-----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, PoWh+VwDN+KWIefKc+s7XpH6/OAhpjjYYiOz6j4wtziURt+sTp+mjf6647SsHMG1 goABKrEOd1tHs1Z+Wy1cFg== 0000891014-96-000014.txt : 19961113 0000891014-96-000014.hdr.sgml : 19961113 ACCESSION NUMBER: 0000891014-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MINERALS TECHNOLOGIES INC CENTRAL INDEX KEY: 0000891014 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 251190717 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11430 FILM NUMBER: 96660144 BUSINESS ADDRESS: STREET 1: 405 LEXINGTON AVENUE STREET 2: 19TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10174 BUSINESS PHONE: 2128781800 MAIL ADDRESS: STREET 1: THE CHRYSLER BUILDING STREET 2: 405 LEXINGTON AVENUE, 19TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10174-1901 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 29, 1996 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-3295 -- MINERALS TECHNOLOGIES INC. (Exact name of registrant as specified in its charter) DELAWARE 25-1190717 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 405 Lexington Avenue, New York, New York 10174-1901 (Address of principal executive offices, including zip code) (212) 878-1800 (Registrant's telephone number, including area code) 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 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 October 25, 1996 Common Stock, $.10 par value 22,610,030 1 MINERALS TECHNOLOGIES INC. INDEX TO FORM 10-Q Page No. PART I.FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Statement of Income for the three-month and nine-month periods ended September 29, 1996 and October 1, 1995 3 Condensed Consolidated Balance Sheet as of September 29, 1996 and December 31, 1995 4 Condensed Consolidated Statement of Cash Flows for the nine-month periods ended September 29, 1996 and October 1, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Independent Auditors' Report 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II.OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature 12 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three Months Ended Nine Months Ended ================== ================= Sept. 29, Oct. 1, Sept. 29, Oct. 1, (thousands of dollars, 1996 1995 1996 1995 except per share data) ========= ======= ======== ======== Net sales $144,121 $135,795 $412,696 $394,617 Operating costs and expenses: Cost of goods sold 102,540 97,883 294,974 283,594 Marketing, distribution and administrative expenses 18,152 17,332 54,377 52,233 Research and development expenses 4,892 4,999 14,671 14,850 ------- ------- ------- ------- Income from operations 18,537 15,581 48,674 43,940 Non-operating items: Other income 698 573 1,126 3,173 Other deductions (1,938) (833) (4,342) (3,458) ------- ------- ------- ------- Non-operating deductions, net (1,240) (260) (3,216) (285) Income before provision for taxes on income and minority interests 17,297 15,321 45,458 43,655 Provision for taxes on income 5,366 4,899 14,293 14,359 Minority interests 41 (145) (79) (171) ------- ------- ------- ------- Net income $ 11,890 $ 10,567 $ 31,244 $ 29,467 ======= ======= ======= ======= Earnings per common share $ 0.53 $ 0.47 $ 1.38 $ 1.30 ======= ======= ======= ======= Cash dividends declared per common share $ 0.025 $ 0.025 $ 0.075 $ 0.075 ======= ======= ======= ======= Weighted average number of common shares outstanding 22,616 22,642 22,627 22,627 ======= ======= ======= ======= See accompanying Notes to Condensed Consolidated Financial Statements. 3 MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEET ASSETS (thousands of dollars) Sept. 29, Dec. 31, 1996* 1995** ========= ======== Current assets: Cash and cash equivalents $ 12,144 $ 11,318 Accounts receivable, net 108,228 100,473 Inventories 70,671 64,637 Other current assets 10,553 5,997 ------- ------- Total current assets 201,596 182,425 Property, plant and equipment, less accumulated depreciation and depletion - Sept. 29, 1996 - $303,407; Dec. 31, 1995 - $275,665 495,571 455,809 Other assets and deferred charges 11,603 10,910 ------- ------- Total assets $708,770 $649,144 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt $ 18,459 $ 14,890 Current maturities of long-term debt 13,000 13,000 Accounts payable 26,365 30,405 Other current liabilities 33,095 37,384 ------- ------- Total current liabilities 90,919 95,679 Long-term debt 104,900 67,927 Other non-current liabilities 73,890 69,385 ------- ------- Total liabilities 269,709 232,991 Shareholders' equity: Common stock 2,523 2,515 Additional paid-in capital 135,020 133,221 Retained earnings 352,922 323,375 Currency translation adjustment 12,755 16,931 Unrealized holding gains 152 111 ------- ------- 503,372 476,153 Less common stock held in treasury, at cost 64,311 60,000 ------- ------- Total shareholders' equity 439,061 416,153 ------- ------- Total liabilities and shareholders' equity $708,770 $649,144 ======= ======= * Unaudited ** Condensed from audited financial statements. See accompanying Notes to Condensed Consolidated Financial Statements. 