-----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, YPj+bz5sABO9ulW4nuZv0B5mxL08MHkT2Rr9gGZ9sU+166FZf7tOOTGZXID6sDDi 3CqCtWi8veSnYoNgOISwYw== 0000058091-94-000005.txt : 19940812 0000058091-94-000005.hdr.sgml : 19940812 ACCESSION NUMBER: 0000058091-94-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAWTER INTERNATIONAL INC CENTRAL INDEX KEY: 0000058091 STANDARD INDUSTRIAL CLASSIFICATION: 2890 IRS NUMBER: 361370818 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07558 FILM NUMBER: 94541851 BUSINESS ADDRESS: STREET 1: 990 SKOKIE BLVD CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7084984700 FORMER COMPANY: FORMER CONFORMED NAME: LAWTER CHEMICALS INC DATE OF NAME CHANGE: 19810602 FORMER COMPANY: FORMER CONFORMED NAME: KRUMBHAAR CHEMICALS INC DATE OF NAME CHANGE: 19701117 10-Q 1 JUNE 30,1994 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 quarterly period ended June 30, 1994 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: 1-7558 LAWTER INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 36-1370818 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 990 Skokie Boulevard; Northbrook, Illinois 60062 (Address of principal executive offices) (708) 498-4700 (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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock $1.00 par value per share - 44,903,179 shares outstanding as of July 29, 1994. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. The condensed financial statements included herein have been prepared by the Company, without audit, 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 disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of the Company, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position of Lawter International, Inc. and Subsidiaries as of June 30, 1994 and December 31, 1993 and the results of their operations for the three months ended June 30, 1994 and 1993, and the six months ended June 30, 1994 and 1993, and the statements of cash flows for the six months ended June 30, 1994 and 1993, have been included. It should be noted that these interim statements are based on certain annual estimates such as the final level of LIFO inventories and the provision for income taxes. These and other similar items may be subject to year end adjustments. The results of operations for such interim periods are not necessarily indicative of the results for the full year. Lawter International, Inc. and Subsidiaries Condensed Statements of Earnings (Shown in thousands) Three Months Ended Six Months Ended June 30 June 30 ------------------- ------------------- 1994 1993 1994 1993 -------- -------- -------- -------- Net Sales $ 44,415 $ 42,080 $ 87,029 $ 84,150 Cost of Products Sold 30,744 29,241 60,485 58,012 -------- -------- -------- -------- $ 13,671 $ 12,839 $ 26,544 $ 26,138 Selling, General and Administrative Expenses 5,319 3,586 9,795 7,861 -------- -------- -------- -------- $ 8,352 $ 9,253 $ 16,749 $ 18,277 Investment Income 1,132 1,131 1,835 2,241 -------- -------- -------- -------- Earnings before Income Taxes and Cumulative Effect of Accounting Change $ 9,484 $ 10,384 $ 18,584 $ 20,518 Provision for Income Taxes 2,459 2,719 4,834 5,253 -------- -------- -------- -------- Earnings before Cumulative Effect of Accounting Change $ 7,025 $ 7,665 $ 13,750 $ 15,265 Cumulative Effect of Change in Accounting for Income Taxes (Note 3) --- --- --- 4,025 -------- -------- -------- -------- Net Earnings $ 7,025 $ 7,665 $ 13,750 $ 19,290 ======== ======== ======== ======== Earnings per Share of Common Stock: (Note 2) Earnings before Cumulative Effect of Accounting Change $ .16 $ .17 $ .31 $ .34 Cumulative Effect of Change in Accounting for Income Taxes (Note 3) --- --- --- .09 -------- -------- -------- -------- Net Earnings $ .16 $ .17 $ .31 $ .43 ======== ======== ======== ======== Dividends per Share of Common Stock $ .10 $ .10 $ .20 $ .20 Weighted Average Shares Outstanding 44,858 44,771 44,839 44,473
