0000950152-95-001800.txt : 19950815 0000950152-95-001800.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950152-95-001800 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONARCH MACHINE TOOL CO CENTRAL INDEX KEY: 0000067532 STANDARD INDUSTRIAL CLASSIFICATION: MACHINE TOOLS, METAL CUTTING TYPES [3541] IRS NUMBER: 344307810 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01997 FILM NUMBER: 95563284 BUSINESS ADDRESS: STREET 1: 615 N OAK ST STREET 2: PO BOX 668 CITY: SIDNEY STATE: OH ZIP: 45365 BUSINESS PHONE: 5134924111 MAIL ADDRESS: STREET 1: 615 N OAK ST STREET 2: PO BOX 668 CITY: SIDNEY STATE: OH ZIP: 45365 10-Q 1 THE MONARCH MACHINE TOOL CO. 10-Q 1 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 June 30, 1995 Commission File No. 1-1997 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES An Ohio Corporation Employer Identification No. 34-4307810 615 North Oak Street, Sidney, Ohio 45365 Telephone 513/492-4111 Securities registered pursuant to Section 12(b) of the act: Name of each exchange Title of each class on which registered ------------------- --------------------- Common Shares, without New York Stock Exchange Inc. par value ---------------------- 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 twelve months, and (2) has been subject to such filing requirements for the past 90 days. Yes x . No . ---- ---- The number of common shares outstanding as of August 8, 1995 was 3,744,967. There are a total of 10 pages filed in this document. 2 PART 1 - FINANCIAL INFORMATION THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET JUNE 30, 1995 AND DECEMBER 31, 1994 (All money amounts stated in thousands of dollars)
ASSETS 6-30-95 12-31-94 ------ ------- -------- Unaudited Cash $ 2,238 $ 30 Accounts receivable Customers 24,047 21,484 Earned and unbilled on partially completed contracts 7,009 4,946 Inventories 22,990 20,187 Other current assets 3,074 2,589 ------- ------- Current assets 59,358 49,236 Property, plant & equipment - net 17,146 17,372 Prepaid pension costs 11,131 11,161 Other assets 2,114 573 ------- ------- 89,749 78,342 ======= ======= LIABILITIES ----------- Short term borrowings 2,231 7,000 Accounts payable 7,941 4,781 Accrued liabilities 5,754 3,519 Advance payments on contracts 9,927 4,599 Accrued taxes 356 1,454 ------- ------- Current liabilities 26,209 21,353 Long-term borrowings 5,000 0 Deferred U.S. income taxes 3,209 1,430 Other accrued liabilities 2,883 2,883 ------- ------- 37,301 25,666 ------- ------- SHAREHOLDERS' EQUITY -------------------- Preferred stock 15 15 Common stock 5,617 5,617 Retained earnings 46,902 46,981 Translation adjustment (86) 63 ------- ------- 52,448 52,676 ------- ------- $89,749 $78,342 ======= ======= The accompanying notes are an integral part of the consolidated financial statements.
-2- 3 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME For the six months ended June 30, 1995 and 1994 (In thousands of dollars, except per share amounts)
1995 1994 --------- --------- Unaudited Unaudited Net sales $50,704 $33,982 Operating costs and expenses: Cost of sales 43,880 29,713 Selling and administrative 6,432 5,287 Interest expense 261 182 Other expense (income) (1) (153) ------- ------- 50,572 35,029 Net income (loss) before income taxes 132 (1,047) Provision (credit) for income taxes (3) (308) ------- ------- Net income (loss) $ 135 $ (739) ======= ======= Earnings per common share: Net income (loss) $ .04 $ (.20) ======= ======= Dividends per share Preferred $ .90 $ .90 Common $ .10 $ .10 The accompanying notes are an integral part of the consolidated financial statements.
