-----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, GH/XCXCm0VXpcTCCkL9pwgPblxAZaWGQSJ1yP0XLZpLBoRZ23wTDlBoyPxJYxHqt SkzVTt2CVVZeJFkKZ34Mdg== 0001171520-05-000303.txt : 20050803 0001171520-05-000303.hdr.sgml : 20050803 20050803091144 ACCESSION NUMBER: 0001171520-05-000303 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050802 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050803 DATE AS OF CHANGE: 20050803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WATTS WATER TECHNOLOGIES INC CENTRAL INDEX KEY: 0000795403 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 042916536 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11499 FILM NUMBER: 05993897 BUSINESS ADDRESS: STREET 1: 815 CHESTNUT ST CITY: NORTH ANDOVER STATE: MA ZIP: 01845 BUSINESS PHONE: 9786881811 MAIL ADDRESS: STREET 1: 815 CHESTNUT STREET CITY: NORTH ANDOVER STATE: MA ZIP: 01845 FORMER COMPANY: FORMER CONFORMED NAME: WATTS INDUSTRIES INC DATE OF NAME CHANGE: 19920703 8-K 1 eps1882.txt WATTS WATER TECHNOLOGIES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 2, 2005 Watts Water Technologies, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-11499 04-2916536 - -------------------------------------------------------------------------------- (State or other juris- (Commission (IRS Employer diction of incorporation File Number) Identification No.) 815 Chestnut Street, North Andover, MA 01845 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (978) 688-1811 - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On August 2, 2005, Watts Water Technologies, Inc. announced its financial results for the fiscal quarter ended July 3, 2005. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing. Item 9.01. Financial Statements and Exhibits (c) Exhibits. The following exhibits are being furnished herewith: Exhibit No. Title - ----------- ----------- 99.1 Press release dated August 2, 2005 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 hereunto duly authorized. Date: August 3, 2005 WATTS WATER TECHNOLOGIES, INC. By: /s/ William C. McCartney ----------------------------------- William C. McCartney Chief Financial Officer EX-99.1 2 ex99-1.txt Exhibit 99.1 FOR IMMEDIATE RELEASE Contact: William C. McCartney Chief Financial Officer Telephone: (978) 688-1811 Fax: (978) 688-2976 WATTS WATER TECHNOLOGIES REPORTS SECOND QUARTER 2005 RESULTS North Andover, MA...August 2, 2005. Watts Water Technologies, Inc. (NYSE Symbol "WTS") today announced results for the second quarter ended July 3, 2005. Sales for the second quarter ended July 3, 2005 were $228,183,000, an increase of $21,229,000, or 10%, from the second quarter last year. Net income for the second quarter ended July 3, 2005, was $13,913,000, or $0.42 per share, which includes a net loss from discontinued operations of $75,000, versus net income of $13,953,000, or $0.43 per share, which included a net loss from discontinued operations of $106,000 for the second quarter last year. Income from continuing operations for the second quarter ended July 3, 2005 decreased $71,000, or 1%,, to $13,988,000, or $0.42 per share, compared to income from continuing operations for the second quarter last year of $14,059,000, or $0.43 per share. Costs incurred for our manufacturing restructuring plan, net of tax, in the second quarters of 2005 and 2004 were $241,000, or $0.01 per share, and $344,000, or $0.01 per share, respectively. Sales for the six months ended July 3, 2005 were $447,210,000, an increase of $54,248,000, or 14%, from the same period last year. Net income for the six months ended July 3, 2005, was $26,271,000, or $0.80 per share, which includes a net loss from discontinued operations of $114,000, versus net income of $24,954,000, or $0.77 per share, which included a net loss of $100,000 from discontinued operations for the same period last year. Income from continuing operations increased $1,331,000, or 5%, for the six months ended July 3, 2005, to $26,385,000, or $0.80 per share, compared to income from continuing operations for the same period last year of $25,054,000, or $0.77 per share. Costs incurred for our manufacturing restructuring plans, net of tax, in the six months of 2005 and 2004 were $737,000, or $0.02 per share, and $1,068,000, or $0.03 per share, respectively. Patrick S. O'Keefe, Chief Executive Officer, commented, "Our overall increase in sales for the second quarter as compared to last year was achieved by internal growth, contributions from acquired companies and the change in foreign exchange rates. Our internal growth contributed $11,985,000 of the increase