-----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, Ws5ohoqTe26HUV7Etqb8DbSmC8E9fFJez7/sLL3iK9MdHW48P9z34emJxr83WubP BVtJGwcde75ASyCNkzbegQ== 0000950129-94-000633.txt : 19940812 0000950129-94-000633.hdr.sgml : 19940812 ACCESSION NUMBER: 0000950129-94-000633 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANIEL INDUSTRIES INC CENTRAL INDEX KEY: 0000026821 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94542718 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 STREET 2: WINDSOR HOUSE - 50 VICTORIA ST CITY: HOUSTON STATE: TX ZIP: 77055 10-Q 1 DANIEL IND. 10-Q FOR 06/30/94 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (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, 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 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 incorporation or organization) Identification No.)
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 1, 1994, there were outstanding 12,030,265 shares of Common Stock, $1.25 par value, of the registrant. 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. DANIEL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited)
June 30, September 30, 1994 1993 ------------ ------------- (in thousands) ASSETS ------ Current assets: Cash and cash equivalents $ 3,469 $ 23,220 Receivables, net of reserve of $182 and $96 38,892 33,105 Costs in excess 16,044 6,054 Inventories 50,261 39,446 Deferred taxes on income 4,288 Other 4,353 3,350 ------------ ------------- Total current assets 117,307 105,175 Property, plant and equipment at cost, net 68,290 64,477 Intangibles, net 4,651 4,786 Investments and other assets 1,647 3,630 ------------ ------------- $ 191,895 $ 178,068 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Notes payable $ 14,000 Current maturities of long-term debt 2,857 $ 2,857 Accounts payable 17,606 17,395 Accrued expenses 17,116 17,714 ------------ ------------- Total current liabilities 51,579 37,966 Long-term debt 11,429 14,286 Deferred taxes on income 8,961 4,766 ------------ ------------- Total liabilities 71,969 57,018 ------------ ------------- Stockholders' equity: Preferred stock, $1.00 par value, 1,000,000 shares authorized, 150,000 shares designated as Series A junior participating preferred stock, no shares issued or outstanding Common stock, $1.25 par value, 20,000,000 shares authorized, 12,030,265 and 12,026,450 shares issued 15,038 15,033 Capital in excess of par value 89,586 89,564 Translation component (2,898) (3,614) Retained earnings 18,200 20,067 ------------ ------------- Total stockholders' equity 119,926 121,050 ------------ ------------- $ 191,895 $ 178,068 ============ =============
See accompanying notes to consolidated condensed financial statements. 3 DANIEL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (In thousands of dollars, except per share data and number of shares) (Unaudited)
Quarter Ended June 30, Nine Months Ended June 30, ------------------------ -------------------------- 1994 1993 1994 1993 ------------ ------------ ------------ ------------ Revenues $ 56,239 $ 50,009 $ 145,446 $ 128,987 ----------- ---------- ---------- ----------- Costs and expenses: Cost of goods sold 39,292 31,827 98,022 78,813 Selling, general and administrative expenses 15,570 15,141 46,161 44,344 Interest expense 475 384 1,351 1,536 ----------- ---------- ---------- ----------- Total expenses 55,337 47,352 145,534 124,693 ----------- ---------- ---------- ----------- Income (loss) before income tax expense 902 2,657 (88) 4,294 Income tax expense 425 852 156 1,633 ----------- ---------- ---------- ----------- Net income (loss) $ 477 $ 1,805 $ (244) $ 2,661 =========== ========== ========== =========== Earnings (loss) per common share(a) $ .04 $ .15 $ (.02) $ .22 =========== ========== ========== =========== Cash dividends per common share $ .045 $ .045 $ .135 $ .135 =========== ========== ========== =========== Average number of shares outstanding(a) 12,030,265 11,996,922 12,029,580 11,982,860 =========== ========== ========== ===========
(a) Earnings (loss) per common share are computed on the basis of the average number of shares outstanding. The effect of outstanding stock options on earnings (loss) per share was insignificant. See accompanying notes to consolidated condensed financial statements. 4 DANIEL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed) (Unaudited)
