-----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, QCIySu4mnXpEW58VmMZHMSImCHXqQBBMqEjL+uBa4dpchJU/uGtSRthzQ+s2uke2 MFTH71l2SGOWbY/E2R2vmA== 0000950129-97-003280.txt : 19970814 0000950129-97-003280.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950129-97-003280 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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: 97659602 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, INC. - 6/30/97 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 JUNE 30, 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 (I.R.S. Employer Identification No.) incorporation 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 August 8, 1997, there were outstanding 17,089,998 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)
June 30, December 31, 1997 1996 -------- ----------- ASSETS Current assets: Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . $ 4,807 $ 5,423 Receivables, net of reserve of $1,223 and $1,252 . . . . . . . . . . . . . 54,189 50,588 Costs and estimated earnings in excess of billings on uncompleted contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,963 3,671 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,898 52,006 Deferred taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . 5,935 8,807 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,484 6,618 -------- -------- Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 130,276 127,113 Property, plant and equipment, net. . . . . . . . . . . . . . . . . . . . . . . 71,098 75,555 Intangibles and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . 28,846 30,907 -------- -------- $230,220 $233,575 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,240 $ 18,287 Current maturities of long-term debt . . . . . . . . . . . . . . . . . . . 5,456 5,552 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,396 18,311 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,436 30,591 -------- -------- Total current liabilities . . . . . . . . . . . . . . . . . . . . . 71,528 72,741 Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,172 30,233 Deferred taxes on income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,393 8,789 -------- -------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 109,093 111,763 -------- -------- 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. . . . . . . . . . . . . . . . . . . . . . . . . . . (4,619) (2,006) Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,413 11,756 -------- -------- Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . 121,127 121,812 -------- -------- $230,220 $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 Six Months Ended June 30, June 30, -------------------- ----------------------- 1997 1996 1997 1996 ------- ------- -------- -------- Revenues . . . . . . . . . . . . . . . . . . . $67,229 $54,516 $126,136 $110,323 ------- ------- -------- -------- Costs, expenses and other income: Cost of sales . . . . . . . . . . . . . . . 42,896 34,631 81,007 70,204 Selling, engineering and administrative expenses . . . . . . . . . . . . . . . . 18,417 14,395 36,424 29,209 Research and development expenses . . . . . 1,032 547 2,039 1,056 Interest & other expenses (income). . . . . 554 452 1,199 (377) ------- ------- -------- -------- Total costs, expenses and other income . . 62,899 50,025 120,669 100,092 ------- ------- -------- -------- Income before income tax expense . . . . . . . 4,330 4,491 5,467 10,231 Income tax expense . . . . . . . . . . . . . . 1,819 1,467 2,272 3,829 ------- ------- -------- -------- Net income . . . . . . . . . . . . . . . . . . $ 2,511 $ 3,024 $ 3,195 $ 6,402 ======= ======= ======== ======== Earnings per common share. . . . . . . . . . . $ .15 $ .18 $ .19 $ .38 ======= ======= ======== ======== Cash dividends per common share. . . . . . . . $ .045 $ .032 $ .090 $ .064 ======= ======= ======== ======== Average number of shares outstanding . . . . . 17,090 17,035 17,085 17,022 ======= ======= ======== ========
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 4 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed) (in thousands) (Unaudited)
Six Months Ended June 30, ---------------------- 1997 1996 ------ ------- Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,195 $ 6,402 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . 5,028 4,555 Changes in operating assets and liabilities . . . . . . . . . . (6,563) (14,584) ------ ------- Net cash provided by (used in) operating activities . . . . . . . . . . . 1,660 (3,627) ------ ------- Cash flows from investing activities: Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (19,134) Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (4,067) (3,746) Proceeds from sales of assets. . . . . . . . . . . . . . . . . . . . . 2,772 6,103 ------ ------- Net cash used in investing activities . . . . . . . . . . . . . . . . . . (1,295) (16,777) ------ ------- Cash flows from financing activities: Net borrowings under notes payable . . . . . . . . . . . . . . . . . . 