-----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, rQYrFuxtQXNYTemUfEQeY9rmK+Ohc8e1vAVNNmudZ2qAFiXgjMzb2fdzWWbJxsds DkORp/oDzb49tZ6IT/E6sw== 0000091817-95-000005.txt : 199507060000091817-95-000005.hdr.sgml : 19950706 ACCESSION NUMBER: 0000091817-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950705 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORE INDUSTRIES INC CENTRAL INDEX KEY: 0000091817 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [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: 95552105 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, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 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 48303-2000 (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 June 30, 1995 - 9,808,992 shares. CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
Third Quarter Ended May 31 1995 1994 Net sales $63,499,000 $60,578,000 Cost of sales, exclusive of depreciation and amortization $43,095,000 $43,187,000 Depreciation and amortization 1,332,000 1,266,000 Selling, general and administrative expenses 13,181,000 11,348,000 Interest expense 1,036,000 1,156,000 Other income (208,000) (215,000) $58,436,000 $56,742,000 Earnings before taxes on income $5,063,000 $3,836,000 Taxes on income 1,930,000 1,390,000 Net earnings $3,133,000 $2,446,000 Net earnings per share $.32 $.25 Dividends per share $.06 $.06 Average shares of stock outstanding 9,809,000 9,801,000 See notes to financial statements
CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
Nine Months Ended May 31 1995 1994 Net sales $173,255,000 $164,180,000 Cost of sales, exclusive of depreciation and amortization $116,911,000 $116,040,000 Depreciation and amortization 3,949,000 3,810,000 Selling, general and administrative expenses 37,905,000 31,203,000 Interest expense 3,163,000 3,422,000 Other income (Note E) (788,000) (2,102,000) $161,140,000 $152,373,000 Earnings before taxes on income $12,115,000 $11,807,000 Taxes on income 4,600,000 4,310,000 Net earnings $7,515,000 $7,497,000 Net earnings per share (Note E) $.77 $.77 Dividends per share $.18 $.18 Average shares of stock outstanding 9,809,000 9,799,000 See notes to financial statements
CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASSETS
May 31, 1995 (Unaudited) Aug. 31, 1994 CURRENT ASSETS: Cash and cash equivalents $2,312,000 $14,643,000 Accounts receivable, less collection allowances of $1,125,000 in May and $960,000 in August 51,630,000 47,444,000 Inventories 56,592,000 48,863,000 Prepaid expenses 451,000 808,000 Deferred taxes on income 1,907,000 2,027,000 TOTAL CURRENT ASSETS $112,892,000 $113,785,000 PROPERTY, PLANT AND EQUIPMENT: Land and land improvements $1,295,000 $1,278,000 Buildings 18,732,000 18,161,000 Machinery and equipment 47,243,000 44,322,000 Total $67,270,000 $63,761,000 Less accumulated depreciation 38,924,000 36,377,000 TOTAL PROPERTY, PLANT AND EQUIPMENT $28,346,000 $27,384,000 OTHER ASSETS: Excess of cost over net assets of companies acquired $9,669,000 $7,033,000 Investment in real estate partnership 1,341,000 1,343,000 Note receivable 1,500,000 1,500,000 Prepaid pensions and other 5,505,000 5,342,000 TOTAL OTHER ASSETS $18,015,000 $15,218,000 $159,253,000 $156,387,000 See notes to financial statements
LIABILITIES & STOCKHOLDERS' EQUITY
