-----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, LcYAscxWHqt1+5Dzh5vBnCUqlp08QvSi+4J2OPz5GCw7ehudccp8dOGcY8v8Fm3j x6JH5NEhYxqtS8crXDogqA== 0000093676-97-000005.txt : 19970514 0000093676-97-000005.hdr.sgml : 19970514 ACCESSION NUMBER: 0000093676-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970513 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: 97602211 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 March 29, 1997 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 March 29, 1997 : Class A Common Shares 5,025,402 Class B Common Shares 1,923,006 Page 1 of 8 THE L. S. STARRETT COMPANY CONTENTS Page No. Part I. Financial Information: Item 1. Financial Statements Consolidated Statements of Earnings and Cash Flows - thirteen and thirty-nine weeks ended March 29, 1997 and March 23, 1996 (unaudited) 3 Consolidated Balance Sheets - March 29, 1997 (unaudited) and June 29, 1996 4 Consolidated Statements of Stockholders' Equity - thirty-nine weeks ended March 29, 1997 and March 23, 1996 (unaudited) 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other information: Item 6. Exhibits and reports on Form 8-K 8 Page 2 of 8 THE L. S. STARRETT COMPANY Consolidated Statements of Earnings and Cash Flows (in thousands of dollars except per share data)(unaudited) 13 Weeks Ended 39 Weeks Ended EARNINGS 3/29/97 3/23/96 3/29/97 3/23/96 Net sales 60,489 53,042 183,712 166,925 Cost of goods sold (42,050) (36,863) (126,518)(116,816) Selling and general (12,426) (11,716) (37,275) (35,971) Other income and expense 316 163 1,081 1,369 Earnings before income taxes 6,329 4,626 21,000 15,507 Provision for federal, foreign and state income taxes 2,077 1,296 7,029 4,987 Net earnings 4,252 3,330 13,971 10,520 Earnings per share .61 .47 1.99 1.49 Dividends per share .18 .18 .54 .54 CASH FLOWS Cash flows from operating activities: Net earnings 4,252 3,330 13,971 10,520 Noncash expenses: Depreciation and amortization 2,592 2,296 7,637 6,982 Deferred taxes 90 96 348 588 Unrealized translation losses(gains) (4) 6 39 74 Working capital changes: Receivables 1,763 2,746 (1,454) 1,269 Inventories 980 (4,775) (1,590) (12,633) Other assets and liabilities (3,982) (329) (3,758) 2,538 Prepaid pension cost and other (324) (216) (471) (493) Net cash from operations 5,367 3,154 14,722 8,845 Cash flows from investing activities: Additions to plant and equipment (3,335) (3,668) (9,108) (9,118) (Increase)decrease in short-term investments (43) (1,332) 1,288 (32) Net cash used in investing (3,378) (5,000) (7,820) (9,150) Cash flows from financing activities: Short-term borrowings, net 1,835 1,856 411 3,378 Long-term debt repayments (1,000) 0 (1,300) (300) Common stock issued 838 750 2,731 2,253 Treasury shares purchased (2,675) (940) (5,871) (3,743) Dividends (1,247) (1,264) (3,766) (3,796) Net cash used in financing (2,249) 402 (7,795) (2,208) Effect of translation rate changes on cash (38) (2) (7) (29) Net decrease in cash (298) (1,446) (900) (2,542) Cash, beginning of period 815 1,493 1,417 2,589 Cash, end of period 517 47 517 47 See notes to consolidated financial statements Page 3 of 8 THE L. S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) Mar. 29 June 29 1997 1996 ASSETS (unaudited) Current assets: Cash 517 1,417 Investments 26,719 27,794 Accounts receivable (less allowance for doubtful accounts of $1,423,000 and $1,284,000) 39,733 37,745 Inventories: Finished goods 28,011 27,692 Goods in process and finished parts 27,567 22,858 Raw materials and supplies 16,943 19,746 72,521 70,296 Prepaid expenses and other current assets 1,521 4,746 Total current assets 141,011 141,998 Property, plant and equipment, at cost (less accumulated depreciation of $62,709,000 and $55,876,000) 61,518 59,602 Cost in excess of net assets acquired (less accumulated amortization of $3,418,000 and $3,117,000) 7,861 8,115 Prepaid pension cost 18,477 17,246 Other assets 351 351 229,218 227,312 