10-Q/A 1 d10qa.txt FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 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 1-5881 ------ BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 050113140 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 275 West Natick Road, Warwick Rhode Island 02886 ----------------------------------------------------- (Address of principal executive offices and zip code) (401) 244-4500 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 [_] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date, 2,861,000 of Class A common stock, 64,282 shares of Class B common stock, par value $0.01 per share, outstanding as of September 30, 2001. This form 10-Q/A for the quarter ended September 30, 2001 is being filed to record the unrealized accumulated comprehensive loss (cumulative foreign translation adjustments) related to the Metrology Business in the calculation of the realized gain reported from the sale of the Metrology Business as reflected in net income. The unrealized accumulated comprehensive loss (cumulative foreign translation adjustments) related to the Metrology Business was originally recorded directly to retained deficit rather than as a component of the realized gain from the sale of the Metrology Business reported in the consolidated statement of operations. This involved no changes to the consolidated balance sheet and no changes to the statement of operations for the quarter ended September 30, 2001. All other references to the gain from the sale of the Metrology Business and net income have also been adjusted. A typographical error has been corrected in the Notes to Consolidated Financial Statements related to the weighted average shares for the nine months ended September 30, 2001. 1 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS* ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (Dollars in Thousands Except Per Share Data) (Unaudited)
For the Quarter ended For the Nine months ended September 30 September 30 --------------------- ------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- Revenues - - - - - - - - - - - - Research and development $ 940 $ 1,432 $ 3,183 $ 4,309 Selling, general and administrative 2,948 3,018 8,094 8,795 ---------------------------------------------------------- Operating loss (3,888) (4,451) (11,277) (13,104) Interest expense 137 1,936 2,819 5,738 Other income (expense), net 1,410 (170) 3,088 575 ---------------------------------------------------------- Loss from continuing operations (2,615) (6,556) (11,008) (18,266) Discontinued operations: Loss from operations, net of income taxes of -0-,$411, $1,240 and $2,106 - - - (5,042) (6,778) (15,262) Gain on sale of business - - - - - - 47,492 - - - ---------------------------------------------------------- Income (loss) before extraordinary item, and (2,615) (11,598) 29,706 (33,528) cumulative effect of accounting change Extraordinary item-extinguishment of debt - - - - - - 6,566 - - - ---------------------------------------------------------- Income (loss) before cumulative effect of (2,615) (11,598) 23,140 (33,528) accounting change Cumulative effect of accounting change - - - - - - - - - (27,401) ---------------------------------------------------------- Net income (Loss) $(2,615) $(11,598) $ 23,140 $(60,929) ========================================================== Net Income (Loss) Per Share Basic and Diluted from Continuing Operations $ (.90) $ (2.38) $ (3.86) $ (6.67) Discontinued Operations - - - (1.83) 14.28 (5.57) Extraordinary Item - - - - - - (2.30) - - - Cumulative Effect of Accounting Change - - - - - - - - - (10.00) ------------------------------------------------------------ Net Income (Loss) per Common Share Basic and Diluted $ (.90) $ (4.21) $ 8.12 $ (22.24) ============================================================
* The accompanying notes are an integral part of the financial statements. 2 Item 1. FINANCIAL STATEMENTS* ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars in Thousands)