1,630 16,284 Net borrowings (payments) on long-term debt. . . . . . . . . . . . . . (1,157) 6,927 Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . (1,538) (1,090) Activity under stock option plans. . . . . . . . . . . . . . . . . . . 161 785 ------ ------- Net cash provided by (used in) financing activities . . . . . . . . . . . (904) 22,906 ------ ------- Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . (77) 4 ------ ------- Increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . (616) 2,506 Cash and cash equivalents, beginning of period. . . . . . . . . . . . . . 5,423 6,806 ------ ------- Cash and cash equivalents, end of period. . . . . . . . . . . . . . . . . $4,807 $ 9,312 ====== =======
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 did not elect fair value expense recognition for stock options and, therefore, the implementation will not materially affect its financial statements. Note 2 - Earnings per Share Earnings per share ("EPS") for the six-month and three-month periods ended June 30, 1997 and 1996 are calculated as primary EPS (net income divided by weighted average shares outstanding including common stock equivalents). In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share" which requires a calculation of basic and 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. 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. The gain on the sale is reflected in the Consolidated Statement of Operations for the six months ended June 30, 1996 as interest and other expenses (income). 6 Note 4 - Inventories
June 30, December 31, 1997 1996 -------- ------------ (in thousands) Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,659 $26,036 Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . 15,018 12,809 Finished goods. . . . . . . . . . . . . . . . . . . . . . . . . . . 17,062 19,803 ------- ------- Inventories before LIFO reserve . . . . . . . . . . . . . . . . 56,739 58,648 Less LIFO reserve . . . . . . . . . . . . . . . . . . . . . . . . . 6,841 6,642 ------- ------- Total inventories . . . . . . . . . . . . . . . . . . . . . . . $49,898 $52,006 ======= =======
Note 5 - Notes Payable Notes payable at June 30, 1997 and December 31, 1996 of $22,240,000 and $18,287,000, consisted of borrowings under lines of credit and notes to banks. Interest rates ranged from 7.5% to 7.9% at June 30, 1997. At June 30, 1997, the Company had both committed and uncommitted short-term lines of credit aggregating approximately $76,000,000. Some of these lines contain restrictions regarding the amount available for short-term borrowings or issuance of letters of credit. At June 30, 1997, approximately $43,000,000 was available for additional short-term borrowings. Note 6 - Long-Term Debt
June 30, December 31, 1997 1996 -------- ------------ (in thousands) Revolving credit facility (secured by Bettis' U.S. assets); interest at prime rate (8.50% at June 30, 1997 and 8.25% at December 31, 1996); interest payable quarterly; principal due July 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,500 $21,100 Payable to four insurance companies (unsecured); 11.5%; principal payable in annual installments of $2,857; 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; interest payable quarterly . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 5,000 Term loan from bank (secured by Bettis' Canadian assets); interest at the Canadian prime rate (4.75% at June 30, 1997 and December 31, 1996); principal and interest payable monthly; payable through August 31, 2001 . . . . . . . . . . . . . . . . . . . 1,539 1,733 Capital lease obligations. . . . . . . . . . . . . . . . . . . . . . . . . 1,730 2,056 Miscellaneous obligations. . . . . . . . . . . . . . . . . . . . . . . . . 144 181 ------- ------- Total obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 34,628 35,785 Less portion due within one year . . . . . . . . . . . . . . . . . . . . . 5,456 5,552 ------- ------- Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,172 $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 Six Months Ended June 30, 1997 vs. Six Months Ended June 30, 1996 Operational revenues for the six months ended June 30, 1997 were $126,136,000 compared to $110,323,000 for the same period in 1996. The increase is primarily due to incremental revenues from measurement and actuator businesses acquired in 1996 offset somewhat by a decline in revenues from the sales of valve products. The Company's backlog at June 30, 1997 was $79,466,000, an increase of 28% and 52% from the backlog balance as of December 31, 1996 and June 30, 1996, respectively, reflecting improved demand for the Company's measurement and actuator products. The gross profit margin for the six months ended June 30, 1997 remained steady at 36%. Margins on the sale of measurement