-----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, W0icTeHcFIvMbN6JT1mHXlL3Mem/PhLyfdulp6ML/trU++coKlj4b12uX/8BSzKj Lp/1EVP3IjDg8+PSIOGmvA== 0000912057-94-001323.txt : 19940414 0000912057-94-001323.hdr.sgml : 19940414 ACCESSION NUMBER: 0000912057-94-001323 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940226 FILED AS OF DATE: 19940412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILLENBRAND INDUSTRIES INC CENTRAL INDEX KEY: 0000047518 STANDARD INDUSTRIAL CLASSIFICATION: 3990 IRS NUMBER: 351160484 STATE OF INCORPORATION: IN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06651 FILM NUMBER: 94522344 BUSINESS ADDRESS: STREET 1: 1069 STATE ROUTE 46E CITY: BATESVILLE STATE: IN ZIP: 47006-9166 BUSINESS PHONE: 8129347000 10-Q 1 10-Q - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED FEBRUARY 26, 1994 COMMISSION FILE NO. 1-6651 HILLENBRAND INDUSTRIES, INC. (Exact name of registrant as specified in its charter) INDIANA 35-1160484 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 700 STATE ROUTE 46 EAST BATESVILLE, INDIANA 47006-8835 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (812) 934-7000 NOT APPLICABLE (Former name, former address and former fiscal year, if changes 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 ------- ------ INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. Common Stock, without par value - 71,426,161 as of March 31, 1994. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1 HILLENBRAND INDUSTRIES, INC. INDEX TO FORM 10-Q Page ---- PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheet, Exhibit 1 2/26/94 and 11/27/93 Consolidated Income for the Three Months Exhibit 1 Ended 2/26/94 and 2/27/93 Consolidated Cash Flows for the Three Months Exhibit 1 Ended 2/26/94 and 2/27/93 Supplementary Financial Information 3-4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 4-7 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports of Form 8-K 7 SIGNATURES 8 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following unaudited, condensed consolidated financial statements appear in Exhibit 1 to this quarterly report on Form 10-Q which financial statements are attached hereto and incorporated herein by reference: Consolidated Balance Sheet, 2/26/94 and 11/27/93 Consolidated Income for the Three Months Ended 2/26/94 and 2/27/93 Consolidated Cash Flows for the Three Months Ended 2/26/94 and 2/27/93 The unaudited, condensed consolidated financial statements appearing in Exhibit 1 to this quarterly report on Form 10-Q, which are incorporated herein by reference, should be read in conjunction with the financial statements and notes thereto included in the Company's latest annual report. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The statements herein have been prepared in accordance with the Company's understanding of the instructions to Form 10-Q. In the opinion of management, such financial statements include all adjustments necessary to present fairly the financial position, results of operations, and cash flows, for the interim periods. Filed as part of this report: Supplementary Balance Sheet Information (Pertaining to non-insurance assets and consolidated shareholders' equity)
(Dollars in Thousands) ---------------------- 2/26/94 11/27/93 ------- -------- Allowance for possible losses and discounts on trade receivables.......... $ 10,340 $ 11,271 Accumulated depreciation of equipment leased to others and property........... 482,421 460,443 Accumulated amortization of intangible assets.................................. 120,244 119,258
3
2/26/94 11/27/93 ------- -------- Capital Stock: Preferred stock, without par value: Authorized 1,000,000 shares; Shares issued........................ None None Common stock, without par value: Authorized 199,000,000 shares; Shares issued...................... 80,323,912 80,323,912
