-----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, TCj82YTnTmQvDeP5hf+fO0Ue273N6UuiD7SpLYavpyRLPR9eWWdO2CMsc/jQqWx9 COHmvYo0cFwbT4Zz9emnuA== 0001014858-97-000035.txt : 19970514 0001014858-97-000035.hdr.sgml : 19970514 ACCESSION NUMBER: 0001014858-97-000035 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENFIELD INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000906419 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 042917072 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21828 FILM NUMBER: 97603064 BUSINESS ADDRESS: STREET 1: 2743 PERIMETER PARKWAY STREET 2: BLDG ONE HUNDRES STE 100 CITY: AUGUSTA STATE: GA ZIP: 30809-8625 BUSINESS PHONE: 7068637708 MAIL ADDRESS: STREET 1: 470 OLD EVANS RD CITY: EVANS STATE: GA ZIP: 30809-8625 10-Q 1 GREENFIELD INDUSTRIES FORM 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities - ----- Exchange Act of 1934. For the quarterly period ended March 31, 1997 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 0-21828 GREENFIELD INDUSTRIES, INC. 470 Old Evans Road Evans, Georgia 30809 706/863-7708 I.R.S. Employment I. D. 04-2917072 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 twelve months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes X No ---------- ---------- The number of shares of common stock outstanding at May 8, 1997 is 16,398,757 shares. Page 1 GREENFIELD INDUSTRIES, INC. INDEX Page Number Part I - Financial Information Item 1. Financial Statements Consolidated Statement of Operations - three months ended March 31, 1997 and 1996 (unaudited) 3 Consolidated Balance Sheet - March 31, 1997 (unaudited) and December 31, 1996 4 Consolidated Statement of Cash Flows - three months ended March 31, 1997 and 1996 (unaudited) 5 Consolidated Statement of Changes in Stockholders' Equity for the three months ended March 31, 1997 (unaudited) 6 Notes to Consolidated Financial Statements 7 - 11 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 12 - 17 Part II - Other Information Item 6 Exhibits and Reports on Form 8-K (a) Exhibits 18 (b) Reports on Form 8-K 18 Signature 19 Page 2 PART I FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (In thousands, except per share data) Three months ended March 31, --------- 1997 1996 ---- ---- Net sales $130,369 $132,698 Cost of sales 92,477 92,128 -------- -------- Gross profit 37,892 40,570 Selling, general and administrative expenses 23,994 22,626 -------- -------- Operating income 13,898 17,944 Interest expense 2,666 3,513 Dividends on company-obligated, mandatorily redeemable convertible preferred securities of subsidiary Greenfield Capital Trust at 6% per annum 1,725 -- -------- -------- Income before provision for income taxes 9,507 14,431 Provision for income taxes 3,850 5,862 -------- -------- Net income $ 5,657 $ 8,569 ======== ======== Earnings per share: Primary $ 0.35 $ 0.53 ======== ======== Fully diluted (see Note 8)(1) $ 0.35 $ -- ======== ======== Weighted average common and common equivalent shares outstanding: Primary 16,386 16,272 ======== ======== Fully diluted 19,174 -- ======== ========
(1) For the quarter ended March 31, 1996, there was no dilutive effect. See accompanying Notes to Consolidated Financial Statements. Page 3 CONSOLIDATED BALANCE SHEET (In thousands, except share data) March 31, December 31, 1997 1996 ---- ---- (UNAUDITED) ASSETS Current assets: Cash $ 914 $ 1,721 Accounts receivable, net 96,087 83,199 Inventories, net 171,009 152,659 Prepaid expenses and other 6,069 8,034 ----------- ----------- Total current assets 274,079 245,613 Property, plant and equipment, net 159,936 144,300 Goodwill, net 182,740 169,958 Other assets, net 3,060 2,773 ----------- ----------- Total assets $ 619,815 $ 562,644 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 6,435 $ 513 Accounts payable 32,940 22,392 Accrued liabilities 38,353 35,411 ----------- ----------- Total current liabilities 77,728 58,316 Long-term debt 193,604 162,625 Deferred income taxes 10,252 9,524 Other long-term liabilities 18,179 16,451 ----------- ----------- Total liabilities 299,763 246,916 ----------- ----------- Commitments and contingencies (see Note 10) Company-obligated, mandatorily redeemable convertible preferred securities of subsidiary Greenfield Capital Trust 115,000 115,000 ----------- ----------- Stockholders' equity: Preferred stock; $0.01 par value; 1,500,000 shares authorized; no shares issued and outstanding Common stock; $0.01 par value; 100,000,000 shares authorized; 16,398,257 and 16,374,925 shares issued and outstanding, respectively 164 164 Additional paid-in capital and other 110,333 109,759 Retained earnings 97,262 92,425 Cumulative translation adjustment (2,707) (1,620) ---------- ---------- Total stockholders' equity 205,052 200,728 ---------- ---------- Total liabilities and stockholders' equity $ 619,815 $ 562,644 =========== ===========
