-----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, LptczN6CLOTBHaefg+D2qMtappf0IQacB12yC82YMyCvpdoCQQiSaJBASaYq2PfW 3BndK74FyHHA0XdOHeAIKg== 0000062418-94-000008.txt : 19940707 0000062418-94-000008.hdr.sgml : 19940707 ACCESSION NUMBER: 0000062418-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940531 FILED AS OF DATE: 19940706 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK IV INDUSTRIES INC CENTRAL INDEX KEY: 0000062418 STANDARD INDUSTRIAL CLASSIFICATION: 3823 IRS NUMBER: 231733979 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08862 FILM NUMBER: 94537854 BUSINESS ADDRESS: STREET 1: 501 JOHN JAMES AUDUBON PKWY STREET 2: P O BOX 810 CITY: AMHERST STATE: NY ZIP: 14226 BUSINESS PHONE: 7166894972 FORMER COMPANY: FORMER CONFORMED NAME: MARK FOUR HOMES INC DATE OF NAME CHANGE: 19770921 10-Q 1 FORM 10-Q FOR PERIOD ENDED 05/31/94 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended May 31, 1994 - ---------------------------------------------------------------------------- Commission File Number 1-8862 - ---------------------------------------------------------------------------- MARK IV INDUSTRIES, INC. - ---------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 23-1733979 - --------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 501 John James Audubon Parkway, P.O. Box 810, Amherst, New York 14226-0810 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (716) 689-4972 - --------------------------------------------------------------------------- (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 --- --- Indicate the number of shares outstanding of each of the issuer's class of common stock as of the latest practicable date. Class Outstanding at July 1, 1994 ----- --------------------------- Common stock $.01 par value 42,748,334 2 MARK IV INDUSTRIES, INC. INDEX ----- Part I. Financial Information Page No. - ------------------------------ -------- Consolidated Condensed Balance Sheets as of May 31, 1994 and February 28, 1994 3 Consolidated Statements of Income and Retained Earnings For the Three Month Periods Ended May 31, 1994 and 1993 4 Consolidated Statements of Cash Flows For the Three Month Periods Ended May 31, 1994 and 1993 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information - --------------------------- Item 6(a) Exhibits 9 Item 6(b) Reports on Form 8-K 9 Signature Page 10 Exhibit Index 11 Exhibit 11 - Statement Regarding Computation of Per Share Earnings 12 3 MARK IV INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) May 31, February 28, 1994 1994 ------- ----------- ASSETS (Unaudited) Current Assets: Cash $ 400 $ 500 Accounts receivable 316,900 275,100 Inventories 262,700 265,000 Other current assets 44,900 42,100 ---------- ---------- Total current assets 624,900 582,700 Pension related and other non-current assets 141,100 126,300 Property, plant and equipment, net 364,600 365,300 Cost in excess of net assets acquired and deferred charges 206,900 208,000 ---------- ---------- TOTAL ASSETS $1,337,500 $1,282,300 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Notes payable and current maturities of debt $ 51,600 $ 45,000 Accounts payable 110,700 99,700 Compensation related liabilities 43,000 43,100 Accrued interest 10,600 13,600 Accrued expenses and other liabilities 66,600 67,000 Income taxes payable 6,600 1,500 ---------- ---------- Total current liabilities 289,100 269,900 ---------- ---------- Long-Term Debt: Senior debt 215,000 195,000 Subordinated debentures 372,200 372,200 ---------- ---------- Total long-term debt 587,200 567,200 ---------- ---------- Other non-current liabilities 97,900 99,800 ---------- ---------- Stockholders' Equity: Common stock 400 400 Additional paid-in capital 262,200 261,500 Retained earnings 104,500 88,600 Foreign currency translation adjustment (3,800) (5,100) ---------- ---------- Total stockholders' equity 363,300 345,400 ---------- ---------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,337,500 $1,282,300 ========== ========== The accompanying notes are an integral part of these financial statements. 4 MARK IV INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED) For the Three Month Periods Ended May 31, 1994 and 1993 (Amounts in thousands, except per share data) 1994 1993 ---- ---- Net sales $363,800 $287,800 -------- -------- Operating costs: Cost of products sold 236,100 185,800 Selling and administration 67,800 53,500 Research and development 7,600 7,100 Depreciation and amortization 11,400 8,500 -------- -------- Total operating costs 322,900 254,900 -------- -------- Operating income 40,900 32,900 Interest expense, net 12,900 11,300 -------- -------- Income from continuing operations before provision for income taxes 28,000 21,600 Provision for income taxes 10,900 8,000 -------- -------- Income from continuing operations 17,100 13,600 Income from discontinued operations - - Extraordinary items - (21,700) Cumulative effect of accounting change - (26,000) -------- -------- Net