-----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, Sly/Xf3j44A51gJixU7XxjLp1FjnABv9lmBhsbNYdLMb5EP0CwtsS6N5+nvTp0Cl Gvoka1mRM6PhECGVFI5PWQ== 0000075049-95-000025.txt : 19951120 0000075049-95-000025.hdr.sgml : 19951120 ACCESSION NUMBER: 0000075049-95-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951115 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSMONICS INC CENTRAL INDEX KEY: 0000075049 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [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: 95593203 BUSINESS ADDRESS: STREET 1: 5951 CLEARWATER DR CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 6129332277 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, 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 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 7, 1995, 12,765,693 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, 1995 and 1994 Consolidated Balance Sheets - . . . . . . . . . . . . 3 September 30, 1995 and December 31, 1994 Consolidated Statements of Cash Flows . . . . . . . . 4 For the Nine Months Ended September 30, 1995 and 1994 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 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . 8 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, 1995 1994 1995 1994 Sales $27,176 $23,383 $80,842 $71,760 Cost of sales 15,692 12,884 45,488 39,867 Gross profit 11,484 10,499 35,354 31,893 Less: Selling, general and administrative 6,187 5,859 19,260 17,188 Research, development and engineering 2,015 1,816 5,891 5,379 Income from operations 3,282 2,824 10,203 9,326 Other income 523 246 1,473 449 Income before income taxes 3,805 3,070 11,676 9,775 Income taxes 1,180 781 3,580 2,612 Net income $ 2,625 $ 2,289 $ 8,096 $ 7,163 Net income per common share $ 0.21 $ 0.18 $ 0.64 $ 0.57 Average common shares outstanding 12,751 12,678 12,738 12,661 OSMONICS, INC. CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Data) September 30, December 31, 1995 1994 ASSETS Current assets Cash and cash equivalents $ 8,701 $ 9,453 Marketable securities 28,925 27,623 Trade accounts receivable, net of allowance for doubtful accounts of $1,123 in 1995, and $1,259 in 1994 17,928 15,536 Inventories 22,431 19,428 Deferred tax assets 3,167 3,284 Other current assets 1,136 1,303 Total current assets 82,288 76,627 Property and equipment, at cost Land and land improvements 2,191 1,951 Building 16,735 12,300 Machinery and equipment 36,745 33,574 55,671 47,825 Less accumulated depreciation and amortization (27,395) (25,262) 28,276 22,563 Other assets 3,094 2,845 $113,658 $102,035 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 7,805 $ 6,459 Notes payable and current portion of long-term debt 1,693 744 Reserve for discontinued operations 1,958 2,088 Other accrued liabilities 10,385 11,341 Total current liabilities 21,841 20,632 Long-term debt 12,605 14,050 Deferred compensation and other liabilities 679 689 Deferred income taxes 3,875 2,913 Shareholders' equity Common stock, $0.01 par value Authorized -- 20,000,000 Issued -- 1995: 12,762,817 and 1994: 12,701,041 shares 128 127 Capital in excess of par value 21,547 21,000 Retained earnings 49,504 41,408 Unrealized gain on marketable securities 3,173 1,038 Foreign currency translation adjustments 306 178 Total shareholders' equity 74,658 63,751 $113,658 $102,035 OSMONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Nine Months Ended September 30, Cash flows from: 1995 1994 Operations: Net income $ 8,096 $ 7,163 Non-cash items included in net income: Depreciation and amortization 2,528 2,483 (Gain)/loss on sale of investments (702) 104 Deferred income taxes 117 (226) Reserve for VAT - (1,363) Accounts receivable (2,392) (457) Inventories and other current assets (2,836) (200) Accounts payable and accrued liabilities 260 (333) Net cash provided by operations 5,071 7,171 Investing activities: Purchase of investments (4,012) (10,200) Sale of investments 6,374 7,096 Purchase of property and equipment (7,985) (2,505) Other (153) 67 Cash provided (used) in investing activities (5,776) (5,542) Financing activities: Reduction of debt (506) (288) Issuance of common stock 548 467 Net cash provided (used) in financing activities 42 179 Effect of exchange rates on cash (89) 61 (Decrease)/increase in cash and cash equivalents (752) 1,869 Cash and cash equivalents - beginning of year 9,453 9,710 Cash and cash equivalents - end of quarter $ 8,701 $11,579 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, 1995, are not necessarily indicative of the results that may be expected for the year 1995. 