-----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, IoYhjIsZMJCjqfPExLDc62WoJ/q6j/lImKXLMLMVAe/FchEeCwNc38Yw6GFWyneY VP7JES6FmcQasn5nBQHOKw== 0000950152-96-006103.txt : 19961118 0000950152-96-006103.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950152-96-006103 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONARCH MACHINE TOOL CO CENTRAL INDEX KEY: 0000067532 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] 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: 96663819 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 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 September 30, 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 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 November 8, 1996 was 3,744,967. There are a total of 11 pages filed in this document. 2 PART 1 - FINANCIAL INFORMATION THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 (All money amounts stated in thousands of dollars)
ASSETS 9-30-96 12-31-95 - ------ Unaudited -------- -------- Cash $ 5,696 $ 2,616 Accounts receivable Customers 21,207 32,010 Earned and unbilled on partially completed contracts 6,491 7,912 Inventories 24,650 26,149 Other current assets 2,585 2,549 -------- -------- Current assets 60,629 71,236 Property, plant & equipment - net 16,120 16,841 Prepaid pension costs 12,768 11,276 Other assets 3,554 1,995 -------- -------- 93,071 101,348 ======== ======== LIABILITIES Short term borrowings 4,347 4,417 Accounts payable 7,002 12,557 Accrued liabilities 8,716 9,840 Advance payments on contracts 3,165 5,123 Accrued taxes 687 357 -------- -------- Current liabilities 23,917 32,294 Long-term borrowings 15,000 14,318 Deferred U.S. income taxes 1,134 Other accrued liabilities 2,920 952 -------- -------- 41,837 48,698 -------- -------- SHAREHOLDERS' EQUITY - -------------------- Preferred stock 15 15 Common stock 5,617 5,617 Retained earnings 45,589 46,993 Translation adjustment 13 25 -------- -------- 51,234 52,650 -------- -------- $ 93,071 $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 nine months ended September 30, 1996 and 1995 (In thousands of dollars, except per share amounts)
1996 1995 ---- ---- Unaudited Unaudited Net sales $ 76,897 $ 82,145 -------- -------- Operating costs and expenses: Cost of sales 70,906 71.497 Selling and administrative 10,319 9,750 Interest expense 1,052 453 Other expense (income) (713) (70) -------- -------- 81,564 81,630 -------- -------- (4,667) 515 Gain on discontinuance of operation of foreign subsidiary 365 230 Gain on sale of foreign property 3,528 -- -------- -------- 3,893 230 -------- -------- Net income (loss) before income taxes (774) 745 Provision for income taxes 48 265 -------- -------- Net income (loss) $ (822) $ 480 ======== ======== Earnings (Loss) per common share: $ (.22) $ .13 ======== ======== Dividends per share: Preferred $ 1.35 $ 1.35 Common $ .15 $ .15
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 September 30, 1996 and 1995 (In thousands of dollars, except per share amounts)
1996 1995 --------- -------- Unaudited Unaudited Net sales $ 24,419 $ 31,441 Operating costs and expenses: -------- -------- Cost of sales 21,828 27,617 Selling and administrative 3,700 3,317 Interest expense 314 192 Other expense (income) (355) (68) -------- -------- 25,487 31,058 -------- -------- (1,068) 383 Gain on discontinuance of operation of foreign subsidiary 365 230 -------- -------- Income before income taxes (703) 613 Provision (credit) for income taxes (291) 268 -------- -------- Net income (loss) $ (412) $ 345 ======== ======== Earnings (loss) per common share: $ (.11) $ .09 ======== ======== 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 nine months ended September 30, 1996 and 1995 (All money amounts stated in thousands of dollars)
1996 1995 ---- ---- Unaudited Unaudited Cash flows from operating activities: Net income (loss) $ (822) $ 480 Adjustments to reconcile net income (loss) to net cash provided by operations: Depreciation 1,406 1,270 Pension Income (1,417) 32 Gain on discontinuance of operation of foreign subsidiary (365) (230) Gain on sale of foreign property (3,528) -- Cash provided by (used for) current assets and liabilities: Accounts receivable 12,223 (11,029) Inventories 1,499 (6,304) Other assets 2,368 (1,992) Accounts payable (5,555) 5,004 Accrued liabilities (435) 8,409 Advance payments on contracts (1,958) 3,019 Accrued income taxes 332 (276) -------- -------- Total adjustments 4,570 (2,097) -------- -------- Net cash provided by (used in) operating activities 3,748 (1,617) Cash flows from investing activities: Capital expenditures (685) (750) -------- -------- Cash flows from financing activities: Dividends paid (582) (582) Proceeds from (repayments of) short-term borrowings 611 4,661 -------- -------- 29 4,079 Effect of exchange rates on cash (12) (36) -------- -------- Net increase in cash 3,080 1,676 Cash and cash equivalents at beginning of period 2,616 30 -------- -------- Cash and cash equivalents at end of period $ 5,696 $ 1,706 ======== ========