See accompanying Notes to Consolidated Financial Statements. Page 4 CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In thousands) Three months ended March 31, --------- 1997 1996 ---- ---- Cash flows from operating activities: Net income $ 5,657 $ 8,569 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 4,255 3,383 Amortization 1,152 1,096 Deferred income taxes 2,633 723 Tax benefits relating to exercise of stock options 4 118 Other 644 (196) Changes in operating assets and liabilities, net of the effects of acquisitions: Accounts receivable, net (5,670) (8,395) Inventories, net (7,812) (4,606) Prepaid expenses and other 2,285 (974) Accounts payable 2,220 (11,637) Accrued liabilities (761) 4,558 --------- --------- Net cash provided by (used in) operating activities 4,607 (7,361) --------- --------- Cash flows from investing activities: Capital expenditures (6,927) (8,615) Purchase of businesses, net of cash acquired (see Note 3) (33,853) (83,344) Other 957 36 --------- --------- Net cash used in investing activities (39,823) (91,923) --------- --------- Cash flows from financing activities: Proceeds from borrowings 38,084 97,459 Payments on borrowings (466) (3,718) Dividends paid on common stock (820) (651) Other (603) 667 --------- --------- Net cash provided by financing activities 36,195 93,757 --------- --------- Effect of exchange rate changes on cash (1,786) 269 Net decrease in cash (807) (5,258) Cash at beginning of period 1,721 5,258 --------- --------- Cash at end of period $ 914 $ 0 ========= =========
See accompanying Notes to Consolidated Financial Statements. Page 5 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED) (In thousands, except per share data) Additional Cumulative Common Paid-In Retained Translation Stock Capital & Other Earnings Adjustment Total ------ --------------- -------- ----------- ----- Balance, December 31, 1996 $ 164 $ 109,759 $ 92,425 $ (1,620) $ 200,728 Net income 5,657 5,657 Exercise of stock options and tax benefits related thereto 18 18 Dividends declared and paid ($0.05 per common share) (820) (820) Partial repayment of stock subscriptions receivable 17 17 Executive stock awards 539 539 Cumulative translation adjustment (1,087) (1,087) ------- --------- ------- --------- ---------- Balance, March 31, 1997 $ 164 $ 110,333 $ 97,262 $ (2,707) $ 205,052 ======= ========= ======= ========= ==========
See accompanying Notes to Consolidated Financial Statements. Page 6 GREENFIELD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data) 1. Unaudited consolidated financial statements The accompanying unaudited consolidated financial statements of Greenfield Industries, Inc. (Company or Greenfield) have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, such information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year. These statements should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements thereto included in the Company's Form 10-K for the year ended December 31, 1996. 2. Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation. 3. Acquisition On March 27, 1997, the Company acquired the outstanding shares of Hanita Metal Works, Ltd., an Israeli-based company, and its U. S. subsidiary Hanita Cutting Tools, Inc. (collectively, Hanita) for approximately $20,800 and assumed indebtedness of approximately $14,600. Hanita, with its primary manufacturing, sales and distribution operations in Israel, is a leading manufacturer of high-quality, high performance end mills and other cutting tools for the metalworking industry. Hanita also sells and distributes products around the world, including the United States, which accounts for approximately 40% of its sales. The acquisition, which will be accounted for using the purchase method of accounting, was financed through the Company's existing unsecured credit facility. For the year ended December 31, 1996, Hanita had net sales of approximately $27,000. The pro forma effects of the acquisition on the Company's results of operations are not material. The balance sheet of Hanita is included in the Company's consolidated balance sheet at December 31, 1996. Page 7 4. Financing The Company has a $180 million senior unsecured credit facility provided by six institutions. The facility includes a $130 million multi-currency revolving credit line and a $50 million U.S. acquisition line. The multi-currency revolving facility provides for loans of up to DM30 million and (pound sterling)15 million. As of March 31, 1997, the Company had approximately $81.3 million, (pound sterling)5.7 million and DM3.5 million outstanding under the revolving credit line. The revolving credit line generally bears interest at floating rates based upon the prime rate or LIBOR, at the option of the Company. As of March 31, 1997, the interest rates on the revolving credit line ranged from approximately 3.9% to 8.5%. As of March 31, 1997, borrowings under the multi-currency facility were as follows: Currency Amount US $ Equivalent Interest Rates -------- ------ --------------- -------------- U. S. Dollars $81,300 $81,300 6.1% to 8.5% British Pounds Sterling (pound)8,100 13,187 6.9% to 7.1% German DeutscheMarks DM5,800 3,516 3.7 to 3.9%
