-----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, QuwHDXzoSNdXxwcKCoS/AnVkeVbzyj3rZyksReeBcNsimRkY2nipHM2RmKEVLh4V kg1QCJEMaxiaINQ0KR/bUw== 0000899243-95-000665.txt : 19951006 0000899243-95-000665.hdr.sgml : 19951006 ACCESSION NUMBER: 0000899243-95-000665 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951005 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALLEN CORP CENTRAL INDEX KEY: 0000312907 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 741366847 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10796 FILM NUMBER: 95578900 BUSINESS ADDRESS: STREET 1: 1333 NORTHWEST FREEWAY CITY: HOUSTON STATE: TX ZIP: 77040 BUSINESS PHONE: 7134628700 MAIL ADDRESS: STREET 1: PO BOX 3587 CITY: HOUSTON STATE: TX ZIP: 72253-3587 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________ FORM 10-Q [ x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter period ended August 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 0-10796 -------------------------------- VALLEN CORPORATION (Exact name of registrant as specified in its charter) Texas 74-1366847 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13333 Northwest Freeway Houston, Texas 77040 (Address of principal executive (Zip Code) offices) Registrant's telephone number, (713) 462-8700 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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ _____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, exclusive of treasury shares, at October 5, 1995: 7,250,988 shares of Common Stock, $.50 Par Value Page 1 of 10 PART I Item 1. Financial Statements VALLEN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Thousands of Dollars)
AUGUST 31, 1995 MAY 31, ASSETS (Unaudited) 1995 ----------- --------- Current assets: Cash and cash equivalents $ 2,915 $ 3,006 Investment securities, at cost which approximates market 2,100 7,255 Accounts receivable, net 30,567 26,039 Notes receivable 412 412 Inventories 32,146 24,026 Prepaid expenses and other current assets 3,077 2,565 -------- ------- Total current assets 71,217 63,303 -------- ------- Property, plant and equipment, at cost 43,743 40,501 Less accumulated depreciation and amortization 22,620 19,558 -------- ------- Net property, plant and equipment 21,123 20,943 Notes receivable, non-current 1,599 1,599 Investment in foreign affiliate, net 7,088 3,070 Intangibles, net of accumulated amortization 5,438 1,235 Other 1,275 504 -------- ------- $107,740 $90,654 ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 228 $ 161 Accounts payable 14,878 8,587 Accrued bonus incentive 136 697 Accrued profit sharing contribution 374 401 Other accrued expenses 3,358 1,556 Income taxes payable 686 180 -------- ------- Total current liabilities 19,660 11,582 ======== ======= Long-term debt, excluding current maturities 10,745 5,194 Deferred income taxes 1,196 1,196 Shareholders' equity: Preferred stock $1.00 par value; 1,000,000 shares authorized and unissued Common stock $.50 par value; 20,000,000 shares authorized; 9,842,637 and 9,713,884 shares issued at August 31, 1995 and May 31, 1995, respectively 4,858 4,857 Additional paid-in capital 5,654 3,955 Translation adjustment (361) (417) Retained earnings 68,602 67,028 -------- ------- 78,753 75,423 Less cost of common shares held in treasury (2,462,997 and 2,591,750 shares at August 31, 1995 and May 31, 1995, respectively) 2,614 2,741 -------- ------- Total shareholders' equity 76,139 72,682 -------- ------- Commitments and contingencies $107,740 $90,654 ======== =======
See accompanying Note to Consolidated Financial Statements (Unaudited). Page 2 of 10 VALLEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Thousands of Dollars Except for Per Share Amounts)
FIRST QUARTER ENDED AUGUST 31, --------------------- 1995 1994 ---------- --------- Net sales $52,002 $46,062 Cost of sales 38,537 34,030 ------- ------- Gross profit 13,465 12,032 Selling, general and administrative expenses 11,307 10,260 ------- ------- Operating income 2,158 1,772 Earnings from foreign affiliate, net 208 123 Interest and dividend income 200 88 Interest expense (103) (47) Other income (expense), net (126) (67) ------- ------- Earnings before income taxes 2,337 1,869 Income taxes 762 664 ------- ------- Net earnings $ 1,575 $ 1,205 ======= ======= Net earnings per share $0.22 $0.17 ======= ======= Weighted average number of common shares outstanding 7,194 7,087
See accompanying Note to Consolidated Financial Statements (Unaudited). Page 3 of 10 VALLEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Thousands of Dollars)
