-----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, OaIo7IHKtbxZvxbb6wGC/yyFnPPlkkFxaP04aIFvF9B40TnWd2jDUiyYWvABNuIS CNAGG8Xhrlvo+CH+VQtH6w== 0000912057-97-012807.txt : 19970415 0000912057-97-012807.hdr.sgml : 19970415 ACCESSION NUMBER: 0000912057-97-012807 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970414 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: 97579533 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 1934 For the quarterly period ended February 28, 1997 / / 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 Identification No.) incorporation or organization) 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 February 28, 1997 --------------------------- ----------------------------- 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 February 28, 1997 (Unaudited) and November 30, 1996 --------------------------------------------------- Feb 28 Nov 30 1997 1996 ---------- ---------- ($000 omitted) ASSETS Current assets: Cash and cash equivalents $ 8,443 16,200 Receivables, net 75,801 79,433 Inventories 76,369 84,737 Other current assets 9,810 9,644 ---------- ---------- Total current assets 170,423 190,014 Other noncurrent assets 13,472 12,247 Property, plant and equipment, at cost 65,131 65,450 Less accumulated depreciation 37,880 37,482 ---------- ---------- Net property, plant and equipment 27,251 27,968 ---------- ---------- TOTAL ASSETS $ 211,146 230,229 ---------- ---------- ---------- ---------- -1- PART I - FINANCIAL INFORMATION - (Continued) Binks Manufacturing Company and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS February 28, 1997 (Unaudited) and November 30, 1996 --------------------------------------------------- Feb 28 Nov 30 1997 1996 -------- -------- ($000 omitted) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable, bank overdrafts and current maturities of long-term debt $ 11,461 9,384 Accounts payable 40,307 52,987 Other current liabilities 23,541 31,188 -------- -------- Total current liabilities 75,309 93,559 Deferred compensation 9,186 9,564 Deferred income taxes 399 425 Long-term debt, less current maturities 45,507 44,634 -------- -------- Total liabilities 130,401 148,182 -------- -------- Stockholders' equity: Capital stock, $l.00 par value. Authorized 12,000,000 shares; issued 3,088,837 shares 3,089 3,089 Additional paid-in capital 24,504 24,504 Retained earnings 54,469 54,327 Foreign currency translation adjustment (1,317) 127 -------- -------- Total stockholders' equity 80,745 82,047 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $211,146 230,229 -------- -------- -------- -------- -2- Binks Manufacturing Company and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended February 28, 1997 and February 29, 1996 ---------------------------------------------------------- (Unaudited) For the three months ended ------------------------ Feb 28 Feb 29 1997 1996 ----------- ----------- ($000 omitted) Net sales $ 64,591 65,429 Cost of goods sold 45,968 44,283 ----------- ----------- Gross profit 18,623 21,146 Selling, general and administrative expenses 17,522 18,051 ----------- ----------- Operating income 1,101 3,095 ----------- ----------- Other expense (income): Interest expense 1,074 1,120 Other expense (income), net (130) (29) ----------- ----------- 944 1,091 Earnings before income taxes 157 2,004 Income tax expense 15 886 ----------- ----------- Net earnings $ 142 1,118 ----------- ----------- ----------- ----------- Net earnings per share $ .05 .36 ----------- ----------- ----------- ----------- Cash dividends declared per share $ - .10 ----------- ----------- ----------- ----------- -3- Binks Manufacturing Company and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended February 28, 1997 and February 29, 1996 (Unaudited) 1997 1996 -------- -------- ($000 omitted) Cash flows from operating activities: Net earnings $ 142 1,118 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 1,052 1,056 Deferred compensation, net of payments (17) 76 Deferred income taxes (294) (32) Other, net 56 161 Cash provided by (used in) changes in: Receivables (2,150) (399) Inventories 8,087 (1,006) Other current assets (1,350) 430 Accounts payable (9,030) (187) Accrued expenses (6,333) (931) Income taxes 54 170 -------- -------- Net cash provided by (used in) operating activities (9,783) 456 -------- -------- Cash flows from investing activities: Purchase of property, plant and equipment (719) (368) Proceeds from sale of equipment 29 14 Other investments and assets 67 480 -------- -------- Net cash provided by (used in) investing activities (623) 126 -------- -------- Cash flows from financing activities: Proceeds from long-term borrowings 1,035 24 Net increase (decrease) in short-term borrowings 1,971 (2,551) Principal payments on long-term debt (140) (199) -------- -------- Net cash provided by (used in) financing activities 2,866 (2,726) -------- -------- Effect of exchange rate changes on cash (217) (50) -------- -------- Net increase (decrease) in cash and cash equivalents (7,757) (2,194) Cash and cash equivalents at beginning of period 16,200 8,527 -------- -------- Cash and cash equivalents at end of period $ 8,443 6,333 -------- -------- -------- -------- -4- Binks Manufacturing Company and Consolidated Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS February 28, 1997 (Unaudited) and November 30, 1996 --------------------------------------------------- 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 periods presented. 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 10-K for the year ended November 30, 1996. 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 the Company "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 issue of whether the patent was valid and infringed. Graco asserts that on remand it will seek damages and interest of approximately $750 thousand. 