-----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, G6pbUlN7WigiQUCRAuZn0zn5TuPGhORJY/IJqmDlTBccxhEDSFGl8Pcqs4I7s4eB 0x2TCcmACR4VkOfa8NE7+A== 0000025757-96-000028.txt : 19960703 0000025757-96-000028.hdr.sgml : 19960703 ACCESSION NUMBER: 0000025757-96-000028 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19960702 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROMPTON & KNOWLES CORP CENTRAL INDEX KEY: 0000025757 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 041218720 STATE OF INCORPORATION: MA FISCAL YEAR END: 1225 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04663 FILM NUMBER: 96590027 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/A 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (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 30, 1995 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 18, 1995 Common Stock, $.10 par value 48,059,110 shares CROMPTON & KNOWLES CORPORATION FORM 10-Q/A FOR QUARTER ENDED September 30, 1995 INDEX PART I. FINANCIAL INFORMATION: Item 1. Condensed Financial Statements and Accompanying Notes . Consolidated Statements of Earnings (unaudited) - Quarters and nine months ended September 30, 1995 and September 24, 1994 . Consolidated Balance Sheets - September 30, 1995 (unaudited) and December 31, 1994 . Consolidated Statements of Cash Flows (unaudited) - Quarters and nine months ended September 30, 1995 and September 24, 1994 . Notes to the Consolidated Financial Statements - Quarter ended September 30, 1995 (unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION: Item 1. Legal Proceedings Item 6. Exhibits and Reports on Form 8-K Signatures Exhibit 11 Statement Re Computation of Per Share Earnings Exhibit 27 Financial Data Schedule UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Earnings Quarters and nine months ended September 30, 1995 and September 24, 1994 (In thousands, except per share data) Quarters ended Nine months ended Sept 30, Sept 24, Sept 30, Sept 24, 1995 1994 1995 1994 Net sales $159,065 $142,821 $502,875 $430,867 Cost of products sold 114,459 98,796 354,817 293,206 Selling, general and administrative 25,584 24,233 77,742 66,399 Depreciation and amortization 4,035 3,596 11,529 9,995 Interest 2,141 578 5,743 962 Other expense(income) 49 (424) (192) (1,059) Total costs and expenses 146,268 126,779 449,639 369,503 Earnings before income taxes 12,797 16,042 53,236 61,364 Income taxes 4,720 5,818 19,905 22,275 Net earnings $ 8,077 $ 10,224 $ 33,331 $ 39,089 Net earnings per common share $ 0.17 $ 0.20 $ 0.69 $ 0.76 Dividends per common share $ .135 $ .12 $ 0.39 $ 0.34 Average shares outstanding 48,343 51,059 48,516 51,708 See accompanying notes to the consolidated financial statements. September 30, 1995 UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets September 30, 1995 and December 31, 1994 (In thousands) September 30, December 31 1995 1994 ASSETS CURRENT ASSETS Cash $ 2,913 $ 1,832 Accounts receivable 110,723 81,859 Inventories 162,367 157,356 Other current assets 27,920 19,610 Total current assets 303,923 260,657 NON-CURRENT ASSETS Property, plant and equipment 124,864 117,105 Cost in excess of acquired net assets 50,453 43,429 Other assets 11,412 11,137 $ 490,652 $ 432,328 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 68,943 $ 39,670 Accounts payable 48,916 47,000 Accrued expenses 31,232 33,369 Income taxes payable 3,993 4,138 Other current liabilities 17,754 14,865 Total current liabilities 170,838 139,042 NON-CURRENT LIABILITIES Long-term debt 64,000 54,000 Accrued postretirement liability 8,011 8,698 Deferred income taxes 7,011 6,681 Total non-current liabilities 79,022 69,379 STOCKHOLDERS' EQUITY Common stock 5,336 5,336 Additional paid-in capital 60,078 62,241 Retained earnings 233,435 218,837 Accumulated translation adjustment 6,677 1,858 Treasury stock at cost (62,350) (54,213) Deferred compensation (2,384) (10,152) Total stockholders' equity 240,792 223,907 $ 490,652 $ 432,328 See accompanying notes to the consolidated financial statements. UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine months ended September 30, 1995 and September 24, 1994 (In thousands) Sept. 30, Sept. 24 Increase (decrease) to cash 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 33,331 $ 39,089 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 11,529 9,995 Deferred compensation 574 272 Changes in assets and liabilities, net (37,177) (35,283) Net cash provided by operations 8,257 14,073 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions (9,538) (13,734) Capital expenditures (14,122) (13,722) Other investing activities (737) 420 Net cash used by investing activities (24,397) (27,036) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings 10,000 30,000 Payments of long-term debt 0 (10,000) Change in notes payable 29,116 31,399 