-----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, SNO4fwqqoRmX/urTnsXk/2E6GPNBlh7G2UZOpSwwZI1/bAGV6U3nDD+UHozx6PM6 7lcFPqZncPJtgxkUgx2cvg== 0000950129-95-000966.txt : 19950814 0000950129-95-000966.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950129-95-000966 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 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: 95561295 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 FORM 10-Q PERIOD ENDED 6/30/95 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, 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 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 4, 1995, there were outstanding 12,083,485 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 of dollars, except per share data and number of shares) (Unaudited)
June 30, September 30, 1995 1994 ------------ ------------- ASSETS ------ Current assets: Cash and cash equivalents $ 9,927 $ 2,520 Receivables, net of reserve of $204 and $243 27,032 38,146 Costs in excess 2,318 14,888 Inventories 35,933 45,314 Deferred taxes 7,424 5,126 Other 3,435 5,657 Net assets held for sale 34,431 -------- -------- Total current assets 120,500 111,651 Property, plant and equipment at cost, net 53,912 69,796 Intangibles and other assets 3,429 5,890 -------- -------- $177,841 $187,337 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Notes payable $ 13,400 $ 5,900 Current maturities of long-term debt 2,857 2,857 Accounts payable 14,388 16,946 Accrued expenses 17,578 19,958 -------- -------- Total current liabilities 48,223 45,661 Long-term debt 8,571 11,429 Deferred taxes 6,116 8,367 -------- -------- Total liabilities 62,910 65,457 -------- -------- 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, 12,083,485 and 12,032,470 shares issued 15,104 15,041 Capital in excess of par value 90,188 89,675 Translation component (138) (2,061) Retained earnings 9,777 19,225 -------- -------- Total stockholders' equity 114,931 121,880 -------- -------- $177,841 $187,337 ======== ========
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 3 DANIEL INDUSTRIES, INC. 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, -------------------------- -------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Revenues $ 42,028 $ 56,239 $ 123,063 $ 145,446 ----------- ---------- --------- --------- Costs and expenses: Cost of sales 24,468 38,347 78,147 95,339 Depreciation and amortization 1,673 1,977 5,857 5,673 Selling and admin- istrative expenses 11,359 13,490 33,426 40,196 Research and develop- ment expenses 621 1,048 2,165 2,975 Unusual items 12,330 Loss on disposal of asset 1,371 1,371 Interest expense 493 475 1,520 1,351 ----------- ---------- --------- --------- Total expenses 39,985 55,337 134,816 145,534 ----------- ---------- --------- --------- Income (loss) before income tax expense (benefit) 2,043 902 (11,753) (88) Income tax expense (benefit) 762 425 (3,930) 156 ----------- ---------- --------- --------- Net income (loss) $ 1,281 $ 477 $ (7,823) $ (244) =========== ========== ========= ========= Earnings (loss) per common share $ .11 $ .04 $ (.65) $ (.02) =========== ========== ========= ========= Cash dividends per common share $ .045 $ .045 $ .135 $ .135 =========== ========== ========= ========= Average number of shares outstanding 12,041,919 12,030,265 12,035,918 12,029,580 =========== ========== ========== ==========
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 4 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed) (Unaudited)
Nine Months Ended June 30, ------------------------------ 1995 1994 ------------ ------------ (in thousands) Cash flows from operating activities: Net loss $ (7,823) $ (244) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Non-cash portion of restructuring and other items 12,495 Depreciation and amortization 5,857 5,673 Changes in operating assets and liabilities (1,102) (27,053) ---------- ----------- Net cash provided by (used in) operating activities 9,427 (21,624) ---------- ----------- Cash flows from investing activities: Acquisition of product line (4,177) Capital expenditures (3,612) (8,924) Proceeds from sales of investment securities 2,039 1,000 Proceeds from sales of assets 91 290 ---------- ----------- Net cash used in investing activities (5,659) (7,634) ---------- ----------- Cash flows from financing activities: Net borrowings on lines of credit 7,500 14,000 Payments on long-term debt (2,858) (2,857) Cash dividends paid (1,625) (1,623) Activity under stock option plan 576 27 ---------- ----------- Net cash provided by financing activities 3,593 9,547 ---------- ----------- Effect of exchange rate changes on cash 46 (40) ---------- ----------- Increase (decrease) in cash and cash equivalents 7,407 (19,751) Cash and cash equivalents, beginning of period 2,520 23,220 ---------- ----------- Cash and cash equivalents, end of period $ 9,927 $ 3,469 ========== ===========
