-----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, A8FmiEeKc0yING2i8wKgBQDYeCPzIUcGtKrpNYIEIB/3a/7wpcKe9KV7ggRrjG2k V+Fuj3sHrFDU002ilhOhCw== 0000093676-94-000012.txt : 19941107 0000093676-94-000012.hdr.sgml : 19941107 ACCESSION NUMBER: 0000093676-94-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940924 FILED AS OF DATE: 19941104 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARRETT L S CO CENTRAL INDEX KEY: 0000093676 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94557556 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 24, 1994 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 24, 1994 : Class A Common Shares 4,850,464 Class B Common Shares 2,236,202 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 24, 1994 and September 25, 1993 (unaudited) 3 Consolidated Balance Sheets - September 24, 1994 (unaudited) and June 25, 1994 4 Consolidated Statements of Stockholders' Equity - thirteen weeks ended September 24, 1994 and September 25, 1993 (unaudited) 5 Calculation of shares for Computation of Consolidated Earnings per Share - thirteen weeks ended September 24, 1994 and September 25, 1993 (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 9/24/94 9/25/93 Net sales 47,316 41,992 Cost of goods sold (34,054) (30,873) Selling and general (10,026) (9,175) Other income and expense 81 (615) Earnings before income taxes 3,317 1,329 Provision for federal, foreign and state income taxes 1,157 122 Net earnings 2,160 1,207 Earnings per share .30 .17 CASH FLOWS Cash flows from operating activities: Net earnings 2,160 1,207 Noncash expenses (income): Depreciation and amortization 2,326 2,164 Deferred taxes 684 232 Unrealized translation losses 301 1,760 Working capital changes: Receivables (2,696) (2,006) Inventories (476) 1,027 Other current assets and liabilities 2,523 1,835 Prepaid pension cost and other (480) (526) Net cash from operating activities 4,342 5,693 Cash flows from investing activities: Additions to plant and equipment (1,970) (2,671) Increase in short-term investments (2,781) (3,164) Net cash used in investing activities (4,751) (5,835) Cash flows from financing activities: Common stock issued 15 19 Treasury shares purchased (475) (502) Dividends (1,207) (1,200) Net cash used in financing activities (1,667) (1,683) Effect of translation rate changes on cash (57) (39) Net increase (decrease) in cash (2,133) (1,864) Cash, beginning of period 2,378 2,845 Cash, end of period 245 981 See notes to consolidated financial statements Page 3 of 9 THE L. S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) Sept. 24 June 25 1994 1994 ASSETS (unaudited) Current assets: Cash 245 2,378 Investments 29,874 27,055 Accounts receivable (less allowance for doubtful accounts of $1,048,000 and $954,000) 31,072 29,133 Inventories: Finished goods 22,636 23,530 Goods in process and finished parts 17,415 16,111 Raw materials and supplies 13,763 13,524 53,814 53,165 Prepaid expenses and other current assets 2,126 4,732 Total current assets 117,131 116,463 Property, plant and equipment, at cost (less accumulated depreciation of $51,083,000 and $48,786,000) 57,198 57,386 Cost in excess of net assets acquired (less accumu- lated amortization of $2,481,000 and $2,386,000) 8,742 8,822 Prepaid pension cost 15,530 14,897 Other assets 464 464 199,065 198,032 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities 1,477 1,583 Accounts payable and accrued expenses 11,588 11,222 Accrued salaries and wages 3,907 4,276 Taxes payable 1,838 2,327 Employee deposits for stock purchase plan 947 601 Total current liabilities 19,757 20,009 Deferred income taxes 7,357 7,110 Long-term debt 10,571 10,843 Accumulated postretirement medical benefit obligation 13,524 13,422 Stockholders' equity: Class A Common $1 par (10,000,000 shrs. auth.) 4,850 4,851 Class B Common $1 par (10,000,000 shrs. auth.) 2,236 2,256 Additional paid-in capital 32,185 32,272 Retained earnings reinvested and employed in the business 113,748 113,147 ESOP guaranteed bank loan (271) (543) Foreign currency translation adjustment (4,892) (5,335) Total stockholders' equity 147,856 146,648 199,065 198,032 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 24, 1994 and September 25, 1993 (in thousands of dollars) (unaudited) Equity Adjustments Common Addi- Stock Out- tional Currency standing Paid-in Retained Trans- ($1 Par) Capital Earnings ESOP lation Total Balance, 6/26/93 (1,303,954 Class A and 111,482 Class B shares in treasury) 7,065 30,023 110,259 (1,627) (4,298) 141,422 Net earnings 1,207 1,207 Dividends ($0.17) (1,200) (1,200) Treasury shares: Purchased (22) (87) (393) (502) Issued 1 18 19 ESOP loan repayments 271 271 Translation loss,net (1,228) (1,228) Balance, 9/25/93 (1,316,743 Class A and 118,602 Class B shares in treasury) 7,044 29,954 109,873 (1,356) (5,526) 139,989 