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. The Company is the defendant in a lawsuit filed by former financial advisors seeking approximately $900 thousand under terms of a contract. Management believes that all required payments have been made and no further amounts have been provided for. The Company has certain other contingent liabilities resulting from litigation and claims incident to the ordinary course of business. Management believes that the probable resolution of such contingencies will not materially affect the financial position or results of operations of the Company. NOTE 3 The Company has entered into a contract to sell the Franklin Park plant that was closed at the end of February 1997. An auction sale of surplus machinery and equipment is scheduled to take place in late April. Cash proceeds in excess of $14 million are expected to be realized from the plant and equipment sales. -5- Binks Manufacturing Company and Consolidated Subsidiaries MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company had net sales of $64.6 million in first quarter fiscal 1997, a decrease of $838 thousand, or 1%, from the $65.4 million reported for first quarter fiscal 1996. Operations in Europe and the Pacific Rim continued to show strong sales growth, achieving a 10% increase over the same period of the prior year. If prevailing first quarter 1996 currency exchange rates had remained in effect during first quarter 1997, sales growth in these markets would have been 12%. Sales in the Americas declined 13% compared to the prior year. This decline was largely attributable to the logistical issues associated with restructuring North American manufacturing operations. The Company believes that sales in the Americas will improve as order backlogs related to start-up inefficiencies of new and expanded manufacturing facilities are eliminated. Gross profit declined $2.5 million (12%) in first quarter fiscal 1997 compared to first quarter fiscal 1996. The gross profit margin was 28.8% in first quarter fiscal 1997 as compared to 32.3% for the same period last year. This decline was primarily due to the cost impact of diminished productivity at the Franklin Park plant following the announcement of its impending closure. The last day of production at the Franklin Park plant was February 20, 1997. Currency translation accounted for over 18% of the $2.5 million gross profit decrease between first quarter fiscal 1997 and first quarter fiscal 1996. Selling, general, and administrative expenses decreased $529 thousand (3%) as compared to first quarter fiscal 1996 reflecting cost reductions resulting from the 1996 restructuring. Interest expense declined by $45 thousand (4%), due to lower average borrowing levels combined with lower effective interest rates. Other income, which increased $101 thousand, includes interest income, exchange gains and losses, gains on sales of fixed assets, and miscellaneous income. The majority of this increase was in European and Pacific Rim markets. Income tax expense was $15 thousand on pretax profit of $157 thousand in first quarter fiscal 1997. The tax rate is due to the geographical mix of the Company's pretax profitability. As a result of all of the factors above, the Company recorded net earnings of $142 thousand ($.05 per share) in first quarter fiscal 1997 as compared to net earnings of $1.1 million (.36 per share) in first quarter fiscal 1996. -6- Binks Manufacturing Company and Consolidated Subsidiaries MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) LIQUIDITY AND CAPITAL RESOURCES Revenue generated from operations is 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. The unused lines of credit were approximately $35.6 million at February 28, 1997. The Company's cash balances decreased $7.8 million during the three months ended February 28, 1997, largely due to cash outflows of $9.8 million used to decrease accounts payable and accrued expenses. Reduced inventories partially offset the liability reductions. Total cash outlays in first quarter fiscal 1997 relating to accruals established at November 30, 1996 for restructuring amounted to $579 thousand. The Company used $623 thousand in investing activities, primarily for the purchase of computer equipment and machinery to improve efficiency in administrative activities and production. Financing activities provided $2.9 million to the Company during first quarter 1997 which was primarily used in European operations to support increased sales activity. Changes in foreign currency translation rates resulted in a $217 thousand cash reduction as reported at February 28, 1997. On March 20, 1997 the Board of Directors declared a dividend of $.10 per share to stockholders of record on April 3, 1997, payable on April 17, 1997. The Company has entered into a contract to sell the Franklin Park plant that was closed at the end of February 1997. An auction sale of surplus machinery and equipment is scheduled to take place in late April. Cash proceeds in excess of $14 million are expected to be realized from the plant and equipment sales. DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS Statements contained herein regarding the Company's expectations for fiscal year 1997 revenues and the amount of proceeds from the sale of the Franklin Park plant and the equipment auction constitute "forward looking statements" within the meaning of 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations include, without limitation, in the case of 1997 revenues, general conditions in the Company's markets, unfavorable changes in currency exchange rates, and product mix; and with respect to the sale of the Franklin Park plant and equipment, a change in the market for such properties at the time of the actual sale. No assurance can be given that the forward looking statements will prove to be accurate. -7- PART II - OTHER INFORMATION Items 1 through 5 Not applicable Item 6 (a) None (b) None 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 APRIL 14, 1997 --------------------- -8- EX-27 2 FDS
5 1,000 3-MOS NOV-30-1997 DEC-01-1996 FEB-28-1997 8,443 0 75,801 0 76,369 170,423 65,131 37,880 211,146 75,309 45,507 0 0 3,089 77,656 211,146 64,591 64,591 45,968 45,968 0 0 1,074 157 15 142 0 0 0 142 .05 .05
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