Supplementary Income Statement Information Earnings per common share were computed by dividing net income by the average number of common shares, including restricted shares issued to employees, outstanding during each period (71,378,272 for the three months of 1994 and 71,567,480 for the three months of 1993). Under a program begun in 1983, the Company has acquired to date 10,228,272 shares of common stock of which 1,479,621 shares have been reissued for general corporate purposes. The remaining treasury stock has been excluded in determining the average number of shares outstanding during each period. Common share equivalents arising from shares awarded under the Senior Executive Compensation Program which was initiated in fiscal year 1978 have also been excluded from the computation because of their insignificant dilutive effect. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION FIRST QUARTER 1994 COMPARED TO YEAR END 1993 LIQUIDITY: Net cash generated from operating activities and selected borrowings represent the Company's primary sources of funds for growth of the business, including capital expenditures and acquisitions. Cash and cash equivalents (excluding investments of the insurance operation) grew from $210.2 million at the end of fiscal 1993 to $282.2 million at the end of the first quarter of 1994, an increase of $72.0 million. 4 Net cash flow from operating activities in the first quarter of $47.6 million was $22.1 million higher than in the first quarter of 1993 due to improved earnings and a smaller increase in net working capital. Excluding working capital acquired, accounts receivable declined $9.6 million in the first quarter compared to a $2.4 million increase in 1993. Inventories increased $2.0 million in 1994 versus $6.7 million in 1993. These items were partially offset by a decrease in accrued expenses. The decline in accounts receivable (excluding acquisitions) from year-end was due to lower sales at Hill-Rom, partially offset by higher revenues at SSI. Days sales outstanding (including the effect of acquisitions) was 68 at the end of the first quarter compared with 70 at year-end. Annualized inventory turns on revenues was 12.8 at quarter-end, down from 14.7 at year-end due to inventories relative to acquisitions occurring near the end of the quarter. Accounts payable and accrued expenses were below year-end levels due to incentive compensation payments throughout the Company and lower shipments and production at Hill-Rom in the first quarter, partially offset by liabilities assumed in acquisitions. Capital spending of $20.5 million was $2.8 million lower than in the first quarter of 1993 due primarily to the production of fewer therapy units at SSI. Acquisition payments of $45.5 million in the first quarter consisted primarily of the purchase of L. & C. Arnold AG, a German manufacturer of hospital and nursing home beds. In addition, Batesville Casket acquired Industrias Arga, S.A. de C.V., a Mexican casket manufacturer and distributor, and Lincoln Casket Company, a casket distributor based in Detroit, Michigan. Forethought generates adequate cash to fund all statutory reserves. CAPITAL RESOURCES: On February 23, 1994, the Company issued $100.0 million of its 7% Debentures due February 15, 2024, the proceeds of which are to be used for general corporate purposes. This brought the long-term debt-to-equity ratio up to 31.1% at the end of the first quarter compared with 16.9% at the end of 1993. The Company intends to prepay without penalty a $75.0 million unsecured promissory note (classified as current debt) in the second quarter of this year. Additional debt capacity affords the Company considerable flexibility in the funding of internal and external growth. 5 RESULTS OF OPERATIONS FIRST QUARTER 1994 COMPARED TO FIRST QUARTER 1993 Net revenues of $377.4 million were up $29.0 million or 8.3%. In the Funeral Services segment, Batesville Casket's sales growth was driven by higher unit volume, sales of new products (including cremation products and services) and a moderate price increase. Earned premium revenue was higher at Forethought due to increased insurance in force. Investment income increased on the strength of a larger invested asset base, partially offset by lower yields. Revenue growth in the Health Care segment was generated by SSI which reported increased units in use across all product lines and market segments. Hill-Rom's sales were negatively impacted by lower volume in Europe due to continued recessionary pressures within the European Community. Sales at Block Medical were down compared with an unusually strong first quarter last year. Medeco Security Lock's sales were essentially unchanged from last year as higher export sales were offset by lower activity in the northeast due to unfavorable weather conditions. Gross profit of $178.2 million was up $11.8 