-----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, DTZ5QA6gL+iMsIwFdhlNvH9HXUk41ZyHHNgk1S30a25qSOdt6af+ghCws+Tb9+eD rpvjNPZPEytrmWlM7Ja4DQ== 0000832815-96-000007.txt : 19961115 0000832815-96-000007.hdr.sgml : 19961115 ACCESSION NUMBER: 0000832815-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYBRON CHEMICALS INC CENTRAL INDEX KEY: 0000832815 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 510301280 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12263 FILM NUMBER: 96660448 BUSINESS ADDRESS: STREET 1: BIRMINGHAM RD STREET 2: PO BOX 66 CITY: BIRMINGHAM STATE: NJ ZIP: 08011 BUSINESS PHONE: 6098931100 MAIL ADDRESS: STREET 1: P O BOX 66 BIRMINGHAM ROAD CITY: BIRMINGHAM STATE: NJ ZIP: 08011 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 ------------------ 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 number 0-19983 ------- SYBRON CHEMICALS INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 51-0301280 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Birmingham Rd., P.O. Box 66, Birmingham New Jersey 08011 -------------------------------------------------- ----- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code (609) 893-1100 -------------- 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 shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for 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. Class Outstanding at September 30, 1996 ----- --------------------------------- Common stock, $.01 par value 5,650,560 SYBRON CHEMICALS INC. INDEX Page No. Part I Financial information Item 1 - Financial Statements Consolidated Balance Sheet - September 30, 1996 and December 31, 1995 1 Consolidated Statement of Operations - nine months ended September 30, 1996 and 1995 2 Consolidated Statement of Operations - three months ended September 30, 1996 and 1995 3 Consolidated Statement of Cash Flows - nine months ended September 30, 1996 and 1995 4 Notes to Consolidated Financial Statements 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 11 Part II Other information Item 1 Legal Proceedings 12 PART I - FINANCIAL INFORMATION SYBRON CHEMICALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited in thousands except share and per share data) ASSETS
Sept. 30, Dec. 31, 1996 1995 Current assets: Cash and cash equivalents $ 13,042 $ 11,284 Accounts receivable, net 33,187 30,685 Inventories 21,746 24,504 Prepaid and other current assets 2,688 1,293 Deferred income taxes 71 68 -------- -------- Total current assets 70,734 67,834 Property, plant and equipment, net 30,909 31,149 Intangible assets 12,099 11,804 Other 721 542 -------- -------- $114,463 $111,329 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 181 $ 1,169 Accounts payable 15,390 15,364 Accrued liabilities 12,353 9,067 Current portion of long-term debt 2,434 2,444 Income taxes payable 599 974 Deferred income taxes 440 321 ------- -------- Total current liabilities 31,397 29,339 Long-term debt 19,688 22,532 Deferred income taxes 2,985 3,450 Postretirement healthcare benefits 4,004 3,938 Other 1,539 2,117 -------- -------- Total liabilities 59,613 61,376 -------- -------- Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value - 500,000 shares authorized; none issued Common stock - $.01 par value - 20,000,000 shares authorized; issued 5,905,000 shares 59 59 Additional paid-in capital 23,530 23,530 Retained earnings 39,308 32,835 Cumulative translation adjustment (2,958) (1,382) --------- --------- 59,939 55,042 Less treasury stock, at cost - 254,440 shares of common stock (5,089) (5,089) --------- --------- Total shareholders' equity 54,850 49,953 --------- -------- $114,463 $111,329 ======== ========
The accompanying notes are an integral part of the financial statements -1- SYBRON CHEMICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited in thousands except per share amounts)
Nine months ended September 30, 1996 1995 Net sales $130,311 $126,066 -------- -------- Cost of sales 83,009 83,105 Selling 22,676 21,848 General and administrative 8,028 6,956 Research and development 3,033 2,999 -------- -------- 116,746 114,908 -------- -------- Operating income 13,565 11,158 -------- -------- Other income(expense): Interest income 275 296 Interest expense (1,546) (1,906) Amortization of intangible assets (980) (1,214) Other - Net (401) (672) --------- --------- (2,652) (3,496) Income before income taxes 10,913 7,662 Provision for income taxes 4,440 3,091 --------- -------- Net income $ 6,473 $ 4,571 ======== ======== Net income per common share $ 1.15 $ 0.81 ======== ========
The accompanying notes are an integral part of the financial statements -2- SYBRON CHEMICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited in thousands except per share amounts)