May 31, 1995 (Unaudited) Aug. 31, 1994 CURRENT LIABILITIES: Accounts payable $12,970,000 $11,485,000 Accrued payroll and other expenses 12,836,000 12,817,000 Dividends payable 589,000 587,000 Taxes on income 1,452,000 1,585,000 Notes payable 1,297,000 -- Long-term debt due within one year 4,610,000 4,610,000 TOTAL CURRENT LIABILITIES $33,754,000 $31,084,000 LONG-TERM DEBT, less amount due within one year 35,580,000 41,608,000 DEFERRED TAXES ON INCOME 2,020,000 1,770,000 ACCRUED EMPLOYEE BENEFITS 2,789,000 2,908,000 STOCKHOLDERS' EQUITY: Preferred stock, par value $1: Authorized - 100,000 shares Issued - none Common stock, par value $1: Authorized - 20,000,000 shares Issued - 11,219,152 shares $11,219,000 $11,219,000 Additional paid-in capital 810,000 810,000 Retained earnings 78,775,000 73,025,000 Cumulative translation adjustments 1,004,000 661,000 Treasury stock (1,410,160 shares) - at cost (6,698,000) (6,698,000) TOTAL STOCKHOLDERS' EQUITY $85,110,000 $79,017,000 $159,253,000 $156,387,000 See notes to financial statements
CORE INDUSTRIES INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended May 31 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $7,515,000 $7,497,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation $3,625,000 $3,593,000 Amortization 324,000 217,000 Gain on sale of division -- (915,000) (Increase) decrease in assets: Accounts receivable (2,618,000) (639,000) Inventories (6,717,000) 957,000 Prepaid expenses 387,000 (28,000) Taxes on income (133,000) 899,000 Deferred taxes on income 370,000 450,000 Increase (decrease) in liabilities: Accounts payable 581,000 (86,000) Accrued payroll and other expenses (19,000) (182,000) TOTAL ADJUSTMENTS ($4,200,000) $4,266,000 NET CASH PROVIDED BY OPERATING ACTIVITIES ($3,315,000) $11,763,000 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($4,488,000) ($3,145,000) Proceeds from sale of division -- 5,898,000 Acquisition of businesses (3,515,000) (2,232,000) Other 151,000 (20,000) NET CASH FROM (USED FOR) INVESTING ACTIVITIES ($7,852,000) $501,000 CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid ($1,766,000) ($1,763,000) Reductions in long-term debt (6,028,000) -- Net payments on short-term bank loans -- (900,000) NET CASH USED IN FINANCING ACTIVITIES ($7,794,000) ($2,663,000) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (12,331,000) 9,601,000 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 14,643,000 651,000 CASH AND CASH EQUIVALENTS, END OF PERIOD $2,312,000 $10,252,000 SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $3,719,000 $3,820,000 Income taxes paid $4,464,000 $2,236,000 See notes to financial statements
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, 1994, for a description of accounting policies and other detailed footnote information. NOTE C - Inventories
May 31 August 31, 1995 1994 Raw materials and supplies $30,112,000 $25,976,000 Work in process 10,313,000 8,940,000 Finished goods 16,167,000 13,947,000 $56,592,000 $48,863,000
NOTE D - Acquisitions Effective January 1, 1995, the Company purchased two Companies. Core's Amprobe Instrument Division purchased Promax Industries, Inc., a manufacturer of refrigerant recycling and recovery products for the heating, ventilating, and air conditioning (HVAC) industry. Core's Fluid Control Group purchased Oil and Gas Specialties, Inc. (OGASCO), which designs and fabricates skid-mounted pipeline metering systems and fabricated strainers. These acquisitions were accounted for as purchases, and accordingly, the operating results of the acquired businesses have been included in the Company's financial statements from January 1, 1995. The pro forma results of operations, as if the operations of the acquired businesses had been included from September 1, 1994, would not differ materially from the amounts reported in the consolidated statement of earnings. The total cost of the above acquisitions was approximately $4,800,000, including short-term notes payable of $1,372,000. NOTE E - Sale of Division In last year's first quarter, 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 for the nine months ended May 31, 1995. NOTE F - Product Segment Information The Company classifies its products and services into three general segments. Financial information by segment is summarized below.
