-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KT4KhQJj2jUmGaqOsScPLdwCAi45KTMBIc7SWQa0lt4njBpWuGqXjCxsTrFp+4tI Bop0mgC0B26tPLKzAkQnJA== 0000091817-94-000010.txt : 19940706 0000091817-94-000010.hdr.sgml : 19940706 ACCESSION NUMBER: 0000091817-94-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940531 FILED AS OF DATE: 19940628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORE INDUSTRIES INC CENTRAL INDEX KEY: 0000091817 STANDARD INDUSTRIAL CLASSIFICATION: 3825 IRS NUMBER: 381052434 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05034 FILM NUMBER: 94536290 BUSINESS ADDRESS: STREET 1: PO BOX 2000 STREET 2: 500 NORTH WOODWARD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 BUSINESS PHONE: 3136423400 MAIL ADDRESS: STREET 1: PO BOX 2000 STREET 2: 500 NORTH WOODWARD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48304 FORMER COMPANY: FORMER CONFORMED NAME: SOS CONSOLIDATED INC DATE OF NAME CHANGE: 19780228 FORMER COMPANY: FORMER CONFORMED NAME: SOSS MANUFACTURING CO DATE OF NAME CHANGE: 19690218 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 May 31, 1994 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 1-5034 CORE INDUSTRIES INC (Exact name of registrant as specified in its charter) Nevada 38-1052434 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. Box 2000, Bloomfield Hills, Michigan 48304 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (810)642-3400 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 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 Common Stock outstanding at May 31, 1994 - 9,802,398 shares. CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
For the Third Quarter Ended May 31, 1994 May 31, 1993 Net sales $60,578,000 $56,484,000 Cost of sales, exclusive of depreciation and amortization $43,187,000 $40,262,000 Depreciation and amortization 1,266,000 1,278,000 Selling, general and administrative expenses 11,348,000 10,613,000 Interest expense 1,156,000 1,176,000 Other income (215,000) (380,000) $56,742,000 $52,949,000 Earnings before taxes on income $3,836,000 $3,535,000 Taxes on income 1,390,000 1,290,000 Net earnings $2,446,000 $2,245,000 Net earnings per share $.25 $.23 Dividends per share $.06 $.06 Average shares of stock outstanding 9,801,000 9,777,000 See notes to financial statements
-2- CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
For the Nine Months Ended May 31, 1994 May 31, 1993 Net sales $164,180,000 $149,443,000 Cost of sales, exclusive of depreciation and amortization $116,040,000 $104,070,000 Depreciation and amortization 3,810,000 3,863,000 Selling, general and administrative expenses 31,203,000 29,791,000 Interest expense 3,422,000 3,877,000 Other income (2,102,000) (1,040,000) $152,373,000 $140,561,000 Earnings before taxes on income $11,807,000 $8,882,000 Taxes on income 4,310,000 3,250,000 Net earnings $7,497,000 $5,632,000 Net earnings per share $.77 $.58 Dividends per share $.18 $.18 Average shares of stock outstanding 9,799,000 9,776,000 See notes to financial statements
-3- CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASSETS
May 31, 1994 (Unaudited) Aug. 31, 1993 CURRENT ASSETS: Cash and cash equivalents $10,252,000 $651,000 Accounts receivable, less collection allowances of $950,000 in May and $970,000 in August 50,854,000 50,558,000 Inventories 50,998,000 54,092,000 Prepaid expenses 1,320,000 1,337,000 Deferred taxes on income 2,597,000 2,776,000 TOTAL CURRENT ASSETS $110,623,000 $109,414,000 PROPERTY, PLANT AND EQUIPMENT: Land and land improvements $1,278,000 $1,374,000 Buildings 17,607,000 18,672,000 Machinery and equipment 51,294,000 50,145,000 Total $70,179,000 $70,191,000 Less accumulated depreciation 42,417,000 41,304,000 TOTAL PROPERTY, PLANT AND EQUIPMENT $27,762,000 $28,887,000 OTHER ASSETS: Excess of cost over net assets of companies acquired $7,203,000 $7,269,000 Investment in real estate partnership 1,531,000 1,432,000 Prepaid pensions and other 5,357,000 4,275,000 TOTAL OTHER ASSETS $14,091,000 $12,976,000 $157,874,000 $151,277,000 See notes to financial statements
-4- LIABILITIES & STOCKHOLDERS' EQUITY
May 31, 1994 (Unaudited) Aug. 31, 1993 CURRENT LIABILITIES: Notes payable to bank -- $900,000 Accounts payable $12,879,000 12,521,000 Accrued payroll and other expenses 12,209,000 12,899,000 Dividends payable 588,000 587,000 Taxes on income 1,342,000 -- Long-term debt due within one year 1,610,000 1,500,000 TOTAL CURRENT LIABILITIES $28,628,000 $28,407,000 LONG-TERM DEBT, less amount due within one year 47,568,000 47,134,000 DEFERRED TAXES ON INCOME 1,990,000 1,580,000 ACCRUED EMPLOYEE BENEFITS 2,923,000 3,190,000 STOCKHOLDERS' EQUITY: Preferred stock, par value $1: Authorized - 100,000 shares Issued - none Common stock, par value $1: Authorized - 20,000,000 shares Issued - 11,212,558 shares $11,213,000 $11,208,000 Additional paid-in capital 747,000 728,000 Retained earnings 71,105,000 63,372,000 Cumulative translation adjustments 398,000 356,000 Treasury stock (1,410,160 shares) - at cost (6,698,000) (6,698,000) TOTAL STOCKHOLDERS' EQUITY $76,765,000 $70,966,000 $157,874,000 $151,277,000 See notes to financial statements