As of March 31, 1997, there were no borrowings under the acquisition facility. 5. Mandatorily Redeemable Convertible Preferred Securities On April 24, 1996, the Company completed a private placement to institutional investors of $115,000 of 6% Convertible Preferred Securities (liquidation peference of $50 per Convertible Preferred Security). The placement was made through Greenfield Capital Trust (Trust), a newly-formed Delaware business trust. The securities represent undivided beneficial ownership interest in the Trust and are fully, irrevocably and unconditionally guaranteed by Greenfield. Greenfield owns all of the common securities of the Trust. The assets of the Trust consist solely of Greenfield's 6% Convertible Junior Subordinated Deferrable Interest Debentures Due 2016 which were acquired with the proceeds from the offering. The Convertible Preferred Securities are convertible at the option of the holders at any time into the common stock of Greenfield at an effective conversion price of $41.25 per share and are redeemable at Greenfield's option after April 15, 1999. 6. Dividends On March 31, 1997, the Company paid a cash dividend of $0.05 per share to common stockholders of record on March 10, 1997. Total dividends paid approximated $820. On March 31, 1997, Greenfield Capital Trust paid quarterly cash dividends totalling approximately $1.7 million to holders of the Convertible Preferred Securities. Page 8 7. Supplemental balance sheet information March 31, December 31, 1997 1996 ---- ---- (Unaudited) Inventories: Raw material and component parts $ 56,861 $ 49,500 Work in process 39,493 38,055 Finished goods 74,655 65,104 ------ ------- $ 171,009 $152,659 ======= ======= Accrued liabilities: Employee compensation and benefits $ 20,979 $ 19,151 Restructuring costs 3,732 3,371 Interest 2,935 1,656 Other 10,707 11,233 -------- -------- $ 38,353 $ 35,411 ====== ======
8. Stock option and stock incentive plans consist of the following: Stock option plans - ------------------ The Company has three stock option plans: the Amended and Restated Employee Stock Option Plan (Employee Plan), the 1995 Directors Non-Qualified Stock Option Plan (Directors Plan) and the 1993 Directors Non-Qualified Stock Option Plan (1993 Directors Plan). The Employee Plan provides for the granting of options to purchase up to 1,000,000 shares of common stock to the Company's executive officers and key employees at prices equal to the fair market value of the stock on the date of grant. The Employee Plan was amended effective May 6, 1997, to, among other things, increase the number of options to purchase shares of common stock from 1,000,000 to 2,000,000. The Directors Plan provides for the granting of options to purchase up to 125,000 shares of common stock to the Company's directors who are not employees of the Company at prices equal to the fair market value of the stock on the date of grant. Options are granted to each eligible director on the date such person is first elected to the board of directors of the Company and on each subsequent re-election date. In addition, eligible directors serving as Chairman of a standing committee maintained by the Board receive options upon election and re-election. Page 9 The 1993 Directors Plan provides for the granting of options to purchase up to 100,000 shares of common stock to the Company's directors who are not employees of the Company at prices equal to the fair market value of the stock on the date of grant. Options are granted to each eligible director on the date such person is first elected to the board of directors of the Company. No further grants will be issued under the 1993 Directors Plan. A summary of stock option transactions for the three months ended March 31, 1997 pursuant to the Employee Plan, Directors Plan and 1993 Directors Plan follows: Weighted Shares Average Subject Exercise Price to Option Summary of stock options: Beginning of period $23.85 954,400 Options granted 23.17 33,000 Options exercised 16.13 (500) Options cancelled 28.82 (2,875) -------- End of period 23.82 984,025 ======== Exercisable at March 31, 1997 168,000 ========
The following table summarizes information for options currently outstanding and exercisable at March 31, 1997: Options Outstanding Options Exercisable -------------------- ------------------- Weighted Average Weighted Range of Number Remaining Average Number Weighted Average Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price - --------------- ----------- ---------------- -------------- ----------- -------------- $14 - 21 331,750 7 16.65 120,750 16.27 $22 - 29 546,775 9 26.73 47,250 24.02 $30 - 37 105,500 9 31.26 -- -- ------- ------- $14 - 37 984,025 8 23.82 168,000 18.45 ======= =======