4 MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Nine Months Ended (thousands of dollars) Sept. 29, Oct. 1, 1996 1995 ========= ======= Operating Activities Net income $31,244 $ 29,467 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and depletion 34,445 30,072 Deferred income taxes 4,288 5,391 Other non-cash items 734 602 Net changes in operating assets and liabilities (28,784) ( 31,538) ------- ------- Net cash provided by operating activities 41,927 33,994 ------- ------- Investing Activities Purchases of property, plant and equipment (78,283) ( 74,338) Other investing activities, net 1,725 812 ------- ------- Net cash used in investing activities (76,558) ( 73,526) ------- ------- Financing Activities Increase in short-term debt 3,569 --- Issuance of long-term debt 50,000 --- Repayment of debt (13,027) ( 2,100) Purchase of common shares for treasury ( 4,311) --- Dividends paid ( 1,697) ( 1,698) Other financing activities, net 1,807 1,031 ------- ------- Net cash provided by (used in) financing activities 36,341 ( 2,767) ------- ------- Effect of exchange rate changes on cash and cash equivalents ( 884) 129 ------- ------- Net increase (decrease) in cash and cash equivalents 826 ( 42,170) Cash and cash equivalents at beginning of period 11,318 56,240 ------- ------- Cash and cash equivalents at end of period $12,144 $ 14,070 ======= ======= Interest paid $ 4,408 $ 3,180 ======= ======= Income taxes paid $10,446 $ 6,298 ======= ======= See accompanying Notes to Condensed Consolidated Financial Statements. 5 MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 -- Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for a fair presentation of the financial information for the periods indicated, have been included. The results for the three-month and nine-month periods ended September 29, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. Note 2 -- Inventories The following is a summary of inventories by major category: September 29, December 31, (thousands of dollars) 1996 1995 ============= ============ Raw materials $ 23,058 $ 17,919 Work in process 10,357 9,757 Finished goods 20,547 20,575 Packaging and supplies 16,709 16,386 ------- ------- Total inventories $ 70,671 $ 64,637 ======= ======= Note 3 -- Long-Term Debt and Commitments The following is a summary of long-term debt: September 29, December 31, (thousands of dollars) 1996 1995 ============= ============ 7.70% Industrial Development Revenue Bonds Series 1990 Due 2009 (secured) $ 7,300 $ 7,300 7.75% Economic Development Revenue Bonds Series 1990 Due 2010 (secured) 4,600 4,600 Variable/Fixed Rate Industrial Development Revenue Bonds Due 2009 4,000 4,000 6.04% Guarantied Senior Notes Due June 11, 2000 52,000 65,000 7.49% Guaranteed Senior Notes Due July 24, 2006 50,000 --- Other borrowings --- 27 ------- ------- 117,900 80,927 Less: Current maturities 13,000 13,000 ------- ------- Long-term debt $104,900 $ 67,927 ======= ======= 6 MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 3 -- Long-Term Debt and Commitments (cont'd) On July 24, 1996, through a private placement, the Company issued $50 million of 7.49% Guaranteed Senior Notes due July 24, 2006. The proceeds from the sale of the notes were used to refinance a portion of the short-term commercial bank debt outstanding. These notes rank pari passu with the Company's other unsecured senior obligations. No required principal payments are due until July 24, 2006. Interest on the notes is payable semi-annually. The Company has available approximately $110 million in uncommitted short-term bank credit lines, of which $16.7 million were in use at September 29, 1996. The interest rate on these borrowings was approximately 5.75%. Note 4 -- Litigation The Company is a defendant in a lawsuit pending in the U.S. District Court for the Western District of Michigan. The suit alleges that certain materials sold to the plaintiff corporation for use in truck transmissions were defective, necessitating repairs for which the plaintiff now seeks reimbursement. The suit was filed on July 31, 1996. The Company has evaluated the claims of this lawsuit to the extent possible considering the limited amount of information available, believes the claims to be without merit, and intends to contest them vigorously. The Company and its subsidiaries are not party to any other material pending legal proceedings, other than ordinary routine litigation incidental to their businesses. 7 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Minerals Technologies Inc.: We have reviewed the condensed consolidated balance sheet of Minerals Technologies Inc. and subsidiary companies as of September 29, 1996 and the related condensed consolidated statements of income for each of the three-month and nine-month periods ended September 29, 1996 and October 1, 1995 and cash flows for the nine-month periods then ended. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Minerals Technologies Inc. and subsidiary companies as of December 31, 1995, and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated January 31, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1995 is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. KPMG Peat Marwick LLP New York, New York November 11, 1996 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Income and Expense Items As a Percentage of Net Sales -------------------------------------- Three Months Ended Nine Months Ended ------------------ ----------------- Sept. 29, Oct. 1, Sept. 29, Oct. 1, 1996 1995 1996 1995 --------- ------- --------- ------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 71.1 72.1 71.5 71.9 Marketing, distribution and administrative expenses 12.6 12.7 13.2 13.2 Research and development expenses 3.4 3.7 3.5 3.8 ----- ----- ----- ----- Income from operations 12.9 11.5 11.8 11.1 Net income 8.3% 7.8% 7.6% 7.5% ===== ===== ===== ===== Results of Operations Three Months Ended September 29, 1996 as Compared with Three Months Ended October 1, 1995 Net sales in the third quarter of 1996 increased 6.1% to $144.1 million from $135.8 million in the third quarter of 1995. This increase was primarily attributable to higher volumes in the precipitated calcium carbonate ("PCC") line and in other mineral products. PCC sales grew 15.4% to $68.9 million from $59.7 million in the third quarter of 1995. This increase was primarily attributable to increased sales from five new satellite plants which began operations after the third quarter of 1995. In addition, expansion of production capacity at several satellite PCC plants during 1995 contributed to the sales growth. The Company began operation of a satellite plant in the United States during this quarter, as well as one in Israel, two in Brazil and a joint venture in Thailand during the first half of 1996. The Company has completed construction of its third satellite PCC plant in Brazil which will commence operations in the fourth quarter. In addition, the Company has three satellite PCC plants under construction - one in the United States, one in Slovakia and another in Indonesia. These satellite plants, combined, will be equivalent to approximately five satellite units and should be operational in the first half of 1997. A satellite "unit" produces between 25,000 and 35,000 tons of PCC annually. Net sales of other mineral products grew 8.3% in the third quarter of 1996 to $28.7 million from $26.5 million in the comparable quarter of 1995. This growth was due to increased volumes across the product line. Net sales of refractory products decreased 6.3% to $46.5 million from $49.6 million in the third quarter of 1995. The decrease in the refractory product line was attributable to overall volume declines in lower margin products and unfavorable foreign exchange rates. Net sales in the United States were 5.0% higher than in the prior year's third quarter, primarily due to volume growth in the PCC and other minerals product lines. Foreign sales were 8.9% higher than in the prior year, due primarily to the international expansion of the PCC satellite product line. This growth was partially offset by unfavorable foreign exchange rates. Income from operations rose 19.0% in the third quarter of 1996 to $18.5 million. This increase was due primarily to good growth in the PCC satellite operations, despite significant start-up costs at several international locations, improved profitability in refractory products, due primarily to the growth in the calcium and metallurgical wire product line and volume increases in the other minerals product line. Other deductions increased primarily due to higher interest costs associated with additional borrowings. Net income grew 12.5% to $11.9 million from $10.6 million. Earnings per share were $0.53 in the third quarter of 1996 compared to $0.47 in the prior year. 9 Nine Months Ended September 29, 1996 as Compared with Nine Months Ended October 1, 1995 Net sales for the first nine months of 1996 increased 4.6% to $412.7 million from $394.6 million in 1995. This increase was due primarily to the continued expansion of the PCC product line. PCC sales increased 12.4% to $192.3 million from $171.1 million in the prior year. Sales increases were primarily attributable to the commencement of operations at five new satellite PCC plants since the third quarter of 1995 and to production capacity expansions at several satellite plants during 1995. Net sales of other mineral products rose 4.5% to $75.9 million for the first nine months of 1996. Refractory product sales decreased 4.2 % to $144.5 million for the first nine months of 1996. This decrease was primarily due to an acceleration of reporting periods of certain international subsidiaries in the prior year and to unfavorable exchange rates. Net sales in the United States increased 5.2% to $285.0 million in the first nine months of 1996, due primarily to growth in the PCC product line and in the calcium and metallurgical wire product group. Net foreign sales increased approximately 3.3% to $127.7 million in the first nine months of 1996. This growth was primarily due to the foreign expansion of the PCC satellite product line, partially offset by the aforementioned acceleration of reporting periods in the prior year and to unfavorable exchange rates. Income from operations rose 10.8% to $48.7 million in the first nine months of 1996 from $43.9 million in the previous year. Other income decreased by $2.0 million in 1996. In the first nine months of 1995, the Company recorded a significant non-recurring foreign exchange gain while a small foreign exchange loss was recorded in the current year. In addition, interest income was significantly higher in the prior year due to higher levels of cash-on-hand. Other deductions increased primarily due to higher interest costs associated with additional borrowings. Net income increased 6.0% to $31.2 million from $29.5 million in 1995. Earnings per