Balance, 6/25/94 (1,251,378 Class A and 133,397 Class B shares in treasury) 7,107 32,272 113,147 (543) (5,335) 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, 9/24/94 (1,266,993 Class A and 138,511 Class B shares in treasury) 7,086 32,185 113,748 (271) (4,892) 147,856 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 9/24/94 9/25/93 Average number of shares outstanding during the period 7,099,308 7,057,805 Incremental shares computed on the assumption that dilutive stock options had been exercised with the proceeds used to purchase treasury stock 8,906 9,509 Average common and common equivalent shares outstanding 7,108,214 7,067,314 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 24, 1994 and June 25, 1994; and also the results of operations, cash flows and changes in stockholders' equity for the thirteen weeks ended September 24, 1994 and September 25, 1993. 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 25, 1994, and these financial statements should be read in conjunction with said annual report. The Company has adopted FAS 115 (Accounting for Certain Investments in Debt and Equity Securities) effective as of the beginning of the current fiscal year. The effect on financial condition and results of operations was not significant. The Company considers all its investments "available for sale." Other income (expense) is comprised of the following (in thousands): Thirteen Weeks Thirteen Weeks September 1994 September 1993 Interest income 328 230 Interest expense and com- mitment fees (221) (171) Realized and unrealized ex- change losses (236) (865) Other 210 191 81 (615) 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 24, 1994, and June 25, 1994, total inventories are $25,407,000 and $25,391,000 less, respectively, than if determined on a FIFO basis. Long-term debt is comprised of the following (in thousands): September June 1994 1994 Industrial revenue bond 3,900 3,900 ESOP guaranteed bank loan 271 543 Revolving credit agreement 7,000 7,000 11,171 11,443 Less current maturities 600 600 10,571 10,843 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 13% 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 150% from the September 1993 quarter. This reflects the increase in foreign and domestic sales volume mentioned above, particularly in Brazil, as well as an increase in factory operating hours resulting in higher overhead absorption. Income Taxes The overall effective income tax rate is 35% in the current quarter compared to 9% a year ago. Last year's rate was unusually low because of the relative contribution to overall pretax income from tax-exempt interest and operating earnings in Puerto Rico. The 1994 tax rate is more normal, but it has been adversely affected by the recent monetary policy changes in Brazil, which have dramatically reduced inflation, at least in the short term. The effect of these changes in Brazil has been a temporarily high effective tax rate. It is expected that this rate will come down next year when inventories purchased prior to the policy change have been used up. Accounting Change The Company has adopted FAS 115 (Accounting for Certain Investments in Debt and Equity Securities) effective as of the beginning of the current fiscal year. The effect on financial condition and results of operations was not significant. The Company considers all its investments "available for sale." Included in investments at September 24, 1994 is $3.6 million of liquid AAA rated Puerto Rico debt obligations. These investments were made during the current 1994 quarter for the purpose of reducing repatriation taxes and have maturities of up to ten years. LIQUIDITY AND CAPITAL RESOURCES The Company continues to maintain a strong financial position with a working capital ratio of 5.9 to one on September 24, 1994 and 5.8 to one on June 25, 1994. 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. Borrowings under the Company's $20 million revolving credit agreement have been used to finance acquisitions. 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 21, 1994. (c) The following directors were elected: abstentions Votes Votes and broker For Withheld non-votes A shares voting as separate class: William S. Hurley 4,393,386 23,452 N/A A and B shares voting together: Douglas A. Starrett 24,880,812 207,866 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 4, 1994 S/ R. U. WELLINGTON, JR. R. U. Wellington, Jr. (Treasurer and Chief Financial Officer) Date November 4, 1994 S/ S. G. THOMSON S. G. Thomson (Chief Accounting Officer) Page 9 of 9 EX-27 2
5 1000 QTR-1 JUN-24-1995 SEP-24-1994 245 29,874 32,120 1,048 53,814 117,131 108,281 51,083 199,065 19,757 10,571 7,086 0 0 140,770 199,065 47,316 47,316 34,054 34,054 0 0 221 3,317 1,157 2,160 0 0 0 2,160 .30 .30
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