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, 1994. 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, 1995 and 1994. Percent of Sales Percent of Sales Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Sales 100.0% 100.0% 100.0% 100.0% Cost of sales 57.7 55.1 56.3 55.6 Gross profit 42.3 44.9 43.7 44.4 Selling, general and administrative 22.8 25.0 23.8 23.9 Research, development and engineering 7.4 7.8 7.3 7.5 Operating expenses 30.2 32.8 31.1 31.4 Income from operations 12.1 12.1 12.6 13.0 Other income 1.9 1.0 1.8 0.6 Income before income taxes 14.0 13.1 14.4 13.6 Income taxes 4.3 3.3 4.4 3.6 Net income 9.7% 9.8% 10.0% 10.0% Sales Sales for the quarter ended September 30, 1995 of $27,176 increased 16% over sales for the third quarter of 1994. Year-to-date 1995 sales through September have increased 13% over their 1994 level. The increase was in both capital and replaceable products. The sales growth reflects the Company's recent and continued investment in expanded sales efforts, and the general strength of the economy. Gross Margin The gross margin for the third quarter of 1995 was 42.3% versus 44.9% in the corresponding period of 1994. The gross margin for nine months ended September 30 was 43.7% in 1995 and 44.4% in 1994. The lower gross margin was due to increased costs for raw material, increased price competition, and a less favorable product mix. Operating Expenses Operating expenses decreased from 32.8% of sales in the third quarter of 1994 to 30.2% in the third quarter of 1995, and from 31.4% in the first nine months of 1994 to 31.1% of sales in the corresponding period of 1995. The decrease in operating expense is primarily attributable to improved operating efficiency realized in the integration of the Company's recent acquisitions. Other Income Other income increased by $1,024 from the first nine months of 1994 to the first nine months of 1995. The increase included $702 of gain on the sale of investments. Income Taxes The effective tax rate for the nine months ended September 30, 1995 was 30.7% based on the forecasted rate for the full year. The current rate compares to 26.7% in the corresponding period of 1994. The lower rate for 1994 included the benefit of tax loss carryforwards acquired with the Autotrol merger. Net Income Net income for the quarter ended September 30, 1995 was $2,625, up 15% from $2,289 in the corresponding quarter last year. Net income per common share for the quarter increased to $0.21 from $0.18 in the prior year. Year-to-date net income was $8,096, up 13% from $7,163 in 1994. Net income per common share year to date was $0.64 in 1995 versus $0.57 in 1994. Liquidity and Capital Resources As of September 30, 1995, the Company had cash, cash equivalents and marketable securities of $37,626 versus $37,076 at December 31, 1994. The current ratio was 3.8 at September 30, 1995, as compared to 3.7 at year-end 1994. The increase in land and building relates to the purchase of the previously-leased facility in Milwaukee, and the expansion of the Minnetonka facility which will be completed by January 1996. 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 5. Other Information Osmonics, Inc. acquired the assets and operations of Western Filter Co., Denver, Colorado, on October 4, 1995. Western Filter, founded in 1934, is a leading supplier of water treatment equipment to the beverage market, and will continue to operate as an independent business unit in Denver. Western Filter products will be sold through the existing Osmonics distribution channels, offering a more complete line of water and waste water treatment options. Revenues of Western Filter were less than $10 million in 1994. Item 6. Exhibits and Reports on Form 8-K (a) None (b) During the quarter ended September 30, 1995, 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 EX-27 2
5 This schedule contains summary financial information extracted from Form 10-Q for the quarter ended September 30, 1995, and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1994 SEP-30-1995 8701 28925 17928 1123 22431 82288 55671 27395 113658 21841 12605 128 0 0 74530 113658 80842 80842 45488 45488 25151 0 773 11676 3580 8096 0 0 0 8096 .64 .64
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