industrial water, paper process and fuel oil treatment company with headquarters in Naples, Italy and subsidiaries in Spain and Portugal. Misan, which has projected 1995 annual sales of approximately $20 million, complements the Southern European operations and boosts the Company's leadership position in Italy by approximately doubling market share in that country. Misan also provides opportunities to expand the Company's business into Spain and Portugal. Included in the purchase transaction are office, laboratory and production facilities near Naples, Italy and Barcelona Spain. The ISO 9001 certified production plant in Naples will allow the Company to produce in Europe the proprietary raw materials used in advanced treatment programs. The Company's customers will also have access to Misan's fuel oil technology called Gemini [registered trademark] for optimizing combustion in boilers and furnaces. The Misan acquisition is not expected to have a material impact on the Company's 1995 results of operations. The 1995 year-end consolidated balance sheet will include the cost of assets purchased and liabilities incurred or assumed as a result of this transaction. The acquisition will be financed with a combination of internal and external financing resources. The Company anticipates that present cash and cash equivalents and net cash provided by 1995 operating activities, combined with available external financing resources, will be sufficient to fund the Company's operating and capital expenditure requirements and to service the dividend and debt requirements associated with its Employee Stock Ownership Plan. PART II OTHER INFORMATION Item 1 - Legal Proceedings There have been no material developments in the case of Katherine Adams, et al. v. Pacific Gas and Electric, et al. nor in the pending proceedings to which the Company is a "Potentially Responsible Party" under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") during the quarter for which this report is filed. The Company is a "Potentially Responsible Party" under CERCLA at fourteen (14) sites. See the discussion under Item 3, "Pending Legal Proceedings," of the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibit 11: Statement Re: Computation of Per Share Earnings. (b) No reports on Form 8-K have been filed during the quarter for which this Form 10-Q is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BETZ LABORATORIES, INC. ------------------------------------- (Registrant) Date: November 13, 1995 By: s/George L. James ---------------------------------- George L. James Vice President - Finance and Treasurer Date: November 13, 1995 By: s/William C. Brafford ---------------------------------- William C. Brafford Vice President, Secretary and General Counsel EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, Primary Earnings per Common Share 1995 1994 1995 1994 - ------------------------------------------------------------------------------- Net earnings $20,537 $18,086 $59,233 $56,782 Effect of preferred stock dividends (1,213) (980) (3,648) (3,413) ------- ------- ------- ------- Net earnings available to common shareholders $19,324 $17,106 $55,585 $53,369 ======= ======= ======= ======= Average Common Shares outstanding 27,701 27,783 27,750 27,903 Common stock equivalents 158 212 165 232 ------- ------- ------- ------- Average number of Common Shares - primary 27,859 27,995 27,915 28,135 ======= ======= ======= ======= Primary earnings per Common Share $0.69 $0.61 $1.99 $1.90 ======= ======= ======= ======= Fully Diluted Earnings per Common Share - ------------------------------------------------------------------------------- Net earnings $20,537 $18,086 $59,233 $56,782 Effect of ESOP charge to operations assuming conversion of Series A ESOP Convertible Preferred Shares (510) (480) (1,564) (1,533) ------- ------- ------- ------- Net earnings available to common shareholders $20,027 $17,606 $57,669 $55,249 ======= ======= ======= ======= Average Common Shares outstanding 27,701 27,783 27,750 27,903 Common stock equivalents 158 234 175 242 Assumed conversion of Series A ESOP Convertible Preferred Shares 2,735 2,791 2,753 2,771 ------- ------- ------- ------- Average number of Common Shares - fully diluted 30,594 30,808 30,678 30,916 ======= ======= ======= ======= Fully diluted earnings per Common Share $0.65 $0.57 $1.88 $1.79 ======= ======= ======= ======= Common stock equivalents reflect the assumed exercise of dilutive employees' stock options using the treasury stock method. EX-27 3 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1995 SEP-30-1995 22,414 0 135,573 2,844 51,227 236,658 652,366 327,039 590,220 94,329 95,500 5,991 0 3,364 345,186 590,220 562,620 562,620 202,894 202,894 0 0 503 96,830 37,597 59,233 0 0 0 59,233 1.99 1.88
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