-----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, Oqpa3q9mJG5PWzXQFXLRDNTN4WP+qjyRHAnQ3ODPYmCRj/TmOxKxICrqtOOW+Xu/ pTIHuJWUZbE6yO+6YKN2UA== 0000912057-96-017844.txt : 19960816 0000912057-96-017844.hdr.sgml : 19960816 ACCESSION NUMBER: 0000912057-96-017844 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARMON INDUSTRIES INC CENTRAL INDEX KEY: 0000045635 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 440657800 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07916 FILM NUMBER: 96613875 BUSINESS ADDRESS: STREET 1: 1300 JEFFERSON CT CITY: BLUE SPRINGS STATE: MO ZIP: 64015 BUSINESS PHONE: 8162293345 MAIL ADDRESS: STREET 1: 1300 JEFFERSON INC CITY: BLUE SPRINGS STATE: MO ZIP: 64015 FORMER COMPANY: FORMER CONFORMED NAME: HARMON ELECTRONICS INC DATE OF NAME CHANGE: 19780823 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter ended June 30, 1996 Commission File No. 0-7916 ----------------------- ------------ HARMON INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Missouri 44-0657800 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1300 Jefferson Court, Blue Springs, Missouri 64015 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 816-229-3345 ---------------------- 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 -------- ------- The number of shares of Registrant's common stock outstanding as of June 30, 1996 was 6,805,626. ---------- -1- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The Consolidated Statements of Earnings, Consolidated Balance Sheets and Consolidated Statements of Cash Flows are unaudited, but reflect, in the opinion of management, all adjustments necessary, all of which are considered normal and recurring, to present fairly the financial position of the Company at June 30, 1996 and December 31, 1995 as well as the results of its operations for the interim periods ended June 30, 1996 and June 30, 1995. -2- HARMON INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS FOR PERIODS ENDED JUNE 30, 1996 AND 1995 IN THOUSANDS OF DOLLARS (EXCEPT SHARE DATA) (UNAUDITED)
Three months ended June 30 Six months ended June 30 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Net sales $ 39,111 $ 32,854 $ 77,509 $ 62,269 Cost of sales 26,141 21,971 53,366 43,279 Research and development expenditures 1,726 1,236 3,183 2,279 ---------- ---------- ---------- ---------- Gross profit 11,244 9,647 20,960 16,711 Selling, general and administrative expenses 6,560 5,990 12,724 11,602 Amortization of cost in excess of fair value of net assets acquired 137 133 274 266 Miscellaneous (income) expense-net (14) (7) (30) (32) ---------- ---------- ---------- ---------- Operating income 4,561 3,531 7,992 4,875 Interest expense (234) (190) (489) (337) Investment income 29 60 198 76 ---------- ---------- ---------- ---------- Earnings before income taxes 4,356 3,401 7,701 4,614 Income tax expense (benefit): Current 1,723 1,414 3,008 1,949 Deferred (24) (71) (40) (99) ---------- ---------- ---------- ---------- 1,699 1,343 2,968 1,850 ---------- ---------- ---------- ---------- Net earnings $ 2,657 $ 2,058 $ 4,733 $ 2,764 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net earnings per common share $ 0.39 $ 0.30 $ 0.69 $ 0.41 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average outstanding shares 6,840,464 6,823,650 6,834,674 6,819,217 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
-3- HARMON INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS IN THOUSANDS OF DOLLARS (UNAUDITED)
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 1996 1995 1996 1995 --------- --------- --------- --------- Assets Liabilities and Stockholders' Equity Current assets: Current liabilities: Cash and cash equivalents $ 353 $ ------ Bank overdraft $ ------ $ 676 Trade receivables, less allowance Current debt installments 576 337 for doubtful accounts for doubtful Accounts payable 8,372 11,022 accounts of $307,000 in 1996 and Accrued payroll, bonus and $362,000 in 1995 22,003 25,317 employee benefit plan Costs and estimated earnings in contributions 6,441 6,688 excess of billings on Billings in excess of costs uncompleted contracts 1,811 4,053 and estimated earnings Inventories: on uncompleted contracts 3,300 1,279 Work in process 