-----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, nW3BU+WwyoAUoBYHcqW5Az04IYxXqIOp3ZlW+SzLWWbxXDrbiEj0PJPoek3qUYBG Swwu88TRjmdoEQ/8f8L6Xg== 0000025757-94-000038.txt : 19941121 0000025757-94-000038.hdr.sgml : 19941121 ACCESSION NUMBER: 0000025757-94-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19940924 FILED AS OF DATE: 19941107 SROS: NYSE 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: 94557859 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 & INDEX 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 September 24, 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 October 19, 1994 Common Stock, $.10 par value 49,477,348 shares CROMPTON & KNOWLES CORPORATION FORM 10-Q FOR QUARTER ENDED SEPTEMBER 24, 1994 INDEX PART I. FINANCIAL INFORMATION: Item 1. Condensed Financial Statements and Accompanying Notes . Consolidated Statements of Earnings (unaudited) - Quarters and nine months ended September 24, 1994 and September 25, 1993 . Consolidated Balance Sheets - September 24, 1994 (unaudited) and December 25, 1993 . Consolidated Statements of Cash Flows (unaudited) - Nine months ended September 24, 1994 and September 25, 1993 . Notes to the Consolidated Financial Statements - Nine months ended September 24, 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 Exhibit 27 Financial Data Schedule -1- EX-1 2 INCOME STATEMENT UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Earnings Quarters and nine months ended September 24, 1994 and September 25, 1993 (In thousands, except per share data) Quarters ended Nine months ended Sept 24, Sept 25, Sept 24, Sept 25, 1994 1993 1994 1993 Net sales $ 142,821 $ 134,031 $ 430,867 $ 415,451 Cost of products sold 98,796 91,248 293,206 281,134 Selling, general and administra 24,233 20,779 66,399 61,872 Depreciation and amortization 3,596 3,132 9,995 9,453 Interest 578 255 962 966 Other income (424) (246) (1,059) (1,122) Total costs and expenses 126,779 115,168 369,503 352,303 Earnings before income taxes 16,042 18,863 61,364 63,148 Income taxes 5,818 7,357 22,275 23,694 Net earnings $ 10,224 $ 11,506 $ 39,089 $ 39,454 Net earnings per common share $ 0.20 $ 0.22 $ 0.76 $ 0.76 Dividends per common share $ .12 $ .10 $ 0.34 $ 0.28 Average shares outstanding 51,059 52,200 51,708 52,236 See accompanying notes to the consolidated financial statements. - 2 - EX-2 3 BALANCE SHEET September 24, 1994 UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets September 24, 1994 and December 25, 1993 (In thousands) September 24, December 25, 1994 1993 ASSETS CURRENT ASSETS Cash $ 7,207 $ 9,284 Accounts receivable 93,830 84,482 Inventories 144,026 113,932 Other current assets 16,657 12,698 Total current assets 261,720 220,396 NON-CURRENT ASSETS Property, plant and equipment 113,339 99,925 Cost in excess of acquired net assets 43,836 33,275 Other assets 10,028 9,650 $ 428,923 $ 363,246 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 36,551 $ 5,100 Accounts payable 50,304 44,905 Accrued expenses 32,766 25,574 Income taxes payable 6,474 12,935 Other current liabilities 12,116 6,925 Total current liabilities 138,211 95,439 NON-CURRENT LIABILITIES Long-term debt 34,000 14,000 Accrued postretirement liability 8,722 9,084 Deferred income taxes 4,953 4,727 Total non-current liabilities 47,675 27,811 STOCKHOLDERS' EQUITY Common stock 5,336 5,336 Additional paid-in capital 61,767 61,783 Retained earnings 212,937 191,230 Accumulated translation adjustment 3,696 (557) Treasury stock at cost (34,453) (11,278) Deferred compensation (6,246) (6,518) Total stockholders' equity 243,037 239,996 $ 428,923 $ 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 Nine months ended September 24, 1994 and September 25, 1993 (In thousands) Sept. 24, Sept. 25, Increase (decrease) to cash 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 39,089 $ 39,454 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 9,995 9,453 Deferred compensation 272 1,169 Changes in assets and liabilities, net (35,283) (18,769) Net cash provided by operations 14,073 31,307 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions (13,734) - Capital expenditures (13,722) (8,938) Other investing activities 420 1,766 Net cash used by investing activities (27,036) (7,172) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings 30,000 - Payments of long-term debt (10,000) (5,000) Change in notes payable 31,399 332 Net treasury stock activity (23,288) 689 Dividends paid (17,382) (14,353) Net cash provided (used) by financing activities 10,729 (18,332) CASH Effect of exchange rates on cash 157 36 Change in cash (2,077) 5,839 Cash at beginning of period 9,284 2,441 Cash at end of period $ 7,207 $ 8,280 See accompanying notes to the consolidated financial statements. -4- EX-4 5 NOTES CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements Nine months ended September 24, 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 $4,083 in 1994 and $4,072 at December 25, 1993. Accumulated depreciation amounted to $83,223 in 1994 and $73,387 at December 25, 1993. Accumulated amortization of cost in excess of acquired net