-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DrQ1KL4Ntt58E1yEqiRS+FU9LtpfZt8/DhCTZQPLcLusqZ0Zq84QXkQxC5o4TCRo H7kgKLxHOANs/aC8t1ARVA== 0000950152-96-002528.txt : 19960517 0000950152-96-002528.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950152-96-002528 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96567567 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 MONARCH MACHINE TOOL CO. 10Q 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 March 31, 1996 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 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 May 10, 1996 was 3,744,967. There are a total of 9 pages filed in this document. 2 PART 1 - FINANCIAL INFORMATION THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31, 1996 AND DECEMBER 31, 1995 (All money amounts stated in thousands of dollars)
ASSETS 3-31-96 12-31-95 - ------ ------- ------- Unaudited Cash $ 7,040 $ 2,616 Accounts receivable Customers 24,502 32,010 Earned and unbilled on partially completed contracts 6,295 7,912 Inventories 28,417 26,149 Other current assets 3,608 2,549 ------- ------- Current assets 69,862 71,236 Property, plant & equipment - net 17,271 16,841 Prepaid pension costs 11,751 11,276 Other assets 1,621 1,995 ------- ------- 100,505 101,348 ======= ======= LIABILITIES - ----------- Short term borrowings 6,400 4,417 Accounts payable 7,598 12,557 Accrued liabilities 8,500 9,840 Advance payments on contracts 6,470 5,123 Accrued taxes 356 357 ------- ------- Current liabilities 29,324 32,294 Long-term borrowings 16,000 14,318 Deferred U.S. income taxes 812 1,134 Other accrued liabilities 2,920 952 ------- ------- 49,056 48,698 ------- ------- SHAREHOLDERS' EQUITY - -------------------- Preferred stock 15 15 Common stock 5,617 5,617 Retained earnings 45,828 46,993 Translation adjustment (11) 25 ------- ------- 51,449 52,650 ------- ------- $100,505 $101,348 ======= =======
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 three months ended March 31, 1996 and 1995 (In thousands of dollars, except per share amounts)
1996 1995 ------- ------- Unaudited Unaudited Net sales $24,356 $22,203 Operating costs and expenses: Cost of sales 22,561 19,853 Selling and administrative 3,259 3,124 Interest expense 352 132 Other expense (income) (185) (37) ------- ------- 25,987 23,072 Income (loss) before income taxes (1,631) (869) Provision (credit) for income taxes (660) (364) ------- ------- Net income (loss) $ (971) $ (505) ======= ======= Earnings per common share: $ (.26) $ (.13) ======= ======= Dividends per share Preferred $ .45 $ .45 Common $ .05 $ .05
The accompanying notes are an integral part of the consolidated financial statements. -3- 4 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the three months ended March 31, 1996 and 1995 (All money amounts stated in thousands of dollars)
1996 1995 ------- ------- Unaudited Unaudited Cash flows from operating activities: Net income (loss) $ (971) $ (505) Adjustments to reconcile net income (loss) to net cash provided by operations: Depreciation 465 416 Pension Income 472 32 Cash provided by (used for) current assets and liabilities: Accounts receivable 9,124 2,698 Inventories (2,268) (2,164) Other assets (1,630) (1,913) Accounts payable (4,959) 2,809 Accrued liabilities 304 1,072 Advance payments on contracts 1,347 621 Accrued income taxes -- (274) ------- ------- Total adjustments 2,855 3,297 ------- ------- Net cash provided by (used in) operating activities 1,884 2,792 Cash flows from investing activities: Capital expenditures (896) (77) ------- ------- Cash flows from financing activities: Dividends paid (194) (194) Proceeds from (repayments of) short-term borrowings 3,665 -- ------- ------- 3,471 (194) Effect of exchange rates on cash (35) (1) ------- ------- Net increase in cash 4,424 2,520 Cash and cash equivalents at beginning of period 2,616 30 ------- ------- Cash and cash equivalents at end of period $ 7,040 $ 2,550 ======= ======= The accompanying notes are an integral part of the consolidated financial statements.
-4- 5 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 1996 and 1995 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. -5- 6 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the three months ended March 31, 1996 and 1995 RESULTS OF OPERATIONS New order bookings for the entire corporation throughout the first three months of 1996 were up approximately 32% relative to the level experienced during the same period last year. The strong improvement in the new order rate, year-to-date, has been experienced at most of our operations and has not been concentrated in any particular business segment. The accelerated order rate year over year was also affected, in the amount of $3.0 million, by the purchase of Monarch Busch GmbH in May of last year. The resulting level of backlogs at the end of the first quarter of 1996 was $69.8 million as compared to $59.6 million at 12/31/95 and $53.7 million at 3/31/95. Net sales for the first three months of 1996 were $24.3 million as compared to $22.2 million for the same period in 1995, but well below those of the prior two quarters. The reduction in net sales relative to recent quarters was due to the slow rate of new order bookings at our domestic machining center division and low beginning backlogs at our foreign strip processing and paper converting subsidiaries. Operations during the first three months of 1996 produced a net loss of $971,000 or $.26 per share as compared to a net loss of $505,000 or $.13 per share during the same period in 1995. The increase in the net loss year over year was due to poor margins on several new product introductions at our domestic strip processing division as well depressed margins at our turning division due to the shipment of a very disadvantageous mix of products during the quarter. Procedures have been developed to prevent a reoccurrence of the cost over-runs experienced at the strip processing operation. An increase in orders for non-commodity type machines at our turning division will help lift margins in the immediate future. Rising new order and backlog levels will begin to increase net shipments, which allows the Company's operations to operate nearer capacity, thereby covering fixed costs to a much greater degree than was possible in the first quarter of this year. Earnings are also hampered by 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. -6- 7 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the three months ended March 31, 1996 and 1995 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 13.4% during the first three months of this year as compared to 14.1% 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 up to 92.6% during the first of 1996 as compared to 89.4% during the same period last year. 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 operation because of considerable excess capacity. As reported in the 1995 Annual Shareholder's Report, the investment banking firm of Lehman Brothers Inc. has been hired to for the purpose of assisting the Company in maximizing shareholder value. Management and Lehman Brothers have been working together over the past few months towards achieving this end. LIQUIDITY AND CAPITAL RESOURCES The Company maintained a strong financial position throughout the past year and has current assets of $2.38 for each dollar of current liabilities at 3/31/96 as compared to $2.12 at 3/31/95. The Company presently has long-term debt of $16 million. The Company has unsecured lines of credit aggregating $37 million, including a $20 million committed three year revolving loan with a three year term-out option. Short-term borrowings against these facilities at 3/31/96 were $6.4 million compared to $7.0 million one year ago. Management completed the renewal of these agreements, during the second quarter of 1995, 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. -7- 8 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K a. - Exhibits 27 Financial Data Schedule b. Reports on Form 8-K No reports on Form 8-K were filed during the three month period ending March 31, 1996 -8- 9 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 5/13/96 By /s/ Robert Riethman -------------------------------- ------------------------------ Robert Riethman, Treasurer Date 5/13/96 By /s/ Earl Hull -------------------------------- ------------------------------ Earl Hull, Corporate Secretary -9- EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEET CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 7,040 0 24,502 0 28,417 69,862 17,271 465 100,505 29,324 0 5,617 0 15 45,817 100,505 24,356 24,356 22,561 25,820 185 150 352 (1,631) (660) (971) 0 0 0 (971) (.26) (.26)
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