-3- 4 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME For the three months ended June 30, 1995 and 1994 (In thousands of dollars, except per share amounts)
1995 1994 --------- --------- Unaudited Unaudited Net sales $28,501 $15,575 Operating costs and expenses: Cost of sales 24,028 13,551 Selling and administrative 3,308 2,715 Interest expense 130 99 Other expense (income) 34 (25) ------- ------- 27,500 16,340 Income (loss) before income taxes 1,001 (765) Provision (credit) for income taxes (361) (262) ------- ------- Net income (loss) $ 640 $ (503) ======= ======= Earnings per common share: $ .17 $ (.14) ======= ======= Dividends per share Preferred $ .45 $ .45 Common $ .05 $ .05 The accompanying notes are an integral part of the consolidated financial statements.
-4- 5 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended June 30, 1995 and 1994 (All money amounts stated in thousands of dollars)
1995 1994 --------- --------- Unaudited Unaudited Cash flows from operating activities: Net income (loss) $ 135 $ (739) Adjustments to reconcile net income (loss) to net cash provided by operations: Depreciation 846 739 Pension Income 32 (178) Gain on discontinuance of operation of foreign subsidiary -- Cash provided by (used for) current assets and liabilities: Accounts receivable (4,627) 4,938 Inventories (2,803) (2,126) Other assets (1,964) (1,520) Accounts payable 3,160 1,263 Accrued liabilities 3,190 (651) Advance payments on contracts 5,328 1,242 Accrued income taxes (274) (549) ------- ------- Total adjustments 2,888 3,158 ------- ------- Net cash provided by (used in) operating activities 3,023 2,419 Cash flows from investing activities: Capital expenditures (619) (1,157) ------- ------- Cash flows from financing activities: Dividends paid (388) (388) Proceeds from (repayments of) short-term borrowings 231 (1,000) ------- ------- (157) (1,388) Effect of exchange rates on cash (39) 284 ------- ------- Net increase in cash 2,208 158 Cash and cash equivalents at beginning of period 30 1,556 ------- ------- Cash and cash equivalents at end of period $ 2,238 $ 1,714 ======= ======= The accompanying notes are an integral part of the consolidated financial statements.
-5- 6 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the six months ended June 30, 1995 and 1994 The foregoing consolidated results of operations are unaudited, but in the opinion of the company all adjustments (consisting of normal recurring accruals as well as the accounting changes) necessary to present fairly the results for these periods have been included. NET INCOME PER COMMON SHARE: Net income per common share, is based upon the weighted average number of common shares outstanding and common share equivalents, after giving effect to the preferred share dividend requirement. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest annual report and any current year's previously filed Forms 10-Q. -6- 7 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the six months ended June 30, 1995 and 1994 RESULTS OF OPERATIONS New order bookings for the entire corporation throughout the first six months of 1995 were up approximately 212% relative to the level experienced during the same period last year. During the second quarter of this year new order bookings were 311% greater than during the same period last year. The large improvement in the new order rate of the past several quarters has been experienced at most of our operations, but have been greatest at our strip processing operations. The order rate was also affected by the purchase of Busch GmbH in May which involved the acquisition of approximately $8.0 million in new orders. The resulting level of backlogs at the end of the second quarter of 1995 was $85.2 million as compared to $49.6 million at 12/31/94 and $32.7 million at 6/30/94. Net sales for the first half of 1995 were $50.7 million as compared to $34.0 million for the same period in 1994, and for the second quarter of 1995 were $28.5 million in contrast to the $ 15.6 million experienced during the same period last year. The increases in net sales in the first six months and the second quarter of this year were principally due to higher backlogs at the beginning of these periods relative to the beginning backlogs in he equivalent periods in 1994. The beginning backlogs were higher at most of our operations, but were up the most, relative to last year, at our strip processing operations. Operations during the first half of 1995 produced a net profit of $.04 per share as compared to a net loss of $.20 per share during the same period in 1994. The net gain of $.17 per share posted in the second quarter of 1995 compares favorably to the net loss of $.14 incurred during the same period one year earlier. Rising new orders and backlog levels have begun to increase net shipments, which allow the Company's operations to operate nearer capacity, thereby covering fixed costs to a much greater degree than was possible during the same quarter in 1994. Earnings were hampered this quarter, however, by the costs of developing our Stamco-Depiereux operation which was established in June