Three months ended September 30, 1996 1995 Net sales $ 42,036 $ 39,127 -------- -------- Cost of sales 27,361 26,499 Selling 7,689 7,214 General and administrative 2,569 2,183 Research and development 1,007 1,021 -------- -------- 38,626 36,917 -------- -------- Operating income 3,410 2,210 -------- -------- Other income(expense): Interest income 90 107 Interest expense (491) (595) Amortization of intangible assets (334) (395) Other - net (227) (256) --------- --------- (962) (1,139) --------- -------- Income before income taxes 2,448 1,071 Provision for income taxes 978 452 --------- -------- Net income $ 1,470 $ 619 ========= ======== Net income per common share $ .26 $ .11 ========= ========
The accompanying notes are an integral part of the financial statements -3- SYBRON CHEMICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited in thousands)
Nine months ended September 30, 1996 1995 Cash flows from operating activities: Net income $ 6,473 $ 4,571 -------- ------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,824 5,095 Changes in assets and liabilities: Accounts receivable (2,867) (1,688) Inventory 2,342 (1,364) Other current assets (1,383) (899) Accounts payable and accrued expenses 3,783 846 Income taxes payable (361) 261 Other assets and liabilities - net (950) 376 -------- ------- Net cash provided by operating activities 11,861 7,198 -------- ------- Cash flows from investing activities: Capital expenditures (4,212) (4,234) Purchase of business assets (1,275) (8,308) Other, net 45 255 -------- ------- Net cash used by investing activities (5,442) (12,287) -------- -------- Cash flows from financing activities: Net (repayments) borrowings under revolving credit facilities (1,348) 8,385 Repayment of debt (2,429) -------- ------- Net cash (used) provided by financing activities (3,777) 8,385 -------- ------- Effect of exchange rate changes on cash (884) 336 -------- ------- Net increase in cash and cash equivalents 1,758 3,632 Cash and cash equivalents at beginning of period 11,284 6,975 -------- ------- Cash and cash equivalents at end of period $13,042 $10,607 ======== =======
The accompanying notes are an integral part of the financial statements -4- SYBRON CHEMICALS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited in thousands) NOTE 1 - ACCOUNTING POLICIES: The accompanying consolidated financial statements are unaudited and have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these consolidated financial statements contain all of the adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in summarized form, the financial position of the Company at September 30, 1996 and the results of its operations and changes in its cash flows for the nine months ended September 30, 1996 and 1995. The Company presumes that users of this Quarterly Report on Form 10-Q have read or have access to the audited financial statements for the year ended December 31, 1995 contained in the Company's Form 10-K which was filed with the Securities and Exchange Commission on April 1, 1996. Accordingly, footnote disclosures which would substantially duplicate the disclosures contained therein have been omitted. NOTE 2 - INVENTORIES: Inventories are stated at the lower of cost or market. For U.S. operations, cost is determined using the last-in, first-out (LIFO) method. For foreign operations, cost is determined using the first-in, first-out (FIFO) method. The components of inventories are: Sept. 30, Dec. 31, 1996 1995 Finished goods $15,192 $17,020 Work-in-progress 188 194 Raw materials 6,366 7,290 ------- ------- $21,746 $24,504 ======= ======= -5- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months Ended September 30, 1996 compared to Nine Months Ended September 30, 1995 and Three Months Ended September 30, 1996 compared to Three Months Ended September 30, 1995. The following tables set forth certain information about the Company's two business segments, Environmental Products and Services and Textile Chemical Specialties.
Nine Months Ended September 30, 1996 1995 (1) % of % of Amount Sales Amount Sales (in thousands except percentages) Sales Environmental Products and Services $ 40,852 31.3% $ 41,471 32.9% Textile Chemical Specialties 89,459 68.7 84,595 67.1 --------- ------ --------- ----- Total 130,311 100.0 126,066 100.0 Cost of Sales Environmental Products and Services 29,160 71.4 30,119 72.6 Textile Chemical Specialties 53,849 60.2 52,986 62.6 --------- ----- --------- ---- Total 83,009 63.7 83,105 65.9 Gross Margin Environmental Products and Services 11,692 28.6 11,352 27.4 Textile Chemical Specialties 35,610 39.8 31,609 37.4 --------- ----- --------- ---- Total 47,302 36.3 42,961 34.1 Operating Expense Environmental Products and Services 8,476 20.7 8,299 20.0 Textile Chemical Specialties 25,261 28.2 23,504 27.8 --------- ----- --------- ---- Total 33,737 25.9 31,803 25.2 Operating Income Environmental Products and Services 3,216 7.9 3,053 7.4 Textile Chemical Specialties 10,349 11.6 8,105 9.6 --------- ----- --------- ---- Total 13,565 10.4 11,158 8.9 Other Income (Expense), Net (2,652) (2.0) (3,496) (2.8) --------- ----- --------- ----- Income Before Income Taxes 10,913 8.4 7,662 6.1 Provision for Income Taxes 4,440 3.4 3,091 2.5 --------- ----- --------- ---- Net Income $ 6,473 5.0% $ 4,571 3.6% ========= ===== ========= ===== (1) Certain amounts have been reclassified for comparative purposes.
