-----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, ZdivE0BSo3/ViQhBAT/djN07/znGX1mVkBoleaJer+B1nSjmgyOp67vgpqLN4lIk vIS+Y8F6BFeoDKMA/xwT4A== 0000062418-95-000005.txt : 199507140000062418-95-000005.hdr.sgml : 19950714 ACCESSION NUMBER: 0000062418-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950713 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK IV INDUSTRIES INC CENTRAL INDEX KEY: 0000062418 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [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: 95553565 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 FIRST QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended May 31, 1995 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 1-8862 - -------------------------------------------------------------------------- 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 --- --- Number of shares outstanding of each class of the Registrant's common stock, as of the latest practicable date: Class Outstanding at July 6, 1995 ----- --------------------------- Common stock $.01 par value 60,153,934 2 MARK IV INDUSTRIES, INC. INDEX Part I. Financial Information Page No. - ------------------------------ -------- Consolidated Condensed Balance Sheets as of May 31, 1995 and February 28, 1995 3 Consolidated Statements of Income and Retained Earnings For the Three Month Periods Ended May 31, 1995 and 1994 4 Consolidated Statements of Cash Flows For the Three Month Periods Ended May 31, 1995 and 1994 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information 11 - --------------------------- Signature Page 12 Exhibit Index 13 3 MARK IV INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) May 31, February 28, 1995 1995 ASSETS (Unaudited) ------ ----------- ----------- Current Assets: Cash $ 900 $ 800 Accounts receivable 421,300 383,700 Inventories 375,300 361,900 Other current assets 66,200 58,600 Total current assets 863,700 805,000 Pension related and other non-current assets 204,000 197,100 Property, plant and equipment, net 494,900 487,900 Cost in excess of net assets acquired 355,400 356,400 TOTAL ASSETS $1,918,000 $1,846,400 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Notes payable and current maturities of debt $ 80,500 $ 67,300 Accounts payable 182,800 174,000 Compensation related liabilities 67,300 70,400 Other current liabilities 114,800 113,600 Total current liabilities 445,400 425,300 Long-Term Debt: Senior debt 371,300 352,700 Subordinated debentures 258,000 258,000 Total long-term debt 629,300 610,700 Other non-current liabilities 184,500 174,900 Stockholders' Equity: Common stock 600 600 Additional paid-in capital 550,200 550,200 Retained earnings 113,600 90,800 Foreign currency translation adjustment (5,600) (6,100) Total stockholders' equity 658,800 635,500 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,918,000 $1,846,400 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, 1995 and 1994 (Amounts in thousands, except per share data) 1995 1994 ---- ---- Net sales $518,500 $363,800 Operating costs: Cost of products sold 345,800 236,100 Selling and administration 90,400 67,800 Research and development 10,800 7,600 Depreciation and amortization 16,200 11,400 Total operating costs 463,200 322,900 Operating income 55,300 40,900 Interest expense 15,000 12,900 Income before provision for taxes 40,300 28,000 Provision for income taxes 15,700 10,900 NET INCOME 24,600 17,100 Retained earnings - beginning of the period 90,800 88,600 Cash dividends of $.03 and $.026 per share (1,800) (1,200) Retained earnings - end of the period $113,600 $104,500 Net income per share of common stock: Primary $ .41 $ .38 Fully-diluted $ .41 $ .34 Weighted average number of shares outstanding: Primary 60,100 44,900 Fully-diluted 60,500 53,500 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, 1995 and 1994 (Dollars in thousands) 1995 1994 ---- ---- Cash flows from operating activities: Net income $ 24,600 $ 17,100 Items not affecting cash: Depreciation and amortization 16,200 11,400 Pension and compensation related items (2,600) (3,600) Deferred income taxes 7,200 1,100 Net cash provided by earnings 45,400 26,000 Changes in assets and liabilities, net of effects of businesses acquired and discontinued: Accounts receivable (32,700) (41,800) Inventories (12,000) 2,400 Accounts payable 6,000 10,700 Other items, net (13,100) (3,600) Net cash used in operating activities (6,400) (6,300) Cash flows from investing activities: Acquisitions (4,300) (10,800) Divestitures and asset sales 600 5,300 Purchase of plant and equipment, net (16,900) (8,500) Net cash used in investing activities (20,600) (14,000) Cash flows from financing activities: Credit agreement borrowings, net 30,400 18,400 Other changes in long-term debt, net (14,900) (3,500) Changes in short-term bank borrowings 13,900 6,400 Common stock transactions (400) 300 Cash dividends paid (1,800) (1,200) Net cash provided by financing activities 27,200 20,400 Effect of exchange rate fluctuations (100) (200) Net increase (decrease) in cash 100 (100) Cash and cash equivalents: Beginning of the year 800 500 End of the year $ 900 $ 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, 1995, and the results of its operations and its cash flows for the three month periods ended May 31, 1995 and 1994. Such results are not necessarily indicative of the results to be expected for the full year. 2. On November 4, 1994, the Company acquired substantially all of the stock of Purolator Products Company (Purolator) for a cash purchase price of $25.00 per share, or a total cost, including expenses, of approximately $286.3 million. Purolator is a manufacturer of a broad range of filters and separation systems used in automotive (principally aftermarket), marine, heating, ventilating, air conditioning, and high-technology liquid-filtration applications, and specialized industrial filters and separation systems. Purolator is a significant addition to the Company's Power and Fluid Transfer business segment. The acquisition has been accounted for under the purchase method, and the financial position of Purolator is included in the consolidated results of operations for the three month period ended May 31, 1995, and in the consolidated balance sheets of the Company as of May 31, 1995 and February 28, 1995 based upon a preliminary determination and allocation of the purchase price. Such amounts will be finalized upon additional analysis and asset valuation determinations to be made by the Company and various outside appraisal firms during fiscal 1996. The final changes are not expected to have a significant impact on the Company's results of operations as reported herein. The following table presents the pro forma consolidated condensed results of operations for the Company's three month period ended May 31, 1994 as if the following transactions had occurred at the beginning of the period: (i) the consummation of the acquisition of Purolator in November 1994 and the borrowings under the 1994 Credit Agreement in connection therewith; and (ii) the consummation of the Equity Offering in December 1994 and the application of the estimated net proceeds therefor. The pro forma amounts do not purport to be indicative of the results that actually would have been obtained had the transactions identified above actually taken place at the beginning of that period, nor are they intended to be a projection of future results (dollars in thousands, except per share amounts): Three Months Ended May 31, 1994 Net sales $478,900 Income before interest and taxes $ 49,300 Net income $ 20,100 Net income per share: Primary $ .39 Fully-diluted $ .35 7 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. Accounts receivable are presented net of allowances for doubtful accounts of $19,100,000 and $18,600,000 at May 31, 1995 and February 28, 1995, respectively. 4. Inventories consist of the following components (dollars in thousands): May 31, February 28, 1995 1995 Raw materials, parts and sub-assemblies $102,000 $103,500 Work-in-process 62,100 60,200 Finished goods 211,200 198,200 Inventories $375,300 $361,900 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, 1995. The amounts at February 28, 1995 are based upon the audited balance sheet at that date. 5. Property, plant and equipment is stated at cost and consists of the following components (dollars in thousands): May 31, February 28, 1995 1995 Land and land improvements $ 41,600 $ 41,500 Buildings 146,200 145,300 Machinery and equipment 469,600 451,600 Total property, plant and equipment 657,400 638,400 Less accumulated depreciation 162,500 150,500 Property, plant and equipment, net $494,900 $487,900 8 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 6. Long-term debt consists of the following at May 31, 1995 and February 28, 1995 (dollars in thousands): May 31, February 28, 1995 1995 Senior Debt: Credit Agreement $ 330,000 $ 300,000 Multi-Currency Agreement 38,600 38,300 Other items 29,600 42,500 Total 398,200 380,800 Less Current maturities (5,800) (8,600) Less amounts allocated to discontinued operations (21,100) (19,500) Net senior debt 371,300 352,700 8-3/4% Senior Subordinated Notes 258,000 258,000 Total long-term debt 629,300 610,700 Total stockholders equity 658,800 635,500 Total capitalization $1,288,100 $1,246,200 Long-term debt as a percentage of total capitalization 48.9% 49.0% 7. In May 1995, the Company's Board of Directors adopted a Shareholders Rights Plan under which Preferred Stock Purchase Rights were distributed as a dividend at a rate of one Right for each share of Common Stock held as of the close of business on June 2, 1995. The Rights will expire at the close of business on June 2, 2005. Each Right will entitle the holder to buy one one-hundredth of a newly- issued share of Mark IV Industries, Inc. Series A Junior Participating Preferred Stock at an exercise price of $80.00 The Rights will detach from the Common Stock and will initially become exercisable for such shares of Preferred Stock if a person or group acquires beneficial ownership of, or commences a tender or exchange offer which would result in such person or group beneficially owning, 20 percent or more of the Company's Common Stock, except through a tender or exchange offer for all shares which the Board determines to be fair and otherwise in the best interest of the Company and its stockholders. 