income (loss) 17,100 (34,100) Retained earnings - beginning of the period 88,600 128,300 Cash dividends of $.0275 and $.024 per share (1,200) (1,000) -------- -------- Retained earnings - end of the period $104,500 $ 93,200 ======== ======== Net income per share of common stock: Primary: Income from continuing operations $ .40 $ .32 Income from discontinued operations - - Extraordinary items - (.51) Cumulative effect of accounting change - (.62) -------- -------- Net income (loss) $ .40 $ (.81) ======== ======== Fully-diluted: Income from continuing operations $ .36 $ .29 Income from discontinued operations - - Extraordinary items - (.43) Cumulative effect of accounting change - (.51) -------- -------- Net income (loss) $ .36 $ (.65) ======== ======== Weighted average number of shares outstanding: Primary 42,725 42,236 ======== ======== Fully-diluted 50,939 50,552 ======== ======== The accompanying notes are an integral part of these financial statements. 5 MARK IV INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Month Periods Ended May 31, 1994 and 1993 (Dollars in thousands) 1994 1993 ---- ---- Cash flows from operating activities: Income from continuing operations $ 17,100 $ 13,600 Items not affecting cash: Depreciation and amortization 11,400 8,500 Pensions and other (2,500) (2,700) -------- -------- Net cash provided by earnings 26,000 19,400 Changes in assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable (41,800) (20,600) Inventories 2,400 (8,300) Other assets (2,800) (8,000) Accounts payable 10,700 7,700 Other liabilities (800) (8,400) -------- -------- Net cash used in continuing operations (6,300) (18,200) Discontinued operations, before non-cash items - 1,100 Extraordinary items, before deferred charges - (30,100) -------- -------- Net cash used in operating activities (6,300) (47,200) -------- -------- Cash flows from investing activities: Acquisitions and divestitures, net (5,500) (1,500) Purchase of plant and equipment (8,500) (10,600) -------- -------- Net cash used in investing activities (14,000) (12,100) -------- -------- Cash flows from financing activities: Credit agreement borrowings, net 18,400 (20,000) Purchases of subordinated debt - (190,200) Issuance of subordinated debt - 258,000 Other changes in debt, net 2,900 11,900 Common stock transactions 300 300 Cash dividends paid (1,200) (1,000) -------- -------- Net cash provided by financing activities 20,400 59,000 -------- -------- Effect of exchange rate fluctuations (200) - Net decrease in cash (100) (300) Cash and cash equivalents: Beginning of the period 500 2,700 -------- -------- End of the period $ 400 $ 2,400 ======== ======== The accompanying notes are an integral part of these financial statements. 6 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of the Company's management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company at May 31, 1994, and the results of its operations and its cash flows for the three month periods ended May 31, 1994 and 1993. Such results are not necessarily indicative of the results to be expected for the full year. 2. Inventories consist of the following components (dollars in thousands): May 31, February 28, 1994 1994 ------- ---------- Raw materials, parts and sub-assemblies $ 78,100 $ 67,700 Work-in-process 45,900 43,500 Finished goods 141,300 157,100 -------- -------- 265,300 268,300 Less progress billings 2,600 3,300 -------- -------- Inventories $262,700 $265,000 ======== ======== Since physical inventories taken during the year do not necessarily coincide with the end of a quarter, management has estimated the composition of inventories with respect to raw materials, work-in- process and finished goods. It is management's opinion that this estimate represents a reasonable approximation of the inventory breakdown as of May 31, 1994. The amounts at February 28, 1994 are based upon the audited balance sheet at that date. 3. Property, plant and equipment is stated at cost and consists of the following components (dollars in thousands): May 31, February 28, 1994 1994 ------- ------------ Land and land improvements $ 35,700 $ 35,700 Buildings 116,600 115,700 Machinery and equipment 333,900 324,700 -------- -------- Total property, plant and equipment 486,200 476,100 Less accumulated depreciation 121,600 110,800 -------- -------- Property, plant and equipment, net $364,600 $365,300 ======== ======== 7 4. For purposes of cash flows, the Company considers overnight investments as cash equivalents. The Company paid interest of approximately $16,300,000 and $18,000,000 in the three month periods ended May 31, 1994 and 1993, respectively. Of such amounts, interest of approximately $400,000 and $700,000 was allocated to discontinued operations for the three month periods ended May 31, 1994 and 1993, respectively. The Company also paid income taxes of approximately $4,300,000 and $4,000,000 in the three month periods ended May 31, 1994 and 1993, respectively. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- Net cash provided by earnings from continuing operations was approximately $26,000,000 for the three month period ended May 31, 1994, an increase of approximately $6,600,000 (34%) over the three month period ended May 31, 1993. As of May 31, 1994, the Company had working capital of approximately $335,800,000, an increase of approximately $23,000,000 (7%) from February 28, 1994. The increase in working capital was primarily in the Company's Power and Fluid Transfer segment to support higher business levels. The Company has borrowing availability under its primary credit agreements of $193,200,000 and additional availability under its various domestic and foreign demand lines of credit of approximately $60,600,000 as of May 31, 1994. Current and long-term debt at May 31, 1994 increased approximately $26,600,000 from the total amount as of February 28, 1994. Such increase was caused primarily by the increased working capital requirements identified above. Despite this increase in debt in absolute terms, the Company's long-term debt as a percentage of total capitalization actually decreased slightly to 61.8% at May 31, 1994. It is anticipated that further debt reduction will be achieved through cash generated from operations and reduced working capital requirements. Management believes that cash generated from operations should be sufficient to support the Company's working capital requirements and anticipated capital expenditures for the foreseeable future. Results of Operations - --------------------- The Company classifies its operations in three core business segments: Power and Fluid Transfer, Transportation, and Professional Audio. The Company's current business strategy is focused upon the enhancement of its three core business segments through internal growth, cost control and quality improvement programs, and strategic acquisitions, with an emphasis on expanding the Company's international presence. 8 Net sales for the three month period ended May 31, 1994 increased approximately $76,000,000 (26%) over the comparable period last year. If the sales of PTI in the three month period preceding its acquisition had been included in the results of operation as of May 31, 1993, sales in the current period would have increased approximately $33,500,000 (10%) over such pro forma results. Excluding the sales of the PTI business in the current period, the internal sales growth of the Company's Power and Fluid Transfer segment was primarily responsible for the Company's increased sales in the current period. Sales in the Company's Transportation segment in the current period were comparable to the prior year's three month period, with current orders and backlogs at record high levels. Sales in the Professional Audio segment in the current period were down from the prior year's three month period, primarily as a result of the continued European recession in the markets served by this segment. The cost of products sold as a percentage of consolidated net sales for the three month period ended May 31, 1994 was 64.9%, compared to 64.6% for the three month period ended May 31, 1993. Selling and administration costs as a percentage of consolidated net sales were 18.6% for each of the three month periods ended May 31, 1994 and 1993. Research and development costs increased by $500,000 (7%) for the three month period ended May 31, 1994 as compared to the three month period ended May 31, 1993. The increase is primarily caused by the PTI acquisition. As a percentage of consolidated net sales, such costs were approximately 2% in each period presented. This consistent level of investment reflects the Company's continuing emphasis on new product development. Depreciation and amortization expense for the three month period ended May 31, 1994 increased by $2,900,000 (34.1%) over the comparable period in the prior year. The current year amount includes $350,000 related to the restricted stock grants made in the second half of fiscal 1994. The remaining increase is primarily the result of the PTI acquisition. Net interest expense for the three month period ended May 31, 1994 increased by approximately $1,600,000 (14.2%) as compared to the three month period ended May 31, 1993. The increase is primarily attributable to the increased debt as a result of the PTI acquisition in the second quarter of fiscal 1994, as well as slightly higher economic interest rates in the three month period ended May 31, 1994 as compared to the three month period ended May 31, 1993. The Company's provision for income taxes as a percentage of pre-tax accounting income was approximately 38.9% for the three month period ended May 31, 1994, as compared to 37.0% in the comparable period last year. The higher rate in the current period is primarily the result of increased income in foreign locations with higher statutory tax rates than in the U.S. As a result of all of the