-----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, GaRHwKT1B1ghl5LWiB26Z5LEUVa/pOSsUqqRAjQF/o3YYOHyJh9ph8EwCoV/bohm 9pwgTZ0pdZk5k1YVORwqhQ== 0000912057-96-022726.txt : 19961016 0000912057-96-022726.hdr.sgml : 19961016 ACCESSION NUMBER: 0000912057-96-022726 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BINKS MANUFACTURING CO CENTRAL INDEX KEY: 0000012180 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 360808480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01416 FILM NUMBER: 96642913 BUSINESS ADDRESS: STREET 1: 9201 W BELMONT AVE CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 7086713000 MAIL ADDRESS: STREET 1: 9201 WEST BELMONT AVENUE CITY: FRANKLIN PARK STATE: IL ZIP: 60131 10-Q 1 FORM 10-Q 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 l934 For the quarterly period ended August 31, 1996 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 1-1416 BINKS MANUFACTURING COMPANY ---------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 36-0808480 - ---------------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9201 WEST BELMONT AVENUE, FRANKLIN PARK, ILLINOIS 60131 ------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code 847-671-3000 Indicate by check mark whether the registrant (l) 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 past 90 days. Yes X No ----- ----- The number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report: Class Outstanding August 31, 1996 ----------------------- --------------------------- Common, par value $1.00 3,088,837 PART I - FINANCIAL INFORMATION SUMMARIZED FINANCIAL STATEMENTS Company or group of companies for which report is filed: Binks Manufacturing Company and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS August 31, 1996 (Unaudited) and November 30, 1995 ------------------------------------------------- Aug 31 Nov 30 1996 1995 ------ ------ ($000 omitted) ASSETS Current assets: Cash and cash equivalents $ 9,414 8,527 Receivables, net 77,739 90,726 Inventories 106,616 86,207 Other current assets 4,558 5,221 ------- ------- Total current assets 198,327 190,681 Investments and other assets 6,455 7,098 Goodwill 2,632 2,695 Property, plant and equipment, at cost 66,223 65,186 Less accumulated depreciation 37,474 35,559 ------- ------- 28,749 30,627 ------- ------- TOTAL ASSETS $236,163 231,101 ------- ------- ------- ------- -1- PART l - FINANCIAL INFORMATION SUMMARIZED FINANCIAL STATEMENTS (Continued) Company or group of companies for which report is filed: Binks Manufacturing Company and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS August 31, 1996 (Unaudited) and November 30, 1995 ------------------------------------------------- Aug 31 Nov 30 1996 1995 ------- ------- ($000 omitted) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable, bank overdrafts and current maturities of long-term debt $ 10,287 11,040 Accounts payable 58,856 53,969 Other current liabilities 18,654 19,070 ------- ------- Total current liabilities 87,797 84,079 Deferred compensation 9,375 8,725 Deferred income taxes 418 490 Long-term debt, less current maturities 44,085 43,202 ------- ------- Total liabilities 141,675 136,496 ------- ------- Stockholder's equity: Capital stock, $1.00 par value. Authorized 12,000,000 shares: issued 3,088,837 shares 3,089 3,089 Additional paid-in capital 24,505 24,505 Retained earnings 67,377 66,671 Foreign currency translation adjustment ( 483) 340 ------- ------- Total stockholders' equity 94,488 94,605 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $236,163 231,101 ------- ------- ------- ------- -2- Binks Manufacturing Company and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS Nine months ended August 31, 1996 and August 31, 1995 ----------------------------------------------------- (Unaudited)
For the three For the nine months ended months ended --------------------- --------------------- Aug 31 Aug 31 Aug 31 Aug 31 1996 1995 1996 1995 ------ ------ ------ ------ ($000 omitted) ($000 omitted) Net Sales $71,536 67,871 199,841 191,239 Cost of goods sold 47,707 45,191 134,077 126,236 ------- ------- ------- ------- Gross profit 23,829 22,680 65,764 65,003 Selling, general and administrative expenses 20,164 19,809 58,674 56,459 ------- ------- ------- ------- Operating income 3,665 2,871 7,090 8,544 Other expenses (income): Interest expense 963 1,034 3,102 3,014 Contribution to employee profit sharing funds 283 8 298 22 Other expense (income), net 442 ( 36) 398 ( 200) ------- ------- ------- ------- 1,688 1,006 3,798 2,836 Earnings before income taxes and equity in earnings (loss) of unconsolidated subsidiaries 1,977 1,865 3,292 5,708 Income taxes 1,170 845 1,659 2,410 ------- ------- ------- ------- Earnings before equity in earnings (loss) of unconsolidated subsidiaries 807 1,020 1,633 3,298 Equity in earnings (loss) of unconsolidated subsidiaries - - - - ------- ------- ------- ------- Net earnings $ 807 1,020 1,633 3,298 ------- ------- ------- ------- ------- ------- ------- ------- Net earnings per share $ .26 .33 .53 1.07 ------- ------- ------- ------- ------- ------- ------- ------- Cash dividend declared per share $ .10 .10 .30 .40 ------- ------- ------- ------- ------- ------- ------- -------