Nine Months Ended June 30, ------------------------------ 1994 1993 ------------ ------------ (in thousands) Cash flows from operating activities: Net income (loss) $ (244) $ 2,661 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,673 4,808 Changes in operating assets and liabilities (27,053) (4,379) ------------ ------------ Net cash provided by (used in) operating activities (21,624) 3,090 ------------ ------------ Cash flows from investing activities: Capital expenditures (8,924) (7,008) Investment in license agreement (2,667) Purchase of investment securities (1,579) Proceeds from sale of investment securities 1,000 Proceeds from sales of assets 290 1,087 ------------ ------------ Net cash used in investing activities (7,634) (10,167) ------------ ------------ Cash flows from financing activities: Net borrowings on lines of credit 14,000 Payments on long-term debt (2,857) (2,857) Cash dividends paid (1,623) (1,618) Activity under stock option plan 27 326 ------------ ------------ Net cash provided by (used in) financing activities 9,547 (4,149) ------------ ------------ Effect of exchange rate changes on cash (40) (578) ------------ ------------ Decrease in cash and cash equivalents (19,751) (11,804) Cash and cash equivalents, beginning of period 23,220 29,249 ------------ ------------ Cash and cash equivalents, end of period $ 3,469 $ 17,445 ============ ============ Cash payments (refunds) for income taxes $ 1,621 $ (1,182) Cash payments for interest 1,860 2,136
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 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 such financial statements. These condensed statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993. Note 2 - Acquisitions As previously reported in the Company's Annual Report on Form 10-K for the year ended September 30, 1993, the Company acquired, effective January 1, 1992, from an agency of the German government, a facility in Potsdam-Babelsberg in the former German Democratic Republic ("GDR"). The facility manufactures oval gear meters and will produce other Company products. Acquisition and related costs, aggregating approximately $4,900,000, are recorded primarily in property, plant and equipment. Registration of legal title in the Company's name was completed in July 1994. Note 3 - Inventories Major components of inventories include:
June 30, September 30, 1994 1993 ------------ ------------- (in thousands) Raw materials $ 16,202 $ 14,193 Work-in-process 11,494 9,663 Finished goods 29,511 22,377 ------------ ------------- 57,207 46,233 Less LIFO reserve (6,946) (6,787) ------------ ------------- $ 50,261 $ 39,446 ============ =============
Inventory reductions in fiscal 1993 resulted in liquidations of LIFO inventory layers carried at lower costs prevailing in prior periods as compared with current costs, the effect of which increased earnings by approximately $.02 per share for the nine months ended June 30, 1993. 6 Note 4 - Accrued Expenses Accrued expenses are summarized as follows:
June 30, September 30, 1994 1993 ------------ ------------- (in thousands) Other accrued expenses $ 12,883 $ 12,711 Salaries and wages 2,212 2,415 Accrued taxes other than income 2,021 2,588 ------------ ------------- $ 17,116 $ 17,714 ============ =============
Note 5 - Notes Payable At June 30, 1994, the Company had uncommitted short-term lines of credit aggregating approximately $45,000,000. Loans under these lines may be made in such amounts and at such maturities and interest rates as are offered by the banks and accepted by the Company at the time of each borrowing. At June 30, 1994, borrowings under these lines were $14,000,000. These borrowings were at a weighted average interest rate of 5.12% and were due at varying dates through August 1, 1994. Some borrowings were subsequently replaced with other borrowings under these lines. Note 6 - Income Taxes Effective October 1, 1993, the Company adopted the Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes" ("FAS 109"). Information on the adoption of FAS 109 is set forth in Note 5 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS of the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1993. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Nine Months Ended June 30, 1994 vs. Nine Months Ended June 30, 1993 Consolidated revenues increased 13% to $145,446,000 for the nine months ended June 30, 1994, from $128,987,000 for the same period last year. The Flow Measurement segment posted a 37% increase in revenues to $106,211,000 for the current period, from $77,780,000 for the same period last year. Sales of flow measurement systems, which accounted for 38% and 22% of this segment's revenues in the respective periods, increased significantly in the current period due to construction of liquid and gas metering systems destined principally for the North Sea and Europe. Sales of flow measurement products increased 9% reflecting increased demand for the Company's