1995 Earnings (Loss) Before Net Sales Income Taxes Third quarter ended May 31: Electronics $ 29,015,000 $ 2,457,000 Farm equipment 12,593,000 1,906,000 Fluid controls and construction products 21,891,000 2,725,000 Corporate unallocated - (988,000) Interest expense - (1,037,000) Total $ 63,499,000 $ 5,063,000 Nine months ended May 31: Electronics $ 79,163,000 $ 5,213,000 Farm equipment 33,869,000 4,870,000 Fluid controls and construction products 60,223,000 8,013,000 Corporate unallocated - (2,818,000) Interest expense - (3,163,000) Total $173,255,000 $12,115,000 1994 Earnings (Loss) 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 (A) Note A: Includes first quarter pretax gain of $1,475,000 (total of $.09 per share) related to the sale of Core's Du-Al division.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the first nine months of fiscal 1995, the Company's net sales increased 6%, rising to $173,255,000 from $164,180,000. Net earnings for the nine month period of fiscal 1995 were $7,515,000, or $.77 per share. Included in last year's nine month results was a $.09 per share gain from the sale of a division; excluding this gain, net earnings were up 14%. For the third quarter of fiscal 1995, net sales increased 5% to $63,499,000 compared to $60,578,000 in last year's third quarter. This year's third quarter net earnings were $3,133,000, or $.32 per share, up 28% from last year's net earnings of $2,446,000, or $.25 per share. For the first nine months of fiscal 1995, the Company's Electronics Group provided 46% of total sales; the Farm Equipment Group, 19% of total sales; and the Fluid Controls and Construction Products Group, 35% of sales. The Electronics Group had a strong third quarter with earnings up 45% over last year due to improved performance in test, measurement and control products. The Electronics Group's nine month performance remained slightly behind last year due to the effect of the Cherokee division's weak first half performance; Cherokee's third quarter profit results rebounded and were slightly better than a year ago. The Farm Equipment Group had a 16% increase in sales and an 8% increase in earnings in the first nine months this year (excluding prior year's gain on sale of a division). However, third quarter earnings in the Farm Equipment Group were 6% short of the prior year due to the effects of excessive rain and related late planting in many areas. Earnings of the Fluid Controls and Construction Products Group increased 25% in the first nine months and 29% in the third quarter compared to last year on nominal sales changes. This was primarily due to improved performance of its fluid control products and the sale of an unprofitable steel door manufacturing unit last year. Overall gross margins on net sales for the first nine months of fiscal 1995 improved to 32.5% from 29.3% last year as a result of product mix changes. The increase in selling, general and administrative expenses from 19% of sales to 21.9% in this year's first nine months relates primarily to increased investments in research and development and higher promotional and selling costs related to new products and entering new markets. Interest expense declined 7.6% in this year's first nine months compared with last year due to reduced borrowings. Other income for the nine months ended May 31, 1994 includes a $1,475,000 gain related to the sale of the Company's Du-Al division. LIQUIDITY AND CAPITAL RESOURCES At May 31, 1995, the Company had working capital of $79.1 million and a current ratio of 3.3 to 1, and the Company's capital employed (total debt and equity) amounted to $125 million. Capital consisted of 32% debt and 68% equity, an improvement from 39% of total capital employed a year ago. During May 1995 the Company reduced its 10% long-term debt by $6 million under maximum allowable prepayment options. Management believes its current cash position, cash flows from operations, along with its borrowing capacity, are adequate to fund its strategies for future growth, including working capital, expenditures for manufacturing expansion and efficiencies, and acquisition activities. At the Company's current dividend rate of $.06 per share, annual dividend payments would approximate $2.4 million. Under the Company's debt agreements with insurance companies, retained earnings of approximately $24 million are available for dividends, subject to future earnings levels. Beginning this fiscal year the Company began using a new and integrated financial measurement system called "Economic Value Added" (EVA). EVA measures profit after a charge for the capital employed. Extensive market research has shown this measure to have a high correlation with long-term stock market valuation. Thus, a framework is provided for resource allocation and compensation decisions that focus more directly on creation of shareholder value. 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 27 - Financial Data Schedule (b) There were no reports on Form 8-K filed for the three months ended May 31, 1995. 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) /s/ RAYMOND H. STEBEN, JR. Date: July 5, 1995 -------------------------- Raymond H. Steben, Jr. Vice President-Finance and Chief Financial Officer /s/ THOMAS G. HOOPER Date: July 5, 1995 --------------------------- Thomas G. Hooper Treasurer and Controller INDEX TO EXHIBITS
EXHIBIT DESCRIPTION *27 Financial Data Schedule
*Filed herewith EX-27 2 EXHIBIT 27
5 9-MOS AUG-31-1995 SEP-01-1994 MAY-31-1995 2,312,000 0 52,755,000 (1,125,000) 56,592,000 112,892,000 67,270,000 38,294,000 159,253,000 33,754,000 35,580,000 11,219,000 0 0 73,891,000 159,253,000 173,255,000 173,255,000 116,911,000 158,765,000 (788,000) 0 3,163,000 12,115,000 4,600,000 7,515,000 0 0 0 7,515,000 .77 .77
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