Net treasury stock activity (3,281) (23,288) Dividends paid (18,733) (17,382) Net cash provided by financing activities 17,102 10,729 CASH Effect of exchange rates on cash 119 157 Change in cash 1,081 (2,077) Cash at beginning of period 1,832 9,284 Cash at end of period $ 2,913 $ 7,207 See accompanying notes to the consolidated financial statements. CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements Quarter ended September 30, 1995 (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 $2,973 in 1995 and $3,829 at December 31, 1994. Accumulated depreciation amounted to $96,925 in 1995 and $85,691 at December 31, 1994. Accumulated amortization of cost in excess of acquired net assets amounted to $7,784 in 1995 and $6,622 at December 31, 1994. Other current liabilities consist primarily of customer deposits. It is suggested that the interim consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1994 Annual Report on Form 10-K. CAPITAL STOCK There are 53,361,072 common shares issued at $.10 par value, of which 5,301,962 shares and 4,703,891 shares were held in the treasury at September 30, 1995 and December 31, 1994, respectively. INVENTORIES Components of inventories are as follows: Sept. 30, Dec. 31, 1995 1994 Finished goods $89,805 $ 90,386 Work in process 31,850 32,640 Raw materials and supplies 40,712 34,330 $162,367 $157,356 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 January 1995, the Company acquired the business and certain assets of McNeil Akron Repiquet S.a.r.l. in France at a cost of $4,638. In March 1995, the Company acquired Killion Extruders, Inc. at a cost of $4,900. 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 the purchase price over fair value of net assets acquired in the amount of $7,738 is being amortized over forty years. The operating results of each acquisition are included in the Consolidated Statements of Earnings since the dates of acquisition. DEBT In June 1995, the Company amended its credit agreement with a group of five banks whereby the revolving credit loans available to the Company were increased from $70,000 to $125,000 through September 28, 1998. Borrowings under the revolving credit agreement amounted to $60,000 at September 30, 1995. STOCK INCENTIVE PLANS In December 1994, the Company transferred 448,000 shares to an independent trustee to administer long-term performance awards under the Company's Long Term Incentive Plan. In June 1995, such shares were returned to the Company and will be issued to the trustee at the end of the incentive period in 1997, as earned. Compensation expense is being accrued annually based upon the expected level of incentive achievement. BUSINESS SEGMENT DATA Quarter ended Sept. 30, Sept. 24, 1995 1994 SALES Specialty chemicals $ 92,486 $ 92,633 Specialty process equipment and controls 66,579 50,188 $159,065 $142,821 OPERATING PROFIT Specialty chemicals $ 7,921 $ 11,973 Specialty process equipment and controls 9,697 7,132 General corporate expense ( 2,631) ( 2,909) Consolidated operating profit 14,987 16,196 Interest expense ( 2,141) ( 578) Other income (expense) (49) 424 Earnings before income taxes $ 12,797 $ 16,042 Nine months ended Sept. 30, Sept. 24, 1995 1994 SALES Specialty chemicals $296,257 $293,599 Specialty process equipment and controls 206,618 137,268 $502,875 $430,867 OPERATING PROFIT Specialty chemicals $ 36,645 $ 47,605 Specialty process equipment and controls 30,797 22,450 General corporate expense ( 8,655) ( 8,788) Consolidated operating profit 58,787 61,267 Interest expense ( 5,743) ( 962) Other income 192 1,059 Earnings before income taxes $ 53,236 $ 61,364 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRD QUARTER RESULTS Overview Consolidated net sales of $159.1 million for the third quarter of 1995 increased 11% over the comparable 1994 period. Net earnings of $8.1 million declined 21% from the third quarter of 1994. Net earnings per common share of $.17 was 15% lower than the $.20 reported last year. Gross margin as a percentage of net sales decreased to 28.0% from 30.8% in last year's third quarter, primarily from lower margins in the domestic and international dyes businesses. Consolidated operating profit of $15.0 million declined 7% from the third quarter of 1994 as specialty chemicals decreased 34% and specialty process equipment and controls segment increased 36%. Specialty Chemicals The Company's specialty chemicals segment sales of $92.5 million were approximately even with the 1994 third quarter as increases in unit volume were offset by lower selling prices. Domestic dyes sales of $45.2 million declined 7% from the third quarter of 1994 primarily due to lower unit volume (-2%) and lower selling prices (-5%). International dyes sales of $21.4 million were essentially even versus the comparable 1994 period primarily as