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, 1994. In connection with the determination of certain restructuring and other charges recognized in the second quarter of fiscal 1995, the Company elected early adoption of Financial Accounting Standards Board Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" effective for fiscal years beginning after December 15, 1995, which is the Company's fiscal 1997. Note 2 - Restructuring and Other Items In February 1995, the Company announced that its Board of Directors approved and adopted a restructuring plan to improve the Company's overall profitability through a greater focus on high margin and market leading product lines and cost reductions in overhead and direct expenses. In the second quarter of fiscal 1995, the Company recorded pretax charges of $16,115,000 relating to restructuring and other items as follows:
(in thousands) Recorded as unusual items: Employee terminations $ 3,997 Impairments of property, plant and equipment and other assets 7,339 Expenses incurred in connection with an unsolicited merger proposal 600 Other 394 ------- 12,330 Recorded as cost of sales adjustments: Inventory writedowns 3,785 ------- Total charges $16,115 =======
Charges for asset impairments and writedowns are non-cash in nature. At June 30, 1995, the Company's reserve for employee terminations totaled $1,783,000; approximately two-thirds of the 245 planned terminations had occurred as of that date. 6 As part of the restructuring plan, the Company announced its plan to divest identified non-core product lines. In August 1995, the Company sold its airplane. Accordingly, related net assets were classified as a current asset at June 30, 1995 and a loss on disposal of $1,371,000 was recorded in the statement of operations for the June quarter. The Company is engaged in ongoing discussion with prospective buyers for the remaining businesses that are being divested. At June 30, 1995, the Company recorded a current asset of $34,431,000 representing the book value of net assets held for sale. These net assets consist primarily of inventory and property, plant and equipment of approximately $14,800,000 and $13,000,000, respectively. Any gain or loss from divestitures of non-core product lines will be recorded in the periods the transactions are finalized. The results of operations for non-core businesses included in the Consolidated Statement of Operations are as follows:
Quarter Ended June 30, Nine Months Ended June 30, ------------------------- -------------------------- 1995 1994 1995 1994 -------- -------- -------- -------- (in thousands) Revenues $10,037 $9,782 $27,893 $25,331 Operating Income (loss) 1,250 (461) 1,989 (2,868)
Operating income (loss) amounts have been determined based upon management's estimate of certain costs and expenses which have been allocated to the non-core product lines. Effective February 1, 1995, depreciation was discontinued on non-core assets held for sale. Note 3 - Acquisition In October 1994, the Company acquired the orifice metering product line assets of another company. Acquisition and related costs of $4,177,000 were paid in cash. The operations related to this acquisition, which was accounted for under the purchase method, are not material to the Company's results of operations. 7 Note 4 - Inventories Major components of inventories include:
June 30, September 30, 1995 1994 ------------ ------------- (in thousands) Raw materials $13,996 $16,412 Work-in-process 10,158 8,854 Finished goods 16,813 27,490 ------- ------- 40,967 52,756 Less LIFO reserve 5,034 7,442 ------- ------- $35,933 $45,314 ======= =======
Note 5 - Accrued Expenses Accrued expenses are summarized as follows:
June 30, September 30, 1995 1994 ------------ ------------- (in thousands) Other accrued expenses $11,659 $14,873 Accrued taxes other than income 2,083 2,809 Salaries and wages 2,053 2,276 Reserve for restructuring 1,783 ------- ------- $17,578 $19,958 ======= =======
Note 6 - Notes Payable At June 30, 1995, the Company had uncommitted short-term lines of credit aggregating approximately $40,000,000. Loans under these lines may be made in such amounts and at such maturities and interest rates as are offered by banks and accepted by the Company at the time of each borrowing. At June 30, 1995, borrowings under these lines were $13,400,000. These borrowings were at a weighted average interest rate of 6.65% and were due on or before July 6, 1995. Some borrowings were subsequently replaced with other borrowings under these lines. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Restructuring and Other Unusual Charges In February 1995, the Company announced that its Board of Directors approved and adopted a restructuring plan to improve the Company's overall profitability through a greater focus on high margin and market leading product lines, and annual cost reductions in overhead and direct expenses of approximately $8 to $10 million. Significant benefits of the restructuring will be realized in the second half of fiscal 1995. As discussed in Note 2 to NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, the Company recorded charges aggregating $16,115,000 related to employee terminations, inventory writedowns, impairment of certain assets and other costs, and $1,371,000 related to a loss on the sale of the Company's airplane. Nine Months Ended June 30, 1995 vs. Nine Months Ended June 30, 1994 Consolidated revenues decreased 15% to $123,063,000 for the current period compared to $145,446,000 for the same period last year. Revenues in the flow measurement segment were $83,441,000 in the current period compared to $106,211,000 last year. Revenues from sales of flow measurement systems, which accounted for 20% and 38% of this segment's revenues in the respective periods, declined primarily due to the inclusion in the prior year of revenues related to the construction of two large gas metering stations destined for the North Sea. Revenues from sales of flow measurement products remained unchanged between the two periods. Revenues in the energy products segment increased slightly to $39,423,000 in the current period from $38,932,000 last year. Revenues from sales of fastener products, which accounted for 52% and 42% of this segment's revenues in the respective periods, benefitted from price increases and improved demand as a result of improved deliverability of fastener products. Revenues from sales of pipeline valves decreased due to the competitive foreign market. The consolidated gross profit margin for the nine months ended June 30, 1995 increased to 36% of revenues from 34% of revenues last year. The gross profit margin in the flow measurement segment improved to 41% of revenues in the current period from 37% of revenues last year. This improvement is due to a change in product mix towards sales of products, which earn higher margins than sales of flow measurement systems, partially offset by the charge for inventory writedowns recorded in the second quarter of fiscal 1995 in connection with the Company's focus on its strategic plan related to ongoing business. The gross profit margin in the energy products segment declined slightly to 26% of revenues in the current period compared to 27% of revenues last year. This decline is due to the charge for inventory writedowns partially offset by improved margins for fastener products due to price increases. Depreciation and amortization expense increased 3% to $5,857,000 from the prior year due to the amortization of intangibles associated with the acquisition 9 (see Note 3 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS), partially offset by the discontinuation of depreciation of assets held for sale. Consolidated selling and administrative ("S&A") expenses declined 17% to $33,426,000 in the current period. S&A expenses in the flow measurement segment declined 12% to $21,335,000; expenses in the energy products segment declined 23% to $7,800,000 and corporate expenses declined 24% to $4,291,000. These declines are attributable to the decreases in revenues and the realization of benefits from the restructuring program. The unusual charges of $12,330,000 represents restructuring and other charges as previously discussed. In August 1995, the Company sold its airplane and recorded a loss on disposal of $1,371,000 in the period ended June 30, 1995. Interest expense increased 13% from the same period a year ago due to increased short-term borrowing levels partially offset by lower long-term debt levels. Quarter Ended June 30, 1995 vs. Quarter Ended June 30, 1994 Consolidated revenues decreased 25% to $42,028,000 for the quarter ended June 30, 1995. Revenues in the flow measurement segment were $27,955,000 for the current quarter compared to $40,298,000 for the same period last year. This decline is due primarily to the inclusion in the prior year of revenues related to the construction of two large gas metering stations destined for the North Sea. Revenues from sales of flow measurement systems represented 16% and 44% of this segment's revenues in the respective periods. Revenues from sales of flow measurement products increased 5% to $23,521,000 reflecting improved demand for the Company's metering and electronic products. Revenues in the energy products segment decreased 12% to $14,001,000 for the current quarter. Decreased sales of valve products due to the competitive foreign market were partially offset by increased revenues from the sales of fastener products due to price increases and improved demand. The consolidated gross profit margin for the quarter ended June 30, 1995 improved significantly to 42% of revenues compared to 32% of revenues last year. The gross profit margin in the flow measurement segment improved to 47% of revenues