-----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, HH9vI3nLWScPpFgccWFGClbgTtl8FC6vSJy6IOLGEeLSBCiGC3HsGr17QBrQUY4D cC+cbf68qwTEe8+kalF6vQ== 0000950116-95-000492.txt : 20040504 0000950116-95-000492.hdr.sgml : 20040504 19951114140700 ACCESSION NUMBER: 0000950116-95-000492 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 DATE AS OF CHANGE: 19990831 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: 033-21866 FILM NUMBER: 95592166 BUSINESS ADDRESS: STREET 1: BIRMINGHAM RD STREET 2: PO BOX 66 CITY: BIRMINGHAM STATE: NJ ZIP: 08011 BUSINESS PHONE: 6098931100 MAIL ADDRESS: STREET 1: BIRMINGHAM ROAD STREET 2: PO BOX 66 CITY: BIRMINGHAM STATE: NJ ZIP: 08011 10-Q 1 FORM 10-Q 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, 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 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, 1995 - - - ----------------------------- ---------------------------------- 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, 1995 and December 31, 1994 1 Consolidated Statement of Operations - nine months ended September 30, 1995 and 1994 2 Consolidated Statement of Operations - three months ended September 30, 1995 and 1994 3 Consolidated Statement of Cash Flows - nine months ended September 30, 1995 and 1994 4 Notes to Consolidated Financial Statements 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 10 Part II Other Information Item 1 Legal Proceedings 11 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, 1995 1994 --------- --------- Current assets: Cash and cash equivalents $ 10,607 $ 6,975 Accounts receivable 31,241 28,349 Inventories 23,548 20,446 Prepaid and other current assets 2,746 1,415 Deferred income taxes 244 --------- --------- Total current assets 68,142 57,429 Property, plant and equipment 30,549 27,564 Intangible assets 11,026 8,411 Other 533 530 --------- --------- $ 110,250 $ 93,934 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 205 $ 692 Accounts payable 13,888 13,820 Accrued liabilities 9,258 7,303 Income taxes payable 333 107 Deferred income taxes 375 Current portion of long-term debt 2,429 --------- --------- Total current liabilities 26,488 21,922 Long-term debt 26,793 20,366 Deferred income taxes 2,953 3,010 Postretirement healthcare benefits 3,990 3,901 Other 1,879 2,035 --------- --------- Total liabilities 62,103 51,234 --------- --------- 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 31,077 26,506 Cumulative translation adjustment (1,430) (2,306) --------- --------- 53,236 47,789 Less treasury stock, at cost - 254,440 shares of common stock (5,089) (5,089) --------- --------- Total shareholders' equity 48,147 42,700 --------- --------- $ 110,250 $ 93,934 ========= ========= 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, -------------------------- 1995 1994 --------- --------- Net sales $ 126,066 $ 108,913 --------- --------- Cost of sales 83,105 68,654 Selling 21,848 18,742 General and administrative 6,956 6,482 Research and development 2,999 2,400 --------- --------- 114,908 96,278 --------- --------- Operating income 11,158 12,635 --------- --------- Other income(expense): Interest income 296 143 Interest expense (1,906) (1,243) Amortization of intangible assets (1,214) (806) Other - Net (672) (423) --------- --------- (3,496) (2,329) --------- --------- Income before income taxes 7,662 10,306 Provision for income taxes 3,091 4,022 Net income $ 4,571 $ 6,284 ========= ========= Net income per common share $ 0.81 $ 1.11 ========= ========= 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, ------------------------ 1995 1994 -------- -------- Net sales $ 39,127 $ 35,665 -------- -------- Cost of sales 26,499 23,047 Selling 7,214 6,288 General and administrative 2,183 2,253 Research and development 1,021 768 -------- -------- 36,917 32,356 -------- -------- Operating income 2,210 3,309 -------- -------- Other income(expense): Interest income 107 50 Interest expense (595) (481) Amortization of intangible assets (395) (280) Other - net (256) (163) -------- -------- (1,139) (874) -------- -------- Income before income taxes 1,071 2,435 Provision for income taxes 452 966 -------- -------- Net income $ 619 $ 1,469 ======== ======== Net income per common share and share equivalents $ .11 $ .26 ======== ======== 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, 1995 1994 -------- -------- Cash flows from operating activities: Net income $ 4,571 $ 6,284 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,095 4,082 