-6-
Three Months Ended September 30, 1996 1995 (1) % of % of Amount Sales Amount Sales (in thousands except percentages) Sales Environmental Products and Services $ 13,546 32.2% $ 13,406 34.3% Textile Chemical Specialties 28,490 67.8 25,721 65.7 -------- ------ -------- ----- Total 42,036 100.0 39,127 100.0 Cost of Sales Environmental Products and Services 9,704 71.6 9,829 73.3 Textile Chemical Specialties 17,657 62.0 16,670 64.8 -------- ----- -------- ---- Total 27,361 65.1 26,499 67.7 Gross Margin Environmental Products and Services 3,842 28.4 3,577 26.7 Textile Chemical Specialties 10,833 38.0 9,051 35.2 -------- ----- -------- ---- Total 14,675 34.9 12,628 32.3 Operating Expense Environmental Products and Services 2,976 22.0 2,761 20.6 Textile Chemical Specialties 8,289 29.1 7,657 29.8 -------- ----- -------- ---- Total 11,265 26.8 10,418 26.7 Operating Income Environmental Products and Services 866 6.4 816 6.1 Textile Chemical Specialties 2,544 8.9 1,394 5.4 -------- ----- -------- ---- Total 3,410 8.1 2,210 5.6 Other Income (Expense), Net (962) (2.3) (1,139) (2.9) -------- ----- -------- ----- Income Before Income Taxes 2,448 5.8 1,071 2.7 Provision for Income Taxes 978 2.3 452 1.1 -------- ----- -------- ----- Net Income $ 1,470 3.5% $ 619 1.6% ======= ===== ======== ====== (1) Certain amounts have been reclassified for comparative purposes.
-7- Operations Sales for the nine months and quarter ending September 30, 1996 increased by 3.4% and 7.4%, respectively, compared with similar 1995 periods. Sales in the Textile Chemical Specialties segment improved 5.7% and 10.8%, respectively, compared with similar 1995 periods. In the Environmental Products and Services segment, sales were 1.5% below last year's nine month level although third quarter sales increased by 1.0% compared with the similar 1995 period. In the Textile Chemical Specialties segment, Europe division sales in U.S. dollars for the nine month period and third quarter improved 14.8% and 26.2%, respectively, as compared with the same periods in 1995, while physical volume improved by 11.4% and 23.4%. Both periods were favorably impacted by substantial sales growth in Western Europe as well as developing markets in Eastern Europe and the Middle East. In the America division, substantial volume gains in Mexico combined with new product sales in the U.S. contributed to an overall 1.0% increase in third quarter sales versus 1995's similar period in spite of continued weakness in the North America textile market and the related organic chemicals business. For the nine month period, America division sales dropped by less than 1% although textile chemical sales grew substantially in Mexico and modestly in North America and Asia. These increases were offset by a decline in the related organic chemicals business due to the changing requirements of toll manufacturing customers. In the Environmental Product and Services segment, sales for the current nine month period declined by 1.5% versus the similar period in 1995 in spite of significant growth in biochemical product line sales for institutional, consumer, waste water and bioremediation applications. This decline principally resulted from a substantial reduction of export volume in the membrane product line due to competitive pricing combined with slight selling price decreases in the ion exchange product line. The overall 1.0% increase in third quarter sales was directly related to the continued improvement in biochemicals, which, for the quarter, more than offset lower sales in the membrane product line. Sales of specialty polymers, the remaining product line in this segment, had a modest positive impact for the quarter and the respective nine month period. The gross margin for the nine months and third quarter ending September 30, 1996 was 36.3% and 34.9%, an improvement over the 34.1% and 32.3% experienced during the comparable periods in 1995. The gross margin in the Textile Chemicals Specialties segment on a nine month basis was 39.8% while the quarter resulted in a 38.0% margin, both better than last year's comparable rates of 37.4% and 35.2%. The gross margins in Europe in both periods were substantially higher than the comparable periods in 1995 due to new -8- products selling at higher margins and the continued favorable currency impact of a weaker guilder as compared with certain European currencies. The gross margin in America, on a nine month basis, equalled last year's rate. However, for the third quarter, the gross margin in America dropped to 26.5% versus 28.1% in 1995 as a result of unfavorable inventory adjustments and increased manufacturing related costs, only partially offset by lower freight expenses. The gross margin in the Environmental Products and Services segment was 28.6% for the nine month period and 28.4% for the third quarter, both of which were better than the respective prior year margins of 27.4% and 26.7%. This improvement was principally the result of a favorable product mix and lower raw material costs. Ion exchange product line margins on a nine month basis were under last year's comparable rates due to decreases in average selling prices, unfavorable labor and manufacturing variances and reduced inventory levels. These variances were somewhat offset by lower costs for several major raw materials including styrene. However, for the quarter, margins improved as average selling prices essentially equalled last year's similar period while raw material prices were substantially lower. Membrane product line gross margins declined in both periods due to overall average selling price decreases which were partially offset by