-----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, Kv3UhsN6i1wBi4j8kinKuxnBVAM3u+3jc6Z2ocq1D297exra1ezsv9/osw50PooV jcopioGHpjq6LOji67siJw== 0000950116-96-000406.txt : 19960517 0000950116-96-000406.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950116-96-000406 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE 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: 96567431 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 March 31, 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 March 31, 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 - March 31, 1996 and December 31, 1995 1 Consolidated Statement of Operations - three months ended March 31, 1996 and 1995 2 Consolidated Statement of Cash Flows - three months ended March 31, 1996 and 1995 3 Notes to Consolidated Financial Statements 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 5 - 8 Part II Other Information Item 1 Legal Proceedings 9 PART I - FINANCIAL INFORMATION SYBRON CHEMICALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited in thousands except share and per share data) ASSETS Mar. 31, Dec. 31, 1996 1995 -------- --------- Current assets: Cash and cash equivalents $ 11,298 $ 11,284 Accounts receivable, net 34,231 30,685 Inventories 24,422 24,504 Prepaid and other current assets 2,116 1,293 Deferred income taxes 64 68 -------- -------- Total current assets 72,131 67,834 Property, plant and equipment 30,778 31,149 Intangible assets 11,484 11,804 Other 610 542 -------- -------- $115,003 $111,329 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 156 $ 1,169 Accounts payable 15,726 15,364 Accrued liabilities 9,718 9,067 Current portion of long term debt 2,442 2,444 Income taxes payable 1,817 974 Deferred income taxes 355 321 -------- -------- Total current liabilities 30,214 29,339 Long-term debt 23,842 22,532 Deferred income taxes 3,340 3,450 Postretirement healthcare benefits 3,967 3,938 Other 2,092 2,117 -------- -------- Total liabilities 63,455 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 35,089 32,835 Cumulative translation adjustment (2,041) (1,382) -------- -------- 56,637 55,042 Less treasury stock, at cost - 254,440 shares of common stock (5,089) (5,089) -------- -------- Total shareholders' equity 51,548 49,953 -------- -------- $115,003 $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) Three months ended March 31, ------------------- 1996 1995(1) -------- -------- Net sales $ 43,672 $ 43,008 -------- -------- Cost of sales 27,958 27,899 Selling 7,302 7,119 General and administrative 2,612 2,327 Research and development 989 986 -------- -------- 38,861 38,331 -------- -------- Operating income 4,811 4,677 -------- -------- Other income(expense): Interest income 97 91 Interest expense (556) (629) Amortization of intangible assets (321) (410) Other - net (210) (422) -------- -------- (990) (1,370) -------- -------- Income before income taxes 3,821 3,307 Provision for income taxes 1,567 1,350 -------- -------- Net income $ 2,254 $ 1,957 ======== ======== Net income per common share and share equivalents $ .40 $ .35 ======== ======== (1) Certain amounts have been reclassified for comparative purposes. The accompanying notes are an integral part of the financial statements -2- SYBRON CHEMICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited in thousands) Three months ended March 31, ----------------- 1996 1995 ------ ------ Cash flows from operating activities: Net income $ 2,254 $1,957 ------- ------ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,606 1,667 Changes in assets and liabilities: Accounts receivable (3,720) (3,314) Inventory (97) (880) Other current assets (829) 111 Accounts payable and accrued expenses 1,247 1,696 Income taxes payable 848 283 Other assets and liabilities - net (37) 137 ------- ------ Net cash provided by operating activities 1,272 1,657 ------- ------ Cash flows from investing activities: Capital expenditures (1,146) (1,547) Purchase of business assets (8,259) Other, net 11 (183) ------- ------ Net cash used by investing activities (1,135) (9,989) ------- ------ Cash flows from financing activities: Net borrowings under revolving credit facilities 245 8,479 ------- ------ Net cash provided by financing activities 245 8,479 ------- ------ Effect of exchange rate changes on cash (368) 1,261 ------- ------ Net increase in cash and cash equivalents 14 1,408 Cash and cash equivalents at beginning of period 11,284 6,975 ------- ------ Cash and cash equivalents at end of period $11,298 $8,383 ======= ====== The accompanying notes are an integral part of the financial statements -3- 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 March 31, 1996 and the results of its operations and changes in its cash flows for the three months ended March 31, 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: March 31, Dec. 31, 1996 1995 --------- -------- Finished goods $16,464 $17,020 Work-in-progress 155 194 Raw materials 7,803 7,290 --------- -------- $24,422 $24,504 ========= ======== -4- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995. The following table sets forth certain information about the Company's two business segments, Environmental Products and Services and Textile Chemical Specialties. Three Months Ended March 31, ---------------------------------- 1996 1995(1) --------------- --------------- % of % of Amount Sales Amount Sales ------ ----- ------ ----- (in thousands except percentages) Sales Environmental Products and Services $ 13,648 31.3% $ 13,819 32.1% Textile Chemical Specialties 30,024 68.7 29,189 67.9 -------- ----- -------- ----- Total 43,672 100.0 43,008 100.0 Cost of Sales Environmental Products and Services 10,031 73.5 10,105 73.1 Textile Chemical Specialties 17,927 59.7 17,794 61.0 -------- ----- -------- ----- Total 27,958 64.0 27,899 64.9 Gross Margin Environmental Products and Services 3,617 26.5 3,714 26.9 Textile Chemical Specialties 12,097 40.3 11,395 39.0 -------- ----- -------- ----- Total 15,714 36.0 15,109 35.1 Operating Expense Environmental Products and Services 2,598 19.0 2,689 19.5 Textile Chemical Specialties 8,305 27.7 7,652 12.5 -------- ----- -------- ----- Total 10,903 25.0 10,432 24.2 Operating Income Environmental Products and Services 1,019 7.5 1,025 7.4 Textile Chemical Specialties 3,792 12.6 3,652 12.5 -------- ----- -------- ----- Total 4,811 11.0 4,677 10.9 Other Income (Expense), Net (990) (2.3) (1,370) (3.2) -------- ----- -------- ----- Income Before Income Taxes 3,821 8.7 3,307 7.7 Provision for Income Taxes 1,567 3.6 1,350 3.1 -------- ----- -------- ----- Net Income $ 2,254 5.2% $1,957 4.6% ======== ===== ======== ===== (1) Certain amounts have been reclassified for comparative purposes. -5- Operations Sales for the quarter ending March 31, 1996 increased by 1.5% compared with the similar 1995 period on the strength of a 2.9% increase in the Textile Chemical Specialties segment. Sales in the Environmental Products and Services segment were 1.2% under the first quarter of 1995. In the Textile Chemical Specialties segment, Europe sales for the quarter grew by 12.5% in terms of U.S. dollars compared with the same period in 1995. This improvement resulted from new product introductions and substantial sales growth in several developing markets including Egypt, Portugal, Russia, and Turkey, favorable currency effects and a slight overall price increase. Tonnage in Europe increased 4.1% on a quarter-to-quarter basis. America textile chemical sales declined by 4.5% compared with the first quarter of 1995, reflecting weak textile market conditions in the United States, offset to some extent by growth in business outside the United States, and reduced activity in the related organic chemical toll manufacturing operation. The decline in sales in the Environmental Products and Services segment principally resulted from substantially lower export business in the membrane product line which offset sales growth in the other product lines in this segment. Ion exchange resin sales grew by 1.4% due to increased domestic and export sales. Increased institutional, bioremediation and foreign sales volume and selected selling price increases resulted in a 7.0% improvement in the sales of the biochemical product line. The gross margin for the first quarter ending March 31, 1996 was 36.0%, compared with the 35.1% realized during the comparable period in 1995. The gross margin in the Textile Chemical Specialties segment increased to 40.3% compared with 39.0% during the first quarter of 1995. The gross margin on Europe textile chemical sales improved substantially due to new products selling at higher margins, selling price increases, and the favorable currency impact of a weaker guilder as compared with the other European currencies. The gross margin in America declined as a result of lower average selling prices and an unfavorable change in product mix. The gross margin in the Environmental Products and Services segment decreased to 26.5% from 26.9% in last year's similar period. This decline was principally the result of lower ion exchange margins due to decreases in average selling prices, unfavorable labor variances, reduced inventory levels and slightly increased plant spending. These negative factors were only partially offset by lower costs for freight and for several major raw materials, especially styrene. Manufacturing efficiencies, continued cost containment, favorable product mix and selected price increases lead to a significant improvement in the Biochemical product line gross margin. Operating expenses as a percent of sales for the first quarter increased to 25.0% as compared to last year's 24.2%. Operating expenses in the Environmental Products and Services segment decreased to 19.0% of sales versus last year's 19.5% as a result of continued efforts to control and reduce costs. In the Textile Chemical Specialties segment, expenses increased to 27.7% from last year's 26.5% primarily due to the lower sales and increased emphasis on research in North America. -6- 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 41.0% for the first quarter increased slightly over last year's applicable rate of 40.8%. Other income (expense) was approximately ($1.0) million for the first quarter of 1996 versus ($1.4) 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 at March 31, 1996 was approximately $11.3 million which was essentially equal to the December 31, 1995 balance. Net cash flow generated by operating activities was approximately $1.3 million for the first quarter of 1996 versus $1.7 million for the same period in 1995. The decrease principally resulted from lower accounts payable and accrued expenses and increased accounts receivable which were partially offset by higher net income and inventory levels. Net cash used for investing activities was approximately $1.1 million for the first quarter of 1996 compared with $10.0 million for the same period in 1995. The first quarter of 1995 was impacted by the purchase of the Auralux Corporation in January 1995. Capital expenditures for the first quarter of 1996 were approximately $1.1 million compared with $1.5 million for the comparable 1995 period. Net cash provided by financing activities for the first three months of 1996 was $245,000. This was substantially lower than the $8.5 million during the first quarter of 1995 which was the result of borrowings to fund the acquisition of Auralux Corporation. At March 31, 1996, the Company had a $25 million multi-currency unsecured revolving line of credit with Bank of Boston which expires in July, 1997. The amount owed under this credit facility was $9.2 million at March 31, 1996. The Company had previously 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 borrowings during the first quarter of 1996 was 8.13%. -7- 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 the Company's Mexican manufacturing facility from a leased facility to Company owned premises and certain site improvements at its Yantic, Connecticut facility. 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 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 $38,000 in the Europe division in the first three months of 1996 as compared with an exchange loss of $387,000 during the similar 1995 period. -8- 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. -9- 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 and Accounting Officer Date: May 15, 1996 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000832815 SYBRON CHEMICALS INC. 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 11,298,000 0 34,231,000 0 24,422,000 72,131,000 30,778,000 0 115,003,000 30,214,000 0 0 0 59,000 51,489,000 115,003,000 43,672,000 43,672,000 27,958,000 38,861,000 434,000 0 556,000 3,821,000 1,567,000 2,254,000 0 0 0 2,254,000 .40 .40
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