Stock incentive plans - --------------------- The Company has two stock incentive plans: the 1995 Equity Incentive Plan (Incentive Plan) and the 1995 Restricted Stock Bonus Plan (Ownership Plan). The Incentive Plan provides for the granting of up to 273,000 shares of common stock to certain senior executives of the Company in time-lapse restricted stock, Page 10 performance contingent restricted stock and performance shares. Time-lapse restricted stock vests in one-third increments over a three-year period commencing four years after the date of the award. Performance contingent restricted stock is earned when the price for the Company's stock reaches certain predetermined levels, and then vests over a three- or five-year period. Performance shares are earned based on attainment of a predetermined four-year cumulative earnings per share level. Attainment of between 50% and 200% of the predetermined objective will entitle the participants to receive restricted performance shares of between 50% and 200% of the target award, which then vests over a three-year period. No performance shares are earned if less than 50% of the performance objective is obtained. The Ownership Plan provides for the issuance of up to 250,000 shares of common stock to certain employees, by allowing such employees to elect to defer up to 50% of their annual cash bonus and receive, in lieu thereof, shares of the Company's common stock. The Company will increase the employees' deferred bonus by either 20% or 35% (depending on the employees' selection of three or five years, respectively, for the restriction period). Shares issued under these plans are restricted and are subject to forfeiture upon termination of employment. During the restricted period, award holders have the right to vote and to receive dividends on such shares. A summary of stock issued pursuant to the Ownership Plan for the three months ended March 31, 1997 follows: Market Value Shares at Award Date Vesting Period ------ ------------- -------------- Ownership Plan 22,832 $24.625 Feb 1998 - Feb 2002 ======
9. Commitments and contingencies The Company is involved in certain claims and legal proceedings in which monetary damages are sought. The Company is vigorously contesting these claims. However, resolution of these claims is not expected to occur quickly and their ultimate outcome presently cannot be predicted. It is the opinion of management that any liability of the Company for claims or proceedings will not materially affect its financial position. Page 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL The following discussion summarizes the significant factors affecting the consolidated operating results and financial condition of Greenfield Industries, Inc. (Greenfield or the Company) for the three months ended March 31, 1997 compared to the three months ended March 31, 1996. This discussion should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements thereto included in the Company's Form 10-K for the year ended December 31, 1996. The Company has made the following acquisitions in the past two years: January 1996 Rule Industries, Inc. (Rule) June 1996 Boride Products, Inc. (Boride) July 1996 Arkansas Cutting Tools, a division of Production Carbide & Steel Company (ACT) December 1996 Bassett Rotary Tool Company (Bassett) March 1997 Hanita Metal Works, Ltd. (Hanita) Certain statements included herein are forward-looking statements. Actual results could differ materially from those anticipated as a result of various factors, including cyclical or other downturns in demand for the Company's products, manufacturing inefficiencies, dislocations arising from the consolidation and/or restructuring of acquired businesses, the inability to achieve cost reductions through consolidation and restructuring of acquired companies, and possible future acquisitions that may not be complementary or additive. Page 12 RESULT OF OPERATIONS The following table sets forth for the periods indicated the percentage of net sales represented by certain items reflected in the Company's consolidated statement of operations: Three months ended March 31, --------- 1997 1996 ---- ---- Net sales 100.0% 100.0% Cost of sales 70.9 69.4 ---- ---- Gross profit 29.1 30.6 Selling, general and administrative expenses 18.4 17.1 ---- ---- Operating income 10.7 13.5 Interest expense 2.1 2.6 Dividends on mandatorily redeemable convertible preferred securities 1.3 - ---- ---- Income before provision for income taxes 7.3 10.9 Provision for income taxes 3.0 4.4 --- --- Net income 4.3% 6.5% === ===
Page 13 THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996 Net sales for the three months ended March 31, 1997 were $130.4 million, a decrease of $2.3 million, or 1.8%, from net sales of $132.7 million for the three months ended March 31, 1996. Net sales for the three months ended March 31, 1997 were favorably affected by incremental sales of $4.5 million as a result of acquisitions since March 31, 1996. Excluding the effects of acquisitions, sales declined primarily due to softer market conditions, particularly in Western Europe, and unfavorable foreign currency exchange rates. Net sales of the six product groups, including the effects of acquisitions, were as follows: ($in millions) Three months ended March 31, Increase 1997 1996 (Decrease) ---- ---- ---------- ---------- Industrial $ 66.3 $ 70.7 $ (4.4) Electronics 14.9 17.0 (2.1) Engineered 18.4 16.4 2.0 Energy & Construction 16.0 14.4 1.6 Consumer 8.7 8.6 0.1 Marine 6.1 5.6 0.5 ------ ------ ------ $130.4 $132.7 $ (2.3) ====== ====== ======