September 30, 2001 December 31,2000 ------------------ ----------------- ASSETS Current Assets: Cash and cash equivalents $ 9,751 $ 8,882 Other receivable, net of reserve of $1,206 and $0 2,960 313 Assets held for sale or disposition 3,352 234,230 Prepaid expenses and other current assets 334 2,185 ------------------ ----------------- Total current assets 16,397 245,610 Property, plant and equipment: Land 337 415 Buildings and improvements 102 - Machinery and equipment 1,159 672 ------------------ ----------------- 1,598 1,087 Less accumulated depreciation (352) (255) ------------------ ----------------- 1,246 832 Other assets 3,596 4,203 ------------------ ----------------- $ 21,239 $ 250,645 ================== ================= LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable to banks $ - $ 27,400 Accounts payable and accrued expenses 9,832 7,954 Current portion of long-term debt 3,545 54,344 Liabilities assumed - 142,735 ------------------ ----------------- Total current liabilities 13,377 232,433 Long-term liabilities 723 7,070 Commitments and contingencies - - Shareowners' Equity: Preferred stock, $1.00 par value; authorized 1,000,000 shares; none issued - - Common stock: Class A, par value, $.01; authorized 30,000,000 shares; 28 27 issued 2,861,000 shares in 2001 and 2,665,867 shares in 2000 Class B, par value, $.01; authorized 2,000,000 shares; 1 1 issued 64,282 shares in 2001 and 100,208 shares in 2000 Additional paid-in capital 85,951 127,275 Retained deficit $(78,403) (101,543) Accumulated other comprehensive income (loss) 17 (14,163) Treasury stock: 8,518 shares in 2001 and 2000 at cost (455) (455) ----------------- ------------------- Total shareowners' equity 7,139 11,142 ------------------ ------------------- $ 21,239 $ 250,645 ================== ===================
* The accompanying notes are an integral part of the financial statements. 3 Item 1. FINANCIAL STATEMENTS* ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (Dollars in Thousands)
For the Nine months ended September 30 ------------------------- 2001 2000 ---- ---- Cash Provided by (Used in) Operations: Net income (loss) $ 23,140 $ (60,929) Extraordinary item--extinguishment of debt 6,566 - Cumulative effect of accounting change - 27,401 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 97 71 Changes in operating assets and liabilities 3,521 5,449 Changes in assets and liabilities related to discontinued operations. - 27,916 Gain on sale of business (47,492) - -------- --------- Net Cash used in Operations (14,168) (92) Cash Flows from Investing Activities: Acquisition of property, plant and equipment (511) (55) Proceeds from sale of business, net of expenses 142,820 - -------- --------- Net Cash provided by (used in) Investing Activities 142,309 (55) Cash Flows for Financing Activities: Payment of notes payable (27,400) (269) Payment of long-term senior notes (57,893) - Payment on mortgage (655) (866) Distributions to stockholders (44,480) - Equity contributions 3,156 704 -------- --------- Net Cash used in Financing Activities (127,272) (431) Cash and Cash Equivalents: Increase (decrease) in cash and cash equivalents 869 (578) Beginning balance 8,882 10,885 -------- --------- Ending balance $ 9,751 $ 10,307 ======== ========= Supplementary Cash Flow Information: Interest Paid $ 3,308 $ 5,404 ======== ========= Taxes paid $ 230 $ 945 ======== =========
* The accompanying notes are an integral part of the financial statements. 4 Item 1. FINANCIAL STATEMENTS* ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------- CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY --------------------------------------------- (Dollars in Thousands) For the Nine months ended September 30, 2001
Accumulated Common other Stock $.01 Additional paid Retained comprehensive Treasury Total Shares par value in capital deficit income (loss) stock Equity -------------------------------------------------------------------------------------------------- Balance at January 1, 2001 2,766 $ 28 $127,276 $(101,543) $(14,163) $(455) $11,143 Net loss through March 31, 2001 (8,749) (8,749) Foreign currency translation adjustment (5,545) (5,545) -------------------------------------------------------------------------------------------------- Balance March 31, 2001 2,766 28 127,276 (110,292) (19,708) (455) (3,151) Net income for quarter ended June 30, 2001 34,504 34,504 Foreign currency translation adjustment 4,879 4,879 Foreign currency translation adjustment included in net income 14,881 14,881 Dividend paid ($15.25 per share) (44,480) (44,480) Exercise of stock options 158 1 1,771 1,772 Acquisition of subsidiary minority interest 1,384 1,384 -------------------------------------------------------------------------------------------------- Balance at June 30, 2001 2,924 29 85,951 (75,788) 52 (455) 9,789 Net loss for quarter ended September 30, 2001 (2,615) (2,615) Foreign currency translation adjustment (35) (35) -------------------------------------------------------------------------------------------------- 2,924 $ 29 $ 85,951 $ (78,403) $ 17 $(455) $ 7,139 Balance at September 30, 2001 ==================================================================================================