million or 7.1%. Batesville Casket's profitability was favorably affected by increased sales of higher margin products, control of fixed costs and improved operating efficiencies. While gross profit grew at Forethought, it did not match the growth in revenues due to unfavorable claim experience. The increase in gross profit in the Health Care segment was consistent with revenue growth. Administrative, distribution and selling expenses (including unassigned corporate overhead) increased $5.4 million, or 5.0%, from the first quarter of 1993. As a percentage of revenues, these expenses declined to 30.0% from 30.9% due to increasing revenues without a proportional increase in fixed expenses. Additionally, depreciation expense relative to the SSI acquisition continues to decline. Interest expense was 13.4% lower than in the first quarter of 1993 due to a decrease in debt associated with the acquisition of LeCouviour. Other income, net, consisting of investment income and miscellaneous income and expense, was $1.0 million lower than in 1993. Investment income was up due to higher average levels of interest-earning assets, partially offset by lower yields. This was offset by unfavorable foreign currency transaction adjustments and lower death benefits associated with the Company's corporate-owned life insurance program. The Company's effective income tax rate was 38.2% in the first quarter of 1994 compared with 38.0% in the same period last year. An increase in the Federal statutory rate was mostly offset by a decrease in the state effective rate. 6 Results for the remainder of the year will be affected by the death rate (Batesville Casket) and the demand for capital goods by Hill-Rom's customers. Management is cautiously optimistic about the prospects for continued growth. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits The unaudited, condensed consolidated financial statements for the first quarter ended February 26, 1994 are attached hereto as Exhibit 1. B. Reports on Form 8-K There were no reports filed on Form 8-K during the first quarter ended February 26, 1994. 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HILLENBRAND INDUSTRIES, INC. DATE: April 11, 1994 BY: /S/ Tom E. Brewer ------------------------------ Tom E. Brewer Senior Vice President and Chief Financial Officer DATE: April 11, 1994 BY: /S/ James D. Van De Velde -------------------------------- James D. Van De Velde Vice President - Controller 8 HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT I FINANCIAL STATEMENTS (Unaudited) Consolidated Cash Flows
(In Thousands) Three Months Ended 02/26/94 02/27/93 Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . .$ 37,691 $ 33,559 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization . . . . . . . . . 23,298 23,704 Change in noncurrent deferred income taxes . . . . . . . . . . . . . . . . . (4,312) (3,548) Change in net working capital excluding cash, current debt and acquisitions . . . . . . . . . . . . . . . (13,442) (31,784) Change in insurance items: Benefit reserves . . . . . . . . . . . . . . . 42,614 37,128 Unearned revenue . . . . . . . . . . . . . . . 17,250 16,358 Deferred acquisition costs . . . . . . . . . . (12,712) (9,740) Investments, net . . . . . . . . . . . . . . . (36,621) (39,864) Other, net . . . . . . . . . . . . . . . . . . . (6,205) (386) ------- ------- Net cash flows from operating activities . . . . . . . . . . . . . . . . . . . . 47,561 25,427 ------- ------- Cash flows from investing activities: Capital expenditures, net . . . . . . . . . . . . (20,451) (23,284) Acquisition of businesses. . . . . . . . . . . . . (45,531) - ------- ------- Net cash flows from investing activities . . . . . . . . . . . . . . . . . . . . (65,982) (23,284) ------- ------- Cash flows from financing activities: Additions to debt, net . . . . . . . . . . . . . . 101,278 40 Payment of cash dividends . . . . . . . . . . . . (10,191) (8,049) Treasury stock acquisitions. . . . . . . . . . . . (637) (2,415) Other . . . . . . . . . . . . . . . . . . . . . . - 55 ------- ------- Net cash flows from financing activities . . . . . . . . . . . . . . . . . . . . 90,450 (10,369) ------- ------- Total cash flows . . . . . . . . . . . . . . . . . . 72,029 (8,226) Cash and cash equivalents: At beginning of period . . . . . . . . . . . . . . 210,157 149,989 ------- ------- At end of period . . . . . . . . . . . . . . . . . 282,186 141,763 ------- ------- ------- -------