The accompanying notes to the condensed financial statements are an integral part of these statements. -2- Lawter International, Inc. and Subsidiaries Condensed Balance Sheets (Shown in thousands) June 30 December 31 -------- ----------- Assets 1994 1993 - - -------- -------- -------- Current Assets Cash $ 5,570 $ 6,701 Time Deposits 63,744 70,787 Marketable Securities 7,692 5,591 Accounts Receivable (net) 40,525 31,317 Inventories (Note 1) Raw Materials 12,220 11,151 Finished Goods 21,513 15,102 Prepaid Expenses 2,600 1,662 -------- -------- Total Current Assets $153,864 $142,311 -------- -------- Property, Plant and Equipment $ 97,591 $ 87,856 Less Accumulated Depreciation (48,799) (43,661) -------- -------- Net Property $ 48,792 $ 44,195 -------- -------- Investment in Affiliates $ 18,998 $ 18,077 -------- -------- Intangibles and Other Assets $ 9,207 $ 4,894 -------- -------- Total Assets $230,861 $209,477 ======== ======== Liabilities and Stockholders' Equity - - ------------------------------------ Current Liabilities Accounts Payable and Accrued Expenses $ 28,560 $ 29,822 Short-Term Borrowings 33,358 20,044 Income Taxes Payable 9,538 8,196 -------- -------- Total Current Liabilities $ 71,456 $ 58,062 -------- -------- Deferred Income Taxes $ 36,478 $ 36,458 -------- -------- Long-Term Obligations $ 4,204 $ 4,206 -------- -------- Total Liabilities $112,138 $ 98,726 -------- -------- Stockholders' Equity Preferred Stock (None Issued) $ --- $ --- Common Stock 44,881 44,811 Additional Paid-in Capital 6,666 6,260 Retained Earnings 74,256 69,475 Cumulative Translation Adjustments (5,315) (6,456) Other (1,765) (3,339) -------- -------- Net Stockholders' Equity $118,723 $110,751 -------- -------- Total Liabilities and Equity $230,861 $209,477 ======== ======== The accompanying notes to the condensed financial statements are an integral part of these balance sheets. -3- Lawter International, Inc. and Subsidiaries Condensed Statements of Cash Flows (Shown in thousands) Six Months Ended June 30 --------------------------- 1994 1993 -------- -------- Cash Flow from Operating Activities: Net Earnings $ 13,750 $ 19,290 Adjustments to Reconcile Net Earnings to Net Cash Provided/(Used) by Operating Activities- Depreciation and Amortization 1,905 2,117 Deferred Income Taxes --- (3,937) Undistributed Equity Income (921) (906) Deferred Exchange Gain (Loss) (311) (1,039) Purchase of Marketable Securities (2,298) (5,528) Proceeds from Sales of Marketable Securities --- 3,802 Net (Gain)/Loss from Marketable Securities 198 (350) (Increase) Decrease in Current Assets- Accounts Receivable (4,657) (3,055) Inventories (5,335) (578) Prepaid Expenses (473) (127) Increase (Decrease) in Current Liabilities- Accounts Payable and Accrued Expenses (4,774) 77 Income Taxes Payable 1,335 2,427 Deferred Income Taxes --- (1,531) -------- -------- Net Cash Provided/(Used) by Operating Activities $ (1,581) $ 10,662 -------- -------- Cash Flow from Investing Activities: Expenditures for Property, Plant & Equipment - Net $ (5,019) $ (6,203) Loans to Officers (58) (377) Repayment of Officers' Loans 1,633 37 Purchase of Business-Net of Cash (6,344) --- -------- -------- Net Cash Provided/(Used) by Investing Activities $ (9,788) $ (6,543) -------- -------- Cash Flow from Financing Activities: Exercise of Stock Options $ 476 $ 896 Proceeds from Short-Term Borrowings 11,479 --- Payment of Short-Term Borrowings --- (8,013) Cash Dividends Paid (8,969) (8,948) -------- -------- Net Cash Provided/(Used) by Financing Activities $ 2,986 $(16,065) -------- -------- Effect of Exchange Rate Changes on Cash $ 209 $ (164) -------- -------- Increase (Decrease) in Cash and Equivalents $ (8,174) $(12,110) Cash and Equivalents, Beginning of Period 77,488 72,903 -------- -------- Cash and Equivalents, End of Period $ 69,314 $ 60,793 ======== ======== The accompanying notes to the condensed financial statements are an integral part of these statements. -4- Lawter International, Inc. and Subsidiaries Notes to the Condensed Financial Statements Note 1. Inventories At year end, the Company takes a complete physical inventory to determine inventory values. During interim periods, the Company uses a combination of perpetual inventory records, physical inventories and the gross profit method to determine inventory values. The Company values the majority of its domestic