8. For purposes of cash flows, the Company considers overnight investments as cash equivalents. The Company made cash interest payments of approximately $21,800,000 and $16,300,000 in the three month periods ended May 31, 1995 and 1994, respectively. The Company also made cash income tax payments of approximately $5,400,000 and $4,300,000 in the three month periods ended May 31, 1995 and 1994, respectively. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources - ------------------------------- Net cash provided by earnings was approximately $45,400,000 for the three month period ended May 31, 1995, an increase of approximately $19,400,000 (75%) over the three month period ended May 31, 1994. As of May 31, 1995, the Company had working capital of approximately $418,300,000 an increase of approximately $38,600,000 (10%) from February 28, 1995. The increase in working capital is substantially attributable to the Power and Fluid Transfer segment to support higher business levels and temporary seasonal inventory and accounts receivable increases. The Company has borrowing availability under its primary credit agreements in excess of $350,000,000 and additional availability under its various domestic and foreign demand lines of credit of approximately $100,000,000 as of May 31, 1995. Long-term debt at May 31, 1995 increased approximately $18,600,000 (3%) from the total amount as of February 28, 1995, primarily as a result of increased borrowings to support the temporarily increased working capital requirements. Although the Company's long-term debt increased in absolute terms, as a percentage of total capitalization it remained relatively constant at 49% as of May 31, 1995, the same as at February 28, 1995. Debt reduction in the balance of the fiscal year will be pursued through the use of 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 two business segments: Power and Fluid Transfer and Professional Audio. The Company's current business strategy is focused upon the enhancement of its business segments through internal growth, cost control and quality improvement programs and selective, strategic acquisitions, with an emphasis on expanding the Company's international presence. The results of operations for the three month period ended May 31, 1995 include the results of operations of Purolator, which was acquired in November 1994. Net sales for the three month period ended May 31, 1995 increased $154,700,000 (43%) over the comparable period last year. The increase was primarily due to the inclusion of the results of operations of Purolator and several smaller acquisitions for the period ended May 31, 1995, as well as internal sales growth in both the Power and Fluid Transfer and Professional Audio segments. Excluding the acquisitions, sales increased approximately $25,000,000 (7%) in the three month period ended May 31, 1995, with $16,000,000 of the increase in the Power and Fluid Transfer segment and $9,000,000 in the Professional Audio segment. Foreign currency exchange rate movements had a $7,700,000 positive effect on May 31, 1995 sales in comparison to May 31, 1994. Excluding acquisitions and the positive effect of foreign currency movements, the internal growth was $17,300,000 (5%) in the quarter ended May 31, 1995 compared to the quarter ended May 31, 1994. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The cost of products sold as a percentage of consolidated net sales increased to 67% for the three month period ended May 31, 1995, as compared to 65% for the three month period ended May 31, 1994. The increase in the percentage of costs is primarily the result of the Purolator acquisition, due to its historically lower gross margins. Selling and Administration costs as a percentage of consolidated net sales were 17.4% for the three month period ended May 31, 1995 as compared to 18.6% for the three month period ended May 31, 1994. The reduced level of costs as a percentage of sales is primarily a result of the inclusion of the Purolator operations which tend to have a lower level of such costs after the elimination of duplicate corporate and other costs. The reduction in the level of costs also indicates the company's continued emphasis on cost control has been successful in substantially offsetting the impact of