-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, E0ug2r0/Q4zOQGtshYZwdnZ8jaUWU4ORlSAszk4YB9wBe1I0MxawIAOy6D2jP/a/ vwIO4FE5XBhOJO+6jhzRdg== 0000025757-94-000030.txt : 19940811 0000025757-94-000030.hdr.sgml : 19940811 ACCESSION NUMBER: 0000025757-94-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940625 FILED AS OF DATE: 19940809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROMPTON & KNOWLES CORP CENTRAL INDEX KEY: 0000025757 STANDARD INDUSTRIAL CLASSIFICATION: 2860 IRS NUMBER: 041218720 STATE OF INCORPORATION: MA FISCAL YEAR END: 1225 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04663 FILM NUMBER: 94542362 BUSINESS ADDRESS: STREET 1: ONE STATION PL STREET 2: METRO CTR CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033535400 MAIL ADDRESS: STREET 1: ONE STATION PLACE STREET 2: METRO CENTER CITY: STAMFORD STATE: CT ZIP: 06902 10-Q 1 COVER 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 June 25, 1994 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 No. 1-4663 Crompton & Knowles Corporation (exact name of registrant as specified in its charter) Massachusetts 04-1218720 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Station Place, Metro Center Stamford, Connecticut 06902 (address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203)353-5400 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 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. Class Outstanding at July 20, 1994 Common Stock, $.10 par value 50,922,368 shares CROMPTON & KNOWLES CORPORATION FORM 10-Q FOR QUARTER ENDED JUNE 25, 1994 INDEX PART I. FINANCIAL INFORMATION: Item 1. Condensed Financial Statements and Accompanying Notes . Consolidated Statements of Earnings (unaudited) - Quarters and six months ended June 25, 1994 and June 26, 1993 . Consolidated Balance Sheets - June 25, 1994 (unaudited) and December 25, 1993 . Consolidated Statements of Cash Flows (unaudited) - Six months ended June 25, 1994 and June 26, 1993 . Notes to the Consolidated Financial Statements - Six months ended June 25, 1994 (unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K Signatures Exhibit 11 Statement Re Computation of Per Share Earnings -1- EX-1 2 P&L UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Earnings Quarters and six months ended June 25, 1994 and June 26, 1993 (In thousands, except per share data) Quarters ended Six months ended June 25, June 26, June 25, June 26, 1994 1993 1994 1993 Net sales $ 154,452 $ 147,677 $ 288,046 $ 281,420 Cost of products sold 103,500 98,824 194,410 189,886 Selling, general and administra 22,362 20,932 42,166 41,093 Depreciation and amortization 3,173 3,171 6,399 6,321 Interest 202 303 384 711 Other income (91) (322) (635) (876) Total costs and expenses 129,146 122,908 242,724 237,135 Earnings before income taxes 25,306 24,769 45,322 44,285 Income taxes 9,199 9,116 16,457 16,337 Net earnings $ 16,107 $ 15,653 $ 28,865 $ 27,948 Net earnings per common share $ .31 $ .30 $ .56 $ .54 Dividends per common share $ .12 $ .10 $ .22 $ .18 Average shares outstanding 51,791 52,176 51,935 52,155 See accompanying notes to the consolidated financial statements. - 2 -
EX-2 3 BALANCE SHEET June 25, 1994 UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets June 25, 1994 and December 25, 1993 (In thousands) June 25, December 25, 1994 1993 ASSETS CURRENT ASSETS Cash $ 2,359 $ 9,284 Accounts receivable 98,752 84,482 Inventories 132,569 113,932 Other current assets 16,896 12,698 Total current assets 250,576 220,396 NON-CURRENT ASSETS Property, plant and equipment 109,174 99,925 Cost in excess of acquired net assets 41,386 33,275 Other assets 9,673 9,650 $ 410,809 $ 363,246 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 24,038 $ 5,100 Accounts payable 50,344 44,905 Accrued expenses 33,036 25,574 Income taxes payable 8,146 12,935 Other current liabilities 13,444 6,925 Total current liabilities 129,008 95,439 NON-CURRENT LIABILITIES Long-term debt 14,000 14,000 Accrued postretirement liability 9,080 9,084 Deferred income taxes 4,837 4,727 Total non-current liabilities 27,917 27,811 STOCKHOLDERS' EQUITY Common stock 5,336 5,336 Additional paid-in capital 61,773 61,783 Retained earnings 208,808 191,230 Accumulated translation adjustment 1,207 (557) Treasury stock at cost (17,377) (11,278) Deferred compensation (5,863) (6,518) Total stockholders' equity 253,884 239,996 $ 410,809 $ 363,246 See accompanying notes to the consolidated financial statements. - 3 - EX-3 4 CASH FLOW UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Six months ended June 25, 1994 and June 26, 1993 (In thousands) June 25, June 26, Increase (decrease) to cash 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 28,865 $ 27,948 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 6,399 6,321 Deferred compensation and income taxes 