-----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, ML+SAC9S3bZ11DjZDCSDfvCT823w+SofsKDAzfFVqPsoSF/HJ2R5UqCj5er23ab6 GicvJbg4v4jVYn9R+BDCRA== 0000034629-95-000013.txt : 19951119 0000034629-95-000013.hdr.sgml : 19951119 ACCESSION NUMBER: 0000034629-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FARR CO CENTRAL INDEX KEY: 0000034629 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 951288401 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04723 FILM NUMBER: 95592791 BUSINESS ADDRESS: STREET 1: 2221 PARK PL CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3105366300 MAIL ADDRESS: STREET 1: P.O. BOX 92187 AIRPORT STATION CITY: LOS ANGELES STATE: CA ZIP: 90009 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the Quarterly Period ended September 30, 1995 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the Transition Period From __________________ to ____________________ Commission File No. 0-4723 FARR COMPANY (Exact name of registrant as specified in its charter) Delaware 95-1288401 (State of other jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 2221 Park Place, El Segundo, California 90245 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrants phone number (310) 536-6300 - ------------------------------------------------------------------------------ Prior name, address & fiscal year if changed since last report 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 ----- ----- 3,792,586 Number of shares of registrants common stock outstanding as of close of the period covered by this report. PART I - FINANCIAL INFORMATION FARR COMPANY AND SUBSIDIARIES INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1995 Part I - Financial Information Introduction Condensed Consolidated Financial Statements Balance Sheets - September 30, 1995 and December 31, 1994 Income Statements for the three months ended September 30, 1995 and October 1, 1994 and for the nine months ended September 30, 1995 and October 1, 1994. Statements of Cash Flows for the nine months ended September 30,1995 and October 1, 1994. Notes to Condensed Consolidated Financial Statements Management's Discussion and Analysis Part II - Other Information Exhibits FARR COMPANY AND SUBSIDIARIES INTRODUCTION TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1995 The Condensed Consolidated Financial Statements included herein have been prepared by the Company, without audit, and include all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position as of September 30, 1995 and the results of operations for the three and nine month periods ended September 30, 1995 and October 1, 1994 pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest annual report on Form 10-K. FARR COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Assets
(Unaudited) (Audited) Sep. 30, 1995 Dec. 31,1994 ------------- ------------ Current Assets: Cash and cash equivalents .................... $ 253,000 $ 127,000 Accounts receivable, less allowances of $216,000 in 1995 and $266,000 in 1994 ...... 20,618,000 21,011,000 Inventories .................................. 15,753,000 14,655,000 Prepaid expenses ............................. 909,000 597,000 Asset held for investment .................... 2,083,000 2,083,000 Deferred tax benefit ......................... 946,000 1,602,000 ------------ ------------ Total current assets ....................... 40,562,000 40,075,000 ------------ ------------ Property, Plant and Equipment at cost Land ......................................... 2,098,000 2,092,000 Buildings and improvements ................... 15,141,000 14,879,000 Machinery and equipment ...................... 34,285,000 33,766,000 ------------ ------------ 51,524,000 50,737,000 Less-accumulated depreciation and amortization 34,765,000 32,807,000 ------------ ------------ 16,759,000 17,930,000 Investments & Other ............................. 729,000 1,264,000 ------------ ------------ $ 58,050,000 $ 59,269,000 ============ ============ The accompanying notes are an integral part of these balance sheets.
FARR COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Liabilities & Stockholders' Investment
(Unaudited) (Audited) Sep. 30, 1995 Dec. 31,1994 ------------- ------------ Current Liabilities: Notes/overdraft payable to banks ............. $ 240,000 $ 0 Current portion of long-term debt ............ 1,942,000 2,012,000 Accounts payable ............................. 8,250,000 8,326,000 Accrued liabilities .......................... 8,071,000 7,692,000 Income taxes payable and deferred taxes ...... 432,000 263,000 ------------- ------------ Total current liabilities ................. 18,935,000 18,293,000 Long-Term Debt .................................. 14,564,000 18,957,000 Deferred Income Taxes ........................... 847,000 847,000 Commitments and Contingencies Stockholders' Investment: Common stock, $0.10 par value-- Authorized--10,000,000 shares Outstanding--3,792,586 shares at September 30, 1995 and 3,782,806 shares at December 31, 1994 ........................ 368,000 368,000 Additional paid-in capital .................... 12,174,000 12,005,000 Cumulative translation adjustments ............ (1,579,000) (1,847,000) Retained earnings: Balance beginning of year ................... 11,281,000 11,636,000 Net income(loss) for the period ............. 2,034,000 (355,000) Balance at end of period .................... 13,315,000 11,281,000 Loan to ESOPs ................................. (574,000) (635,000) ------------- ------------ Total stockholders' investment ............ 23,704,000 21,172,000 ------------- ------------ $ 58,050,000 $ 59,269,000 ============= ============ The accompanying notes are an integral part of these balance sheets.