of last year. This year's earnings are beginning to improve relative to the first six months of last year primarily due to the increased shipments made possible by a much better new order rate. However, earnings were not as strong as we would have liked due to the generally increasing cost of purchased items that we have only had limited success in passing along to the customer due to severe price competition from both domestic and foreign builders of similar products. The Company, however, continues to implement a company-wide effort to control costs particularly with respect to the largest and fastest growing areas of costs such as health care, travel and product liability insurance. -7- 8 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the six months ended June 30, 1995 and 1994 RESULTS OF OPERATIONS (continued) Our efforts at cost containment are evidenced by the fact that selling and general and administrative expenses expressed as a percentage of sales were 12.7% during the first half of this year as compared to 15.6% during the same period last year. Although this ratio is highly dependent upon sales volume because of the fixed nature of many of these costs, the Company will continue to focus on controlling these costs where possible as we have in the past. Cost of sales expressed as a percentage of sales went down to approximately 86% during the six months of 1995 as compared to 87% during the same period last year. Cost of sales expressed as a percentage of sales decreased to approximately 84% during the second quarter of 1995 as compared to 87% during the same period last year. Most of the improvement in the second quarter was due to increased shipment volume. The lower margins incurred in past quarters were due to the factors noted above particularly the excess-capacity situation at some of our operations. Due to the high engineering content of our products it is not practical or desirable to radically adjust these costs to cyclical changes in the marketplace for our equipment. Earnings continue to be strongest at our strip processing operations due to reasonable plant capacity utilization, and remain poorest at our turning operations because of considerable excess capacity. During the past several years the Company has been divesting of and reorganizing under-performing operations and will continue to pursue this course of action. The Company is also continually evaluating new opportunities worldwide , with the intent of diversifying into related businesses to reduce our reliance on any one market. In May of this year the Company acquired the Busch GmbH company located in Dueren Germany, which manufactures machinery for the processing of papers, plastics, films, and foils. LIQUIDITY AND CAPITAL RESOURCES The Company maintained a strong financial position throughout the past year and has current assets of $2.26 for each dollar of current liabilities at 6/30/95 as compared to $2.31 at 12/31/94. The Company presently has long-term debt of $5 million. The Company has unsecured lines of credit aggregating $30 million, including a $20 million committed three year revolving loan with a three year term-out option. Short-term borrowings against these facilities at 6/30/95 were $7.0 million compared to the same amount of $7.0 million at the end of last year and at 6/30/94. Management has recently completed the renewal of these agreements, including the expansion of the existing unsecured $13 million committed line to $ 20 million under essentially the same terms as were present in the existing facility. -8- 9 PART II - OTHER INFORMATION Item 4 - Submission of matters to a vote of security holders. During the annual meeting of shareholders held on May 2, 1995 the following matters were voted upon by the Company's security holders. The following is a tabulation of the voting results: 1) Election of directors to the class whose term expires in 1998. Votes Votes "For" "For" --------- ---------- William A. Enouen 2,650,577 269,837 Joseph M. Rigot 2,634,188 286,226 Robert J. Siewert 2,653,146 267,268 Directors not voted upon whose term of office continued after the meeting: John A. Bertrand Waldemar M. Goulet Kenneth H. Hopkins David E. Lundeen Robert B. Meeker John M. Richardson John F. Torley 2) Shareholder proposal to recommend to the Board of Directors that they engage an investment banker: Votes Votes "For" "Against" "Abstain" -------- ----------- ---------- 1,010,133 1,447,171 30,162 Item 6 - Exhibits and Reports on Form 8-K No reports on Form 8-K were filed during the three month period ending June 30, 1995. -9- 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized. THE MONARCH MACHINE TOOL COMPANY Date 8/9/95 By /s/ Robert Riethman --------------------------- -------------------------- Robert Riethman, Treasurer Date 8/9/95 By /s/ Earl Hull --------------------------- -------------------------- Earl Hull, Corporate Secretary -10- EX-27 2 EXHIBIT 27
5 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 2,238 0 24,047 0 22,990 59,358 17,146 846 89,749 26,209 0 5,617 0 15 46,816 89,749 50,704 50,704 43,880 50,572 0 313 261 132 (3) 135 0 0 0 135 .04 .04