-----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, DiMrbM3NO1EBjRX+oZI44L1bSF2ie+uzYqIeoUYkOS+3W3ZESKYDC+2z1c8LCOUV dz/zwcg6QpFxKG+H/4mxBQ== 0000950129-97-001958.txt : 19970514 0000950129-97-001958.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950129-97-001958 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANIEL INDUSTRIES INC CENTRAL INDEX KEY: 0000026821 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 741547355 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06098 FILM NUMBER: 97602970 BUSINESS ADDRESS: STREET 1: 9753 PINE LAKE DR CITY: HOUSTON STATE: TX ZIP: 77055 BUSINESS PHONE: 7134676000 MAIL ADDRESS: STREET 1: 9753 PINE LAKE DRIVE CITY: HOUSTON STATE: TX ZIP: 77055 10-Q 1 DANIEL INDUSTRIES - 3/31/97 1 UNITED STATES 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 31, 1997 ------------------------------------------------ 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 1-6098 -------------------- DANIEL INDUSTRIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 74-1547355 - --------------------------------------------- ------------------------------------ (State or other jurisdiction of incorporation (I.R.S. Employer Identification No.) or organization)
9753 Pine Lake Drive, Houston, Texas 77055 --------------------------------------------------- (Address of principal executive offices) (Zip Code) 713-467-6000 --------------------------------------------------- (Registrant's telephone number, including area code) 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 / /. On May 7, 1997, there were outstanding 17,090,030 shares of Common Stock, $1.25 par value, of the registrant. 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. DANIEL INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (in thousands except per share data) (Unaudited)
March 31, December 31, 1997 1996 ---------- ---------- ASSETS Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,536 $ 5,423 Receivables, net of reserve of $1,252 . . . . . . . . . . . . . . . . . . . 51,187 50,588 Costs and estimated earnings in excess of billings on uncompleted contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,751 3,671 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,701 52,006 Deferred taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . 8,387 8,807 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,704 6,618 -------- -------- Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 126,266 127,113 Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . 73,252 75,555 Intangibles and other assets . . . . . . . . . . . . . . . . . . . . . . . 30,101 30,907 -------- -------- $229,619 $233,575 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,871 $ 18,287 Current maturities of long-term debt. . . . . . . . . . . . . . . . . . . . 5,478 5,552 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,365 18,311 Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,180 30,591 -------- -------- Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 72,894 72,741 Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,431 30,233 Deferred taxes on income. . . . . . . . . . . . . . . . . . . . . . . . . . 8,611 8,789 -------- -------- Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 109,936 111,763 -------- -------- Stockholders' equity: Preferred stock, $1.00 par value, 1,000 shares authorized, 150 shares designated as Series A junior participating preferred stock, no shares issued or outstanding. . . . . . . . . . . . . . . . . . . . . . Common stock, $1.25 par value, 40,000 shares authorized, 17,090 and 17,064 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . 21,363 21,330 Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . 90,970 90,732 Translation component . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,322) (2,006) Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,672 11,756 -------- -------- Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . 119,683 121,812 -------- -------- $229,619 $233,575 ======== ========
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 3 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS (in thousands except per share data) (Unaudited)
Quarter Ended March 31, ----------------------------- 1997 1996 ---------- ---------- Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59,338 $55,822 ------- ------- Costs, expenses and other income: Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,111 35,573 Selling, engineering and administrative expenses. . . . . . . . . . . . . 18,122 14,975 Research and development expenses. . . . . . . . . . . . . . . . . . . . 892 348 Gain on divestitures of assets. . . . . . . . . . . . . . . . . . . . . . (1,499) Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,076 685 ------- ------- Total costs, expenses and other income. . . . . . . . . . . . . . . 58,201 50,082 ------- ------- Income before income tax expense. . . . . . . . . . . . . . . . . . . . . . . 1,137 5,740 Income tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453 2,362 ------- ------- Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 684 $ 3,378 ======= ======= Earnings per common share. . . . . . . . . . . . . . . . . . . . . . . . . . . $ .04 $ .20 ======= ======= Cash dividends per common share. . . . . . . . . . . . . . . . . . . . . . . . $ .045 $ .032 ======= ======= Average number of shares outstanding. . . . . . . . . . . . . . . . . . . . . 17,081 17,009 ======= =======
