-----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, HmH5s2HA10m9zZxfbDgglGyysAeFOEFXTeag5s6H/E8eZCpg+RgZpc9Tm8wAPb0t dn91tzmhPkiL9bCKNB2vlg== 0000093676-95-000012.txt : 19951103 0000093676-95-000012.hdr.sgml : 19951103 ACCESSION NUMBER: 0000093676-95-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950923 FILED AS OF DATE: 19951102 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARRETT L S CO CENTRAL INDEX KEY: 0000093676 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 042756926 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00367 FILM NUMBER: 95586818 BUSINESS ADDRESS: STREET 1: 121 CRESCENT ST CITY: ATHOL STATE: MA ZIP: 01331 BUSINESS PHONE: 5082493551 10-Q 1 UNITED STATES 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 23, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission file number 1-367 THE L. S. STARRETT COMPANY (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-1866480 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No. 121 CRESCENT STREET, ATHOL, MASSACHUSETTS 01331-1915 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 508-249-3551 Former name, address and fiscal year, if changed since last report. 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 filings requirements for the past 90 days. YES X NO Common Shares outstanding as of September 23, 1995 : Class A Common Shares 4,992,361 Class B Common Shares 2,069,106 Page 1 of 9 THE L. S. STARRETT COMPANY CONTENTS Page No. Part I. Financial Information: Item 1. Financial Statements Consolidated Statements of Earnings and Cash Flows - thirteen weeks ended September 23, 1995 and September 24, 1994 (unaudited) 3 Consolidated Balance Sheets - September 23, 1995 (unaudited) and June 24, 1995 4 Consolidated Statements of Stockholders' Equity - thirteen weeks ended September 23, 1995 and September 24, 1994 (unaudited) 5 Calculation of shares for Computation of Consolidated Earnings per Share - thirteen weeks ended September 23, 1995 and September 24, 1994 (unaudited) 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information: Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 Page 2 of 9 THE L. S. STARRETT COMPANY Consolidated Statements of Earnings and Cash Flows (in thousands of dollars except per share data) (unaudited) 13 Weeks Ended EARNINGS 9/23/95 9/24/94 Net sales 52,000 47,316 Cost of goods sold (36,775) (34,054) Selling and general (12,033) (10,026) Other income and expense 754 81 Earnings before income taxes 3,946 3,317 Provision for federal, foreign and state income taxes 1,383 1,157 Net earnings 2,563 2,160 Earnings per share .36 .30 CASH FLOWS Cash flows from operating activities: Net earnings 2,563 2,160 Noncash expenses (income): Depreciation and amortization 2,354 2,326 Deferred taxes 404 684 Unrealized translation losses (gains) (2) 301 Working capital changes: Receivables 3,689 (2,696) Inventories (7,519) (476) Other current assets and liabilities (410) 2,523 Prepaid pension cost and other (136) (480) Net cash from operating activities 943 4,342 Cash flows from investing activities: Additions to plant and equipment (2,644) (1,970) (Increase) decrease in short-term investments 1,707 (2,781) Net cash used in investing activities (937) (4,751) Cash flows from financing activities: Common stock issued 623 15 Treasury shares purchased (1,912) (475) Dividends (1,267) (1,207) Net cash used in financing activities (2,556) (1,667) Effect of translation rate changes on cash (10) (57) Net increase (decrease) in cash (2,560) (2,133) Cash, beginning of period 2,589 2,378 Cash, end of period 29 245 See notes to consolidated financial statements Page 3 of 9 THE L. S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) Sept. 23 June 24 1995 1995 ASSETS (unaudited) Current assets: Cash 29 2,589 Investments 26,736 28,511 Accounts receivable (less allowance for doubtful accounts of $1,276,000 and $1,071,000) 34,793 38,716 Inventories: Finished goods 26,930 22,698 Goods in process and finished parts 19,483 18,928 Raw materials and supplies 17,077 14,571 63,490 56,197 Prepaid expenses and other current assets 2,272 4,625 Total current assets 127,320 130,638 Property, plant and equipment, at cost (less accumulated depreciation of $54,636,000 and $52,722,000) 58,367 58,135 Cost in excess of net assets acquired (less accumu- lated amortization of $2,846,000 and $2,766,000) 8,386 8,488 Prepaid pension cost 16,638 16,328 Other assets 351 351 211,062 213,940 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities 600 600 Accounts payable and accrued expenses 12,777 14,080 Accrued salaries and wages 4,981 5,102 Taxes payable 4,922 6,005 Employee deposits for stock purchase plan 288 378 Total current liabilities 23,568 26,165 Deferred income taxes 8,232 8,093 Long-term debt 8,700 8,700 Accumulated postretirement medical benefit obligation 14,252 14,153 Stockholders' equity: Class A Common $1 par (10,000,000 shrs. auth.) 4,992 4,951 Class B Common $1 par (10,000,000 shrs. auth.) 2,069 2,166 Additional paid-in capital 34,831 34,610 Retained earnings reinvested and employed in the business 119,348 119,506 Other equity adjustments (4,930) (4,404) Total stockholders' equity 156,310 156,829 211,062 213,940 See Notes to Consolidated Financial Statements Page 4 of 9 THE L. S. STARRETT COMPANY Consolidated Statements of Stockholders' equity For the Thirteen Weeks Ended September 23, 1995 and September 24, 1994 (in thousands of dollars) (unaudited) Common Addi- Stock Out- tional Equity standing Paid-in Retained Adjust- ($1 Par) Capital Earnings ments Total Balance June 25, 1994 (1,251,378 Class A and 133,397 Class B shares in treasury) 7,107 32,272 113,147 (5,878) 146,648 Net earnings 2,160 2,160 Dividends ($0.17) (1,207) (1,207) Treasury shares: Purchased (22) (101) (352) (475) Issued 1 14 15 ESOP loan repayments 272 272 Translation gain, net 443 443 Balance Sept. 24, 1994 (1,266,993 Class A and 138,511 Class B