-3- Binks Manufacturing Company and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended August 31, 1996 and August 31, 1995 ----------------------------------------------------- (Unaudited) 1996 1995 -------- -------- ($000 omitted) Cash flows from operating activities: Net earnings $ 1,633 3,298 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,259 2,775 Equity in (earnings) loss of unconsolidated subsidiaries - - Deferred compensation, net of payments 472 690 Deferred income taxes ( 78) ( 6) Other, net 428 ( 258) Cash provided by (used in) changes in: Receivables 11,826 ( 7,404) Inventories (20,810) ( 7,112) Other current assets 56 584 Accounts payable 5,165 8,376 Accrued employees' profit-sharing contributions 345 ( 264) Accrued expenses 148 ( 1,479) Income taxes 448 582 -------- -------- Net cash provided by (used in) operating activities 2,892 2,740 -------- -------- Cash flows from investing activities: Purchase of property, plant and equipment ( 2,537) ( 4,741) Proceeds from sale of equipment 793 1,954 Sale (purchase) of other investments and assets 432 ( 2,014) -------- -------- Net cash provided by (used in) investing activities ( 1,312) ( 4,801) -------- -------- Cash flows from financing activities: Proceeds from long-term borrowings 1,041 4,141 Dividends paid ( 927) ( 1,235) Net increase (decrease) in commercial paper, notes payable and bank overdrafts 180 ( 1,869) Principal payments on long-term debt ( 920) ( 1,194) -------- -------- Net cash provided by (used in) financing activities ( 626) ( 157) -------- -------- Effect of exchange rate changes on cash ( 67) 210 -------- -------- Net increase (decrease) in cash and cash equivalents 887 ( 2,008) -------- -------- Cash and cash equivalents at beginning of period 8,527 8,564 -------- -------- Cash and cash equivalents at end of period $ 9,414 6,556 -------- -------- -------- -------- -4- Binks Manufacturing Company and Consolidated Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 1996 (Unaudited) and November 30, 1995 ------------------------------------------------- NOTE 1 The accompanying financial statements are unaudited, but in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position for the applicable period. Results of operations for any interim period are not necessarily indicative of results for any other period or for the full year. These interim financial statements should be read in conjunction with the financial statements and related notes contained in the Annual Report on Form l0-K for the year ended November 30, 1995. NOTE 2 On June 30, 1995, the Court of Appeals for the Federal Circuit, in GRACO, INC. V. BINKS MANUFACTURING COMPANY, vacated a judgment of infringement and an award of $2.75 million against the Company regarding certain pumps sold prior to June 1993. The United States District Court for the Southern District of Texas previously found that the Company had "willfully" infringed a patent and awarded Graco treble damages, attorney fees and costs. The Federal Circuit reversed the district court's finding that Binks "willfully" infringed Graco's patent and the resulting enhancement of damages and award of attorneys' fees. The Federal Circuit remanded the case for findings on the issues of whether the patent was valid and infringed. Graco asserts that on remand it will seek damages and interest of approximately $750,000. The Company believes that there are meritorious defenses to these claims and thus no provision for any liability has been made in the financial statements. NOTE 3 In the first quarter of 1995, the Company sold two buildings in the United States. The pretax gains on these sales amounted to $258,000 and are included in other income in the consolidated statement of earnings. The after tax gains on these sales were $127,000. NOTE 4 In the third quarter of 1996, the Company sold its corporate jet. The pretax loss on this sale amounted to $194,000 and is included in other expense in the consolidated statement of earnings. The after tax loss on this sale was $152,000. NOTE 5 The Company is attempting to negotiate a settlement of litigation brought against the Company in 1993 to limit the costs associated with protracted litigation. No estimate of loss can be made at this time. -5- Binks Manufacturing Company and Consolidated Subsidiaries MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Revenue generated from operations constitutes the primary source of the Company's liquidity. Short-term funds are also provided for current operations through bank loans and the issuance of bankers acceptances. The Company maintains substantial lines of credit for general corporate purposes and to provide support for the issuance of bankers acceptances. The unused lines of credit were effectively $27,604,000 at August 31, 1996. The Company's cash balances increased $887,000 during the nine months ended August 31, 1996. The net increase was the result of $2,892,000 provided by operations due to higher sales volumes, $1,312,000 used for investing activities principally for purchases of property, plant and equipment, $626,000 used in financing activities mainly for the payment of dividends and a $67,000 decrease based on the changes in foreign exchanges rates during the period. On November 30, 1993 the Company agreed to issue $15,000,000 of 7.14% senior notes with a final maturity in 2008. Funding of the notes took place on December 