The net sales of industrial and engineered products were positively impacted in the amounts of $2.4 million and $2.1 million, respectively, as a result of acquisitions since March 31, 1996. Sales for the industrial and electronics products groups, excluding the effects of the acquisitions, declined due to softer market conditions, particularly in Western Europe, and unfavorable foreign currency exchange rates. In addition, the Company believes that certain customers delayed orders in the first quarter of 1997 primarily as a result of inventory planning. Sales in the remaining product groups increased due to favorable market conditions and new product introductions. Gross profit decreased 6.6% to $37.9 million from $40.6 million, and gross margins decreased to 29.1% from 30.6% of net sales. The decline in gross profit and gross margins is primarily from lower production levels and plant inefficiencies resulting from a decline in net sales of existing businesses and higher costs caused by operating interruptions and plant inefficiencies at certain acquired operations. Page 14 Selling, general and administrative (SG&A) expenses increased $1.4 million in 1997 primarily as a result of acquisitions. SG&A expenses as a percentage of net sales increased to 18.4% from 17.1% as a result of acquisitions and lower net sales of existing businesses. Operating income declined $4.0 million, or 22.5%, to $13.4 million and operating margins decreased to 10.7% from 13.5% compared to the three months ended March 31, 1996. The operating profit and operating margin decreases resulted from the factors noted above. Interest expense decreased $0.8 million to $2.7 million for the three months ended March 31, 1997 from $3.5 million for the three months ended March 31, 1996. The decrease in interest expense resulted primarily from the decrease in the debt level due to the issuance of $115 million of mandatorily redeemable convertible preferred securities by the Company's wholly owned subsidiary, Greenfield Capital Trust, in April 1996. Dividends on company-obligated mandatorily redeemable convertible preferred securities of Greenfield Capital Trust were $1.7 million for the three months ended March 31, 1997. Provision for income taxes decreased to $3.9 million for the three months ended March 31, 1997, a decrease of $2.0 million over the three months ended March 31, 1996, due to the decrease in pretax income. Net income decreased to $5.7 million for the three months ended March 31, 1997, a decrease of $3.0 million, or 34.0%, from the same period in 1996 as a result of the factors noted above. Primary earnings per share decreased to $0.35 from $0.53 for the three months ended March 31, 1997 and 1996, respectively. LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31, 1997, cash provided by operating activities was approximately $4.6 million while during the three months ended March 31, 1996, cash used by operating activities was approximately $7.4 million. The increase in cash provided by operating activities is due primarily to an increase in accounts payable offset by a decrease in accrued liabilities primarily reflecting the payment of income taxes. In 1996, the Company paid certain past due accounts payables of the acquired business of Rule. Cash provided by operating and financing activities during the three months ended March 31, 1997 was used to finance capital expenditures of approximately $6.9 million and to pay dividends of approximately $0.8 million on the common stock. Net borrowings of the Company increased by approximately $37.6 million in the three months ended March 31, 1997, primarily due to the acquisition of Hanita. During the three months ended Page 15 March 31, 1996, cash provided by operating and financing activities was used to acquire the common stock of Rule of approximately $83.3 million to finance capital expenditures of approximately $8.6 million and to pay dividends of approximately $0.7 million on the common stock. Net borrowings of the Company increased by approximately $93.7 million in the three months ended March 31, 1996, primarily due to the acquisition of Rule. On March 27, 1997, the Company acquired all of the outstanding capital stock of Hanita Metal Works, Ltd. for approximately $20.8 million, and assumed indebtedness of approximately $14.6 million. Hanita is a leading manufacturer of high quality, high performance end mills for the metalworking industry. The Company has a $180 million senior unsecured credit facility provided by six institutions. The facility includes a $130 million multi-currency revolving credit line and a $50 million U.S. acquisition line. The multi-currency revolving facility provides for loans of up to DM30 million and (pound)15 million. As of March 31, 1997, the Company had approximately $81.3 million, (pound)5.7 million and DM3.5 million