metering and electronic products, primarily in foreign markets. The Energy Products segment experienced a 23% decline in revenues to $38,932,000 for the current period, compared to $50,529,000 for the same period last year. Sales of pipeline valves, which comprised 43% and 50% of 7 this segment's revenues in the respective periods, decreased due to a more competitive worldwide market as a result of lower crude oil prices. Sales of fasteners, which comprised 42% and 35% of this segment's revenues in the respective periods, decreased due to an unusually large order for flanges shipped during the nine-month period ended June 30, 1993. The consolidated gross profit margin declined to 33% of revenues for the nine months ended June 30, 1994, compared to 39% of revenues for the same period last year. The gross profit margin in the Flow Measurement segment declined six percentage points to 36% of revenues primarily due to a shift in product mix towards sales of flow measurement systems, which earn lower margins than sales of flow measurement products. The gross profit margin in the Energy Products segment declined nine percentage points to 24% of revenues primarily as a result of current year pricing pressures for both pipeline valve and fastener products, declines in operational efficiencies at the fastener operation and a change in inventory reserves. Consolidated selling, general and administrative expenses increased 4% to $46,161,000 for the nine months ended June 30, 1994, compared to $44,344,000 for the same period last year. However, these expenses, as a percentage of revenues, declined two percentage points to 32% of revenues in the current period. The Flow Measurement segment's expenses declined significantly to 27% of revenues because a comparatively larger portion of those revenues was attributable to sales of flow measurement systems which have lower sales commissions than do sales of flow measurement products. Also contributing to the decline was a decrease in engineering expenses due primarily to completion of certain research and development projects. The Energy Products segment's expenses increased five percentage points to 28% of revenues since certain of these expenses are fixed and do not decrease proportionately with sales. Corporate expenses increased 35% to $6,325,000 primarily because of reversals in the prior year of reserves associated with settled litigation. Consolidated depreciation and amortization expense increased 18% to $5,673,000 for the nine months ended June 30, 1994, compared to the same period last year due to additional capital expenditures in fiscal 1993 in both the Flow Measurement and Energy Products segments. Consolidated interest expense decreased 12% to $1,351,000 for the nine months ended June 30, 1994, compared to the same period last year primarily as a result of payments on long-term debt. The effective tax rate for the nine months ended June 30, 1994, is greater than the U.S. statutory rate primarily due to the losses at the Company's German operation for which no tax benefits are currently recognized. Quarter Ended June 30, 1994 vs. Quarter Ended June 30, 1993 Consolidated revenues increased 12% to $56,239,000 for the quarter ended June 30, 1994, from $50,009,000 for the same period last year. The Flow Measurement segment posted a 41% increase in revenues to $40,298,000 for the current period, from $28,578,000 for the same period last year. Sales of flow measurement systems, which accounted for 44% and 27% of this segment's revenues in the respective periods, increased significantly due to construction of liquid 8 and gas metering systems destined principally for the North Sea and Europe. Sales of flow measurement products increased 8% reflecting increased demand for the Company's electronic products, primarily in foreign markets. The Energy Products segment experienced a 25% decline in revenues to $15,899,000 in the current period, compared to $21,281,000 for the same period last year. Sales of pipeline valves, which comprised 46% and 53% of this segment's revenues in the respective periods, decreased due to a more competitive worldwide market as a result of lower crude oil prices. The consolidated gross profit margin declined to 30% of revenues for the quarter ended June 30, 1994, compared to 36% of revenues for the same period last year. The gross profit margin in the Flow Measurement segment declined nine percentage points to 32% of revenues primarily due to a shift in product mix towards sales of flow measurement systems, which earn lower margins than sales of flow measurement products. The gross profit margin in the Energy Products segment declined