655 729 Changes in assets and liabilities, net (26,306) (18,489) Net cash provided by operations 9,613 16,509 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition (10,718) - Capital expenditures (7,388) (4,775) Other investing activities 106 1,508 Net cash used by investing activities (18,000) (3,267) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings 10,000 - Payments of long-term debt (10,000) - Change in notes payable 18,903 (3,398) Net treasury stock activity (6,206) 393 Dividends paid (11,287) (9,221) Net cash used by financing activities 1,410 (12,226) CASH Effect of exchange rates on cash 52 (46) Change in cash (6,925) 970 Cash at beginning of period 9,284 2,441 Cash at end of period $ 2,359 $ 3,411 See accompanying notes to the consolidated financial statements. -4-
EX-4 5 NOTES CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements Six months ended June 25, 1994 (Unaudited) (In thousands) PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS The information included in the foregoing consolidated financial statements is unaudited but reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Included in accounts receivable are allowances for doubtful accounts of $3,882 in 1994 and $4,072 at December 25, 1993. Accumulated depreciation amounted to $79,273 in 1994 and $73,387 at December 25, 1993. Accumulated amortization of cost in excess of acquired net assets amounted to $6,012 in 1994 and $5,456 at December 25, 1993. Other current liabilities primarily include customer deposits. It is suggested that the interim consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the Company's December 25, 1993 Annual Report on Form 10-K. CAPITAL STOCK There are 53,361,072 common shares issued at $.10 par value, of which 2,359,704 shares and 2,069,547 shares were held in the treasury at June 25, 1994 and December 25, 1993, respectively. INVENTORIES Components of inventories are as follows: June 25, Dec. 25, 1994 1993 Finished goods $ 65,862 $ 57,987 Work in process 34,240 25,748 Raw materials and supplies 32,467 30,197 $132,569 $113,932 EARNINGS PER COMMON SHARE The computation of earnings per common share is based on the weighted average number of common and common equivalent shares outstanding. A dual presentation of earnings per common share has not been made since there is no significant difference in earnings per share calculated on a primary or fully diluted basis. ACQUISITION On May 18, 1994, the Company acquired the business and certain assets of the Egan Machinery Division of John Brown Plastics Machinery at a cost of $10,718. The acquisition has been accounted for using the purchase method and, accordingly, the acquired assets and liabilities have been recorded at their fair value at the date of acquisition. The results of operations of this business have been included in the Consolidated Statements of Earnings since the date of acquisition. BUSINESS SEGMENT DATA Six Months Ended June 25, June 26, 1994 1993 SALES Specialty chemicals $200,966 $208,291 Specialty process equipment and controls 87,080 73,129 $288,046 $281,420 OPERATING PROFIT Specialty chemicals $ 35,632 $ 38,407 Specialty process equipment and controls 15,318 11,914 50,950 50,321 General corporate expenses, net ( 5,244) ( 5,325) Interest expense ( 384) ( 711) Earnings before income taxes $ 45,322 $ 44,285 EX-5 6 MD&A MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SECOND QUARTER RESULTS Overview Consolidated net sales of $154.5 million for the second quarter of 1994 increased 5% over the comparable 1993 period. Net earnings of $16.1 million were 3% higher than the second quarter of 1993. Net earnings per common share of $.31 increased 3% from the $.30 reported last year. Gross margin as a percentage of net sales was 33%, essentially unchanged from the second quarter of 1993. Operating profit of $28.0 million increased 2% from the second quarter of 1993 with all of the increase coming from the specialty process equipment and controls segment. Specialty Chemicals The Company's specialty chemicals segment reported sales of $105.4 million representing a 3% decrease from the comparable period in 1993. The decrease was attributable primarily to lower selling prices (2%) and the impact of foreign currency translation (1%). Domestic dyes sales of $57.4 million were 4% lower than the second quarter of 1993 primarily due to lower selling prices. International dyes sales of $24.0 million were lower by 7% versus the comparable 1993 period with 2% attributable to foreign currency translation and the balance primarily attributable to lower unit volume under a long-term supply agreement. Specialty ingredients sales of $24.0 million rose 4% primarily from increased unit volume. The percentage of sales outside the United States decreased slightly to 24% from 25% in the second quarter of 1993. Operating profit of $19.6 million for the second quarter of 1994 decreased 9% from the comparable quarter in 1993 primarily attributable to lower selling prices and unit volume, offset in part by lower dye intermediate costs. The percentage of operating profit outside the United States of 19% was unchanged versus the comparable period in 1993. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $49.1 million representing a 26% increase over the second quarter of 1993. Approximately 14% was attributable to the acquisition of Egan Machinery, 8% to unit volume and 4% to pricing. Export sales of $15.1 million were up 9% versus 1993 and accounted for 31% of total segment sales versus 35% for the second quarter of 1993. Operating profit increased 36% to $8.4 million in the second quarter of 1994 primarily as a result of unit volume growth and improved pricing. The order backlog for extruders and related equipment at the end of the second quarter amounted to $58 million compared to $38 million at the end of 1993. Other Selling, general and administrative expenses of $22.4 million increased 7% versus the second quarter of 1993 primarily due to the acquisition of Egan Machinery and the impact of inflation. Depreciation and amortization of $3.2 million approximated the level in the second quarter of 1993. Interest expense of $202 thousand decreased 33% from the second quarter of 1993 primarily as a result of lower borrowings. Other income of $91 thousand was lower by $231 thousand (less than 1% of pretax earnings) versus 1993. The Company's effective tax rate of 36.4% was slightly lower than the 37% in the 1993 period. YEAR-TO-DATE RESULTS Overview Consolidated net sales for the first six months of 1994 of $288 million increased 2% from the comparable period in 1993. Net earnings of $28.9 million increased 3% versus the $27.9 million earned in the first half of 1993. Net earnings per common share of $.56 increased 4% versus $.54 reported last year. Gross margin as a percentage of net sales was 32.5%, unchanged from the comparable 1993 period. Operating profit of $51.0 million increased slightly from $50.3 million in the first half of 1993. Specialty Chemicals The Company's specialty chemicals segment reported sales of $201 million representing a decline of 4% versus the first six months of 1993. The decrease was attributable to lower selling prices (2%), lower unit volume (1%) and the impact of foreign currency translation (1%). Domestic dyes sales of $107.7 million were lower than the first six months of 1993 by 5% due to lower selling prices and weak demand for apparel dyes. International dyes sales of $46.4 million were lower by 6% versus 1993 primarily as a result of foreign currency translation and lower unit volume under a long- term supply agreement. Specialty ingredients sales rose 4% to $46.9 million reflecting increased unit volume. The percentage of sales outside the United States decreased slightly to 24% from 25% for the comparable period in 1993. Operating profit of $35.7 million for the first six months of 1994 decreased 7% from 1993. Most of the decrease was attributable to lower unit volume and lower pricing, offset in part by lower dye intermediate costs. The percentage of operating profit outside the United States decreased slightly to 19% from 20% in the first half of 1993. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $87 million representing a 19% increase over the first six months of 1993. The sales increase was attributable to the acquisition of Egan Machinery (7%), unit volume growth (8%), and pricing (4%). Export sales of $21.6 million declined 4% from 1993 and accounted for 25% of total segment sales versus 31% in the first six months of 1993. Operating profit of $15.3 million increased 29% versus the comparable 1993 period primarily as a result of unit volume growth and improved pricing. Other Selling, general and administrative expenses of $42.2 million increased 3% versus the first six months of 1993 primarily due to the acquisition of Egan Machinery. Depreciation and amortization of $6.4 million increased slightly versus the 1993 period as a result of a higher fixed capital base. Interest expense of $384 thousand decreased 46% as a result of lower borrowings for the six months in 1994 versus 1993. Other income decreased by $241 thousand (less than 1% of pretax earnings) versus 1993. The Company's effective tax rate of 36.3% was slightly lower than the 37% in the comparable 1993 period. LIQUIDITY AND CAPITAL RESOURCES The June 25, 1994 working capital balance of $121.6 million decreased 3% from year-end 1993. The current ratio declined to 1.9 from 2.3 at the end of 1993 primarily as a result of increased short-term borrowings. Days sales in receivables of 53 days increased slightly