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 nine months ended September 30, 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 consolidated financial statements should be read in conjunction with the consolidated 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 nine months ended September 30, 1996 and 1995 RESULTS OF OPERATIONS New order bookings for the entire corporation throughout the first nine months of 1996 were down approximately 17% relative to the level experienced during the same period last year. During the third quarter of this year the new order bookings increased 25% relative to the same period in 1995. The new order rate was exceptionally strong in the second quarter last year, primarily due to several large lines being booked at our strip processing operations. Booking year-to-date in 1996 have been good at most of our operations, but have been strongest at our turning operation in Sidney. The resulting level of backlogs at the end of the first nine months of 1996 was $64.3 million as compared to $68.5 million at 6/30/96 and $59.6 million at 12/31/95. Net sales for the first nine months of 1996 were $76.9 million as compared to $82.1 million for the same period in 1995, and for the third quarter of 1996 were $24.4 million in contrast to the $31.4 million experienced during the same period last year. Shipments were low in the third quarter of this year primarily because of a temporary delay, requested by the customer, relative to the completion of a large line of equipment being produced by our domestic strip processing division. Operations during the first nine months of 1996 produced a net loss of $822,000 or $.22 per share as compared to earnings of $480,000 or $.13 per share during the same period in 1995. The net loss of $412,000 or $.11 per share posted in the third quarter of this year compares to the net gain of $345,000 or $.09 per share incurred in the same period one year ago. The third quarter 1996 loss was reduced by a net gain of $237,000 or 6 cents per share from the sale of all remaining property relating to the discontinuance of operations at our Dean Smith & Grace subsidiary. The net loss year-to-date of $822,000 or 22 cents per share was mitigated by the above mentioned gain as well as a net gain of $1.9 million or 51 cents per share from sale of the land & buildings owned by our Monarch Werkzeugmaschinen GmbH subsidiary located in Hemsbach, Germany. This subsidiary has been relocated to the Company's Stamco Depiereux facilities in Dueren Germany. The after-tax loss in the first nine months of this year was also negatively affected by the recording of approximately $1.1 million or 30 cents per share special charge, in the second quarter, to recognize the consolidation of several machine tool product lines, potentially uncollectible accounts and a state personal property tax liability. We continue to analyze our machine tool product lines, primarily at our turning operation, with respect to further potential product consolidations. -7- 8 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the nine months ended September 30, 1996 and 1995 RESULTS OF OPERATIONS (continued) The year-to-date loss was also detrimentally affected in the first quarter of this year by 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. 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. Selling and general and administrative expenses expressed as a percentage of sales were 13.4% during the first nine months of this year as compared to 11.9% during the same period last year. 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 92.2% during the first nine months of 1996 as compared to 87.0% during the same period last year. The lower margins year over year were due to the factors noted above, particularly with respect to the machine tool operations. However the margin erosion was primarily due to cost over-runs on several customer orders at our domestic strip processing operation during the first quarter of 1996, and at our foreign strip processing operations in the third quarter. Earnings continue to be strongest at our strip processing operations due to reasonable plant capacity utilization, and remain poorest, although improving, 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 months towards achieving this end. -8- 9 THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the nine months ended September 30, 1996 and 1995 LIQUIDITY AND CAPITAL RESOURCES The Company maintained a strong financial position throughout the past year and has current assets of $2.54 for each dollar of current liabilities at 9/30/96 as compared to $2.11 at 9/30/95. The Company presently has long-term debt of $15 million as compared to $8 million one year ago. 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 9/30/96 were $4.3 million compared to $3.7 million one year ago. Management completed the renewal of the uncommitted credit line agreements during the second quarter of 1996. During the second quarter of 1995 the prior unsecured $13 million committed line was expanded to $ 20 million under essentially the same terms as were present in the then existing facility. -9- 10 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K No reports on Form 8-K were filed during the nine month period ending September 30, 1996. -10- 11 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 11/08/96 By /s/ Robert Riethman ---------- ------------------------------ Robert Riethman, Treasuer Date 11/08/96 By /s/ Earl Hull, ---------- ------------------------------ Earl Hull, Treasuer -11- 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. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 5,696 0 21,207 0 24,650 60,629 16,120 1,406 93,071 23,917 0 5,617 0 15 45,602 93,071 76,897 76,897 70,906 77,671 0 539 1,052 (774) 48 (822) 0 0 0 (822) (.22) (.22)
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