THREE MONTHS ENDED AUGUST 31, 1995 1994 - --------------------------------------------------------------------- OPERATING ACTIVITIES: Net earnings $ 1,575 $ 1,205 Adjustments to reconcile net earnings to net cash provided by operating activities: Loss (gain) on disposition of property, plant and equipment 18 (10) Depreciation and amortization 796 866 Undistributed earnings from foreign affiliate, net (208) (123) Undistributed loss from U.S. affiliate, net 14 0 Change in assets and liabilities, net of effects from purchase and investment in companies: Decrease in trading securities 5,155 461 (Increase) decrease in accounts receivable, net (4,528) 3,259 (Increase) in inventory (8,118) (1,364) (Increase) decrease in prepaid expenses and other current assets (512) 96 (Increase) decrease in other assets (213) 20 Increase (decrease) in accounts payable and other current liabilities 8,009 (120) ------- ------- Net cash provided by operating activities 1,988 4,290 INVESTING ACTIVITIES: Net additions to property, plant and equipment (700) (1,015) Payments for purchase of, and investment in companies, net of cash acquired (6,941) 0 ------- ------- Cash used for investing activities (7,641) (1,015) FINANCING ACTIVITIES: Increase (decrease) of long-term debt 5,618 (11) Stock transactions 0 65 ------- ------- Net cash provided by financing activities 5,618 54 ------- ------- Net increase (decrease) in cash and cash equivalents (35) 3,329 Effect of exchange rate changes on cash and cash equivalents (56) 0 Cash and cash equivalents at beginning of period 3,006 - ------- ------- Cash and cash equivalents at end of period $ 2,915 $ 3,329 ======= ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest payments $ 93 $ 43 Income tax payments $ 25 $ 180
Page 4 of 10 VALLEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Thousands of Dollars) SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES - CONT'D.: The Company purchased assets or stock of Safety Centers, Inc., All Supplies, Inc., and Century Sales and Services, Ltd. In conjunction with the acquisitions, liabilities assumed and cash paid are as follows:
Fair value of assets acquired $14,046 Cost in excess of net assets of companies acquired 3,523 ------- Total assets recorded $17,569 Liabilities assumed $(7,792) Amounts due to sellers (1,009) Stock issued for common stock (1,827) ------- Cash paid for common stock and assets $ 6,941 =======
See accompanying Note to Consolidated Financial Statements (Unaudited). Page 5 of 10 VALLEN CORPORATION AND SUBSIDIARIES NOTE TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (Thousands of Dollars) Note 1: Basis of Presentation and Significant Accounting Policies The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the Instructions to Quarterly Reports on Form 10-Q required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, the information furnished reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The results of operations for the three months ended August 31, 1995 are not necessarily indicative of the results that will be realized for the fiscal year ending May 31, 1996. The accounting policies followed by the Company in preparing interim consolidated condensed financial statements are similar to those described in the "Notes to Consolidated Financial Statements" in the Company's Form 10-K Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended May 31, 1995. For interim reporting purposes, provisions for income taxes are recorded on the basis of the estimated annual effective tax rate. Certain prior year amounts have been reclassified to conform with current year presentation. An investment in the common stock of a foreign affiliated company is accounted for by the equity method. The excess cost of the stock of this affiliate over the Company's share of their net assets at the acquisition date is being amortized on a straight line basis over 40 years. Net earnings per share were computed by dividing net earnings by the weighted average number of shares outstanding during the periods. The weighted average number of shares outstanding for the three months ended August, 1995 and 1994 were computed based on the actual number of common shares outstanding. Note 2: Inventory costs are summarized as follows:
AUGUST 31, 1995 MAY 31, 1995 --------------- ------------ Raw Materials $ 1,374 $ 1,241 Work-in-process 703 792 Finished goods 30,069 21,993 ------- ------- Total inventories $32,146 $24,026 ======= =======
Page 6 of 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Thousands of Dollars) RESULTS OF OPERATIONS FIRST QUARTER ENDED AUGUST 31, 1995 COMPARED TO FIRST QUARTER ENDED AUGUST 31, 1994 __________________________________________ Net sales increased 12.9% to $52,002 and gross profit increased by 11.9% to $13,465. Approximately $2,500, or 5% of the sales increase for the quarter was attributable to acquisitions added during the quarter ended August 31, 1995. Additionally, national accounts sales in the distribution subsidiary were up. Overall gross profit margins were slightly higher, due principally to changes in the product mix in the distribution subsidiary. The manufacturing subsidiary's sales increased 7.8% due to an increase in the number of unit sales in the emergency shower and eye wash line marketed in addition to a pass