outstanding under the revolving credit line. The revolving credit line generally bears interest at floating rates based upon the prime rate or LIBOR, at the option of the Company. As of March 31, 1997, the interest rates on the revolving credit line ranged from approximately 3.9% to 8.5%. As of March 31, 1997, the buying rates for British pounds and German DeutscheMarks were $1.6448 per British pound and DM1.6678 per dollar, respectively. As of March 31, 1997, the Company had no borrowings outstanding under the acquisition line. The senior unsecured multi-currency credit facility has a scheduled maturity in December 2001. The agreement relating to the facility contains provisions which, among other things, limit certain additional borrowings and capital expenditures, require maintenance of certain debt-to-capital and debt-to-cash-flow ratios and net worth levels. At March 31, 1997 and 1996, the Company was in compliance with such provisions. On March 31, 1997, the Company paid a quarterly cash dividend of $0.05 per share to shareholders of record on March 10, 1997. On March 31, 1997, Greenfield Capital Trust paid quarterly cash dividends totalling approximately $1.7 million to holders of the convertible preferred securities. As of March 31, 1997, the Company had a backlog of $45.7 million, as compared to $45.8 million as of December 31, 1996. The Company's backlog consists of firm customer purchase orders which are subject to cancellation by the customer upon notification. The Company anticipates that approximately 90% of its backlog at any given time will be shipped within the next three-month period. Based on its current operating plans, the Company believes that it will have sufficient cash from operations and its existing credit facilities to meet its currently anticipated needs for liquidity and capital expenditures. Page 16 NEW ACCOUNTING PRONOUNCEMENTS In February 1997, Statement of Financial Accounting Standards No. 128, Earnings Per Share, (FAS 128), was issued. Management intends to adopt FAS 128 for the quarter ending December 31, 1997 and does not expect any material effect from this adoption. FORWARD-LOOKING STATEMENTS Certain statements included herein are forward-looking statements. Actual results could differ materially from those anticipated as a result of various factors, including cyclical or other downturns in demand for the Company products, manufacturing inefficiencies, dislocations arising from the consolidation and/or restructuring of acquired businesses, the inability to achieve cost reductions through consolidation and restructuring of acquired companies, and possible future acquisitions that may not be complementary or additive. Page 17 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11 Statement re: Computation of Per Share Earnings 27 Financial Data Schedule (b) Reports on Form 8-K On January 21, 1997, the Company filed a report on Form 8-K pertaining to the expected results of the Company's operations for the year ended December 31, 1996. Page 18 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. GREENFIELD INDUSTRIES, INC. Date: May 13, 1997 /S/ Gary L. Weller -------------------------------------------- Gary L. Weller Senior Vice President Chief Financial Officer (Principal Accounting and Financial Officer) EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS Exhibit 11 GREENFIELD INDUSTRIES, INC. STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (1) (In thousands, except per share data) Three Months Ended March 31 PRIMARY EARNINGS PER SHARE: 1997 1996 ---- ---- Weighted average number of common shares outstanding 16,386 16,272 ======= ======= Net income $5,657 $8,569 ======= ======= Net income per common share $0.35 $0.53 ======= ======= FULLY DILUTED EARNINGS PER SHARE: Weighted average number of common shares outstanding 16,386 16,272 Shares issued upon assumed conversion of the Mandatorily Redeemable Convertible Preferred Securities 2,788 -- ------- ------- Weighted average number of common and common equivalent shares outstanding 19,174 16,272 ======= ======= Net income $5,657 $8,569 Interest expense on Mandatorily Redeemable Convertible Preferred Securities, net of applicable income 1,035 -- ------- ------- Net income, adjusted $6,692 $8,569 ======= ======= Net income per common share $0.35 $0.53 ======= =======
(1) All numbers of shares in this exhibit are weighted on the basis of the number of days the shares were outstanding or assumed to be outstanding during each period. The effect of shares to be issued upon the exercise of outstanding stock options using the treasury stock method is not material. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ATTACHED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. Dollars 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1 914 0 99,973 3,886 171,009 274,079 223,112 63,176 619,815 77,728 193,604 115,000 0 164 204,888 619,815 130,369 130,369 92,477 92,477 23,994 0 2,666 9,507 3,850 5,657 0 0 0 5,657 0.35 0.35
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