6, 1993 and the proceeds were used to repay a portion of the debt outstanding under one of the Company's lines of credit. The Company will repay the principal in 11 annual installments beginning in 1998. A dividend was paid August 2, 1996 at the rate of $.10 per share to stockholders of record on July 19, 1996. For the first nine months of 1996, dividends have been paid at the rate of $.30 per share versus $.40 per share for the same period in 1995. RESULTS OF OPERATIONS Net sales increased 5% or $8,602,000 to a total of $199,841,000 for the nine months ended August 31, 1996, as compared with $191,239,000 for the same period in 1995. In the third quarter ended August 31, 1996, sales increased 5% to $71,536,000 as compared to $67,871,000 in the third quarter of 1995. Increased demand for electrostatic products produced by the Company's subsidiary in France was chiefly responsible for the increase. Gross profit increased 1% to a total of $65,764,000 for the nine months ended August 31, 1996 as compared to the first nine months in 1995 mainly because of higher sales. The gross profit percentage was 33% in 1996 and 34% in 1995. The gross profit percentage varies depending on the amount of larger contracts that generally have lower margins. Selling, general and administrative expenses increased $2,215,000 or 4% as compared to the first nine months in 1995 mainly to support the increase in sales. As a percentage of net sales, these expenses were 29% in 1996 and 30% in 1995. Interest expense increased $88,000 when compared to the same period in 1995 primarily due to an increase in the average amount of interest bearing debt outstanding. -6- Binks Manufacturing Company and Consolidated Subsidiaries MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Contributions to employee profit sharing funds are based on profitability of the parent company and certain subsidiaries that have profit sharing funds. Amounts will vary according to contribution formulas and the related profits. Contributions of $298,000 were made in the first nine months of 1996 compared to contributions of $22,000 in the first nine months of 1995. Other nonoperating expense increased by $598,000 in the nine months ended August 31, 1996 when compared to the corresponding period in 1995. This net cost increase was primarily due to gains on the sales of buildings by the Company in the first quarter of 1995 totalling $258,000. Also contributing to the variance was a loss on the disposition of the corporate jet in the third quarter of 1996 that amounted to $194,000. In addition there was a $172,000 cost adjustment by the Japanese subsidiary in the second quarter of 1996 related to the liability associated with their Employee Retirement Fund. The percentage of income taxes to pretax earnings was 50% in 1996 as compared with 42% in 1995. The change relates to the geographic mix of profitability. Net income for the nine months ended August 31, 1996 totalled $1,633,000, a decrease of 50% versus the $3,298,000 earned in the corresponding period of 1995. The decrease in net income is the result of all of the factors described above. CURRENT DEVELOPMENTS To improve future profitability the Company is examining all of its operations and the way it serves its markets. Material one time charges are expected to occur in the fourth quarter of fiscal 1996 to settle disputes, reduce headcount, exit unprofitable product lines and lower recurring facilities costs. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. The matters discussed under "Current Developments" are forward-looking statements that involve risks and uncertainties which include, but are not limited to, the timing and amount of any or all of such one-time charges relating to the anticipated dispute settlements and restructuring and the general effects of the restructuring on the Company's business, financial condition and results of operations. -7- PART II - OTHER INFORMATION Items 1 thru 5 Not applicable Item 6 (a) None (b) On June 18, 1996 the Company filed a Form 8-K dated June 6, 1996 reporting change in management under Item 5. On August 29, 1996 the Company filed a Form 8-K dated August 23, 1996 reporting a change in registrant's certifying accountant under Item 4 and an increase in the number of members of the Board of Directors from 5 directors to 7 directors under Item 5. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has dully caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The enclosed financial statements include all adjustments, including normal and recurring adjustments, which are necessary to a fair presentation of the results of operations for the periods presented. Binks Manufacturing Company ------------------------------- /s/ Jeffrey W. Lemajeur ------------------------------- Jeffrey W. Lemajeur, Treasurer/ Chief Financial Officer /s/ Doran J. Unschuld -------------------------------- Doran J. Unschuld, President/ Chief Executive Officer Date October 14, 1996 --------------------- -8- EX-27 2 EXHIBIT 27, FINCIAL DATA SCHEDULE
5 1,000 9-MOS NOV-30-1996 DEC-01-1995 AUG-31-1996 9,414 0 77,739 0 106,616 198,327 66,223 37,474 236,163 87,797 44,085 0 0 3,089 91,399 236,163 199,841 199,841 134,077 134,077 0 0 3,102 3,292 1,659 1,633 0 0 0 1,633 .53 .53
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