through of price increases for materials. Gross profit margins in the manufacturing subsidiary were comparable to those in the previous year. Selling, general and administrative expenses increased 10.2%, due in part to increased marketing activity and related expenditures in the distribution subsidiary, as well as certain non-capitalized expenses related to acquisitions of businesses in the first quarter of fiscal 1996. Earnings from foreign affiliates of $208 for the quarter ending August 31, 1995, increased 69.1% over the previous year's quarter due to increased earnings reported by the Company's 50% owned Mexican affiliate, and includes the earnings recognized from the Company's 50% ownership position in Century Sales and Services, Limited, effective June 6, 1995, of $115. Interest expense increased 119.1% in the first quarter of fiscal 1996 compared to the prior year, due to the Company's entering into a credit arrangement with a major bank in July, 1995, related to the acquisition of the business of Safety Centers, Incorporated (SCI). Net earnings increased 30.8% in the quarter ended August 31, 1995 to $.22 per common share, compared to $.17 in the previous year's first quarter, due primarily to increased sales, slightly higher gross profit margins, and earnings recognized from the above mentioned acquisitions during the quarter ended August 31, 1995. Page 7 of 10 Item 2. (Continued) MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Thousands of Dollars) RESULTS OF OPERATIONS AUGUST 31, 1995 COMPARED TO MAY 31, 1995 ____________________________________ FINANCIAL CONDITION Cash flows provided by operations for the quarter ended August 31, 1995 totaled to $1,988 compared to $4,290 in the comparable period of the prior year. The reduction results from a net increase in inventories assumed from acquisitions made during the quarter ended August 31, 1995, and a related decrease in trading securities held, which were liquidated in part to provide funding for the acquisitions. Cash and cash equivalents decreased by $35, primarily from the use of cash for acquisitions during the first quarter of fiscal 1996. Accounts receivable increased $4,528 and inventory increased $8,118, primarily as a result of acquisitions and based on increased sales levels. Net additions to property, plant and equipment were $700. Additions were primarily for operating equipment, computer hardware and software and assets added through acquisitions. Accounts payable increased $8,009 as a result of increased operating levels and acquisitions in the quarter ending August 31, 1995. Long-term debt increased $5,618 due to debt issued in connection with acquisitions in the quarter ended August 31, 1995 less required principal repayments. The issuance of common stock shares from treasury in connection with acquisitions made during the quarter ended August 31, 1995, had the effect of increasing paid-in capital by $1,826, including the change in treasury stock held. Page 8 of 10 PART II OTHER INFORMATION Item 1. Legal proceedings - None Item 2. Changes in securities - None Item 3. Defaults upon senior securities - None Item 4. Submission of matters to a vote of security holders - None Item 5. Other information - None Item 6. (a) Exhibits - 27 - Financial Data Schedule. (b) Reports on Form 8-K - On August 8, 1995, the Company filed a report on form 8-K pursuant to Section 13 of the Securities Exchange Act of 1934. The report was filed pursuant to the acquisition by the Company of the business of Safety Centers, Inc. (SCI) a distributor of personal safety products, uniform and garment supply programs. On September 14, 1995, the Company filed a supplementary form 8-K/A, including (a) the audited financial statements of SCI for the fiscal years ending July 31, 1994 and July 31, 1993, and the related Notes to Financial Statements, and (b) proforma Consolidated Condensed Financial Information as of and for the fiscal year ended May 31, 1995 for the Company, and as of and for the period ended July 24, 1995 for SCI, and related notes to the proforma Consolidated Condensed Financial Information. Page 9 of 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 thereto duly authorized. VALLEN CORPORATION --------------------------------- Registrant October 5, 1995 /s/ James W. Thompson - ------------------------------ --------------------------------- Date James W. Thompson President October 5, 1995 /s/ Leighton J. Stephenson - ------------------------------- --------------------------------- Date Leighton J. Stephenson Vice President - Finance, Secretary and Treasurer Page 10 of 10 EX-27 2 ARTICLE 5 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAY-31-1996 JUN-01-1995 AUG-31-1995 2,915 2,100 30,885 318 32,146 71,217 43,743 22,620 107,740 19,660 10,745 4,858 0 0 71,281 107,740 52,002 52,002 38,537 38,537 11,307 0 103 2,337 762 1,575 0 0 0 1,575 0.22 0.22
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