Changes in assets and liabilities: Accounts receivable (1,688) (1,816) Inventory (1,364) 76 Other current assets (899) 1,712 Accounts payable and accrued expenses 846 (2,172) Income taxes payable 261 140 Other assets and liabilities - net 376 (1,057) -------- -------- Net cash provided by operating activities 7,198 7,249 -------- -------- Cash flows from investing activities: Capital expenditures (4,234) (4,235) Purchase of business assets (8,308) (3,272) Other, net 255 -------- -------- Net cash used by investing activities (12,287) (7,507) -------- -------- Cash flows from financing activities: Net borrowings under revolving credit facilities 8,385 1,660 Repayment of debt (5,388) -------- -------- Net cash provided (used) by financing activities 8,385 (3,728) -------- -------- Effect of exchange rate changes on cash 336 490 -------- -------- Net increase (decrease) in cash and cash equivalents 3,632 (3,496) Cash and cash equivalents at beginning of period 6,975 9,719 -------- -------- Cash and cash equivalents at end of period $ 10,607 $ 6,223 ======== ======== 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, 1995 and the results of its operations and changes in its cash flows for the nine months ended September 30, 1995 and 1994. 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, 1994 contained in the Company's Form 10-K which was filed with the Securities and Exchange Commission on March 30, 1995. 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, 1995 1994 ------- ------- Finished goods $16,423 $14,047 Work-in-progress 135 218 Raw materials 6,990 6,181 ------- ------- $23,548 $20,446 ======= ======= NOTE 3 - ACQUISITION: On January 9, 1995, the Company purchased all the outstanding stock of the Auralux Corporation ("Auralux"). Auralux, with annual revenues of approximately $10 million at the time of the acquisition, will operate as a subsidiary of the Company. Auralux is a manufacturer of textile chemicals used in fabric finishing with product lines including fire retardants, softeners, thermosetting resins and other specialty products. In connection with this acquisition, the Company acquired a nine acre site in Yantic, Connecticut from which Auralux manufactures, distributes and warehouses its products. The results of this acquisition were included in net income as of the purchase date. This acquisition was accounted for as a purchase and is not considered material for disclosure of pro forma effects. -5- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months Ended September 30, 1995 Compared to Nine Months Ended September 30, 1994 and Three Months Ended September 30, 1995 compared to Three Months Ended September 30, 1994. The following table sets forth certain information about the Company's two business segments, Environmental Products and Services and Textile Chemical Specialties. Nine Months Ended September 30, --------------------------------- 1995 1994 ---------------- --------------- % of % of Amount Sales Amount Sales -------- ----- -------- ----- (in thousands except percentages) Sales Environmental Products and Services $ 41,471 32.9% $ 38,975 35.8% Textile Chemical Specialties 84,595 67.1 69,938 64.2 -------- ----- -------- ----- Total 126,066 100.0 108,913 100.0 Cost of Sales Environmental Products and Services 29,603 71.4 26,386 67.7 Textile Chemical Specialties 53,502 63.2 42,268 60.4 -------- ----- -------- ----- Total 83,105 65.9 68,654 63.0 Gross Margin Environmental Products and Services 11,868 28.6 12,589 32.3 Textile Chemical Specialties 31,093 36.8 27,670 39.6 -------- ----- -------- ----- Total 42,961 34.1 40,259 37.0 Operating Expense Environmental Products and Services 8,299 20.0 7,918 20.3 Textile Chemical Specialties 23,504 27.8 19,706 28.2 -------- ----- -------- ----- Total 31,803 25.2 27,624 25.4 Operating Income Environmental Products and Services 3,569 8.6 4,671 12.0 Textile Chemical Specialties 7,589 9.0 7,964 11.4 -------- ----- -------- ----- Total 11,158 8.9 12,635 11.6 Other Income (Expense), Net (3,496) (2.8) (2,329) (2.1) -------- ----- -------- ----- Income Before Income Taxes 7,662 6.1 10,306 9.5 Provision for Income Taxes 3,091 2.5 4,022 3.7 -------- ----- -------- ----- Net Income $ 4,571 3.6% $ 6,284 5.8% ======== ===== ======== ===== -6- Three Months Ended September 30, -------------------------------------- 1995 1994 ----------------- ------------------ % of % of Amount Sales Amount Sales ------- ----- -------- ----- (in thousands except percentages) Sales