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 4 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed) (in thousands) (Unaudited)
Quarter Ended March 31, -------------------------- 1997 1996 -------- ---------- Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 684 $3,378 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . 2,367 2,241 Changes in operating assets and liabilities . . . . . . . . . . (7,472) (10,231) ------ ------ Net cash used in operating activities . . . . . . . . . . . . . . . . . . . (4,421) (4,612) ------ ------ Cash flows from investing activities: Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,733) Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . (1,819) (1,685) Proceeds from sales of assets . . . . . . . . . . . . . . . . . . . . . 452 3,077 ------ ------ Net cash used in investing activities . . . . . . . . . . . . . . . . . . . (1,367) (1,341) ------ ------ Cash flows from financing activities: Net borrowings under notes payable . . . . . . . . . . . . . . . . . . . 6,584 3,535 Net borrowings (payments) on long-term debt . . . . . . . . . . . . . . . (1,876) 1,234 Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . (768) (545) Activity under stock option plans. . . . . . . . . . . . . . . . . . . . 161 276 ------ ------ Net cash provided by financing activities . . . . . . . . . . . . . . . . . 4,101 4,500 ------ ------ Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . (200) 20 ------ ------ Decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . (1,887) (1,433) Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . 5,423 6,806 ------ ------ Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . $3,536 $5,373 ====== ======
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 5 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note 1 - General The foregoing financial statements have been prepared from the books and records of Daniel Industries, Inc. ("Daniel" or the "Company") without audit. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented, are reflected in the financial statements. These condensed statements should be read in conjunction with the financial statements and the related notes included in the Company's Annual Report on Form 10-K for the year ended September 30, 1996 and the Transition Report on Form 10-Q filed for the three-month transition period ended December 31, 1996. As noted in that transition report, (1) on December 12, 1996, the Company completed a merger with Bettis Corporation, accounted for as a pooling of interests, and accordingly, the Company's financial statements have been restated to include the operations of Bettis for all periods presented, and (2) the Company's year end has been changed to December 31 from September 30. The Company adopted Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation" for its year ending December 31, 1997. The Company does not intend to elect expense recognition for stock options and, therefore, implementation will not materially affect its financial statements. Note 2 - Earnings per Share In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share" ("EPS") which requires a calculation of basic and fully diluted EPS. The statement is effective for periods ending after December 15, 1997, which is the Company's fourth quarter of 1997, with early adoption prohibited and restatement of prior EPS amounts required. The Company does not expect adoption to materially affect its EPS amounts because of the Company's simple capital structure and the immaterial effect of common stock equivalents. EPS for the quarters ended March 31, 1997 and March 31, 1996 are calculated as primary EPS (net income divided by weighted average shares outstanding including common stock equivalents). Note 3 - Divestitures As previously reported in the Company's Annual Report on Form 10-K for the year ended September 30, 1996, the Company sold in March 1996, a non-manufacturing property in Germany for a pretax gain of $1,499,000. 6 Note 4 - Inventories
March 31, December 31, 1997 1996 -------- ---------- (in thousands) Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,829 $26,036 Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,260 12,809 Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,241 19,803 -------- -------- Inventories before LIFO reserve. . . . . . . . . . . . . . . . . 58,330 58,648 Less LIFO reserve . . . . . . . . . . . . . . . . . . . . . . . . . . 6,629 6,642 --------- --------- Total inventories. . . . . . . . . . . . . . . . . . . . . . . . $51,701 $52,006 ======= =======
Note 5 - Notes Payable Notes payable at March 31, 1997 and December 31, 1996 of $24,871,000 and $18,287,000, consisted of borrowings under lines of credit and notes to banks. Interest rates ranged from 4.8% to 8.6% at March 31, 1997. At March 31, 1997, the Company had both committed and uncommitted short-term lines of credit aggregating approximately $78,000,000. Some of these lines contain restrictions regarding the amount available for short-term borrowings or issuance of letters of credit. At March 31, 1997 approximately $36,000,000 was available for additional short-term borrowings. Note 6 - Long-Term Debt