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities 3,610 3,199 Accounts payable and accrued expenses 12,140 14,432 Accrued salaries and wages 4,951 6,149 Taxes payable 2,298 5,545 Employee deposits for stock purchase plan 498 528 Total current liabilities 23,497 29,853 Deferred income taxes 8,369 8,001 Long-term debt 5,800 7,100 Accumulated postretirement medical benefit obligation 15,763 15,073 Stockholders' equity: Class A Common $1 par (10,000,000 shrs. auth.; 5,025,402 outstanding in 1997, excluding 991,156 held in treasury; 5,051,215 outstanding in 1996, excluding 895,516 held in treasury) 5,025 5,051 Class B Common $1 par (10,000,000 shrs. auth.; 1,923,006 outstanding in 1997, excluding 251,731 held in treasury; 2,004,174 outstanding in 1996, excluding 220,572 held in treasury) 1,923 2,004 Additional paid-in capital 38,026 36,650 Retained earnings reinvested and employed in the business 134,068 128,272 Foreign currency translation adjustment (3,358) (4,716) Other equity adjustments 105 24 Total stockholders' equity 175,789 167,285 229,218 227,312 See Notes to Consolidated Financial Statements Page 4 of 8 THE L. S. STARRETT COMPANY Consolidated Statements of Stockholders' equity For the Thirty-nine Weeks Ended March 29, 1997 and March 23, 1996 (in thousands of dollars) (unaudited) Common Addi- Stock Out- tional Equity standing Paid-in Retained Adjust- ($1 Par) Capital Earnings ments Total Balance June 24, 1995 (883,556 Class A and 155,628 Class B shares in treasury) 7,117 34,610 119,506 (4,404) 156,829 Net earnings 10,520 10,520 Dividends ($.54) (3,796) (3,796) Treasury shares: Purchased (161) (774) (2,808) (3,743) Issued 91 2,020 2,111 Options exercised 7 135 142 Translation loss, net (911) (911) Investment valuation 322 322 Balance March 23, 1996 (899,272 Class A and 209,917 Class B shares in treasury) 7,054 35,991 123,422 (4,993) 161,474 Balance June 29, 1996 (895,516 Class A and 220,572 Class B shares in treasury) 7,055 36,650 128,272 (4,692) 167,285 Net earnings 13,971 13,971 Dividends ($.54) (3,766) (3,766) Treasury shares: Purchased (217) (1,245) (4,409) (5,871) Issued 90 2,289 2,379 Options exercised 20 332 352 Translation gain, net 1,358 1,358 Investment valuation 81 81 Balance March 29, 1997 (991,156 Class A and 251,731 Class B shares in treasury) 6,948 38,026 134,068 (3,253) 175,789 See Notes to Consolidated Financial Statements Page 5 of 8 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 March 29, 1997 and June 29, 1996; the results of operations and cash flows for the thirteen weeks and thirty-nine weeks ended March 29, 1997 and March 23, 1996; and changes in stockholders' equity for the thirty-nine weeks ended March 29, 1997 and March 23, 1996. 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 29, 1996, 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 Thirty-nine Weeks Ended March Ended March 1997 1996 1997 1996 Interest income 528 412 1,464 1,411 Interest expense and com- mitment fees (176) (296) (540) (694) Realized and unrealized ex- change losses (21) (17) (105) (162) Other (15) 64 262 814 316 163 1,081 1,369 Approximately 80% of all inventories are valued on the LIFO method. At March 29, 1997, and June 29, 1996, total inventories are $26,055,000 and $25,852,000 less, respectively, than if determined on a FIFO basis. Long-term debt is comprised of the following (in thousands): March June 1997 1996 Industrial revenue bond 2,400 2,700 Revolving credit agreement 4,000 5,000 6,400 7,700 Less current portion 600 600 5,800 7,100 In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No.128, "Earnings per Share," which will be effective for fiscal 1998. The adoption of this standard is not expected to have a material effect on reported earnings per share. Page 6 of 8 THE L. S. STARRETT COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales Sales are up 14% for the quarter and 10% year to date. The increases in the quarterly and year to