FARR COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) Three Months Ended Nine Months Ended Sep. 30, 1995 Oct. 1, 1994 Sep. 30, 1995 Oct. 1, 1994 ------------- ------------ ------------- ------------ Net Sales ............................. $ 28,444,000 $ 27,462,000 $ 84,379,000 $ 79,158,000 Costs and Expenses: Cost of sales ....................... 21,692,000 21,687,000 64,275,000 63,326,000 Selling, general and administration . 5,142,000 4,803,000 15,286,000 14,454,000 Interest expense .................... 426,000 552,000 1,484,000 1,600,000 Restructuring costs ................. 1,000,000 ------------ ------------ ----------- ------------ Total Costs and Expenses .............. 27,260,000 27,042,000 81,045,000 80,380,000 ------------ ------------ ----------- ------------ Income (Loss) Before Income Taxes ..... 1,184,000 420,000 3,334,000 (1,222,000) Income taxes ........................ 458,000 145,000 1,300,000 (457,000) ------------ ------------ ------------ ------------ Net Income (Loss) ..................... $ 726,000 $ 275,000 $ 2,034,000 ($ 765,000) ============ ============ ============ ============ Earnings (Loss) per Common Share * .... $ 0.20 $ 0.07 $ 0.55 ($ 0.21) ============ ============ ============ ============ * Based upon 3,685,914 and 3,678,152 average shares outstanding at September 30, 1995 and October 1, 1994, respectively. The accompanying notes are an integral part of these statements.
FARR COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Cash Provided by ( Used in ) : Year-to-Date Sep. 30, 1995 Oct. 1, 1994 ------------- ------------ Operating Activities: Net (Loss) Income ............................................. $ 2,034,000 ($ 765,000) Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization .............................. 2,248,000 2,475,000 Provision for loss on accounts receivable .................. 114,000 162,000 Change in deferred income taxes ............................ 711,000 (850,000) Net (gain) loss on sale/retirement of P,P & E .............. (23,000) 0 Net gain from investments .................................. (115,000) 0 Decrease (increase) in inventories ......................... (981,000) 798,000 Decrease (increase) in receivables and prepaid expenses .... 335,000 (546,000) (Decrease) increase in accounts payable & accrued expense .. (84,000) 1,932,000 Net change in current income taxes receivable and payable .. (9,000) (160,000) Exchange gain .............................................. (5,000) (14,000) ------------ ----------- Net cash provided by (used in) operating activities ........ 4,225,000 3,032,000 ------------ ----------- Investing Activities: Purchases of property, plant and equipment .................... (674,000) (868,000) Proceeds from sale of property, plant and equipment ........... 23,000 0 Proceeds from sale of investments ............................. 501,000 0 ------------ ----------- Net cash provided by (used in) investing activities ........ (150,000) (868,000) ------------ ----------- Financing Activities: Proceeds from revolving line of credit, and long-term borrowings ..................................... 240,000 19,086,000 Principal payments on revolving line of credit and long-term debt borrowings & overdrafts ................... (4,280,000) (20,890,000) Principal payments received on ESOP loans ..................... 61,000 90,000 Proceeds from sale of stock, stock option plans ............... 167,000 0 Deferred financing costs ...................................... 0 (533,000) Long-term note receivable ..................................... (174,000) 0 ------------ ------------ Net cash (used in) provided by financing activities ........ (3,986,000) (2,247,000) ------------ ------------ Effect of Exchange Rate Changes on Cash ......................... 37,000 (6,000) Increase (Decrease) in Cash and Cash Equivalents ................ 126,000 (77,000) Cash and Cash Equivalents at Beginning of Period ................ 127,000 671,000 ------------ ------------ Cash and Cash Equivalents at End of Period .................... $ 253,000 $ 594,000 ============ ============ The accompanying notes are an integral part of these statements.