in the current period from 33% last year due a favorable change in product mix towards sales of products, which earn higher margins than sales of flow measurement systems. The gross profit margin in the energy products segment increased to 32% of revenues in the current period from 29% of revenues last year. Improved margins on fabricated and fastener products, due to a change in inventory reserves and price increases, respectively, were partially offset by lower margins on pipeline valve products due to the competitive market. Depreciation and amortization expense decreased 15% to $1,673,000 in the current period due to the discontinuation of depreciation of assets held for sale, partially offset by the amortization of intangibles associated with the acquisition in fiscal 1995 (see Note 3 to NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS). 10 Consolidated S&A expenses declined 16% to $11,359,000 in the current period. Expenses in the flow measurement segment declined 11% to $7,234,000; expenses in the energy products segment declined 13% to $2,939,000 and corporate expenses declined 40% to $1,186,000. These declines are attributable to the decreases in revenues and the realization of benefits from the restructuring program. In August 1995, the Company sold its airplane and recorded a loss on disposal of $1,371,000 in the quarter ended June 30, 1995. Liquidity and Capital Resources The primary sources of the Company's liquidity for the nine months ended June 30, 1995 were internally generated funds, short-term borrowings, proceeds from sales of investment securities and cash and cash equivalents available at the beginning of the year. These funds were used primarily for the acquisition of certain assets related to a product line (see Note 3 to NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS), capital expenditures, payments on long-term debt and payments of dividends. Net cash provided by operations for the nine months ended June 30, 1995 was $9,427,000 consisting primarily of the collection of amounts billed on long-term construction contracts and a net decline in receivables and payables, consistent with the decrease in revenues. During the second quarter of fiscal 1995, the Company recorded charges related to restructuring and other items of $16,115,000. In the third quarter of fiscal 1995, the Company recorded a loss on the sale of the Company's airplane of $1,371,000. The non-cash portion of these charges aggregated $12,495,000. The remaining charges represented employee terminations and other costs aggregating $4,991,000, of which $2,507,000 was accrued at June 30, 1995. The Company expects to pay the remainder of these costs within the next twelve months. Working capital at June 30, 1995 included $35,933,000 in inventory which is not as liquid as other current assets. In the first nine months of fiscal 1995 and in 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, 1995, the Company had uncommitted short-term lines of credit aggregating approximately $40,000,000. At June 30, 1995 and August 4, 1995, borrowings under these lines were $13,400,000 and $12,800,000, respectively, at weighted average interest rates of 6.65% and 6.39%, respectively. While the Company expects its borrowing requirements to generally decrease during the remainder of fiscal 1995 from current levels, the timing of one or several major expenditures or receipts may affect the level of borrowings at a particular point in time. As previously mentioned, the Company adopted a strategic restructuring plan. The Company expects to have considerable flexibility with cash proceeds from divestitures as well as borrowing capacity to make acquisitions to complement its core business group. 11 The Company anticipates capital expenditures in fiscal 1995 of approximately $6,000,000. Capital expenditures for the nine months ended June 30, 1995 were $3,612,000. 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. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 - Financial Data Schedule (b) The Company did not file any report on Form 8-K 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. DANIEL INDUSTRIES, INC. (Registrant) Date August 10, 1995 By /s/ W. A. Griffin, III W. A. Griffin, III President and Chief Executive Officer Date August 10, 1995 By /s/ Henry G. Schopfer, III Henry G. Schopfer, III Vice President and Chief Financial Officer 13 INDEX TO EXHIBITS
Exhibit No. Description - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS SEP-30-1995 OCT-01-1994 JUN-30-1995 9,927 0 27,236 204 35,933 120,500 53,912 0 177,841 48,223 0 15,104 0 0 90,188 177,841 123,063 123,063 78,147 78,147 21,723 0 1,520 (11,753) (3,930) (7,823) 0 0 0 (7,823) (.65) (.65) Amount is comprised of unusual items, depreciation and amortization, research and development expenses and loss on disposal of asset.
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