-----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, NV5IWNztJwRxeqT6LGRKXNlFEegJqn1pmro0Jmf1KOvLuJ0rv8AsMo7MT+8guO3l xoJkU8kROUG0U0dk+JMtMg== 0000950129-96-000162.txt : 19960216 0000950129-96-000162.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950129-96-000162 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960213 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: 96517466 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. PERIOD ENDED 12/31/95 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 DECEMBER 31, 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 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 February 7, 1996, 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)
December 31, September 30, 1995 1995 ---------- ----------- ASSETS ------ Current assets: Cash and cash equivalents $ 6,005 $ 3,895 Receivables, net of reserve of $186 and $98 33,962 34,807 Costs in excess 905 941 Inventories 40,966 35,889 Deferred taxes on income 7,892 7,982 Net assets held for sale 84 22,838 Other 5,997 2,427 -------- --------- Total current assets 95,811 108,779 Property, plant and equipment at cost, net 52,939 52,677 Intangibles and other assets 10,908 3,012 -------- --------- $159,658 $164,468 ======== ========= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Notes payable $ 6,200 $ 10,000 Current maturities of long-term debt 2,857 2,857 Accounts payable 10,648 11,702 Accrued expenses 17,936 18,834 -------- --------- Total current liabilities 37,641 43,393 Long-term debt 5,715 8,572 Deferred taxes on income 5,815 3,183 -------- --------- Total liabilities 49,171 55,148 -------- --------- 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 shares issued 15,104 15,104 Capital in excess of par value 90,247 90,247 Translation component (759) (295) Retained earnings 5,895 4,264 -------- --------- Total stockholders' equity 110,487 109,320 -------- --------- $159,658 $164,468 ======== =========
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)
Three Months Ended December 31, ------------------------------- 1995 1994 -------- -------- Revenues $ 40,638 $ 42,298 -------- -------- Costs and expenses: Cost of sales 23,843 26,219 Depreciation and amortization 1,745 2,234 Selling and administrative expenses 10,582 11,662 Research and development expenses 383 794 Interest expense 471 525 -------- -------- Total expenses 37,024 41,434 -------- -------- Income before income tax expense 3,614 864 Income tax expense 1,439 263 -------- -------- Net income $ 2,175 $ 601 ======== ======== Earnings per common share $ .18 $ .05 ======== ======== Cash dividends per common share $ .045 $ .045 ======== ======== Average number of shares outstanding 12,083,485 12,032,470 ========== ==========
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 4 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed) (Unaudited)
Three Months Ended December 31, ------------------------------- 1995 1994 -------- -------- (in thousands) Cash flows from operating activities: Net income $ 2,175 $ 601 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,745 2,234 Changes in operating assets and liabilities (1,713) 2,305 -------- --------- Net cash provided by operating activities 2,207 5,140 -------- --------- Cash flows from investing activities: Acquisition of product line (4,177) Capital expenditures (874) (1,016) Proceeds from sales of non-core assets 8,000 -------- --------- Net cash provided by (used in) investing activities 7,126 (5,193) -------- --------- Cash flows from financing activities: Net (payments) borrowings on lines of credit (3,800) 4,350 Payments on long-term debt (2,857) (2,857) Cash dividend paid (544) (541) -------- --------- Net cash provided by (used in) financing activities (7,201) 952 -------- --------- Effect of exchange rate changes on cash (22) (23) -------- --------- Increase in cash and cash equivalents 2,110 876 Cash and cash equivalents, beginning of period 3,895 2,520 -------- --------- Cash and cash equivalents, end of period $ 6,005 $ 3,396 ======== =========