FARR COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1995 (UNAUDITED) 1. Significant Accounting Policies 2. Restricted Cash 3. Inventories 4. Restructuring Costs 5. Extraordinary Item 6. Common Stock 7. Notes Payable and Long-Term Debt 8. Income Taxes 9. Employee Benefit Plans 10. Stock Options 11. Per Share Amounts 12. Commitments and Contingencies 13. Segment Information MANAGEMENT'S DISCUSSION AND ANALYSIS Financial Condition As of September 30, 1995, working capital was $21,627,000 compared to $21,782,000 at the end of 1994, representing a $155,000 decrease in total working capital for the first nine months of 1995. The decrease in working capital is primarily accounted for by decreases in accounts receivable ($393,000), and deferred income taxes ($825,000) partially offset by a increase in inventory ($1,098,000) . The decrease in accounts receivable during the first nine months of 1995 is related to the implementation of new collection programs, the decrease in deferred taxes is attributable to the utilization of the Company's NOL tax carryforward from prior years and the increase in inventories is primarily related to a increase in work in process inventories associated with several large filter house projects scheduled to be shipped during the fourth quarter. Long-term debt decreased $4,463,000 and short term borrowings increased $240,000 during the first nine months primarily due to the Company's strong cash flow provided by operating activities ($4,225,000). Surplus borrowing availability under the Company's domestic revolving credit facility at the end of the third quarter increased to over $7 million. Capital expenditures of $674,000 during the first nine months decreased over the same period last year by $194,000. Overall, capital expenditures continue to be maintained at low levels commensurate with lender financial covenants and to conserve cash resources. During the third quarter, the Company entered into an agreement to sell its Rialto, California manufacturing facility. The closing of this sale agreement is expected to occur during the fourth quarter of 1995. Current debt maturities and operating capital requirements of the Company are anticipated to be provided through cash flows generated from operating activities and borrowing availability under the Company's domestic revolving credit facility and foreign overdraft credit facilities. Results of Operations During the third quarter, the Company's net income improved to $726,000 from $275,000 during the same period last year. Third quarter sales increased from $27,462,000 reported last year to $28,444,000. Year to date third quarter net income improved to $2,034,000, up from a loss of $765,000 during 1994. The nine month period loss for 1994 included $660,000 in nonrecurring expenses in connection with the closing of the Rialto plant, so that comparable net income results from operations before restructuring cost last year showed a $105,000 net loss. Sales for the nine months were $84,379,000, up from $79,158,000. Sales increases were realized in products related to pollution control, engine, OEM and international markets, while heating, ventilating and air conditioning products showed slight decreases. A modest price increase was initiated in July, 1995. This partially offset material and labor cost increases for the year. The balance of those cost increases have been met through improved material usage and efficiency. Incoming orders were slightly off against plan in the third quarter and while backlog decreased 11 percent during the quarter, it remained ahead of the prior year end level. Early fourth quarter orders remain somewhat sluggish, but are not viewed as having a significant negative effect on the fourth quarter performance. The Company is cautiously optimistic that its favorable recent operating trends will continue into the first quarter of 1996. 6.a. Exhibits The following is being filed with this Quarterly Report on Form 10-Q. - - Exhibit-11 Earnings per share calculation. (unaudited) Exhibit-11 Farr Company and Subsidiaries - Earnings per Share Calculation (unaudited) Earnings
Three Months Ended Nine Months Ended Sep. 30, 1995 Oct. 1, 1994 Sep. 30, 1995 Oct. 1, 1994 ------------ ------------ ------------ ------------ Net income (loss) ................................. $ 726,000 $ 275,000 $ 2,034,000 ($ 765,000) ============ ============ ============ ============ Shares Weighted average number of common shares outstanding ...................... 3,685,914 3,678,152 3,685,914 3,678,152 ============ ============ ============ ============ Earnings per share Net income (loss) per common share ................ $ 0.20 $ 0.07 $ 0.55 ($ 0.21) ============ ============ ============ ============ Earnings assuming full dilution: Net income (loss) ................................. $ 726,000 $ 275,000 $ 2,034,000 ($ 765,000) ============ ============ ============ ============ Shares Weighted average number of common shares outstanding ....................... 3,685,914 3,678,152 3,685,914 3,678,152 Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from the exercise of such options .................................... 8,448 16,461 8,448 -- ------------ ------------ ------------ ------------ 3,694,362 3,694,613 3,694,362 3,678,152 ============ ============ ============ ============ Earnings per share Net (loss) income per common share assuming full dilution .......................... $ 0.20 $ 0.07 $ 0.55 ($ 0.21) ============ ============ ============ ============
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 hereunto duly authorized. FARR COMPANY (registrant) November 13, 1995 /s/ Kenneth W. Gerstner -------------------------- Kenneth W. Gerstner Senior Vice President Chief Financial Officer EX-27 2 ART. 5 FINANCIAL DATA SCHEDULE FOR 3RD QTR 10-Q
5 9-MOS DEC-30-1995 JAN-01-1995 SEP-30-1995 253,000 0 20,618,000 216,000 15,753,000 40,562,000 51,524,000 34,765,000 58,050,000 18,935,000 0 368,000 0 0 23,336,000 58,050,000 84,379,000 84,379,000 64,275,000 64,275,000 15,268,000 0 1,484,000 3,334,000 1,300,000 2,034,000 0 0 0 2,034,000 0.550 0.550
-----END PRIVACY-ENHANCED MESSAGE-----