above, the Company's income from continuing operations for the three month period ended May 31, 1994 increased $3,500,000 (26%) over the comparable period last year. 9 As a result of the debt extinguishment in the first quarter of fiscal 1994, the Company incurred extraordinary losses, net of related tax benefits, of $21,700,000. Additionally, the Company's adoption of SFAS No. 106 in fiscal 1994 resulted in the recognition of a net of tax charge of $26,000,000 as the cumulative effect of the accounting change in the three month period ended May 31, 1993. The extraordinary losses and one-time charge resulted in a net loss of $34,100,000 in the three month period ended May 31, 1993 in comparison to the net income of $17,100,000 earned in the current period. Impact of Inflation - ------------------- Generally, the Company has been able to pass on or offset inflation- related cost increases; consequently, inflation has had no material impact on income from operations. Part II. OTHER INFORMATION - --------------------------- Items 1, 2, 3, 4 and 5 are inapplicable and have been omitted. Item 6(a) - Exhibits - -------------------- Exhibit No. 11 Statement Regarding Computation of Per Share Earnings Item 6(b) Reports on Form 8-K - ----------------------------- None 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 thereunto duly authorized. MARK IV INDUSTRIES, INC. Registrant DATE: July, 1994 /s/ Sal H. Alfiero ------------------- -------------------------- Sal H. Alfiero Chairman of the Board DATE: July 6, 1994 /s/ Clement R. Arrison ------------------- -------------------------- Clement R. Arrison President DATE: July 6, 1994 /s/ William P. Montague ------------------- -------------------------- William P. Montague Executive Vice President and Chief Financial Officer DATE: July 6, 1994 /s/ John J. Byrne ------------------- -------------------------- John J. Byrne Vice President-Finance DATE: July 6, 1994 /s/ Richard L. Grenolds ------------------- -------------------------- Richard L. Grenolds Vice President and Chief Accounting Officer 11 EXHIBIT INDEX Description - ----------- 11* Statement Regarding Computation of Per Share Earnings _______________ * Filed herewith by direct transmission pursuant to the EDGAR program. EX-11 2 PER SHARE EARNINGS 1 EXHIBIT 11 MARK IV INDUSTRIES, INC. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) For the Three Month Periods Ended May 31, 1994 and 1993 (Amounts in thousands, except per share data) 1994 1993 ---- ---- PRIMARY Shares outstanding: Weighted average number of shares outstanding 42,725 42,236 Net effect of dilutive stock options (1) 268 337 -------- -------- Total 42,993 42,573 ======== ======== Income from continuing operations $ 17,100 $ 13,600 ======== ======== Income per share from continuing operations (2) $ .40 $ .32 ======== ======== Extraordinary items $ - $(21,700) ======== ======== Loss per share from extraordinary items (2) $ - $ (.51) ======== ======== Cumulative effect of a change in accounting principle $ - $(26,000) ======== ======== Loss per share from the cumulative effect of a change in accounting principle (2) $ - $ (.61) ======== ======== Net income (loss) $ 17,100 $(34,100) ======== ======== Net income (loss) per share (2) $ .40 $ (.80) ======== ======== 2 1994 1993 ---- ---- FULLY-DILUTED Shares outstanding: Weighted average number of shares outstanding 42,725 42,236 Shares issuable upon conversion of the Company's 6-1/4% Convertible Subordinated Debentures 7,944 7,952 Net effect of dilutive stock options (1) 270 364 -------- -------- Total 50,939 50,552 ======== ======== Income from continuing operations $ 17,100 $ 13,600 Interest on Convertible Subordinated Debentures, less tax effect 1,100 1,200 -------- -------- Income from continuing operations applicable to fully-diluted shares $ 18,200 $ 14,800 ======== ======== Income per share from continuing operations $ .36 $ .29 ======== ======== Extraordinary items $ - $(21,700) ======== ======== Loss per share from extraordinary items $ - $ (.43) ======== ======== Cumulative effect of a change in accounting principle $ - $(26,000) ======== ======== Loss per share from the cumulative effect of a change in accounting principle $ - $ (.51) ======== ======== Net income (loss) $ 18,200 $(32,900) ======== ======== Net income (loss) per share $ .36 $ (.65) ======== ======== - ------------------------------------ (1) The net effects for the three month periods ended May 31, 1994 and 1993 are based upon the treasury stock method using the average market price during the periods for the primary amounts, and the higher of the average market price or the market price at the end of the period for the fully-diluted amounts. (2) Primary earnings per share have been reported in the Company's financial statements based only upon the shares of common stock outstanding, since the dilutive effect of the stock options is not considered to be material. -----END PRIVACY-ENHANCED MESSAGE-----