-5- CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended May 31 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $7,497,000 $5,632,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation $3,593,000 $3,689,000 Amortization 217,000 174,000 Gain on sale of division (915,000) -- (Increase) decrease in assets: Accounts receivable (639,000) (3,435,000) Inventories 957,000 (4,962,000) Prepaid expenses (28,000) (221,000) Taxes on income 899,000 3,176,000 Deferred taxes on income 450,000 3,606,000 Increase (decrease) in liabilities: Accounts payable (86,000) 4,203,000 Accrued payroll and other expenses (182,000) (99,000) TOTAL ADJUSTMENTS $4,266,000 $6,131,000 NET CASH PROVIDED BY OPERATING ACTIVITIES $11,763,000 $11,763,000 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($3,145,000) ($3,334,000) Proceeds from sale of division 5,898,000 -- Acquisition of businesses (2,232,000) -- Proceeds from disc. operations -- 7,651,000 Other (20,000) 184,000 NET CASH FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES: Net payments on short-term bank loans ($900,000) ($15,900,000) Cash dividends paid (1,763,000) (1,760,000) NET CASH USED IN FINANCING ACTIVITIES ($2,663,000) ($17,660,000) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,601,000 (1,396,000) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 651,000 1,917,000 CASH AND CASH EQUIVALENTS, END OF PERIOD $10,252,000 $521,000 SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $3,820,000 $4,201,000 Income taxes paid (refunded) $2,236,000 ($4,073,000) See notes to financial statements
-6- CORE INDUSTRIES INC AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE A The accompanying consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the information presented therein, and such adjustments are of a normal recurring nature. NOTE B Reference is made to the Company's Annual Report on Form 10-K for the year ended August 31, 1993, for a description of accounting policies and other detailed footnote information. NOTE C - Inventories
May 31, August 31, 1994 1993 Raw materials and supplies $25,883,000 $26,762,000 Work in process 12,313,000 13,417,000 Finished goods 12,802,000 13,913,000 $50,998,000 $54,092,000
NOTE D - Acquisition In May 1994 the Company's Mueller Steam Specialty unit acquired all of the capital stock of Hendrix Steel & Fabricating of Houston, Texas. Hendrix is primarily engaged in fabricating strainers and other specialty flow control products. The acquisition was accounted for as a purchase. NOTE E - Sale of Division On September 23, 1993, the Company sold one of its farm equipment divisions, Du-Al Manufacturing Company, for a pretax gain of $1,475,000 (total of $.09 per share, after tax). This gain is included in other income on the Statement of Earnings. Du-Al represented approximately 4% of the Company's total 1993 sales and approximately 4% of the Company's assets as of August 31, 1993. -7- NOTE F - Product Segment Information The Company classifies its products and services into three general segments. Financial information by segment is summarized below.
1994 Earnings Before Net Sales Income Taxes Third quarter ended May 31: Electronics $ 26,094,000 $ 1,690,000 Farm equipment 11,956,000 2,032,000 Fluid controls and construction products 22,528,000 2,116,000 Corporate unallocated - (846,000) Interest expense - (1,156,000) Total $ 60,578,000 $ 3,836,000 Nine months ended May 31: Electronics $ 75,404,000 $ 5,365,000 Farm equipment 29,126,000 5,977,000 (A) Fluid controls and construction products 59,650,000 6,402,000 Corporate unallocated - (2,515,000) Interest expense - (3,422,000) Total $164,180,000 $11,807,000 1993 Earnings Before Net Sales Income Taxes Third quarter ended May 31: Electronics $ 24,192,000 $ 1,158,000 Farm equipment 11,972,000 1,767,000 Fluid controls and construction products 20,320,000 2,562,000 Corporate unallocated - (776,000) Interest expense - (1,176,000) Total $ 56,484,000 $ 3,535,000 Nine months ended May 31: Electronics $ 64,706,000 $ 4,058,000 Farm equipment 30,515,000 4,201,000 Fluid controls and construction products 54,222,000 6,894,000 Corporate unallocated - (2,394,000) Interest expense - (3,877,000) Total $149,443,000 $ 8,882,000 Note A: Includes pretax gain of $1,475,000 (total of $.09 per share) related to the sale of Core's Du-Al division.