inventories at last-in, first- out (LIFO) cost which is not in excess of net realizable value. The Company's other inventories are valued at the lower of first-in, first-out (FIFO) cost or market. Because the inventory determination under the LIFO method can only be made at the end of each fiscal year based on the inventory levels and costs at that point, interim LIFO determinations, including that at June 30, 1994, must necessarily be based on management's estimates of expected year end inventory levels and costs. Such future estimates of inventory levels and prices are subject to many forces beyond the control of management. Note 2. Earnings per Share Earnings per share of common stock are computed on the weighted average shares outstanding during the respective periods. Net earnings per share would not be materially different from reported earnings per share if all outstanding stock options were exercised. Note 3. Change in Accounting Principle Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The adoption of SFAS No. 109 changed the Company's method of accounting for income taxes from the deferred method to the asset and liability method. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Liquidity and Capital Resources Lawter's cash and equivalents, net of short-term borrowings, decreased $21,400,000 from $57,400,000 at December 31, 1993 to $36,000,000 at June 30, 1994. The decrease in cash and equivalents was due primarily to the purchase of Cremona Resine, an increase in other working capital and expenditures for the new U.S. resin facility. Lawter anticipates maintaining a strong liquid position. The capital expenditures planned for the near future include construction of a new synthetic resin and printing ink vehicle facility in Europe, as well as additions to and modernization of existing facilities elsewhere. The Company currently anticipates using internally generated funds for the majority of these capital expenditures. -5- Results of Operations SALES. The Company's consolidated net sales increased 5.5% in the second quarter of 1994 when compared to the second quarter of 1993. Domestic sales volume increased 7% while average selling prices decreased 2%, resulting in a 5% increase in domestic net sales. Reportable European net sales increased 2% as a result of a 6% increase in sales volume, partially offset by a 3% decrease in average exchange rates while average selling prices remained constant. Consolidated net sales for the first six months of 1994 increased 3.4% over consolidated net sales for the first six months of 1993. Domestic sales volume increased 4% while average selling prices decreased 1%, resulting in a 3% increase in domestic net sales. While European sales volume increased 6%, net reportable European sales remained constant as the result of a 4% decrease in average exchange rates and a 2% decrease in average selling prices. GROSS MARGINS. Gross margins as a percent of net sales were comparable at 30.8% and 30.5% for the quarters ended June 30, 1994 and 1993, respectively, and 30.5% and 31.1% for the six months ended June 30, 1994 and 1993, respectively. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses include net foreign transaction exchange gains/(losses) of $(304,000) and $108,000 for the three months ended June 30, 1994 and 1993, respectively, and $23,000 and $574,000 for the six months ended June 30, 1994 and 1993, respectively. Transaction gains and losses result mainly from the effect of the exchange rate fluctuations on transactions of the foreign subsidiaries which are denominated in currencies other than the subsidiaries' functional currencies. Excluding these net transaction gains/(losses), selling, general and administrative expenses as a percent of sales were 11.4% and 11.3% for the three months and six months ended June 30, 1994, respectively, and 8.8% and 10.0% for the three months and six months ended June 30, 1993, respectively. The lower percentages in both periods of 1993 were due primarily to an $840,000 gain on the sale of two properties due to the consolidation of U.S. manufacturing facilities. INVESTMENT INCOME. Investment income in the first six