-----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, mgy5Lb9tCw7OnUeLq5OSeBN1Nrntt6Kmdl501cRn+PIoQWO5qy/Kit3QpeHdqrSh RoZ9oJUgqHW9iIjkDz4kIg== 0000950112-94-001224.txt : 19940511 0000950112-94-001224.hdr.sgml : 19940511 ACCESSION NUMBER: 0000950112-94-001224 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940326 FILED AS OF DATE: 19940510 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: 94526797 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 CROMPTON & KNOWLES CORP 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 March 26, 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 April 20, 1994 ---------------------------- ----------------------------- Common Stock, $.10 par value 51,286,996 shares CROMPTON & KNOWLES CORPORATION FORM 10-Q FOR QUARTER ENDED MARCH 26, 1994 INDEX ----- PART I. FINANCIAL INFORMATION: Item 1. Condensed Financial Statements and ------ ---------------------------------- Accompanying Notes ------------------ . Consolidated Statements of Earnings (unaudited) - Quarters ended March 26, 1994 and March 27, 1993 . Consolidated Balance Sheets - March 26, 1994 (unaudited) and December 25, 1993 . Consolidated Statements of Cash Flows (unaudited) - Quarters ended March 26, 1994 and March 27, 1993 . Notes to the Consolidated Financial Statements - Quarter ended March 26, 1994 (unaudited) Item 2. Management's Discussion and Analysis of Financial ------ ------------------------------------------------- Condition and Results of Operations ----------------------------------- PART II. OTHER INFORMATION: Item 4. Submission of Matters to a Vote of Security Holders ------ --------------------------------------------------- Item 6. Exhibits and Reports on Form 8-K ------ -------------------------------- Signatures Exhibit 11 Statement Re Computation of Per Share Earnings -1- UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Earnings Quarters ended March 26, 1994 and March 27, 1993 (In thousands, except per share data) March 26, March 27, 1994 1993 Net sales $ 133,594 $ 133,743 Cost of products sold 90,910 91,062 Selling, general and administrative 19,804 20,161 Depreciation and amortization 3,226 3,150 Interest 182 408 Other income (544) (554) Total costs and expenses 113,578 114,227 Earnings before income taxes 20,016 19,516 Income taxes 7,258 7,221 Net earnings $ 12,758 $ 12,295 Net earnings per common share $ .25 $ .24 Dividends per common share $ .10 $ .08 Average shares outstanding 51,988 52,095 See accompanying notes to the consolidated financial statements. - 2 - March 26, 1994 UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets March 26, 1994 and December 25, 1993 (In thousands) March 26, December 25, 1994 1993 ASSETS CURRENT ASSETS Cash $ 4,865 $ 9,284 Accounts receivable 82,495 84,482 Inventories 117,855 113,932 Other current assets 13,264 12,698 Total current assets 218,479 220,396 NON-CURRENT ASSETS Property, plant and equipment 100,605 99,925 Cost in excess of acquired net assets 33,108 33,275 Other assets 9,580 9,650 $ 361,772 $ 363,246 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 2,995 $ 5,100 Accounts payable 47,140 44,905 Accrued expenses 21,654 25,574 Income taxes payable 15,525 12,935 Other current liabilities 7,596 6,925 Total current liabilities 94,910 95,439 NON-CURRENT LIABILITIES Long-term debt 4,000 14,000 Accrued postretirement liability 9,079 9,084 Deferred income taxes 4,769 4,727 Total non-current liabilities 17,848 27,811 STOCKHOLDERS' EQUITY Common stock 5,336 5,336 Additional paid-in capital 61,892 61,783 Retained earnings 198,857 191,230 Accumulated translation adjustment 179 (557) Treasury stock at cost (11,136) (11,278) Deferred compensation (6,114) (6,518) Total stockholders' equity 249,014 239,996 $ 361,772 $ 363,246 See accompanying notes to the consolidated financial statements. - 3 - UNAUDITED CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Quarters ended March 26, 1994 and March 27, 1993 (In thousands) March 26, March 27, Increase (decrease) to cash 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 12,758 $ 12,295 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 3,226 3,150 Deferred compensation 404 403 Changes in assets and liabilities, net (416) (6,467) Net cash provided by operations 15,972 9,381 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (3,267) (1,673) Other investing activities 