from 52 days at year-end 1993. Inventory turnover of 3.0 for the first half of 1994 improved slightly from 2.9 at year-end 1993. Cash flows from operating activities of $9.6 million decreased $6.9 million from the first half of 1993 primarily attributable to increased working capital requirements. Cash provided by operating activities, cash reserves and increased borrowings were used to finance the acquisition of Egan Machinery, fund capital expenditures, pay cash dividends and repurchase 338,300 shares of the Company's common stock. The Company's debt to total capital ratio increased to 13% from 7% at year-end 1993. Capital expenditures are expected to approximate $20 million in 1994 primarily for expansion and improvement of operating facilities in the United States and Europe. Long-term liquidity requirements including such items as capital expenditures and dividends are expected to be financed from operations. INTERNATIONAL OPERATIONS The lower U.S. dollar exchange rate at June 25, 1994 versus year-end 1993 for the Belgian Franc and French Franc accounted for the increase of $1.8 million in the accumulated translation adjustment account since year-end 1993. Changes in the balance of this account are primarily a function of fluctuations in exchange rates and do not necessarily reflect either enhancement or impairment of the net asset values or the earnings potential of the Company's foreign operations. The Company operates manufacturing facilities in Europe which serve primarily the European market. Exchange rate disruptions between the United States and European currencies, and among European currencies, are not expected to have a material effect on year-to-year comparisons of the Company's earnings. RESEARCH AND DEVELOPMENT The Company employs about 240 engineers, draftsmen, chemists, and technicians responsible for developing new and improved chemical products, specialty food and pharmaceutical ingredients and process equipment systems for the industries served by the Company. Year-to-year variations in sales of such new products generally are not expected to significantly affect the Company's results versus the prior year. Research and development expenditures totalled $5.6 million for the first half of 1994 compared to $5.5 million in the comparable 1993 period. ENVIRONMENTAL MATTERS The Company's manufacturing facilities are subject to various federal, state and local requirements with respect to the discharge of materials into the environment or otherwise relating to the protection of the environment. The Company has been designated, along with others, as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or comparable state statutes, at two waste disposal sites; and two inactive subsidiaries have been designated, along with others, as potentially responsible parties at a total of four other sites. While the cost of compliance with existing environmental requirements is expected to increase, based on the facts currently known to the Company, management expects that those costs, including the cost to the Company of remedial actions at the waste disposal sites where it has been named a potentially responsible party, will not have a material effect on the Company's liquidity and financial condition and that the cost to the Company of any remedial actions will not be material to the results of the Company's operations in any given year. EX-6 7 SIGNATURES PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Number Description (11) Statement Re Computation of Per Share Earnings (b) No reports on Form 8-K were filed during the quarter for which this report is filed. 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. CROMPTON & KNOWLES CORPORATION (Registrant) August 9, 1994 By: /s/ Charles J. Marsden Charles J. Marsden Vice President - Finance (Principal Financial Officer) August 9, 1994 By: /s/ John T. Ferguson John T. Ferguson, II General Counsel and Secretary EX-11 8 EXHIBIT 11 CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share data) PRIMARY Quarter Ended Six Months Ended June 25, June 26, June 25, June 26, 1994 1993 1994 1993 Earnings Net earnings $ 16,107 $ 15,653 $ 28,865 $ 27,948 Shares Weighted average shares outstanding 51,206 51,258 51,255 51,204 Common stock equivalents 576 885 655 881 Average shares outstanding 51,782 52,143 51,910 52,085 Per share Net earnings $ 0.31 $ 0.30 $ 0.56 $ 0.54 FULLY DILUTED Quarter Ended Six Months Ended June 25, June 26, June 25, June 26, 1994 1993 1994 1993 Earnings Net earnings $ 16,107 $ 15,653 $ 28,865 $ 27,948 Shares Weighted average shares outstanding 51,206 51,258 51,255 51,204 Common stock equivalents 585 918 680 951 Average shares outstanding 51,791 52,176 51,935 52,155 Per share Net earnings $ 0.31 $ 0.30 $ 0.56 $ 0.54
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