assets amounted to $6,377 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 1993 Annual Report on Form 10-K. CAPITAL STOCK There are 53,361,072 common shares issued at $.10 par value, of which 3,375,891 shares and 2,069,547 shares were held in the treasury at September 24, 1994 and December 25, 1993, respectively. INVENTORIES Components of inventories are as follows: Sept. 24, Dec. 25, 1994 1993 Finished goods $ 80,046 $ 57,987 Work in process 30,168 25,748 Raw materials and supplies 33,812 30,197 $144,026 $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. ACQUISITIONS In May, 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. In June, 1994, the Company acquired the business and certain assets of McNeil & NRM, Inc. at a cost of $3,016. The acquisitions have been accounted for using the purchase method and, accordingly, the acquired assets and liabilities have been recorded at their fair values at the dates of acquisition. The excess cost of purchase price over fair value of net assets acquired in the amount of $10,522 is being amortized over forty years. The operating results of each acquisition are included in the Consolidated Statements of Earnings since the date of the acquisition. BUSINESS SEGMENT DATA Nine Months Ended Sept. 24, Sept. 25, 1994 1993 SALES Specialty chemicals $293,599 $308,971 Specialty process equipment and controls 137,268 106,480 $430,867 $415,451 OPERATING PROFIT Specialty chemicals $ 47,605 $ 54,381 Specialty process equipment and controls 22,450 17,613 70,055 71,994 General corporate expenses, net ( 7,729) ( 7,880) Interest expense ( 962) ( 966) Earnings before income taxes $ 61,364 $ 63,148 EX-5 6 MD&A MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRD QUARTER RESULTS Overview Consolidated net sales of $142.8 million for the third quarter of 1994 increased 7% over the comparable 1993 period. Net earnings of $10.2 million declined 11% from the third quarter of 1993. Net earnings per common share of $.20 decreased 9% from the $.22 reported last year. Gross margin as a percentage of net sales decreased to 30.8% from 31.9% in last year's third quarter primarily as a result of the specialty chemicals segment. Operating profit of $19.1 million declined by 12% as profits of the specialty process equipment and controls segment increased 25% while those of the specialty chemicals segment declined 25%. Specialty Chemicals The Company's specialty chemicals segment reported sales of $92.6 million representing an 8% decrease from the comparable period in 1993. Approximately 6% was attributable to lower unit volume and 3% to lower selling prices, partially offset by 1% favorable impact from foreign currency translation. Domestic dyes sales of $48.7 million were 11% lower than the third quarter of 1993 due to weak demand for apparel dyes (7%) and lower selling prices (4%). International dyes sales of $21.3 million declined by 10% versus the comparable 1993 period primarily attributable to lower unit volume under a long-term supply agreement. Specialty ingredients sales were essentially unchanged from the comparable 1993 period. The percentage of sales outside the United States decreased slightly to 24% from 25% in the third quarter of 1993. Operating profit of $12.0 million for the third quarter of 1994 declined 25% from the comparable quarter in 1993 primarily attributable to lower unit volume and lower selling prices, offset in part by lower dye intermediate costs. The proportion of operating profit outside the United States decreased to 21% from 27% in the third quarter of 1993. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $50.2 million representing a 51% increase over the third quarter of 1993. Approximately 35% was attributable to the acquisition of Egan Machinery, 11% to unit volume and 5% to pricing. Export sales of $12.4 million were up 93% versus 1993 and accounted for 25% of total segment sales versus 19% for the third quarter of 1993. Operating profit increased 25% to $7.1 million in the third quarter of 1994. Approximately 11% was attributable to the acquisition of Egan Machinery with the balance attributable primarily to higher unit volume and improved pricing. The order backlog for extruders and related equipment at the end of the third quarter amounted to $68 million compared to $38 million at the end of 1993. Other Selling, general and administrative expenses of $24.2 million increased 17% versus the third quarter of 1993 primarily due to the acquisition of Egan Machinery and the impact of inflation. Depreciation and amortization of $3.6 million increased 15% versus the third quarter of 1993 primarily as a result of the Egan Machinery acquisition and a higher fixed asset base. Interest expense increased $323 thousand to $578 thousand in the third quarter of 1994 primarily as a result of increased borrowings. Other income of $424 thousand increased by $178 thousand versus 1993. The Company's effective tax rate of 36.3% was lower than the 39% in the third quarter of 1993 primarily because the latter rate reflected a retroactive charge for increased federal income