12 137 Net cash used by investing activities (3,255) (1,536) CASH FLOWS FROM FINANCING ACTIVITIES Payments of long-term debt (10,000) - Change in notes payable (2,142) (3,164) Net treasury stock activity 70 159 Dividends paid (5,131) (4,093) Net cash used by financing activities (17,203) (7,098) CASH Effect of exchange rates on cash 67 (109) Change in cash (4,419) 638 Cash at beginning of period 9,284 2,441 Cash at end of period $ 4,865 $ 3,079 See accompanying notes to the consolidated financial statements. -4- CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements Quarter ended March 26, 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 $3,679 in 1994 and $4,072 at December 25, 1993. Accumulated depreciation amounted to $76,190 in 1994 and $73,387 at December 25, 1993. Accumulated amortization of cost in excess of acquired net assets amounted to $5,705 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. INVENTORIES ----------- Components of inventories are as follows: March 26, Dec. 25, 1994 1993 --------- -------- Finished goods $ 58,297 $ 57,987 Work in process 28,548 25,748 Raw materials and supplies 31,010 30,197 ------- ------- $117,855 $113,932 ======= ======= -5- CAPITAL STOCK ------------- There are 53,361,072 common shares issued at $.10 par value, of which 2,039,076 shares and 2,069,547 shares were held in the treasury at March 26, 1994 and December 25, 1993, respectively. 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. BUSINESS SEGMENT DATA --------------------- March 26, March 27, 1994 1993 --------- --------- SALES Specialty chemicals $ 95,586 $ 99,581 Specialty process equipment and controls 38,008 34,162 ------- ------- $133,594 $133,743 ======= ======= OPERATING PROFIT Specialty chemicals $ 16,078 $ 17,028 Specialty process equipment and controls 6,858 5,688 ------- ------- 22,936 22,716 General corporate expenses, net ( 2,738) ( 2,792) Interest expense ( 182) ( 408) ------- ------- Earnings before income taxes $ 20,016 $ 19,516 ======= ======= -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FIRST QUARTER RESULTS --------------------- Overview -------- Consolidated net sales of $133.6 million for the first quarter of 1994 were essentially unchanged from the first quarter of 1993. Net earnings of $12.8 million were 4% higher than in 1993. Net earnings per common share of $.25 increased 4% from the $.24 reported last year. Gross margin as a percentage of net sales of 32.0% was slightly higher than the 31.9% reported in the first quarter of 1993. Operating profit of $22.9 million increased 1% from the first quarter of 1993 with all of the increase coming from the specialty process equipment and controls segment. Specialty Chemicals ------------------- Sales in the specialty chemicals segment were $95.6 million representing a decline of 4% from the first quarter 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 $50.3 million were lower than the prior year by 6% primarily due to lower selling prices and weak demand for apparel, aggravated by poor weather conditions which also disrupted production and delayed shipments of raw materials and finished goods. International dyes sales of $22.4 million were lower by 6% versus the first quarter of 1993 primarily as a result of foreign currency translation. Specialty ingredients sales of $22.9 million rose 3% primarily reflecting increased unit volume in sweetener ingredient products. The percentage of sales outside the United States decreased slightly to 25% from 26% in the first quarter of 1993. Operating profit of $16.1 million for the first quarter of 1994 decreased 6% from 1993. Most of the decrease was attributable to lower unit volume and the impact of lower pricing not fully offset by lower raw material costs. The percentage of operating profit outside the United States decreased to 19% from 22% in 1993 primarily due to the negative impact of foreign currency translation. -7- Specialty Process Equipment and Controls ---------------------------------------- The Company's specialty process equipment and controls segment reported sales of $38.0 million representing a 11% increase over the first quarter of 1993. Approximately 8% was attributable to unit volume and 3% to pricing. Export sales accounted for 17% of total segment sales versus 25% for the comparable period in 1993. Operating profit for the