4,630 4,583 Federal and state income Raw materials and supplies 22,067 21,262 taxes payable 302 ------ --------- --------- Other accrued liabilities 1,738 1,825 26,697 25,845 --------- --------- Total current liabilities 20,729 21,827 --------- --------- Income tax receivable ------ 434 Deferred compensation liability 3,880 3,696 Deferred tax asset 584 584 Long-term debt 5,507 12,090 Prepaid expenses and other --------- --------- current assets 1,148 608 --------- --------- Total current assets 52,596 56,841 Total liabilities 30,116 37,613 --------- --------- --------- --------- Property, plant and equipment, at cost: Stockholders' equity Land 356 356 Common stock of $.25 par Buildings 7,115 5,802 value; authorized Machinery and equipment 13,546 12,820 20,000,000 shares, Office furniture and equipment 16,073 14,589 issued 6,805,626 in 1996 Transportation equipment 1,057 1,036 and 6,805,626 in 1995 1,702 1,702 Leasehold improvements 2,334 2,288 Additional paid-in capital 23,003 23,003 --------- --------- Retained earnings 28,750 24,527 40,481 36,891 --------- --------- Less accumulated depreciation and Total stockholders' equity 53,455 49,232 amortization 24,710 22,714 --------- --------- Net property, plant and equipment 15,771 14,177 Deferred tax asset 661 621 Cost in excess of fair value of net assets acquired,net of accumulated amortization of $2,166,000 in 1996 and $1,892,000 in 1995 7,400 7,674 Deferred compensation asset 5,670 5,575 Other assets 1,473 1,957 --------- --------- ---------- --------- $83,571 $86,845 $83,571 $86,845 --------- --------- ---------- ---------
HARMON INDUSTRIES, INC CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995 IN THOUSANDS OF DOLLARS (UNAUDITED) JUNE 30, JUNE 30, 1996 1995 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 4,733 $ 2,764 Adjustments to reconcile net earnings to net cash provided by operating actvities: Depreciation and amortization 2,373 1,826 Gain on sale of property, plant and equipment 9 (21) Deferred tax expense (benefit) (40) (99) Changes in assets and liabilities: Trade receivables 3,314 1,389 Inventories (852) (4,220) Estimated cost, earnings and billings on contracts 4,263 (2,019) Income tax receivable 434 667 Prepaid expenses (540) (282) Accounts payable (2,650) 426 Accrued payroll and benefits (247) (1,943) Current income taxes 302 609 Other liabilities (87) (34) Other deferred liabilities 184 149 -------- -------- Total adjustments 6,463 (3,552) -------- -------- Net cash provided by (used in) operating activities 11,196 (788) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (3,702) (2,315) Proceeds from sale of property, plant and equipment -- 58 Deferred compensation contributions (95) (523) Other investing activities 484 116 Servo acquisition SERRMI acquisition -- (1,150) -------- -------- Net cash used in investing activities (3,313) (3,814) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock -- 292 Proceeds from issuance of long-term debt 337 -- Borrowings under line of credit agreements 23,464 10,950 Repayments under line of credit agreements (29,925) (5,950) Principal payments of long-term debt (220) (212) Bank overdraft (676) -- Cash dividends paid (510) (509) -------- -------- Net cash provided by (used in) financing activities (7,530) 4,571 -------- -------- Net increase (decrease) in cash and cash equivalents 353 (31) Cash and cash equivalents at beginning of year -- 250 -------- -------- Cash and cash equivalents at end of period $ 353 $ 219 -------- -------- -------- -------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: CASH PAID DURING THE PERIOD FOR: Interest $ 398 $ 220 Income taxes $ 2,351 $ 665 -5- PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's sales for the second quarter ended June 30, 1996 were $39.1 million, representing a 19.0% increase over the same quarter one year ago. Gross profit for the 1996 second quarter of $11.2 million represented a 16.6% increase over the 1995 second quarter. The quarterly sales increase resulted from strong sales of train control systems, carborne equipment and asset management services partially offset by lower train inspection systems sales. Expenditures for research and development for the second quarter