taxes. YEAR-TO-DATE RESULTS Overview Consolidated net sales for the first nine months of 1994 of $430.9 million increased 4% from the comparable period in 1993. Net earnings of $39.1 million decreased slightly versus the $39.5 million earned in the comparable period in 1993. Net earnings per common share of $.76 were equal to last year. Gross margin as a percentage of net sales decreased slightly to 31.9% from 32.3% reported in the comparable nine month period last year. Operating profit of $70.1 million was 3% lower then the comparable period in 1993 as profits of the specialty process equipment and controls segment increased 27% while those of the specialty chemicals segment decreased 13%. Specialty Chemicals The Company's specialty chemicals segment reported sales of $293.6 million representing a decline of 5% versus the first nine months of 1993. The decrease was attributable equally to lower selling prices and unit volume. Domestic dyes sales decreased 7% to $156.3 million for the first nine months of 1994 due equally to lower selling prices and weak demand for apparel dyes. International dyes sales of $67.7 million were lower by 7% versus 1993 primarily as a result of lower unit volume under a long-term supply agreement. Specialty ingredients sales rose 2% to $69.6 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 $47.6 million for the first nine months of 1994 decreased 13% from 1993 due primarily 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 to 19% from 22% for the comparable period in 1993. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $137.3 million representing a 29% increase over the first nine months of 1993. Approximately 16% was attributable to the acquisition of Egan Machinery, 9% to unit volume and 4% to pricing. Export sales of $34 million increased 18% from 1993 and accounted for 25% of total segment sales versus 27% in the first nine months of 1993. Operating profit of $22.5 million increased 28% versus the comparable period in 1993. Approximately 5% was attributable to the acquisition of Egan Machinery with the balance attributable primarily to unit volume and improved pricing. Other Selling, general and administrative expenses of $66.4 million increased 7% versus the first nine months of 1993 primarily due to the acquisition of Egan Machinery and the impact of inflation. Depreciation and amortization of $10.0 million increased 6% primarily as a result of the Egan Machinery acquisition and a higher fixed asset base. Interest expense and other income were essentially the same versus 1993. The Company's effective tax rate of 36.3% was lower than the 37.5% in the comparable 1993 period. LIQUIDITY AND CAPITAL RESOURCES The September 24, 1994 working capital balance of $123.5 million decreased $1.4 million 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 54 days increased slightly from 52 days at year- end 1993. Inventory turnover of 2.8 for the first nine months of 1994 declined slightly from 2.9 at year-end 1993. Cash flows from operating activities of $14.1 million decreased $17.2 million from the first nine months 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 1.4 million shares of the Company's common stock. The Company's debt to total capital ratio increased to 22% 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 September 24, 1994 for the Belgian Franc and French Franc accounted for the increase of $4.3 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 $8.6 million for the first nine months of 1994 compared to $8.3 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 OTHER INFORMATION & 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 (27) Financial Data Schedule (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) November 7, 1994 By: /s/ Charles J. Marsden Charles J. Marsden Vice President - Finance (Principal Financial Officer) November 7, 1994 By: /s/ John T. Ferguson, II John T. Ferguson, II General Counsel and Secretary EX-11 8 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 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 Nine Months Ended Sept 24, Sept 25, Sept 24, Sept 25, 1994 1993 1994 1993 Earnings Net earnings $ 10,224 $ 11,506 $ 39,089 $ 39,454 Shares Weighted average shares outstanding 50,599 51,426 51,037 51,278 Common stock equivalents 444 665 617 731 Average shares outstanding 51,043 52,091 51,654 52,009 Per share Net earnings $ 0.20 $ 0.22 $ 0.76 $ 0.76 FULLY DILUTED Quarter Ended Nine Months Ended Sept 24, Sept 25, Sept 24, Sept 25, 1994 1993 1994 1993 Earnings Net earnings $ 10,224 $ 11,506 $ 39,089 $ 39,454 Shares Weighted average shares outstanding 50,599 51,426 51,037 51,278 Common stock equivalents 460 774 671 958 Average shares outstanding 51,059 52,200 51,708 52,236 Per share Net earnings $ 0.20 $ 0.22 $ 0.76 $ 0.76 EX-27 9 FINANCIAL DATA SCHEDULE
5 QTR-3 DEC-31-1994 SEP-24-1994 7,207 0 93,830 4,083 144,026 261,720 113,339 83,223 428,923 138,211 0 5,336 0 0 237,701 428,923 430,867 430,867 293,206 369,600 (1,059) 242 962 61,364 22,275 39,089 0 0 0 39,089 0.76 0.76
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