products improved, actuator margins were flat and margins at the valve operations declined due to lower levels of production Selling, engineering, and administrative ("SE&A") expenses increased $7,215,000 to $36,424,000 in the current period largely due to SE&A expenses associated with the companies acquired in 1996. Included in SE&A expenses for the six months ended June 30, 1997 is a provision for $1,123,000 relating to anticipated costs associated with the Company's German subsidiary prior to the completion of its pending sale to a group including members of the subsidiary's management. Research and development expenses increased $983,000 to $2,039,000 in the current period largely due to the May 1996 acquisition of Spectra-Tek International Limited ("Spectra-Tek"), coupled with increased spending on electronic product development. Interest expense increased $761,000 to $2,216,000 in the current period primarily due to increased borrowings used to fund 1996 acquisitions. Quarter Ended June 30, 1997 vs. Quarter Ended June 30, 1996 Revenues from operations for the quarter ended June 30, 1997 were $67,229,000 compared to $54,516,000 for the same period in 1996. The increase is primarily due to incremental revenues from measurement and actuator businesses acquired in 1996, partially offset by a decline in revenues from the sale of valve products. The gross profit margin for the quarter remained constant when compared to the same period in 1996, at 36% of revenues. Although margins on revenues from measurement, control and valve operations were slightly down compared to the same period in 1996, these declines were offset by the increased margin on revenues from the sale of actuator products. Selling, engineering, and administrative expenses increased $4,022,000 to $18,417,000 in the current period primarily due to SE&A expenses of companies acquired in 1996. SE&A expenses during the quarter ended June 30, 1997 included a provision for $750,000 relating to anticipated costs associated with the Company's German subsidiary prior to the completion of its pending sale to a group including members of the subsidiary's management. Research and development expenses increased $485,000 to $1,032,000 in the current period due to the May 1996 Spectra-Tek acquisition and increased expenditures on electronic development projects. Interest expense increased $370,000 to $1,140,000 in the current period largely due to increased borrowings which were used to fund acquisitions in 1996. 8 The effective tax rate for the current quarter was 42.0% compared to 32.7% for the same period last year. The increase in rates is largely attributable to the 1996 recognition of tax benefits resulting from management's review of the Company's tax contingencies. Liquidity and Capital Resources The primary sources of the Company's liquidity for the six months ended June 30, 1997 were short-term borrowings, internally generated funds, and proceeds from the sales of assets. These funds were primarily used for capital expenditures, funding of operations, payments on long-term debt, payment of severance costs which were accrued at December 31, 1996, and for the payment of cash dividends. Working capital at June 30, 1997 of $58,748,000 reflects an increase of $4,376,000 from the balance at December 31, 1996. This increase is primarily due to the increase in accounts receivable associated with higher revenues realized this year. Daniel considers its financial position to be strong with a current ratio at June 30, 1997 of 1.8 to 1.0. Working capital at June 30, 1997 included $55,833,000 in inventory and deferred tax assets, which are not as liquid as other current assets. At June 30, 1997, the Company had both committed and uncommitted short-term lines of credit aggregating approximately $76,000,000. Some of these lines contain restrictions regarding the amount available for short-term borrowings or the issuance of letters of credit. At June 30, 1997, approximately $43,000,000 was available for additional short-term borrowings. Capital expenditures for the quarter and six months ended June 30, 1997 were $2,248,000 and $4,067,000 respectively. 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. 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 June 30, 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: August 13, 1997 By: /s/ James M. Tidwell ---------------------------- Executive Vice President and Chief Financial Officer Date: August 13, 1997 By: /s/ Wilfred M. Krenek ----------------------------- Vice President and Controller (Chief Accounting Officer) 10 INDEX TO EXHIBITS
EXHIBIT DESCRIPTION - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 4,807 0 55,412 1,223 49,898 130,276 145,844 74,746 230,220 71,528 0 0 0 21,363 99,764 230,220 126,136 126,136 81,007 81,007 37,446 0 2,216 5,467 2,272 3,195 0 0 0 3,195 0.19 0.19
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