date comparisons are primarily in domestic operations and reflect an overall improvement in domestic business conditions, although foreign sales have increased modestly. Earnings Before Taxes Pretax earnings are up 37% for the quarter and 35% year to date. This is a result of the increase in sales volume mentioned above, the related efficiencies from increased domestic manufacturing activity (mainly in the year to date comparison), and the fact that selling and general expenses increased at a lower rate than sales. Income Taxes The effective income tax rate is 33% for the quarter and year to date. This compares to 28% and 32% a year ago. Higher rates are due to the fact that the rate in the March quarter of last year was a little lower than normal because of the income mix between Puerto Rico and the U.S.. LIQUIDITY AND CAPITAL RESOURCES 13 Weeks Ended 39 Weeks Ended 3/29/97 3/23/96 3/29/97 3/23/96 Cash provided by operations 5,367 3,154 14,722 8,845 Cash used in investing activities (3,378) (5,000) (7,820) (9,150) Cash used in financing activities (2,249) 402 (7,795) (2,208) Cash effect of translation rate changes (38) (2) (7) (29) Net increase (decrease) in cash (298) (1,446) (900) (2,542) Increased cash flow provided by the increase in net earnings has been used primarily to finance increases in receivables and inventory resulting from the overall improvement in business activity as well as to purchase treasury shares. The Company maintains sufficient liquidity and has adequate resources, including lines of credit, to fund its operations under current business conditions. The Company continues to maintain a strong financial position with a working capital ratio of 6.0 to 1 as of March 29, 1997 and 4.8 to 1 as of June 29, 1996. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This quarterly report includes forward-looking statements about the Company's business, sales, liquidity and capital resources, and other operating and capital requirements. In addition, forward-looking statements concerning those and other issues may be included in future Company documents and in oral statements by Company representatives to security analysts and investors. The Company is subject to risks that could cause actual events to vary materially from such forward-looking statements. Such risks relate to the unpredicta- bility of foreign operations (particularly in Brazil), to the cyclical nature of the Company's industry (including the level of capital spending by industrial companies), and to competition, including pricing pressures from low-wage foreign sources and the effects of changes in foreign currency relationships. These risks are discussed in greater detail in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Report on Form 10K for the year ended June 29, 1996. Page 7 of 8 THE L. S. STARRETT COMPANY PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. 6(a) Exhibit 11. Calculation of shares for computation of Consolidated Earnings per share 13 Weeks Ended 39 Weeks Ended 3/29/97 3/23/96 3/29/97 3/23/96 Average number of shares out- standing during the period 6,977,310 7,046,911 7,011,779 7,061,774 Incremental shares computed on the assumption that dilutive stock options had been exercised with the proceeds used to purchase treasury stock 14,034 13,756 11,289 11,046 Average common and common equiva- lent shares outstanding 6,991,344 7,060,667 7,023,068 7,072,820 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 May 13, 1997 S/R.U.WELLINGTON, JR. R. U. Wellington, Jr. (Treasurer and Chief Financial Officer) Date May 13, 1997 S/S.G.THOMSON S. G. Thomson (Chief Accounting Officer) Page 8 of 8 EX-27 2
5 1000 9-MOS JUN-28-1997 MAR-29-1997 517 26,719 41,156 1,423 72,521 141,011 124,227 62,709 229,218 23,497 5,800 0 0 6,948 168,841 229,218 183,712 183,712 126,518 126,518 0 0 540 21,000 7,029 13,971 0 0 0 13,971 1.99 1.99
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