months of 1994 decreased from the same period in 1993 due primarily to $350,000 in gains on the sale of marketable securities in 1993 versus a $198,000 write down of marketable securities to the lower of cost or market in 1994. INCOME TAXES. The effective tax rates were 25.9% and 26.2% for the three months ended June 30, 1994 and 1993, respectively. The slightly lower effective tax rate was principally the result of higher taxes on the disposition of U.S. property in 1993. For the six months ended June 30, 1994 and 1993, the effective tax rates were 26.0% and 25.6%, respectively. The higher effective tax rate in 1994 was primarily the result of the increase in the U.S. federal statutory tax rate from 34% to 35% which was changed in the third quarter of 1993, partially offset by the higher taxes on the disposition of U.S. property in 1993. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The adoption of SFAS No. 109 changed the Company's method of accounting for income taxes from the deferred method to the asset and liability method. -6- PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION On June 30, 1994, the Registrant issued a press release announcing the acquisition of Cremona Resine SpA, attached hereto as Exhibit A. On July 18, 1994, the Registrant issued a press release regarding an explosion/fire at its new resin manufacturing plant located in Pleasant Prairie, Wisconsin, attached hereto as Exhibit B. ITEM 6. EXHIBITS Exhibit A - Press release dated June 30, 1994. Exhibit B - Press release dated July 18, 1994. 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. LAWTER INTERNATIONAL, INC. -------------------------- (Registrant) August 5, 1994 /s/ Richard D. Nordman - - -------------- -------------------------- Richard D. Nordman President August 5, 1994 /s/ William S. Russell - - -------------- -------------------------- William S. Russell Vice President, Finance and Secretary -7- EX-99 2 JUNE 30, 1994 PRESS RELEASE Exhibit - A LAWTER INTERNATIONAL, INC. 990 Skokie Blvd., Northbrook, IL 60062 (708) 498-4700 FOR IMMEDIATE RELEASE - - --------------------- (For further information, please contact Mr. Richard D. Nordman, President) LAWTER INTERNATIONAL, INC. ACQUIRES CREMONA RESINE SpA Northbrook, Illinois -- June 30, 1994 -- Lawter International, Inc. today announced that the Company has acquired Cremona Resine SpA for an undisclosed amount. Cremona Resine SpA, headquartered in Cremona, Italy, is engaged in the manufacture and sale of specialty chemicals, predominantly synthetic resins for publication gravure inks to the graphic arts industry. Lawter International, Inc., a specialty chemical company, with 24 facilities in 15 countries throughout the world is a major manufacturer and distributor of printing ink vehicles, ink additives, synthetic resins, fluorescent colors and themographic products to the graphic arts and other industries. Lawter management believes that this acquisition provides the Company with new technology and new markets. EX-99 3 JULY 18,1994 PRESS RELEASE Exhibit - B LAWTER INTERNATIONAL, INC. 990 Skokie Blvd., Northbrook, IL 60062 (708) 498-4700 FOR IMMEDIATE RELEASE - - --------------------- (For further information, please contact Mr. Richard D. Nordman, President) Northbrook, Illinois -- July 18, 1994 -- Lawter International, Inc., headquartered in Northbrook, Illinois, stated that a portion of its new resin manufacturing plant located in Pleasant Prairie, Wisconsin, experienced an explosion/fire late Friday afternoon. There were no major injuries. Two people were taken to a local hospital. Both were released the same afternoon. The fire was contained in the warehouse storage area, where it originally occurred. The affected plant has been producing a group of new widely accepted products. Delivery of these new promising products will now be delayed until the affected plant is restored to full operating status which should be achieved in two to three months. Research and development activities of new products will continue as usual. The adjacent ink vehicle and additives plant was not affected and is operating without interruption. -----END PRIVACY-ENHANCED MESSAGE-----