-8- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the first nine months of fiscal 1994, the Company's net sales increased 10% to $164,180,000. Net earnings for the first nine months of fiscal 1994 were $7,497,000, or $.77 per share. Included in this year's first nine month results was a net favorable $.09 per share related to the sale of the Company's Du-Al division in the first quarter; excluding this gain, net earnings were up $.10 per share or 17%. For the third quarter of fiscal 1994, net sales increased 7% to $60,578,000 compared to $56,484,000 for the corresponding quarter in the prior year. This year's third quarter net earnings were $2,446,000, or $.25 per share, up 9% from last year's net earnings of $2,245,000, or $.23 per share. For the first nine months of fiscal 1994, the Company's Electronics Group provided 46% of total sales; the Farm Equipment Group, 18% of total sales; and the Fluid Controls and Construction Products Group, 36% of sales. The Electronics Group reported strong improvement compared with the prior year comparable nine month and third quarter periods with sales increases of 17% and 8%, and earnings increases of 32% and 46%, respectively. New product introductions and increased market coverage programs in the Electronics Group's test, measurement and control businesses more than offset continued competitive margin pressures in its power supply unit. New products such as the acquired grain drill line and strong market conditions contributed to the Farm Equipment Group outpacing last year's third quarter results in spite of the first quarter divestiture of the Du-Al unit. Although sales were up over last year in the Fluid Controls and Construction Products Group, earnings lagged last year's third quarter and nine month periods primarily because of much lower return on sales at the Robert Carter mechanical contracting division because of increased competitive pressures. Overall gross profit margins on net sales for the first nine months of fiscal 1994 decreased to 29.3% from 30.4% last year, primarily due to margin pressures on the units in the Fluid Controls and Construction Products Group. Selling, general and administrative expenses decreased to 19.0% of sales from 19.9% in the prior year's first nine months as the pace of expense growth trailed sales. Interest expense declined 12% in this year's first nine months primarily due to reduced borrowings. Other income for the nine months ended May 31, 1994 includes the $1,475,000 first quarter gain related to the sale of the Company's Du-Al division. LIQUIDITY AND CAPITAL RESOURCES During the first nine months of fiscal 1994, the Company increased its cash and short-term investments $9,601,000. The sources of this increase were $11,763,000 from operating activities, $5,898,000 from the sale of the Company's -9- Du-Al division, offset by capital expenditures, acquisitions, reduction of bank debt and dividends. At May 31, 1994, the Company had working capital of $87,393,000 with a current ratio of 4.1 to 1 compared to working capital of $81,007,000 and a current ratio of 3.9 to 1 at the beginning of the fiscal year. The improved current ratio reflects the Company's profitable operations and the sale of the Company's Du-Al division. The Company's internal sources of funds are supplemented with unsecured bank credit facilities totaling $15 million (nothing outstanding at May 31, 1994). Management believes sufficient additional credit is available from banks and other sources should the need arise. Management also believes the Company's cash flow is more than sufficient to meet payments on maturing debt, capital expenditures and dividends. Stockholders' equity amounted to $76,765,000 or $7.83 per share at May 31, 1994, with total capital employed (total debt and equity) amounting to $126 million consisting of 39% debt and 61% equity. At the Company's current quarterly dividend rate of $.06 per share, annual dividend payments would approximate $2,350,000. Under the Company's debt agreements with insurance companies, retained earnings of approximately $19 million are available for dividends, subject to future earnings levels. -10- PART II - OTHER INFORMATION Items 1 through 5 of Part II are omitted because they are not applicable or because they are not required. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - None (b) There were no reports on Form 8-K filed for the three months ended May 31, 1994. -11- SIGNATURES 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. CORE INDUSTRIES INC (Registrant) Date: June 28, 1994 /s/ Raymond H. Steben, Jr. Raymond H. Steben, Jr. Vice President-Finance and Chief Financial Officer Date: June 28, 1994 /s/ Thomas G. Hooper Thomas G. Hooper Treasurer and Controller -12- -----END PRIVACY-ENHANCED MESSAGE-----