in sales in the second quarter ended July 3, 2005. Acquisitions contributed sales of $6,387,000 for the second quarter. This acquired growth was attributable to the June 2005 acquisition of Alamo Water Refiners, Inc., the May 2005 acquisition of Electro Controls Ltd., the January 2005 acquisitions of HF Scientific, Inc. and Sea Tech, Inc., and the May 2004 acquisition of Orion Enterprises, Inc. The change in foreign exchange rates for the second quarter ended July 3, 2005 increased our sales by $2,857,000, due primarily to the strengthening of the euro versus the U.S. dollar." "Our North American segment increased sales for the second quarter ended July 3, 2005 by 13% to $157,116,000 compared to $138,782,000 last year. This increase in North American sales was achieved through internal sales growth of $11,674,000, the inclusion of sales from the acquisitions of Alamo Water Refiners, Inc., HF Scientific, Inc., Sea Tech, Inc. and Orion Enterprises, Inc. totaling $5,752,000, and $908,000 due to favorable foreign exchange rates associated with the strengthening of the Canadian dollar versus the U.S. dollar." "Internal sales growth in the North American wholesale market for the second quarter ended July 3, 2005 increased 8% as compared to the second quarter last year. This increase was led by increased sales of backflow prevention units, as well as strength in our plumbing and under-floor radiant heating product lines. Our internal sales growth in the North American home improvement retail market increased 12% for the second quarter ended July 3, 2005 over last year. This increase was led by new product introductions including flood-safe connectors, pre-soldered copper fittings, hot water heater connector kits and hot water re-circulation pumps." "We derived 28% of our total sales for the second quarter ended July 3, 2005 from Europe compared to 29% last year. Sales in Europe for the second quarter ended July 3, 2005 increased $2,655,000, or 4% to $63,636,000, compared to last year. This increase is due to the favorable foreign exchange rates associated with the strengthening of the euro versus the U.S. dollar, which accounted for $1,949,000, the inclusion of the sales from the Electro Controls Ltd acquisition of $635,000 and internal sales growth of $71,000. The appreciation of the euro had a minimal impact on European income in the second quarter ended July 3, 2005, compared with a $0.01 per share effect for the second quarter last year." "Sales in China increased 3% to $7,431,000 for the quarter ended July 3, 2005 from $7,191,000 last year. Earnings in China also improved as compared to last year primarily due to the increased production levels." "Operating income for the quarter ended July 3, 2005 declined 2% to $24,201,000 as compared to $24,707,000 last year. This decrease is primarily attributable to the increased costs of our raw materials. We have experienced significant increases in costs of raw materials since June 2004, and copper and oil prices remain at historic levels. During the quarter ended July 3, 2005, we were not able to completely recover these increased costs through reduced manufacturing costs or increased selling prices in the North American market. We also incurred incremental pre-tax charges in the second quarter of 2005 of $541,000 for an acquisition earn out being treated as compensation expense. These increased costs were partially offset by decreased costs of $697,000 to comply with the requirements of Section 404 under the Sarbanes-Oxley Act of 2002." "We continue with the consolidation of our manufacturing plants in North America and Europe while continuing to expand our manufacturing capacity in China and other areas of the world in an effort to lower our cost of manufacturing. For the second quarter ended July 3, 2005 we recorded a pre-tax charge of approximately $398,000, which was comprised of $302,000 recorded in cost of sales primarily for accelerated depreciation for both the expected closure of a U.S. manufacturing plant and a reduction in the estimated useful lives of certain manufacturing equipment and $96,000 recorded in selling, general and administrative expenses for severance costs related to European restructuring. This compares to $560,000 recorded in cost of goods sold last year for accelerated depreciation for both the expected closure of a U.S. manufacturing plant and a reduction in the estimated useful lives of certain manufacturing equipment." On July 8, 2005, the Company acquired the water connector business of the Donald E. Savard Company located in San Gabriel, California. The