Environmental Products and Services $13,406 34.3% $ 12,958 36.3% Textile Chemical Specialties 25,721 65.7 22,707 63.7 ------- ----- -------- ----- Total 39,127 100.0 35,665 100.0 Cost of Sales Environmental Products and Services 9,660 72.1 8,986 69.3 Textile Chemical Specialties 16,839 65.5 14,061 61.9 ------- ----- -------- ----- Total 26,499 67.7 23,047 64.6 Gross Margin Environmental Products and Services 3,746 27.9 3,972 30.7 Textile Chemical Specialties 8,882 34.5 8,646 38.1 ------- ----- -------- ----- Total 12,628 32.3 12,618 35.4 Operating Expense Environmental Products and Services 2,761 20.6 2,745 21.2 Textile Chemical Specialties 7,657 29.7 6,564 28.9 ------- ----- -------- ----- Total 10,418 26.7 9,309 26.1 Operating Income Environmental Products and Services 985 7.3 1,227 9.5 Textile Chemical Specialties 1,225 4.8 2,082 9.2 ------- ----- -------- ----- Total 2,210 5.6 3,309 9.3 Other Income (Expense), Net (1,139) (2.9) (874) (2.5) ------- ----- -------- ----- Income Before Income Taxes 1,071 2.7 2,435 6.8 Provision for Income Taxes 452 1.1 966 2.7 ------- ----- -------- ----- Net Income $ 619 1.6% $ 1,469 4.1% ======= ===== ======== ===== -7- Operations Sales for the nine months and quarter ending September 30, 1995 increased by 15.7% and 9.7%, respectively, compared with the similar 1994 periods. The largest growth was in the Textile Chemical Specialties segment which increased 21.0% and 13.3%, respectively. The Environmental Products and Services segment also showed improvement for both periods, increasing 6.4% and 3.5% over the same 1994 periods. Sales in the Textile Chemical Specialties segment in both America and Europe improved for the nine month and quarter periods. The sales growth of 28.0% and 18.6% during the first nine months and third quarter of 1995 in America principally resulted from the acquisition of the Auralux Corporation in January of this year along with growth in the liquid-for-solid, preparation and garment finishing product lines in the first six months. Europe division textile chemical sales for the 1995 nine month and third quarter periods improved in terms of U.S. dollars by 12.4% and 5.8%. In local currencies, Europe sales increased 4.4% and 1.9% with growth in units of 4.8% and 2.5%, principally the result of increases in Turkey, France, Germany, and Italy. Improved ion exchange and specialty polymer product line sales aided the growth in both periods in the Environmental Products and Services segment. For the year, selling prices in the ion exchange product line continue to be lower than the first nine months of 1994 and the market remained flat. Biochemical product line sales increased in the nine month and quarter periods due, in part, to initial revenues gained from a bioremediation project for a major U.S. oil company, and to improvements in the industrial and municipal wastewater treatment area. The Company's membrane product line improved on a nine month basis due to increased export business, although the third quarter was substantially under the same quarter in 1994 due to order spacing. The gross margin for the nine months and third quarter ending September 30, 1995 was 34.1% and 32.3%, lower than the 37.0% and 35.4% experienced during the comparable periods in 1994. The gross margin in the Textile Chemicals Specialties segment decreased to 36.8% and 34.5%, respectively, as compared with last year's similar periods of 39.6% and 38.1%. Margins dropped in both Europe and America. Europe continues to be adversely affected by the weakness of the lira in Italy, where a large portion of the sales occur, and increased U.S. dollar translated costs relating to the strong guilder in Holland where manufacturing costs are incurred. America margins declined in both periods due to an unfavorable product and customer mix, lower average selling prices and increased raw material costs. These were partially offset by lower freight costs, improved manufacturing efficiencies and overall continued cost controls. -8- The gross margin in the Environmental Products and Services segment decreased to 28.6% and 27.9%, respectively from last year's similar periods of 32.3% and 30.7%. These declines were principally the result of lower ion exchange margins due to continued period-to-period increases in major raw material costs, especially styrene, coupled with a decrease in average selling prices. These were somewhat offset by favorable manufacturing cost containment efforts. Biochemical gross margins