shares in treasury) 7,086 32,185 113,748 (5,163) 147,856 Balance June 24, 1995 (883,556 Class A and 155,628 Class B shares in treasury) 7,117 34,610 119,506 (4,404) 156,829 Net earnings 2,563 2,563 Dividends ($0.18) (1,267) (1,267) Treasury shares: Purchased (84) (374) (1,454) (1,912) Issued 28 595 623 Translation loss, net (555) (555) Investment valuation 29 29 Balance Sept. 23 1995 (901,689 Class A and 193,773 Class B shares in treasury) 7,061 34,831 119,348 (4,930) 156,310 See Notes to Consolidated Financial Statements Page 5 of 9 THE L. S. STARRETT COMPANY Calculation of Shares for Computation of Consolidated Earnings per Share (unaudited) 13 Weeks Ended 9/23/95 9/24/94 Average number of shares outstanding during the period 7,086,868 7,099,308 Incremental shares computed on the assumption that dilutive stock options had been exercised with the proceeds used to purchase treasury stock 10,596 8,906 Average common and common equivalent shares outstanding 7,097,464 7,108,214 See Notes to Consolidated Financial Statements Page 6 of 9 THE L. S. STARRETT COMPANY Notes to Consolidated Financial Statements In the opinion of management, the accompanying financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 23, 1995 and June 24, 1995; and also the results of operations, cash flows and changes in stockholders' equity for the thirteen weeks ended September 23, 1995 and September 24, 1994. The Company follows the same accounting policies in the preparation of interim statements as described in the Company's annual report filed on form 10-K for the year ended June 24, 1995, and these financial statements should be read in conjunction with said annual report. Other income (expense) is comprised of the following (in thousands): Thirteen Weeks Thirteen Weeks September 1995 September 1994 Interest income 516 328 Interest expense and com- mitment fees (176) (221) Realized and unrealized ex- change losses (28) (236) Other 442 210 754 81 The net effect of changes in foreign currency exchange rates includes realized exchange gains and losses from foreign currency transactions along with unrealized translation gains and losses from our subsidiary in Brazil, a country with a hyperinflationary economy. Translation gains and losses on short-term borrowings and marketable securities in Brazil are netted against the related interest charged or earned. Similar losses on accounts receivable are treated as sales discounts and are netted against sales. Approximately 80% of all inventories are valued on the LIFO method. At September 23, 1995, and June 24, 1995, total inventories are $25,720,000 and $25,627,000 less, respectively, than if determined on a FIFO basis. Long-term debt is comprised of the following (in thousands): September June 1995 1995 Industrial revenue bond 3,300 3,300 Revolving credit agreement 6,000 6,000 9,300 9,300 Less current maturities 600 600 8,700 8,700 Page 7 of 9 THE L. S. STARRETT COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales Sales for the September quarter are 10% above the corresponding quarter of a year ago. The increase is in both foreign and domestic operations and reflects an overall improvement in business conditions. Earnings Before Taxes Pretax earnings are up 19% from the September 1994 quarter. This primarily reflects the increase in foreign and domestic sales volume mentioned above as well as the efficiencies resulting from increased manufacturing activity. High real interest rates on short-term investments and a reduction in unrealized exchange losses mitigated increased selling and general expense. Income Taxes The overall effective income tax rate is 35% in the current quarter as well as the prior year's quarter. The rate has been adversely affected in both years by monetary policy changes in Brazil that have dramatically reduced inflation but also caused high taxes in U.S. dollars. LIQUIDITY AND CAPITAL RESOURCES The Company continues to maintain a strong financial position with a working capital ratio of 5.4 to one on September 23, 1995 and 5.0 to one on June 24, 1995. The fact that the changes in receivables and payables in the Statement of Cash Flows do not exactly match the changes in the related balance sheet accounts is because of inflation in Brazil. These differences should not be interpreted as uses and sources of cash, but rather as noncash adjustments to net income to arrive at cash generated from operations. Also, these differences tend to be offset by unrealized exchange gains and losses. The Company believes that existing cash balances, funds generated from operations and available funds under its credit line will be sufficient to meet foreseeable cash needs. Cash not immediately required for working capital needs is invested in short-term government securities and other money market investments. These temporary cash investments should be considered when analyzing overall cash flow. Page 8 of 9 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders. (a) A regular meeting of shareholders was held on September 20, 1995. (c) The following directors were elected: abstentions Votes Votes and broker For Withheld non-votes A shares voting as separate class: J. Richard Bullock 4,337,163 32,921 N/A A and B shares voting together: George B. Webber 24,570,317 153,387 N/A ITEM 6. Exhibits and Reports on Form 8-K. None 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. THE L. S. STARRETT COMPANY (Registrant) Date November 2, 1995 S/ R. U. WELLINGTON, JR. R. U. Wellington, Jr. (Treasurer and Chief Financial Officer) Date November 2, 1995 S/ S. G. THOMSON S. G. Thomson (Chief Accounting Officer) Page 9 of 9 EX-27 2
5 1000 3-MOS JUN-29-1996 SEP-23-1995 29 26,736 36,069 1,276 63,490 127,320 113,003 54,636 211,062 23,568 8,700 7,061 0 0 149,249 211,062 52,000 52,000 36,775 36,775 0 0 176 3,946 1,383 2,563 0 0 0 2,563 .36 .36
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