March 31, December 31, 1997 1996 ---------- ------------ (in thousands) Revolving credit facility (secured by Bettis' U.S. assets); interest at prime rate (8.50% at March 31, 1997 and 8.25% at December 31, 1996); interest payable quarterly; principal due April 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . $20,100 $21,100 Payable to four insurance companies (unsecured); 11.5%; principal payable in annual installments of $2,857,140; interest payable semi-annually. . . . . . . . . . . . . . . . . . . . . . 5,715 5,715 Note payable to bank (secured by Bettis' U.S. assets); 5.95%; principal payable in quarterly installments of $500,000; interest payable quarterly . . . . . . . . . . . . . . . . . . . 4,500 5,000 Term loan to bank (secured by Bettis' Canadian assets); interest at the Canadian prime rate (4.75% at March 31, 1997 and December 31, 1996); principal and interest payable monthly; payable through August 31, 2001. . . . . . . . . . . . . . . . . 1,625 1,733 Capital lease obligations. . . . . . . . . . . . . . . . . . . . . . 1,819 2,056 Miscellaneous obligations . . . . . . . . . . . . . . . . . . . . . . 150 181 ---------- ---------- Total obligations. . . . . . . . . . . . . . . . . . . . . . . . 33,909 35,785 Less portion due within one year. . . . . . . . . . . . . . . . . . . 5,478 5,552 --------- --------- Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . $28,431 $30,233 ======= =======
The terms of certain financing agreements contain, among other provisions, requirements for maintaining defined levels of working capital, net worth, capital expenditures and various financial ratios, including debt to equity. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Quarter Ended March 31, 1997 vs. Quarter Ended March 31, 1996 Revenues for the quarter ended March 31, 1997 were $59,338,000 compared to $55,822,000 for the same period in 1996. The increase is due primarily to revenues from measurement and actuator businesses acquired in 1996 of approximately $7,500,000 partially offset by a decline in revenues from sales of valve products. The Company's backlog at March 31, 1997 was $71,000,000, an increase of 14% from the backlog balance at December 31, 1996, resulting from improved demand for the Company's measurement and actuator products. The gross profit margin for the quarter ended March 31, 1997 remained constant at 36% of revenues. Improved margins from sales of measurement products due to lower manufacturing costs were offset by decreased margins at the valve operations due to lower production levels and by decreased margins due to a change in the product mix of actuators sold. Selling, engineering and administrative ("SE&A") expenses increased $3,147,000 to $18,122,000 in the current period due primarily to SE&A expenses of companies acquired in 1996. Research and development expenses increased $544,000 to $892,000 in the current period representing increased expenditures on electronic development projects. Interest expense increased $391,000 to $1,076,000 in the current period due primarily to increased borrowings which were used to fund acquisitions in 1996. In the quarter ended March 31, 1996, the Company recorded a pretax gain of $1,499,000 on the sale of a non-manufacturing property in Germany. Liquidity and Capital Resources The primary source of the Company's liquidity for the quarter ended March 31, 1997 was short-term borrowings. These funds were used primarily for capital expenditures, funding of operations, payments on short-term and long-term debt, payment of severance costs which were accrued at December 31, 1996, and for the payment of cash dividends. Working capital at March 31, 1997 of $53,372,000 remained essentially unchanged from the balance at December 31, 1996. Daniel considers its financial position to be strong with a current ratio at March 31, 1997 of 1.7 to 1.0. Working capital at March 31, 1997 included $60,088,000 in inventory and deferred tax assets, which are not as liquid as other current assets. At March 31, 1997, the Company had both committed and uncommitted short-term lines of credit aggregating approximately $78,000,000. Some of these lines contain restrictions regarding the amount available for short-term borrowings or the issuance of letters of credit. At March 31, 1997, approximately $36,000,000 was available for additional short-term borrowings. Capital expenditures for the quarter ended March 31, 1997 were $1,819,000. The Company continues to seek acquisitions that would build upon its expertise in the manufacture and sale of fluid measurement, flow control, actuation and analytical products and services. The Company believes that its working capital, cash generated from operations and amounts available under its short-term lines of credit will be adequate to meet its operating needs for the foreseeable future. 8 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position or results of operations of the Company. ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 - Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended March 31, 1997. 9 SIGNATURE 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. DANIEL INDUSTRIES, INC. (Registrant) Date: May 12, 1997 By: /s/ James M. Tidwell ------------------------------ Executive Vice President and Chief Financial Officer 10 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------ ----------- 27 - Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 3,536 0 52,439 1,252 51,701 126,266 73,252 0 229,619 72,894 0 0 0 21,363 98,320 229,619 59,338 59,338 38,111 38,111 19,014 0 1,076 1,137 453 684 0 0 0 684 0.04 0.04
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