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, 1995. As a result of the sale of the Company's non-core product lines, the Company determined that it now has one business segment, fluid measurement and flow control products and systems. The Company has not elected early adoption of Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation", effective for fiscal years beginning after December 15, 1995, which is the Company's year ending September 30, 1997. The Company believes adoption of this statement will not materially affect the Company's financial statements. Note 2 - Acquisitions On January 8, 1996, the Company signed a letter of intent to purchase all of the outstanding stock of a valve manufacturer and refurbisher for approximately $3 million. The transaction is subject, among other conditions, to a due diligence examination by the Company and the signing of a definitive agreement. Completion of the transaction is expected in the second quarter of fiscal 1996. The operations related to this acquisition, which will be accounted for under the purchase method, are not material to the Company's results of operations. As previously reported in the Company's Annual Report on Form 10-K for the year ended September 30, 1995, 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. Note 3 - Divestiture As previously reported in the Company's Annual Report on Form 10-K for the year ended September 30, 1995, the Company sold, effective November 1995, the net assets of its fastener subsidiary, Daniel Industrial, Inc., to an investor group for $8,000,000 cash and $9,500,000 in notes, discounted to $8,600,000. The charge to operations from this transaction was recorded in fiscal 1995. Notes receivable include: 6
December 31, 1995 ----------------- (in thousands) Note receivable; interest of 8.5% for the first five years and 12.5% thereafter; interest payable quarterly; principal due November 29, 2002 $ 6,000 Note receivable; collaterized by certain inventory; discounted at an effective rate of 11%; annual principal payments with the last payment due December 31, 1999 2,600 ------- 8,600 Less current portion (included in other current assets) (357) ------- Long-term portion (included in intangibles and other assets) $ 8,243 =======
Minimum annual principal payments on these notes receivable are as follows: 1996 - $357,000, 1997 - $422,000, 1998 - $469,000, 1999 and thereafter - - $7,352,000. Note 4 - Inventories Major components of inventories include:
December 31, September 30, 1995 1995 ---------- ---------- (in thousands) Raw materials $ 15,111 $ 14,527 Work-in-process 12,122 10,752 Finished goods 19,031 15,751 --------- --------- 46,264 41,030 Less LIFO reserve 5,298 5,141 --------- --------- $ 40,966 $ 35,889 ========= =========
Note 5 - Accrued Expenses Accrued expenses are summarized as follows:
December 31, September 30, 1995 1995 ---------- ---------- (in thousands) Other accrued expenses $ 13,506 $ 14,382 Accrued taxes other than income 2,763 2,325 Salaries and wages 1,667 2,127 --------- --------- $ 17,936 $ 18,834 ========= =========
Substantially all of the planned terminations associated with the Company's restructuring program announced in fiscal 1995 had occurred as of December 31, 1995. 7 Note 6 - Notes Payable At December 31, 1995, the Company had uncommitted short-term lines of credit aggregating approximately $45,000,000. One of these lines contains restrictions regarding the amount of the line available for short-term borrowings and the amount available for issuance of letters of credit. The other lines are available for either short-term borrowings or the issuance of letters of credit. Loans under these lines may be made in such amounts and at such maturities and interest rates as may be offered by the banks and accepted by the Company at the time of each borrowing. At December 31, 1995, borrowings under these lines were $6,200,000, and $26,400,000 was available for additional short-term borrowings. These borrowings were at a weighted average interest rate of 6.38% and were due at varying dates through January 9, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Three Months Ended December 31, 1995 vs. Three Months Ended December 31, 1994 As a result of the sale of the Company's non-core product lines, the Company determined that it now has one business segment, fluid measurement and flow control products and systems. Consolidated revenues for the quarter ended December 31, 1995 were $40,638,000 compared to $42,298,000 last year, inclusive of revenues from divested product lines of $4,815,000 and $7,037,000, respectively. Revenues from sales of fluid measurement and flow control products increased 11% from the prior year reflecting increased worldwide demand for the Company's products, particularly valves. This trend is expected to continue through the remainder of fiscal 1996. Sales of measurement systems decreased due to the timing of completion of orders. Revenues in the current period include a pretax gain of approximately $1,200,000 from the sale of certain non-manufacturing property in Germany. The Company's backlog at December 31, 1995 was approximately $43,800,000, an increase of 27% from the balance at December 31, 1994, reflecting a significant improvement in orders for