also declined in both periods due to a continuing unfavorable mix and increased fixed manufacturing costs incurred in the development and support of new business. The remaining businesses in this segment had a slight overall decline in margins for both periods. Operating expenses as a percent of sales for the nine month period improved slightly to 25.2% as compared to last year's 25.4%. For the quarter, operating expenses as a percent of sales increased to 26.7% versus 26.1% for 1994's third quarter due to negative performance in the Textile Chemical Specialties segment caused by adverse currency impacts in Europe and slightly lower sales volumes in the core America business. 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 40.3% for the nine month period increased over last year's applicable rate of 39.0%. The increase was the result of the Company earning more of its income in jurisdictions with higher tax rates and certain purchase accounting adjustments related to the acquisition of a textile chemical specialty business. Other expense was $3.5 million for the nine months of 1995 versus $2.3 million in last year's comparable period. The increase was primarily due to higher interest expense and amortization related to the acquisition of the Auralux Corporation and the textile chemical business of CNC International and to losses on the translation of European textile chemical intercompany accounts on sales from Holland to other European subsidiaries with weak currencies. Liquidity and Capital Resources Cash and cash equivalents increased to $10.6 million as of September 30, 1995 compared to $7.0 million at December 31, 1994. This increase was primarily the result of net income from operations, the favorable impact of a weak U.S. dollar and a strong Dutch guilder since most of the cash is located in Europe, and additional borrowings. -9- Net cash flow generated by operating activities totalled $7.2 million on a nine month basis, approximately the same amount of cash generated in the similar 1994 period. In 1995, the Company experienced higher non-cash expenses and increases in accounts payable and accrued expenses on higher levels of business, offset by lower net income and increases in inventory and accounts receivable. Net cash used for investing activities totalled $12.3 million for the first nine months of 1995 as compared with $7.5 million for the same period in 1994. The increase was essentially the result of acquiring the Auralux Corporation in January 1995. Capital expenditures of $4.2 million were the same for the first nine months of both 1995 and 1994. Net cash provided by financing activities for the first nine months of 1995 included an increase in net borrowings of $8.4 million primarily due to the funding of the Auralux Corporation acquisition, and a EuroLira loan established in June as a hedge against the lira versus guilder exchange rates. In 1994, the Company reduced debt by approximately $3.7 million in excess of some additional borrowings. At September 30, 1995, the Company had a $25 million multi- currency unsecured revolving line of credit with Bank of Boston which expires in July, 1997 and owed $12,363,000 as of that date. The Company has 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 Company's effective interest rate on all borrowings during the first nine months of 1995 was 8.41%. During 1995, 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 1994 levels due to a planned relocation of a manufacturing facility in Mexico. The Company 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 that 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 exchange losses in the Europe division in the first nine months of 1995 of $356,000 compared to losses of $72,000 for the similar 1994 period. -10- 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 March 30, 1995. -11- 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/ Jeffrey Albin ------------------------------ Jeffrey Albin Executive Vice President- Date: November 10, 1995 Finance and Chief Financial Officer (Principal Financial and Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 0000832815 SYBRON CHEMICALS INC 9-MOS DEC-31-1995 JUL-01-1995 SEP-30-1995 10,607,000 0 31,241,000 0 23,548,000 68,142,000 30,549,000 0 110,250,000 26,488,000 0 23,589,000 0 0 24,558,000 110,250,000 39,127,000 39,127,000 26,499,000 36,917,000 544,000 0 595,000 1,071,000 452,000 0 0 0 0 619,000 0.11 0.11
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