* The accompanying notes are an integral part of the financial statements. 5 BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (Dollars in Thousands) 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2001 are not indicative of the results that may be expected for the year ended December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2000. At a special meeting held on April 27, 2001, the stockholders of BNS Co. (formerly Brown & Sharpe Manufacturing Company) approved the sale of substantially all assets of the Company, including a) the sale of its worldwide Metrology Business to Hexagon AB of Stockholm, Sweden, ("Hexagon") and b) the sale of its North Kingstown Facility to Precision Park Partners, LLC. At the same meeting, the stockholders also approved the change of the Company's name to BNS Co., a reduction of the par value per share of the Class A Common Stock and Class B Common Stock from $1.00 to $.01 and a one-for-five reverse stock split of the Company's outstanding Class A Common Stock and Class B Common Stock. The record date for the one-for-five reverse stock split was May 10, 2001. All references to shares have been restated to reflect the stock split. Following the conclusion of the Special Meeting of Stockholders, the Company completed the closing of the sale of its worldwide Metrology Business to Hexagon AB, effective April 27, 2001. The purchase price for the sale of the Metrology Business was $170 million less a $12.8 million cash adjustment based on the terms of the Acquisition Agreement. After the estimated cash adjustment and payment of all U.S. bank debt and long-term senior noteholder obligations, the Company received net proceeds of approximately $70 million. Also in connection with the sale to Hexagon, Hexagon invested $2.5 million in Xygent Inc., the Company's software development subsidiary, in exchange for a 16.7% ownership interest in such subsidiary. The post-closing matters pending with Hexagon include the completion of arrangements to transfer to Hexagon the Company's interest in the Metrology Business Joint Ventures in China (which will require some net outlay of cash by the Company), and certain other matters. On May 25, 2001, the Company paid a special cash dividend of $15.25 per share (post reverse stock split) on its outstanding shares of Class A Common Stock and Class B Common Stock to stockholders of record at May 11, 2001. Although the Purchase and Sale Agreement with Precision Park Partners LLC for the sale of the North Kingstown property has lapsed, as the parties were not able to complete the transaction on the terms and conditions contemplated by the Agreement, the Company continues to plan to sell its North Kingstown property and its real estate adjacent to the Heathrow Airport in the United Kingdom at later dates. The Company plans to make additional cash distributions to its shareholders after the properties have been sold. However, the amount of such future cash distributions is subject to later determination by the Company's Board of Directors, based on a number of factors as earlier disclosed in the Company's Proxy Statement dated March 30, 2001 for the Special Meeting of Stockholders held on April 27, 2001, and possible subsequent developments. The Company will continue to operate its software development business through its controlled subsidiary Xygent. 2. During the fourth quarter of 2000, the Company changed its method of accounting for revenue recognition in accordance with Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial Statements. Pursuant to Financial Accounting Statements Board 6 Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, effective January 1, 2000, the Company recorded the cumulative effect of the accounting change amounting to $27.4 million and, accordingly, the consolidated financial statements for the third quarter and year-to-date period ended September 30, 2000 have been restated to reflect the new accounting method. The effect of adopting SAB 101 decreased third quarter ended September 30, 2000 revenues by approximately $4.0 million and increased the net loss by $2.0 million, or $0.72 per share. The effect of adopting SAB 101 increased year-to-date revenues in 2000 by approximately $2.1 million and increased the loss by $36 million or $13.15 per share. 3. Discontinued Operations - As mentioned above, the Company disposed of its Metrology Business effective April 27, 2001. This disposition is reflected in the accompanying financial statements in accordance with APB Opinion No. 30. Accordingly, the financial statements for prior periods have been restated. Also, in the second quarter of 2000, the Board of Directors approved a plan to discontinue the Electronics Division (ED). The results of operations of ED have also been classified as a discontinued operation. As a result, the results of operations for the third quarter and year-to-date period ending September 30, 2000, have been restated to present ED as a discontinued operation. 