four percentage points to 26% of revenues primarily as a result of a decline in operational efficiencies at the fastener operation. Consolidated selling, general and administrative expenses increased 3% to $15,570,000 for the quarter ended June 30, 1994, compared to the same period last year. However, these expenses as a percentage of revenues, declined two percentage points to 28% of revenues in the current period. The Flow Measurement segment's expenses declined significantly to 24% of revenues because of the shift in product mix towards sales of flow measurement systems which have lower sales commissions than do sales of flow measurement products. The Energy Products segment's expenses increased five percentage points to 23% of revenues since certain of these expenses are fixed and do not decrease proportionately with revenues. Consolidated depreciation and amortization expense increased 22% to $1,977,000 for the quarter ended June 30, 1994, compared to the same period last year due to additional capital expenditures in fiscal 1993 in both the Flow Measurement and Energy Products segments. Consolidated interest expense increased 24% to $475,000 for the quarter ended June 30, 1994, compared to the same period last year due to the borrowings under bank lines of credit in the current period. The effective tax rate for the quarter ended June 30, 1994 is greater than the U.S. statutory rate primarily due to the losses at the Company's German operation for which no tax benefits are currently recognized. Liquidity and Capital Resources At June 30, 1994, the Company's working capital balance was $65,728,000, compared to $67,209,000 at September 30, 1993. Although the Company's working capital position decreased slightly between the two periods, its cash balance declined significantly to $3,469,000 at June 30, 1994, from $23,220,000 at September 30, 1993. This decrease in cash was due to the funding of operational activities, capital expenditures, payments on long-term debt and payments of dividends. Inventories and costs in excess of billings on contracts in progress increased an aggregate $20,805,000, consistent with the increase in revenues in the Flow Measurement segment. The recording of a current deferred tax asset, in 9 the amount of $4,288,000 at June 30, 1994, is attributable to a reclassification from non-current deferred tax liabilities as a result of fiscal 1994 implementation of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (see Note 6 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS). Working capital at June 30, 1994, included $50,261,000 of inventory, which is not as liquid as other current assets. During the third quarter of fiscal 1994, the Company relied upon short-term borrowings under its bank lines of credit to supplement its working capital and other cash requirements. At June 30, 1994, the Company had uncommitted short-term lines of credit aggregating approximately $45,000,000. As of June 30, 1994 and August 3, 1994, borrowings under these lines were $14,000,000 and $11,850,000, respectively, and at weighted average interest rates of 5.12% and 5.30%, respectively. While the Company expects its borrowing requirements to decrease over the near term, the timing of one or a few major expenditures or receipts may affect the level of borrowings at a particular point in time. The Company considers its financial position to be strong and believes that its current financial position and available lines of credit will provide ample sources of funds to meet foreseeable requirements. The Company anticipates capital expenditures in fiscal 1994 of approximately $14,000,000. Capital expenditures for the nine months ended June 30, 1994, were $8,924,000. The Company continues to seek acquisitions that would expand its existing business. 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 of the Company. Additionally, in the ordinary course of business, the Company issues standby letters of credit and bank guarantees as security for advances, progress payments and performance on long-term contracts. The Company is contingently liable for such obligations which amounted to approximately $26,400,000 at June 30, 1994. Item 6. Exhibits and Reports on Form 8-K (b) The Company did not file any report on Form 8-K during the quarter for which this report is filed. 10 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. DANIEL INDUSTRIES, INC. (Registrant) Date August 10, 1994 By /s/ W. A. GRIFFIN, III W. A. Griffin, III President (Chief Operating Officer) Date August 10, 1994 By /s/ HENRY G. SCHOPFER, III Henry G. Schopfer, III Vice President, Finance -----END PRIVACY-ENHANCED MESSAGE-----