-----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, H133KWUETGle1KrPL8tJgQOxmZaidtzFGd9O/PfUMBE9ErsU/EepZ1PzLJAMvuJl gVyI5f9XHRrNa8a0UShLHQ== 0000075049-94-000004.txt : 19941129 0000075049-94-000004.hdr.sgml : 19941129 ACCESSION NUMBER: 0000075049-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 DATE AS OF CHANGE: 19941128 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSMONICS INC CENTRAL INDEX KEY: 0000075049 STANDARD INDUSTRIAL CLASSIFICATION: 3569 IRS NUMBER: 410955759 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08282 FILM NUMBER: 94561816 BUSINESS ADDRESS: STREET 1: 5951 CLEARWATER DR CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 612-933-2277 MAIL ADDRESS: STREET 1: 5951 CLEARWATER DRIVE CITY: MINNETONKA STATE: MN ZIP: 55343 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 Quarter Ended September 30, 1994 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 No. 1-12714 OSMONICS, INC (Exact name of registrant as specified in its charter) Minnesota 41-0955759 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification Number) 5951 Clearwater Drive, Minnetonka, MN 55343 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (612) 933-2277 N/A Former name, former address and former fiscal year, if changed since last report 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 at least the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. At November 10, 1994, 12,688,476 shares of the issuer's Common Stock, $0.01 par value, were outstanding. OSMONICS, INC. INDEX PART I. FINANCIAL INFORMATION PAGE ITEM I. FINANCIAL STATEMENTS Consolidated Statements of Income - . . . . . . . . . 2 For the Three and Nine Month Periods Ended September 30, 1994 and 1993 Consolidated Balance Sheets - . . . . . . . . . . . . 3 September 30, 1994 and December 31, 1993 Consolidated Statements of Cash Flows . . . . . . . . 4 For the Nine Months Ended September 30, 1994 and 1993 Notes to Consolidated Financial Statements . . . . . . 5 ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF . . . . . . 6-7 FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . 8 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ITEM I - FINANCIAL STATEMENTS
OSMONICS, INC. CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Data) Three Months Ended Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Sales $23,383 $21,683 $71,760 $66,485 Cost of sales 12,884 12,102 39,867 37,111 Gross profit 10,499 9,581 31,893 29,374 Less: Selling, general and administrative 5,859 5,269 17,188 15,874 Research, development and engineering 1,816 1,632 5,379 4,987 Merger and transition expense - 356 - 949 Income from operations 2,824 2,324 9,326 7,564 Other income 246 106 449 358 Income before income taxes 3,070 2,430 9,775 7,922 Income taxes 781 651 2,612 2,252 Net income $ 2,289 $ 1,779 $ 7,163 $ 5,670 Net income per common share $ 0.18 $ 0.14 $ 0.57 $ 0.45 Average common shares outstanding 12,678 12,627 12,661 12,621
OSMONICS, INC. CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Data) September 30, December 31, 1994 1993 ASSETS Current assets Cash and cash equivalents $11,579 $ 9,710 Marketable securities 19,505 18,641 Trade accounts receivable, net of allowance for doubtful accounts of $1,289 in 1994, and $1,282 in 1993 14,112 13,655 Inventories 17,105 15,838 Deferred tax assets 3,460 3,234 Notes receivable - 667 Other current assets 1,339 1,739 Total current assets 67,100 63,484 Property and equipment, at cost Land and land improvements 1,951 1,937 Building 12,380 12,056 Machinery and equipment 32,539 30,527 46,870 44,520 Less accumulated depreciation and amortization (24,854) (22,564) 22,016 21,956 Long-term investments 4,957 1,233 Other assets 2,032 2,153 $96,105 $88,826 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 5,917 $ 5,714 Notes payable and current portion of long-term debt 245 779 Reserve for VAT payable 242 1,605 Reserve for discontinued operations 2,083 2,212 Other accrued liabilities 8,782 9,126 Total current liabilities 17,269 19,436 Long-term debt 14,159 13,913 Deferred compensation and other liabilities 706 769 Deferred income taxes 3,157 2,638 Shareholders' equity Common stock, $0.01 par value Authorized -- 20,000,000 Issued -- 1994: 12,685,542 and 1993: 12,637,473 shares 127 126 Capital in excess of par value 20,787 20,321 Retained earnings 38,616 31,453 Unrealized gain on marketable securities 1,053 - Foreign currency translation adjustments 231 170 Total shareholders' equity 60,814 52,070 $96,105 $88,826
OSMONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Nine Months Ended September 30, Cash flows from: 1994 1993 Operations: Net income $ 7,163 $ 5,670 Non-cash items included in net income: Depreciation and amortization 2,483 2,465 (Gain)/loss on sale of property 104 (275) Deferred income taxes (226) - Reserve for VAT (1,363) - Accounts receivable (457) 61 Inventories and other current assets (200) 3,053 Accounts payable and accrued liabilities (333) (2,133) Net cash provided by operations 7,171 8,841 Investing activities: Purchase of investments (10,200) (7,778) Sale of investments 7,096 1,940 Purchase of property and equipment (2,505) (2,386) Disposal of property - 349 Other 67 (99) Cash provided (used) in investing activities (5,542) (7,974) Financing activities: Reduction of debt (288) (383) Issuance of common stock 467 234 Net cash provided (used) in financing activities 179 (149) Effect of exchange rates on cash 61 123 Increase in cash and cash equivalents 1,869 841 Cash and cash equivalents - beginning of year 9,710 7,327 Cash and cash equivalents - end of quarter $11,579 $ 8,168
OSMONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 1994, are not necessarily indicative of the results that may be expected for the year 1994. These statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report to shareholders and Form 10-K for the year ended December 31, 1993. ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except per share data) As an aid to understanding the Company's operating results, the following table shows the percentage of sales that each income statement item represents for the three-month and nine-month periods ended September 30, 1994 and 1993.