4. Income taxes through the date of the disposal of the Metrology Business included provisions for foreign income taxes and were based on the Company's estimate of the effective income tax rates for a full year. No provision for income taxes has been reflected subsequent to the disposal of the Metrology Business since the Company has net operating loss carry forwards fully offset by a valuation allowance. 5. The following table sets forth the computation of basic and diluted (loss) earnings per share (dollars in thousands, except per share data):
For the For the Quarter Ended Nine Months Ended September 30 September 30 ------------- ----------------- 2001 2000 2001 2000 ---- ---- ---- ---- Numerator: Loss from Continuing Operations $(2,615) $ (6,556) $(11,008) $(18,266) (Loss) Income from Discontinued Operations - - - (5,042) 40,714 (15,262) Extraordinary Item - - - - - - (6,566) - - - Cumulative Effect of Change in Accounting Principle - - - - - - - - - (27,401) -------------------------------------------------- Net (Loss) Income $(2,615) $(11,598) $ 23,140 $(60,929) ================================================== Denominator for Basic Earnings Per Share: Weighted-Average Shares 2,917 2,758 2,850 2,740 Effect of Dilutive Securities: Employee Stock Options - - - - - - - - - - - - -------------------------------------------------- Denominator for Diluted Earnings Per Share: 2,917 2,758 2,850 2,740 ================================================== Basic and Diluted (Loss) Earnings Per Share from Continuing Operations $ (.90) $ (2.38) $ (3.86) $ (6.67) Discontinued Operations - - - (1.83) 14.28 (5.57) Extraordinary Item - - - - - - (2.30) - - - Cumulative Effect of Change in Accounting Principle - - - - - - - - - (10.00) -------------------------------------------------- Basic and Diluted (Loss) Earnings Per Share $ (.90) $ (4.21) $ 8.12 $ (22.24) ==================================================
Diluted income (loss) per share is the same as basic loss per share in 2001 and 2000 because the computation of diluted earnings per share would have an antidilutive effect on loss per share calculations in 2000 and all options excercisable prior to the sale of the Metrology Business were exercised and are included in the basic calculation. 7 At the Special Meeting of Stockholders on April 27, 2001, the stockholders approved a one-for-five reverse stock split. Accordingly, the above calculation reflects the effect of the reverse stock split. 6. Comprehensive loss for the quarter ended September 30, 2001 and 2000 amounted to $2.7 million and $18.4 million, respectively. Comprehensive income (loss) for the nine months ended September 30, 2001 and 2000 amounted to $37.3 million and $(74.6) million, respectively. Accumulated other comprehensive income (loss) at September 30, 2001 and December 31, 2000 is comprised of foreign currency translation adjustments of $17,000 and $14.1 million. 7. Contingencies - The Company is a defendant in several legal claims that arose in the normal course of business. Based upon the information presently available to management, the Company believes that any liability for these claims would not have a material effect on the Company's results of operations or financial condition. 8. Segment Information - Subsequent to the sale of the Metrology Business mentioned above, the Company conducts its business through its subsidiary Xygent Inc., its only segment. 9. Extraordinary Item - The repayment of the long-term private placement senior notes following the sale of the Metrology Business resulted in a prepayment penalty and related cost of $6.6 million or $2.30 per share. 10. Executive Compensation - As a result of the closing of the transaction with Hexagon, the Company has certain arrangements, as yet not finalized, relating to a change in control contract with an employee who has remained as the CEO. While all the details of the CEO's compensation arrangement have not been finalized and a contract has not, as yet, been executed, certain provisions of the arrangement have been agreed upon which resulted in the Company recording a charge to SG&A of $1.2 million during the third quarter ended September 30, 2001. 11. Reclassification - Certain 2000 balances have been reclassified to conform with 2001 presentation. 8 BNS Co. (f/k/a Brown & Sharpe Manufacturing Company) By: /s/ Andrew C. Genor ------------------------------------- Andrew C. Genor President and Chief Financial Officer (Principal Financial Officer) March 15, 2002 9