increased 39.6% in 1996 and increased as a percentage of sales to 4.4% from 3.8% in 1995. This increase represents a shift of engineering resources from application engineering projects to research and development along with the addition of new engineering resources. One of the major development activities is Incremental Train Control System as described in our 1995 Form 10K. As a percentage of sales, gross profit for the three months ended June 30, 1996 decreased to 28.7% from 29.4% for the same period last year. This decline is almost entirely the result of the increase in research and development expenditures in the second quarter of 1996 compared to 1995. Sales for the six months ended June 30, 1996 increased 24.5% over last year to $77.5 million. The sales increase reflects strong sales of train control systems, carborne equipment, asset management services and signal hardware products, partially offset by lower sales of printed circuit boards. Year to date expenditures for research and development increased 39.7% for the first six months of 1996 compared to the same period a year ago. As a percentage of sales for the same period, research and development increased to 4.1% in 1996 from 3.7% in 1995. This increase for the first six months of 1996 is due to the same reasons noted above for the quarter. Gross profit for the six month period increased 25.4% to $21.0 million in 1996 and increased slightly as a percentage of sales to 27.0% in 1996 from 26.8% last year. The increase in margins resulting from the absence of the 1995 integration costs of the acquired hot box detector line was virtually offset by the increased research and development expenditures and the higher proportionate sales of lower margin asset management services. Selling, general and administrative expenses (SG&A), increased 9.5% for the three months ended June 30, 1996 compared to the same period last year. As a percentage of sales for the same period, SG&A decreased to 16.8% from 18.2%. The increased SG&A expenses in absolute dollars in the second quarter of 1996 was primarily higher selling expenses commensurate with higher sales (approximately $250 thousand), higher fringe benefit expenses (approximately $200 thousand), increased incentive based compensation expenses which vary with the earnings of the Company (approximately $100 thousand), higher depreciation expenses (approximately $80 thousand) and general inflation, partially offset by lower legal and audit expenses (approximately $325 thousand). The decrease in SG&A as a percentage of sales reflects generally the leveraging of costs over the higher sales volume, as well as the absence of integration costs of the acquired hot box detector line and costs associated with new computer systems implementations incurred during 1995. For the six month period ended June 30, 1996, SG&A increased 9.7% over last year but similarly decreased as a percentage of sales to 16.4% in 1996 from 18.6% in 1995. The increased SG&A expenses for the six months was again primarily due to higher selling -6- expenses (approximately $335 thousand), higher incentive based compensation (approximately $275 thousand), higher depreciation (approximately $200 thousand) and general inflation, partially offset by decreased legal and audit expenses (approximately $400 thousand). The decrease in SG&A as a percentage of sales for the first six months of 1996 reflects the same reasons noted above. Orders for the Company's products and services increased from $35.2 million in 1995 to $36.2 million in 1996 for the second quarter and increased slightly from $70.9 million in 1995 to $71.1 in 1996 for the six months ended June 30. The second quarter increase reflects growth in train control systems, asset management services and signal hardware products offset partially by decreased carborne equipment and printed circuit board orders. The slight increase in orders for the first six months of 1996 compared to 1995 reflects strong growth in the freight rail market for control systems, asset management services and signal hardware products offset by decreased orders for train control systems from the rail transit market and decreased orders for carborne equipment from freight rail