a result of unit volume increases (7%) plus foreign currency translation (2%) offset by lower selling prices (-9%). Specialty ingredient sales of $25.9 million rose 14% primarily as a result of increased unit volume. The percentage of specialty chemicals sales outside the United States increased to 25% from 24% in the third quarter of 1994. Operating profit of $7.9 million for the third quarter of 1995 declined 34% from the comparable quarter in 1994. The decline was attributable to both domestic and international dyes. Domestic dyes operating profit declined due to lower unit volume and pricing. International dyes operating profit declined primarily due to lower pricing and exchange rate fluctuations among European currencies, offset in part by certain accrual adjustments. The percentage of specialty chemicals operating profit outside the United States decreased to 2% from 21% in the third quarter of 1994. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $66.6 million representing an increase of 33% from the third quarter of 1994. Approximately 11% was attributable to the incremental impact of acquisitions with the balance of 22% primarily from increased unit volume. International sales of $21.0 million increased 69% from 1994 and accounted for 32% of total segment sales versus 25% for the comparable period in 1994. Operating profit for the third quarter of 1995 increased 36% to $9.7 million primarily attributable to increased unit volume. The order backlog for extruders and related equipment at the end of the third quarter amounted to $82 million compared to $66 million at December 31, 1994. Other Selling, general and administrative expenses of $25.6 million increased 6% versus the comparable period in 1994 primarily due to the impact of acquisitions and inflation. Depreciation and amortization of $4.0 million increased 12% versus 1994 primarily as a result of a higher fixed asset base including acquisitions. Interest expense increased $1.6 million to $2.1 million primarily as a result of increased borrowings. Other expense (income) of $49 thousand increased by $473 thousand versus 1994 principally from lower foreign currency gains. The Company's effective tax rate of 36.9% increased versus the 36.3% in the 1994 period. YEAR-TO-DATE RESULTS Overview Consolidated net sales for the first nine months of 1995 of $502.9 million increased 17% from the comparable period in 1994. Net earnings of $33.3 million decreased 15% versus the $39.1 million earned in the comparable period in 1994. Net earnings per common share of $.69 decreased 9% from the $.76 reported last year. Gross margin as a percentage of net sales decreased to 29.4% from 31.9% in the comparable 1994 period primarily from lower margins in the domestic and international dyes businesses. Consolidated operating profit of $58.8 million decreased 4% from $61.3 million in the first nine months of 1994 as specialty chemicals decreased 23% and specialty process equipment and controls increased 37%. Specialty Chemicals The Company's specialty chemicals segment reported sales of $296.3 million representing a 1% increase from $293.6 million in the first nine months of 1994. The increase was primarily attributable to foreign currency translation as unit volume increases were offset by lower selling prices. Domestic dyes sales of $147.1 million were 6% lower versus the first nine months of 1994 primarily due to lower selling prices. International dyes sales of $72.8 million increased by 8% versus 1994 primarily as a result of foreign currency translation (7%) and unit volume growth (8%), offset by lower selling prices (-7%). Specialty ingredients sales rose 10% to $76.4 million reflecting primarily increased unit volume. The percentage of sales outside the United States increased to 26% from 24% for the comparable period in 1994. Operating profit of $36.6 million for the first nine months of 1995 decreased 23% from 1994. The decline was attributable to both domestic and international dyes. Domestic dyes operating profit declined primarily due to lower pricing. International dyes operating profit declined primarily due to lower pricing and exchange rate fluctuations among European currencies, offset in part by certain accrual adjustments. The percentage of operating profit outside the United States decreased to 13% from 19% for the comparable period in 1994. Specialty Process Equipment and Controls The Company's specialty process equipment and controls segment reported sales of $206.6 million representing a 51% increase over the first nine months of 1994. Approximately 34% of the sales increase was attributable to the incremental impact of acquisitions with the balance primarily from increased unit volume. International sales of $51.4 million increased 51% from 1994 and accounted for 25% of total segment