acquisition of the water connector business of Savard is consistent with the Company's theme of water conservation, safety and control. This acquisition allows the Company to expand its presence in one of its leading product lines with a brand name that is well known to the plumbing wholesale market. Savard has annual revenues of approximately $6 million. On July 5, 2005, the Company acquired 100% of the outstanding stock of Microflex N.V., located in Rotselaar, Belgium. Microflex produces and distributes flexible, pre-insulated, waterproof PEX pipes for hot and cold water transport, as well as a range of accessory products including couplings, caps, and insulation kits in the HVAC and water protection markets. Microflex has annual revenues of $8.5 million. On June 20, 2005, the Company acquired the water softener business of Alamo Water Refiners, Inc. located in San Antonio, Texas. The products of Alamo are consistent with the Company's theme of water quality and provide many synergistic opportunities when utilized in conjunction with its existing water filtration and water quality businesses. The acquisition of Alamo also expands its distribution presence into the southwestern U.S. markets. Alamo has annual revenue of approximately $13 million. On May 11, 2005, the Company acquired 100% of the outstanding stock of Electro Controls Ltd. located in Hounslow, United Kingdom. Electro Controls designs and assembles a range of electrical controls for the HVAC market, with sales primarily in the United Kingdom with some export sales to the Middle East. Electro Controls has annual revenue of approximate $4 million. Watts Water Technologies, Inc. will hold a live web cast of its conference call to discuss second quarter results for 2005 on Wednesday, August 3, 2005, at 2:00 p.m. Eastern Time. The press release and the live web cast can be accessed by visiting the Investors section of the Company's website at www.wattswater.com. Following the web cast, an archived version of the call will be available at the same address until August 3, 2006. Watts Water Technologies, Inc. is a world leader in the manufacture of innovative products to control the efficiency, safety, and quality of water within residential, commercial, and institutional applications. Its expertise in a wide variety of water technologies enables it to be a comprehensive supplier to the water industry. This Press Release includes statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Watts Water Technologies' current views about future results of operations and other forward-looking information. In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. You should not rely on forward-looking statements because Watts' actual results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. These factors include, but are not limited to, the following: shortages in and pricing of raw materials and supplies including price increases by suppliers of raw materials and the Company's ability to pass these costs on to customers, loss of market share through competition, introduction of competing products by other companies, pressure on prices from competitors, suppliers, and/or customers, costs associated with efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002, identification and disclosure of material weaknesses in our internal controls over financial reporting, failure to expand our markets through acquisitions, failure or delay in developing new products, lack of acceptance of new products, failure to manufacture products that meet required performance and safety standards, foreign exchange rate fluctuations, cyclicality of industries, such as plumbing and heating wholesalers and home improvement retailers, in which the Company markets certain of its products, economic factors, such as the levels of housing starts and remodeling, impacting the markets where the Company's products are sold, manufactured, or marketed, environmental compliance costs, product liability risks, the results and timing of the Company's manufacturing restructuring plan, changes in the status of current litigation, including the James Jones case, and other risks and uncertainties discussed under the heading "Certain Factors Affecting Future Results" in the Watts Water Technologies, Inc. Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities Exchange Commission and other reports Watts files from time to time with the Securities and Exchange Commission. Watts does not intend to, and undertakes no duty to, update the information contained in this Press Release. WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Second Quarter Ended Six Months Ended ---------------------- ---------------------- July 3, June 27, July 3, June 27, 2005 2004 2005 2004 --------- --------- --------- --------- STATEMENTS OF INCOME Net sales $ 228,183 $ 206,954 $ 447,210 $ 392,962 Income from continuing operations $ 13,988 $ 14,059 $ 26,385 $ 25,054 Loss from discontinued operations (75) (106) (114) (100) --------- --------- --------- --------- Net income $ 13,913 $ 13,953 $ 26,271 $ 24,954 ========= ========= ========= ========= DILUTED EARNINGS PER SHARE Weighted Average Number of Common Shares & Equivalents 33,077 32,726 33,032 32,639 Earnings per Share: Continuing operations $ 0.42 $ 0.43 $ 0.80 $ 0.77 Discontinued operations -- -- -- -- --------- --------- --------- --------- Net income $ 0.42 $ 0.43 $ 0.80 $ 0.77 ========= ========= ========= ========= Cash dividends per share $ 0.08 $ 0.07 $ 0.16 $ 0.14
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share information) (Unaudited)
July 3, December 31, ASSETS 2005 2004 ---------- ---------- CURRENT ASSETS: Cash and cash equivalents ............................................... $ 66,236 $ 65,913 Investment securities ................................................... -- 26,600 Trade accounts receivable, less allowance for doubtful accounts of $7,913 at July 3, 2005 and $7,551 at December 31, 2004 ............... 171,726 150,073 Inventories, net: Raw materials ........................................................ 65,306 61,250 Work in process ...................................................... 27,540 28,020 Finished goods ....................................................... 123,272 113,774 ---------- ---------- Total Inventories ................................................. 216,118 203,044 Prepaid expenses and other assets ....................................... 16,755 14,359 Deferred income taxes ................................................... 28,297 27,463 Assets of discontinued operations ....................................... 9,372 10,227 ---------- ---------- Total Current Assets ................................................. 508,504 497,679 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment, at cost .................................. 321,413 321,655 Accumulated depreciation ................................................ (175,512) (170,966) ---------- ---------- Property, plant and equipment, net ................................... 145,901 150,689 ---------- ---------- OTHER ASSETS: Goodwill ................................................................ 232,327 226,178 Other ................................................................... 54,103 49,702 ---------- ---------- TOTAL ASSETS ................................................................ $ 940,835 $ 924,248 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ........................................................ $ 76,577 $ 73,606 Accrued expenses and other liabilities .................................. 59,226 64,604 Accrued compensation and benefits ....................................... 28,685 29,679 Current portion of long-term debt ....................................... 6,198 4,981 Liabilities of discontinued operations .................................. 23,456 24,303 ---------- ---------- Total Current Liabilities ............................................ 194,142 197,173 ---------- ---------- LONG-TERM DEBT, NET OF CURRENT PORTION ...................................... 196,581 180,562 DEFERRED INCOME TAXES ....................................................... 20,235 19,578 OTHER NONCURRENT LIABILITIES ................................................ 24,657 26,632 MINORITY INTEREST ........................................................... 7,525 7,515 STOCKHOLDERS' EQUITY: Preferred Stock, $.10 par value; 5,000,000 shares authorized; no shares issued or outstanding ...................................... -- -- Class A Common Stock, $.10 par value; 80,000,000 shares authorized; 1 vote per share; issued and outstanding: 25,174,148 shares at July 3, 2005 and 25,049,338 shares at December 31, 2004 .............. 2,517 2,505 Class B Common Stock, $.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding: 7,343,880 shares at July 3, 2005 and at December 31, 2004 ................................ 734 734 Additional paid-in capital .............................................. 143,222 140,172 Retained earnings ....................................................... 345,194 324,145 Deferred compensation ................................................... (2,068) (1,386) Accumulated other comprehensive income .................................. 8,096 26,618 ---------- ---------- Total Stockholders' Equity ........................................... 497,695 492,788 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................................. $ 940,835 $ 924,248 ========== ==========