share were $1.38 compared to $1.30 in the prior year. Liquidity and Capital Resources The Company's financial position remained solid in the first nine months of 1996. Cash flows were provided principally from operations and short-term and long-term financing and were applied principally to fund $78.3 million of capital expenditures and approximately $28.8 million of working capital increases. In addition, the Company remitted its initial required principal payment of $13 million under the Company's Guarantied Senior Notes due June 11, 2000. On July 24, 1996, through a private placement, the Company issued $50 million of 7.49% Guaranteed Senior Notes due July 24, 2006. The proceeds from the sale of the notes were used to refinance a portion of the short-term commercial bank debt outstanding. No required principal payments are due until July 24, 2006. Interest on the notes is payable semi-annually. The Company has available approximately $110 million in uncommitted, short-term bank credit lines, of which $16.7 million were in use at September 29, 1996. The interest rate on these borrowings was approximately 5.75%. The Company anticipates that capital expenditures for all of 1996 will be approximately $100 million, principally related to the construction of satellite PCC plants, expansion projects at existing satellite PCC plants and at other mineral plants, and other opportunities which meet the strategic growth objectives of the Company. The Company expects to meet such requirements from internally generated funds, the aforementioned uncommitted bank credit lines, long-term financing and, where appropriate, project financing of certain satellite plants. 10 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is a defendant in a lawsuit captioned Eaton Corporation v. Pfizer Inc., Minerals Technologies Inc. and Specialty Minerals Inc. pending in the U.S. District Court for the Western District of Michigan. The suit alleges that certain materials sold to Eaton for use in truck transmissions were defective, necessitating repairs for which Eaton now seeks reimbursement. The suit was filed on July 31, 1996. The Company has evaluated the claims of this lawsuit to the extent possible considering the limited amount of information available, believes the claims to be without merit, and intends to contest them vigorously. The Company and its subsidiaries are not party to any other material pending legal proceedings, other than ordinary routine litigation incidental to their businesses. ITEM 6. EXIBITS AND REPORTS ON FORM 8-K a) Exhibits: 11 - Schedule re: Computation of earnings per common share (Part I Data). 15 - Accountants' Acknowledgment (Part I Data). 27 - Financial Data Schedule (submitted electronically to, but not filed with, the Securities and Exchange Commission pursuant to Rule 402 of Regulation S-T). b) No reports on Form 8-K were filed during the third quarter of 1996. 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. Minerals Technologies Inc. By: /s/ John R. Stack John R. Stack Vice President-Finance and Chief Financial Officer November 11, 1996 EX-11 2 EXHIBIT 11 SCHEDULE RE: COMPUTATION OF EARNINGS PER COMMON SHARE* (In thousands, except per share amounts) Three Months Ended Nine Months Ended ------------------ ----------------- Sept. 29, Oct 1, Sept. 29, Oct 1, 1996 1995 1996 1995 --------- ------ --------- ------ PRIMARY Net income $11,890 $10,567 $31,244 $29,467 ------ ------ ------ ------ Weighted average shares outstanding 22,616 22,642 22,627 22,627 ------ ------ ------ ------ Primary earnings per share * $ 0.53 $ 0.47 $ 1.38 $ 1.30 ====== ====== ====== ====== FULLY DILUTED Net income $11,890 $10,567 $31,244 $29,467 ------ ------ ------ ------ Weighted average shares outstanding 22,616 22,642 22,627 22,627 Add incremental shares representing: Shares issuable upon exercise of stock options based on period-end market price 500 423 500 423 ------ ------ ------ ------ Weighted average number of shares, as adjusted 23,116 23,065 23,127 23,050 ------ ------ ------ ------ Fully diluted earnings per share $ 0.51 $ 0.46 $ 1.35 $ 1.28 ====== ====== ====== ====== Dilutive effect of incremental shares 2.2% 1.9% 2.2% 1.9% ====== ====== ====== ====== * Incremental shares have not been considered in the computation of primary earnings per common share in accordance with generally accepted accounting principles, which require inclusion only when the dilutive effect is greater than 3%. EX-15 3 EXHIBIT 15 ACCOUNTANTS' ACKNOWLEDGEMENT The Board of Directors Minerals Technologies Inc.: Re: Registration Statement Nos. 33-59080, 33-65268 and 33-96558 With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated November 11, 1996, related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. Very truly yours, KPMG Peat Marwick LLP New York, New York November 11, 1996 EX-27 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the condensed consolidated financial statements of Minerals Technologies Inc., and is qualified in its entirety by reference to such condensed consolidated financial statements. 1,000 9-MOS DEC-31-1996 SEP-29-1996 12,144 0 108,228 0 70,671 201,596 798,978 303,407 708,770 90,919 104,900 0 0 2,523 487,942 708,770 412,696 412,696 294,974 294,974 14,671 0 0 45,458 14,293 31,244 0 0 0 31,244 1.38 0
-----END PRIVACY-ENHANCED MESSAGE-----