Consolidated Income
(In Thousands Except Per Share Data) Three Months Ended 02/26/94 02/27/93 Net revenues . . . . . . . . . . . . . . . . . . . $377,406 $348,432 Cost of revenues . . . . . . . . . . . . . . . . . 199,222 182,006 Administrative, dist. and selling expenses . . . . 113,092 107,658 -------- ------- Operating profit . . . . . . . . . . . . . . . . . 65,092 58,768 Interest expense . . . . . . . . . . . . . . . . . (4,870) (5,621) Other income, net . . . . . . . . . . . . . . . . . 766 1,815 -------- ------- Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . 60,988 54,962 Income taxes . . . . . . . . . . . . . . . . . . . 23,297 20,889 -------- ------- Income from continuing operations . . . . . . . . . 37,691 34,073 Loss from discontinued operations net of income taxes . . . . . . . . . . . . . . . . . . . - (514) -------- ------- Net income . . . . . . . . . . . . . . . . . . . . 37,691 33,559 -------- ------- -------- ------- Earnings/common share: Income from continuing operations . . . . . . . . . .53 .48 Loss from discontinued operations net of income taxes . . . . . . . . . . . . . . . . . . - (.01) -------- ------- Net income/common share . . . . . . . . . . . . . . .53 .47 -------- ------- -------- ------- Dividends/common share . . . . . . . . . . . . . . .1425 .1125 -------- ------- -------- -------
Consolidated Balance Sheet
ASSETS (In Thousands) 02/26/94 11/27/93 Current assets: Cash and cash equivalents. . . . . . . . . . . .$ 282,186 $ 210,157 Trade receivables. . . . . . . . . . . . . . . . 255,847 253,818 Inventories. . . . . . . . . . . . . . . . . . . 107,006 90,900 Other. . . . . . . . . . . . . . . . . . . . . . 18,343 19,151 ---------- ---------- Total current assets. . . . . . . . . . . . . . 663,382 574,026 Equipment leased to others, net. . . . . . . . . . 59,246 58,405 Property, net. . . . . . . . . . . . . . . . . . . 283,902 268,383 Other assets: Intangible assets, net . . . . . . . . . . . . . 178,032 138,384 Other assets . . . . . . . . . . . . . . . . . . 20,344 19,116 ---------- ---------- Total other assets. . . . . . . . . . . . . . . 198,376 157,500 Insurance assets: Investments. . . . . . . . . . . . . . . . . . . 982,183 934,029 Deferred acquisition costs . . . . . . . . . . . 230,515 217,803 Deferred income taxes. . . . . . . . . . . . . . 35,884 33,649 Other. . . . . . . . . . . . . . . . . . . . . . 26,613 26,952 ---------- ---------- Total insurance assets. . . . . . . . . . . . . 1,275,195 1,212,433 ---------- ---------- Total assets . . . . . . . . . . . . . . . . . . .$2,480,101 $2,270,747 ---------- ---------- ---------- ---------- LIABILITIES (In Thousands) 02/26/94 11/27/93 Current liabilities: Short-term debt. . . . . . . . . . . . . . . . .$ 18,736 $ 12,708 Current portion of long-term debt. . . . . . . . 76,285 77,318 Trade accounts payable . . . . . . . . . . . . . 39,392 47,768 Accrued expenses . . . . . . . . . . . . . . . . 151,151 152,234 ---------- ---------- Total current liabilities . . . . . . . . . . . 285,564 290,028 Long-term debt . . . . . . . . . . . . . . . . . . 210,971 107,887 Other long-term liabilities. . . . . . . . . . . . 92,673 72,780 Deferred income taxes. . . . . . . . . . . . . . . 18,556 20,633 Insurance liabilities: Benefit reserves . . . . . . . . . . . . . . . . 870,429 827,815 Unearned revenue . . . . . . . . . . . . . . . . 309,836 292,586 General liabilities. . . . . . . . . . . . . . . 12,760 19,086 ---------- ---------- Total insurance liabilities . . . . . . . . . . 1,193,025 1,139,487 ---------- ---------- Total liabilities. . . . . . . . . . . . . . . . . 1,800,789 1,630,815 ---------- ---------- SHAREHOLDERS' EQUITY Common stock . . . . . . . . . . . . . . . . . . 4,442 4,442 Additional paid-in capital . . . . . . . . . . . 11,555 3,900 Retained earnings. . . . . . . . . . . . . . . . 807,423 779,923 Foreign currency translation adjustment. . . . . (1,431) (1,643) Treasury stock . . . . . . . . . . . . . . . . . (142,677) (146,690) ---------- ---------- Total shareholders' equity. . . . . . . . . . . 679,312 639,932 ---------- ---------- Total liabilities and shareholders' equity. . . . . . . . . . . . . . .$2,480,101 $2,270,747 ---------- ---------- ---------- ----------
-----END PRIVACY-ENHANCED MESSAGE-----