valve products and a modest improvement in orders for measurement products. The consolidated gross profit margin for the quarter ended December 31, 1995, inclusive of the pretax gain on the sale of the property mentioned above, improved to 41% of revenues compared to 38% of revenues last year primarily due to the current year divestiture of the low-margin, non-core fastener product line and a change in product mix towards fluid measurement products which have higher margins than systems. Consolidated selling and administrative expenses ("S&A"), as a percentage of revenues, declined two percentage points to 26% of revenues in the current period. This decline is primarily attributed to the realization of benefits from the restructuring program, which was adopted in fiscal 1995, and from the gain on sale of property mentioned above. Consolidated depreciation and amortization expense decreased 22% to $1,745,000 for the quarter ended December 31, 1995 primarily due to the current year divestiture of the non-core fastener product line. Consolidated interest expense decreased 10% to $471,000 in the current quarter due to both lower short-term and long-term debt levels. The Company has not elected early adoption of Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation", effective for fiscal years beginning after December 15, 8 1995, which is the Company's year ending September 30, 1997. The Company believes adoption of this statement will not materially affect the Company's financial statements. Liquidity and Capital Resources The primary sources of the Company's liquidity for the three months ended December 31, 1995, were proceeds from the sale of the net assets of the fastener subsidiary (see Note 3 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS), internally generated funds and cash and cash equivalents available at the beginning of the year. These funds were used primarily for capital expenditures, payments on short-term and long-term debt, and the payment of a dividend. Working capital decreased $7,216,000 from the balance at September 30, 1995 to $58,170,000 at December 31, 1995, primarily due to the reclassification to non-current assets of the notes received from the sale mentioned above. The Company considers its financial position to be strong, with debt to total capitalization of 12%. The Company's working capital ratio at December 31, 1995, of 2.5 to 1.0 is adequate to meet the Company's needs. In the first three months of fiscal 1996 and in fiscal 1995, the Company relied upon short-term borrowings under its bank lines of credit to supplement its working capital and other cash requirements. At December 31, 1995, the Company had uncommitted short-term lines of credit aggregating approximately $45,000,000. At December 31, 1995 and February 6, 1996, borrowings under these lines were $6,200,000, at weighted average interest rates of 6.38% and 6.0%, respectively. While the Company expects its borrowings requirements to generally decrease during the remainder of fiscal year 1996 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. The Company anticipates capital expenditures in fiscal 1996 of approximately $4,000,000. Capital expenditures for the three months ended December 31, 1995 were $874,000. On January 8, 1996, the Company signed a letter of intent to purchase all of the outstanding stock of a valve manufacturer and refurbisher for approximately $3,000,000. The Company continues to seek acquisitions that would build upon its expertise in the manufacturing and marketing of fluid measurement and flow control products and systems. 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) During the quarter for which this report is filed, the Company filed a Report on Form 8-K dated December 13, 1995, which described the divestiture of Daniel Industrial, Inc. 9 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 February 12, 1996 By /s/ W. A. Griffin, III ------------------------------- W. A. Griffin, III President and Chief Executive Officer Date February 12, 1996 By /s/ Henry G. Schopfer, III -------------------------------- Henry G. Schopfer, III Vice President and Chief Financial Officer Date February 12, 1996 By /s/ Mary R. Beshears -------------------------------- Mary R. Beshears Corporate Controller and Chief Accounting Officer 10 INDEX TO EXHIBITS Exhibit Description - ------- ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS SEP-30-1996 OCT-01-1995 DEC-31-1995 6,005 0 34,148 186 40,966 95,811 52,939 0 159,658 37,641 0 0 0 15,104 95,383 159,658 40,638 40,638 23,843 23,843 12,710 0 471 3,614 1,439 2,175 0 0 0 2,175 .18 .18
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