customers and printed wiring boards. The order backlog at June 30, 1996 was $34.7 million, down from $49.1 million at December 31, 1995 and $55.0 million one year ago. The backlog decrease reflects the high shipment levels and comparison to backlogs containing a large rail transit project order which was substantially completed by the first quarter of 1996. Interest expense increased from $190 thousand to $234 thousand for the three months ended June 30, 1996 compared to the same period last year. Year to date interest expense through June 30, 1996 also increased to $489 thousand from $337 thousand in 1995. Increased average outstanding interest bearing debt and higher interest rates when compared to last year account for the increased interest expense. The effective tax rate decreased from 39.5% in 1995 to 39.0% in 1996 for the three months and decreased from 40.1% in 1995 to 38.5% in 1996 for the six months ended June 30, 1996. This decrease reflects a combination of lower non- deductible expenses and lower state income taxes in 1996. The Company's liquidity and capital resources remain strong. The Company has approximately $9 million available under existing bank lines of credit at the end of the second quarter of 1996, up from approximately $6 million at December 31, 1995 but down from approximately $13 million one year ago. Positive cash was generated through collection of account receivables and a significant reduction in contracts in progress. -7- PART II. OTHER INFORMATION ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K No Form 8-K was required to be filed during the most recent quarter. EXHIBIT TABLE REFERENCE # PAGE # Computation of earnings per share A 10 - 11 -8- 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. HARMON INDUSTRIES, INC. Date: August 9, 1996 /s/Bjorn E. Olsson -------------------------------- Bjorn E. Olsson, President Date: August 9, 1996 /s/Charles M. Foudree -------------------------------- Charles M. Foudree, Executive Vice President-Finance Date: August 9, 1996 /s/Stephen L. Schmitz -------------------------------- Stephen L. Schmitz, Vice President-Controller -9- HARMON INDUSTRIES, INC. EXHIBIT A FORM 10-Q --------- JUNE 30, 1996 COMPUTATION OF EARNINGS PER SHARE (INSTRUCTION H(g)) Computation of the average number of shares of Common Stock outstanding for the three months ended June 30, 1996 and 1995.
(1) (2) (3) (4) Average number of shares outstanding as shown on consolidated statements of operations (3) divided by Shares of Number of days Share days number of common stock outstanding (2 x 1) days in period ------------ -------------- ------------ -------------- 1996 April 1 - June 30 6,805,626 91 619,311,966 Equivalent shares under the Company's option plans 34,838 91 3,170,258 ------------ 622,482,224 6,840,464 ------------ -------------- ------------ -------------- 1995 April 1 - June 30 6,766,211 91 615,725,201 Equivalent shares under the Company's bonus plan 1,144 91 104,119 Options exercised 9,350 86 804,100 1,800 65 117,000 9,500 63 598,500 2,000 44 88,000 2,000 39 78,000 1,000 38 38,000 2,000 37 74,000 1,600 30 48,000 2,000 30 60,000 Shares issued under the 1994 bonus plan 4,950 51 252,450 Equivalent shares under the Company's option plans 32,580 91 2,964,780 ------------ 620,952,150 6,823,650 ------------ -------------- ------------ --------------
-10- Computation of the average number of shares of Common Stock outstanding for the six months ended June 30, 1996 and 1995. 1996 Quarter 1 weighted average 6,828,883 Quarter 2 weighted average 6,840,464 ------------ Divided by 13,669,347 2 quarters = 6,834,674 ---------- ---------- 1995 Quarter 1 weighted average 6,814,783 Quarter 2 weighted average 6,823,650 ------------ Divided by 13,638,433 2 quarters = 6,819,217 ---------- ---------- -11- EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFO EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF HARMON INDUSTRIES INC. AT JUNE 30, 1996 AND FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 353 0 22,310 (307) 26,697 52,596 40,481 (24,710) 83,571 20,729 6,083 0 0 1,702 51,753 83,571 77,509 77,509 56,549 56,549 0 0 489 7,701 2,968 4,733 0 0 0 4,733 0.69 0.69
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