improved production efficiencies, lower raw material costs and continued cost controls. Margins increased in the specialty polymer product line which resulted from higher overall average selling prices and reduced raw materials costs, principally styrene. Operating expenses as a percent of sales for the nine month period increased to 25.9% as compared to last year's 25.2%. For the quarter, expenses were 26.8% of sales versus 26.7% for the similar 1995 period. In the Textile Chemical Specialties segment, expenses as a percentage of sales increased in the nine month period due to additions to the R&D and marketing staffs in North America and increased environmental, legal and compensation costs. However, for the quarter, this segment's expenses as a percentage of sales improved over the similar quarter in 1995 due to the significant increase in sales volume between the two periods. The Environmental Products and Services segment expenses increased as a percent of sales in both periods primarily due to the lower overall sales, increased legal and compensation costs and staff additions in the marketing area. Income Taxes and Other Items The Company's provision for income taxes was computed using applicable prevailing income tax rates. The Company's effective tax rate of 40.7% for the nine months increased slightly over last year's applicable rate of 40.3%. This increase was the result of the Company earning more of its income in higher tax rate jurisdictions. -9- Other income (expense) was ($2.7) million for the first nine months of 1996 versus ($3.5) million in last year's comparable period. The decrease was primarily due to lower interest expense related to a reduction in the amount of outstanding debt, lower amortization expense and the absence of a large non-recurring 1995 translation loss on Europe intercompany accounts. Liquidity and Capital Resources Cash and cash equivalents increased to $13.0 million as of September 30, 1996 compared to $11.3 million at December 31, 1995. This increase principally resulted from a substantial increase in net cash provided from operations due to higher net income and improvements in working capital. Net cash flow generated by operating activities totalled $11.9 million on a nine month basis versus $7.2 million for the same period in 1995. This increase principally was due to higher accounts payable and accrued expenses, lower inventory levels and improved net income, only partially offset by increased accounts receivables. Net cash used by investing activities totalled $5.4 million for the first nine months of 1996 as compared with $12.3 million for the same period in 1995. The decrease was principally due to the purchase of the Auralux Corporation in January 1995. Capital expenditures were essentially equal for both periods. Net cash used by financing activities for the nine month period of 1996 was $3.8 million. This use of capital was due to a principal repayment of $2.4 million on the Company's outstanding debt. During 1995, borrowings increased to fund the purchase of the Auralux Corporation. The Company has a $25 million multi-currency unsecured revolving line of credit with Bank of Boston which expires in July, 1998. The amount owed under this credit facility was approximately $7.5 million as of September 30, 1996. The Company had entered into a series of interest rate swap agreements which effectively converted a significant portion of its long term debt from a fixed rate of 8.17% to a variable rate based upon the 90 day Libor rate. The last swap agreement expired in February 1996. The Company's effective interest rate on all 1996 borrowings was 7.79%. During 1996, the Company believes its capital expenditures for existing operations can be funded from operating cash flow and are expected to be somewhat in excess of 1995 levels due to the relocation of its manufacturing facility in Mexico. The Company -10- further believes that between its anticipated operating cash flow and present credit facilities, it will be able to meet both short term and long term financial obligations in the foreseeable future. Foreign Exchange The Company has subsidiaries in Europe, Asia, Africa and the Americas and, for all subsidiaries, the Company has determined the functional currencies are the subsidiaries' local currency. The Company has a large manufacturing facility in Ede, Holland where chemicals are manufactured and sold either directly to customers or to various subsidiaries which are principally in Europe. Intercompany balances arise between the Dutch operation and various subsidiaries. The Company recognized an exchange gain of $33,000 in the Europe division in the first nine months of 1996 as compared with an exchange loss of $356,000 during the similar 1995 period. -11- PART II - OTHER INFORMATION Item 1. Legal Proceedings There have been no material developments in connection with any pending legal proceedings as reported in the Registrant's Form 10-K Annual Report which was filed with the Securities and Exchange Commission on April 1, 1996. -12- SIGNATURE 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. SYBRON CHEMICALS INC. /s/ Lawrence R. Hoffman Lawrence R. Hoffman Acting Principal Financial Date: November 12, 1996 and Accounting Officer EX-27 2
5 0000832815 SYBRON CHEMICALS INC. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 13,042,000 0 33,187,000 0 21,746,000 70,734,000 30,909,000 0 114,463,000 31,397,000 0 0 0 59,000 54,791,000 114,463,000 130,311,000 130,311,000 83,009,000 116,746,000 1,106,000 0 1,546,000 10,913,000 4,440,000 6,473,000 0 0 0 6,473,000 1.15 1.15
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