Percent of Sales Percent of Sales Three Months Ended Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Sales 100.0% 100.0% 100.0% 100.0% Cost of sales 55.1 55.8 55.6 55.8 Gross profit 44.9 44.2 44.4 44.2 Selling, general and administrative 25.0 24.3 23.9 23.9 Research, development and engineering 7.8 7.5 7.5 7.5 Merger and transition expense - 1.7 - 1.4 Operating expenses 32.8 33.5 31.4 32.8 Income from operations 12.1 10.7 13.0 11.4 Other income 1.0 0.5 0.6 0.5 Income before income taxes 13.1 11.2 13.6 11.9 Income taxes 3.3 3.0 3.6 3.4 Net income 9.8% 8.2% 10.0% 8.5%
Sales Sales for both the quarter ended September 30, 1994 and for 1994 year- to-date increased 8% over prior year sales for the corresponding periods. Gross Margin The gross margins for the third quarter and year-to-date 1994 were 44.9% and 44.4%, respectively. In 1993, gross margins were 44.2% for both the third quarter and year-to-date through September 30. The improvement in gross margin in 1994 is primarily due to increased plant utilization on the higher sales and improved product mix. Operating Expenses Operating expenses were 32.8% of sales in the third quarter of 1994 and 31.4% for year-to-date 1994. Operating expense has decreased as a percentage of sales from 33.5% in the third quarter of 1993 and 32.8% of sales for the nine months ended September 30, 1993. The decrease was primarily due to the reduction of merger and transition expenses related to the 1993 Autotrol acquisition. Other Income Other income increased to $246 in the third quarter of 1994 compared to $106 in third quarter 1993, and to $449 year-to-date 1994 from $358 for the corresponding period a year ago. The increase is primarily due to increased interest income on a larger investment portfolio. Income Taxes The effective tax rate for the nine months ended September 30, 1994 was 27%, based on the forecast for the full year. This compares to 28% in the corresponding period of 1993. The reduced rate in 1994 reflects the full year benefits of tax loss carryforwards related to the acquired Autotrol operations. The tax rate in 1995 is expected to increase as tax loss carryforwards are depleted. Net Income Net income for the quarter ended September 30, 1994 was $2,289, up 29% from $1,779 in the corresponding quarter last year. Net income per common share for the quarter increased to $0.18 from $0.14 in the prior year. Year-to-date net income was $7,163, up 26% from $5,670 in 1993. Net income per common share year to date was $0.57 in 1994 versus $0.45 in 1993. Liquidity and Capital Resources As of September 30, 1994, the Company had cash, cash equivalents and marketable securities of $31,084 versus $28,351 at December 31, 1993. The current ratio was 3.9 at September 30, 1994, as compared to 3.3 at year-end 1993. The Company believes that its current cash and investments position, its cash flow from operations, and amounts available from bank credit will be adequate to meet its anticipated cash needs for working capital, capital expenditures, and potential acquisitions during the foreseeable future. OSMONICS, INC. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) None (b) During the quarter ended September 30, 1994, the Registrant did not file a Form 8-K report. 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. Dated: _____________________ OSMONICS, INC. (Registrant) /s/ L. Lee Runzheimer L. Lee Runzheimer Chief Financial Officer /s/ Howard W. Dicke Howard W. Dicke Treasurer and Vice President Corporate Development /s/ D. Dean Spatz D. Dean Spatz Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----