first quarter of 1994 increased 21% to $6.8 million primarily as a result of higher unit volume and improved pricing. The order backlog for extruders and related equipment at the end of the first quarter of 1994 amounted to $41 million compared to $38 million at the end of fiscal 1993. Other ----- Selling, general and administrative expenses of $19.8 million decreased 2% versus the comparable period in 1993 as planned cost reductions more than offset inflationary cost increases. Depreciation and amortization of $3.2 million increased 2% versus 1993 primarily as a result of a higher fixed capital base. Interest expense decreased 55% to $182 thousand primarily due to lower borrowings versus the first quarter of 1993. Other income of $544 thousand was essentially unchanged from the first quarter of 1993. The effective tax rate of 36.3% was slightly lower than the 37% in the 1993 period. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The March 26, 1994 working capital balance of $123.6 million decreased 1% from year-end 1993, while the current ratio of 2.3 remained unchanged. Days sales in receivables of 54 days increased slightly from 52 days at year-end 1993. Inventory turnover of 2.9 for the first quarter of 1994 remained unchanged from year-end 1993. Cash flows from operating activities of $16.0 million increased 70% over the first quarter of 1993 and was used primarily to finance capital expenditures, pay cash dividends and reduce notes payable and long-term indebtedness. The Company's debt to total capital ratio decreased to 3% 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. -8- INTERNATIONAL OPERATIONS ------------------------ The lower U.S. dollar exchange rate at March 26, 1994 versus year-end 1993 for the Belgian Franc and French Franc accounted for the increase of $736 thousand 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 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 $2.6 million for the first quarter of 1994 compared to $2.9 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. -9- 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. -10- PART II. OTHER INFORMATION: Item 4. Submission of Matters to a Vote of Security Holders ------ --------------------------------------------------- (a) The Annual Meeting of the Stockholders was held on April 12, 1994. (b) Proxies for the Annual Meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, there was no solicitation in opposition to the nominees for the Board of Directors as listed in the Proxy Statement, and all of such nominees were elected. (c) A brief description of each matter voted upon at the Annual Meeting, and the results of voting, are as follows: 1. Election of four (4) Directors to serve for a term expiring in 1997: FOR AGAINST ------------------- --------------- Robert A. Fox 40,738,295 Shares 561,933 Shares Roger L. Headrick 40,748,534 Shares 551,694 Shares Leo I. Higdon, Jr. 40,661,226 Shares 639,002 Shares Howard B. Wentz, Jr. 40,749,687 Shares 550,541 Shares 2. Approval of the selection by the Board of Directors of an auditor for 1994: FOR AGAINST ABSTAINED ----------------- ---------------- -------------- 40,780,868 Shares 63,695 Shares 455,665 Shares 3. Approval of the material terms of the performance goal under the Annual Incentive Compensation Plan for "A" Group of Senior Executives: FOR AGAINST ABSTAINED ------------------ ---------------- -------------- 39,156,609 Shares 1,494,483 Shares 649,136 Shares -11- 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. -12- 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) May 9, 1994 By: /s/ Charles J. Marsden --------------------------------- Charles J. Marsden Vice President - Finance (Principal Financial Officer) May 9, 1994 By: /s/ John T. Ferguson --------------------------------- John T. Ferguson, II General Counsel and Secretary -13- EX-11 2 EXHIBIT 11 CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share data) PRIMARY FULLY DILUTED Quarter Ended Quarter Ended March 26, March 27, March 26, March 27, 1994 1993 1994 1993 Earnings Net earnings $ 12,758 $ 12,295 $ 12,758 $ 12,295 Shares Weighted average shares outstanding 51,305 51,150 51,305 51,150 Common stock equivalents 654 918 683 945 Average shares outstanding 51,959 52,068 51,988 52,095 Per share Net earnings $ 0.25 $ 0.24 $ 0.25 $ 0.24 -----END PRIVACY-ENHANCED MESSAGE-----