inflation on such costs. Research and development costs increased by $3,200,000 (42%) for the three month period ended May 31, 1995 as compared to the three month period ended May 31, 1994. The increase was primarily attributable to the inclusion of the results of operations of Purolator and several smaller acquisitions. As a percentage of consolidated net sales, these expenses remained consistent at approximately 2% in each period. This consistent level of investment reflects the Company's continuing emphasis on new product development. Depreciation and amortization expense increased by $4,800,000 (42%) for the three month period ended May 31, 1995 as compared to the three month period ended May 31, 1994. The increase is primarily attributable to the inclusion of the results of operations of Purolator and several smaller acquisitions, as well as depreciation resulting from fixed asset additions made in the second half of fiscal 1995. Interest expense for the three month period ended May 31, 1995 increased by $2,100,000 (16%) as compared to the three month period ended May 31, 1994. The increase is primarily due to an increase in the weighted average debt outstanding resulting from borrowings incurred to finance the acquisition of Purolator, net of the effects of the conversion of the Company's 6-1/4% Convertible Subordinated Debentures and the equity offering which occurred in the second half of fiscal 1995. Increases in economic rates on the Company's domestic and foreign debt also contributed to increased interest expense in the current period. The Company's provision for income taxes as a percentage of pre-tax accounting income for the three month periods ended May 31, 1995 and 1994 remained relatively constant at approximately 39%. The benefit of increased domestic income resulting from the acquisition of Purolator were substantially offset by 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 net income for the three month period ended May 31, 1995 increased $7,500,000 (44%) over the comparable period last year. 11 Impact of Inflation - ------------------- Generally, the Company has been able to pass on 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 27 Financial Data Schedule Item 6(b) Reports on Form 8-K - ------------------------------ The following report on Form 8-K was filed pertaining to events occurring during the quarter ended May 31, 1995. 1. A current report on Form 8-K, dated May 24, 1995, was filed to report under Items 5, pertaining to the adoption by the Company's Board of Directors of the Shareholders Rights Plan pursuant to which preferred stock purchase rights were to be issued by the Company to the holders of record of shares of the Company's Common Stock on June 2, 1995. 12 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 13, 1995 /s/ Sal H. Alfiero Sal H. Alfiero Chairman of the Board DATE: July 13, 1995 /s/ Clement R. Arrison Clement R. Arrison President DATE: July 13, 1995 /s/ William P. Montague William P. Montague Executive Vice President and Chief Financial Officer DATE: July 13, 1995 /s/ John J. Byrne John J. Byrne Vice President-Finance DATE: July 13, 1995 /s/ Richard L. Grenolds Richard L. Grenolds Vice President and Chief Accounting Officer 13 EXHIBIT INDEX - ------------- Description Page No. 11 Statement Regarding Computation of Per Share Earnings 14 27 Financial Data Schedule 15 EX-11 2 EXHIBIT 11 MARK IV INDUSTRIES, INC. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) For the Three Month Periods Ended May 31, 1995 and 1994 (Amounts in thousands, except per share data) Three Months Ended May 31, ------------ 1995 1994 PRIMARY Shares outstanding: Weighted average number of shares outstanding 60,104 44,861 Net effect of dilutive stock options (1) 323 281 Total 60,427 45,142 Net income $ 24,600 $ 17,100 Net income per share (2) $ .41 $ .38 FULLY-DILUTED Shares outstanding: Weighted average number of shares outstanding 60,104 44,861 Shares issuable upon conversion of the Company's 6-1/4% Convertible Subordinated Debentures - 8,341 Net effect of dilutive stock options (1) 367 284 Total 60,471 53,486 Net Income $ 24,600 $17,100 Interest on Convertible Subordinated Debentures, less tax effect - 1,100 Net income $ 24,600 $18,200 Net income per share $ .41 $ .34 - ------------------------------------ (1) The net effects for the three month periods ended May 31, 1995 and 1994 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. EX-27 3
5 This schedule contains summary financial information extracted from the financial statements of Mark IV Industries, Inc. and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS FEB-28-1995 MAY-31-1995 900 0 440,400 19,100 375,300 863,700 657,400 162,500 1,918,000 445,400 629,300 600 0 0 658,200 1,918,000 518,500 518,500 345,800 463,200 0 0 15,000 40,300 15,700 24,600 0 0 0 24,600 .41 .41
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