sales, virtually the same as 1994. Operating profit of $30.8 million increased 37% versus the comparable 1994 period. Approximately 15% was attributable to acquisitions with the balance primarily from higher unit volume. Other Selling, general and administrative expenses of $77.7 million increased 17% versus the first nine months of 1994 primarily due to the impact of acquisitions and inflation. Depreciation and amortization of $11.5 million increased 15% versus the 1994 period as a result of a higher fixed asset base including acquisitions. Interest expense increased $4.8 million primarily as a result of increased borrowings. Other income of $192 thousand decreased $867 thousand versus 1994 primarily due to lower foreign currency gains. The effective tax rate of 37.4% increased versus the 36.3% in the comparable 1994 period. LIQUIDITY AND CAPITAL RESOURCES The September 30, 1995 working capital balance of $133.1 million increased $11.5 million from $121.6 million at year-end 1994. The current ratio declined to 1.8 from 1.9 at the end of 1994 primarily as a result of the increase in notes payable. Days sales in receivables averaged 54 days essentially equal to the level for all of 1994. Inventory turnover averaged 2.8 for the first nine months of 1995 compared to 3.0 for all of 1994. Cash flows from operating activities of $8.3 million decreased $5.8 million from the first nine months of 1994 primarily attributable to lower earnings. Cash provided by operating activities and increased borrowings were used to finance acquisitions, fund capital expenditures, pay cash dividends and repurchase 222,800 shares of the Company's common stock. The Company's debt to total capital increased to 36% from 29% at year-end 1994. Capital expenditures are expected to approximate $20 million in 1995 primarily for expansion and improvement of operating facilities in the United States and Europe. The Company's long-term liquidity needs including such items as capital expenditures and dividends are expected to be financed from operations. INTERNATIONAL OPERATIONS The lower U.S. dollar exchange rate versus the Belgian Franc and French Franc accounted primarily for the favorable increase of $4.8 million in the accumulated translation adjustment account since year-end 1994. 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 275 engineers, draftsmen, chemists, and technicians responsible for developing new and improved chemical products and process equipment systems for the industries served by the Company. Often, new products are developed in response to specific customer needs. The Company's process of developing and commercializing new products and product improvements is ongoing and involves many products, no one of which is large enough to significantly impact the Company's results of operations from year-to-year. Research and development expenditures totaled $10.8 million for the first nine months of 1995 compared to $8.6 million in the comparable 1994 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 three 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. PART II. OTHER INFORMATION: Item 1. Legal Proceedings On September 28, 1995, Kem Manufacturing Corporation, a wholly owned subsidiary of the Corporation, was released by the state of New Jersey as a potentially responsible party with respect to the Evor Phillips waste disposal site located in New Jersey upon payment to the state of New Jersey of $175,000. 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 13, 1995 By:/s/ Charles J. Marsden Charles J. Marsden Vice President-Finance and Chief Financial Officer November 13, 1995 By:/s/ John T. Ferguson, II John T. Ferguson, II General Counsel and Secretary EX-11 2 EXHIBIT 11 STATEMENT OF PER SHARE EARNINGS 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 30, Sept 24, Sept 30, Sept 24, 1995 1994 1995 1994 Earnings Net earnings $ 8,077 $10,224 $33,331 $39,089 Shares Weighted average shares outstanding 48,051 50,599 48,038 51,037 Common stock equivalents 267 444 415 617 Average shares outstanding48,318 51,043 48,453 51,654 Per share Net earnings $ 0.17 $ 0.20 $ 0.69 $ 0.76 FULLY DILUTED Quarter Ended Nine Months Ended Sept 30, Sept 24, Sept 30, Sept 24, 1995 1994 1995 1994 Earnings Net earnings $ 8,077 $10,224 $33,331 $39,089 Shares Weighted average shares outstanding 48,051 50,599 48,038 51,037 Common stock equivalents 292 460 478 671 Average shares outstanding48,343 51,059 48,516 51,708 Per share Net earnings $ 0.17 $ 0.20 $ 0.69 $ 0.76 EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-30-1995 SEP-30-1995 2,913 0 110,723 2,973 162,367 303,923 124,864 96,925 490,652 170,838 0 5,336 0 0 235,456 490,652 502,875 502,875 354,817 444,088 (192) 167 5,743 53,236 19,905 33,331 0 0 0 33,331 0.69 0.69
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