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share information) (Unaudited)
Second Quarter Ended Six Months Ended ------------------------ ------------------------ July 3, June 27, July 3, June 27, 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Net sales ........................................................ $ 228,183 $ 206,954 $ 447,210 $ 392,962 Cost of goods sold ............................................... 147,000 131,327 288,649 252,423 ---------- ---------- ---------- ---------- GROSS PROFIT ................................................. 81,183 75,627 158,561 140,539 Selling, general & administrative expenses ....................... 56,886 50,920 112,592 96,054 Restructuring .................................................... 96 -- 458 -- ---------- ---------- ---------- ---------- OPERATING INCOME ............................................. 24,201 24,707 45,511 44,485 ---------- ---------- ---------- ---------- Other (income) expense: Interest income .............................................. (329) (261) (638) (563) Interest expense ............................................. 2,567 2,758 5,088 5,302 Minority interest ............................................ 72 340 137 515 Other ........................................................ (90) (92) (177) (256) ---------- ---------- ---------- ---------- 2,220 2,745 4,410 4,998 ---------- ---------- ---------- ---------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ....... 21,981 21,962 41,101 39,487 Provision for income taxes ....................................... 7,993 7,903 14,716 14,433 ---------- ---------- ---------- ---------- INCOME FROM CONTINUING OPERATIONS ........................... 13,988 14,059 26,385 25,054 Loss from discontinued operations, net of taxes .................. (75) (106) (114) (100) ---------- ---------- ---------- ---------- NET INCOME ................................................... $ 13,913 $ 13,953 $ 26,271 $ 24,954 ========== ========== ========== ========== BASIC EPS Income per share: Continuing operations ........................................ $ 0.43 $ 0.43 $ 0.81 $ 0.78 Discontinued operations ...................................... -- -- -- -- ---------- ---------- ---------- ---------- NET INCOME ................................................... $ 0.43 $ 0.43 $ 0.81 $ 0.78 ========== ========== ========== ========== Weighted average number of shares ................................ 32,475 32,265 32,442 32,202 ========== ========== ========== ========== DILUTED EPS Income per share: Continuing operations ........................................ $ 0.42 $ 0.43 $ 0.80 $ 0.77 Discontinued operations ...................................... -- -- -- -- ---------- ---------- ---------- ---------- NET INCOME ................................................... $ 0.42 $ 0.43 $ 0.80 $ 0.77 ========== ========== ========== ========== Weighted average number of shares ................................ 33,077 32,726 33,032 32,639 ========== ========== ========== ========== Dividends per share ......................................... $ 0.08 $ 0.07 $ 0.16 $ 0.14 ========== ========== ========== ==========
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES SEGMENT INFORMATION (Amounts in thousands) (Unaudited) Net Sales Second Quarter Ended Six Months Ended ------------------------ ------------------------ July 3, June 27, July 3, June 27, 2005 2004 2005 2004 ---------- ---------- ---------- ---------- North America $ 157,116 $ 138,782 304,593 259,764 Europe 63,636 60,981 130,070 121,014 China 7,431 7,191 12,547 12,184 ---------- ---------- ---------- ---------- Total $ 228,183 $ 206,954 447,210 392,962 ========== ========== ========== ========== Operating Income Second Quarter Ended Six Months Ended ------------------------ ------------------------ July 3, June 27, July 3, June 27, 2005 2004 2005 2004 ---------- ---------- ---------- ---------- North America $ 19,695 $ 21,077 37,523 36,235 Europe 7,952 7,992 15,445 15,437 China 572 457 1,117 (1) Corporate (4,018) (4,819) (8,574) (7,186) ---------- ---------- ---------- ---------- Total $ 24,201 $ 24,707 45,511 44,485 ========== ========== ========== ========== -----END PRIVACY-ENHANCED MESSAGE-----