-----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, LBJt6rms+EedB4azafJf9wMaFJGS8hjDIYnYR6DCFe9W4NhXGemRgvkM+zZTyB3k NdjSDNgnBRpPXWqmyTuyvA== 0000093676-96-000002.txt : 19960207 0000093676-96-000002.hdr.sgml : 19960207 ACCESSION NUMBER: 0000093676-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951223 FILED AS OF DATE: 19960206 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: 96511415 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 December 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 December 23, 1995 : Class A Common Shares 5,003,797 Class B Common Shares 2,058,158 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 and twenty-six weeks ended December 23, 1995 and December 24, 1994 (unaudited) 3 Consolidated Balance Sheets - December 23, 1995 (unaudited) and June 24, 1995 4 Consolidated Statements of Stockholders' Equity - twenty-six weeks ended December 23, 1995 and December 24, 1994 (unaudited) 5 Calculation of Shares for Computation of Consolidated Earnings per Share - thirteen and twenty-six weeks ended December 23, 1995 and December 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 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 26 Weeks Ended EARNINGS 12/23/95 12/24/94 12/23/95 12/24/94 Net sales 61,883 56,132 113,883 103,448 Cost of goods sold (43,178) (39,425) (79,953) (73,479) Selling and general (12,222) (10,879) (24,255) (20,905) Other income and expense 452 433 1,206 514 Earnings before income taxes 6,935 6,261 10,881 9,578 Provision for federal, foreign and state income taxes 2,308 2,416 3,691 3,573 Net earnings 4,627 3,845 7,190 6,005 Earnings per share .66 .55 1.02 .85 Dividends per share .18 .17 .36 .34 CASH FLOWS Cash flows from operating activities: Net earnings 4,627 3,845 7,190 6,005 Noncash expenses: Depreciation and amortization 2,332 2,330 4,686 4,656 Deferred taxes 88 197 492 881 Unrealized translation losses 70 9 68 310 Working capital changes: Receivables (5,166) (1,423) (1,477) (4,119) Inventories (339) 1,912 (7,858) 1,436 Other assets and liabilities 4,799 2,328 4,389 4,851 Prepaid pension cost and other (141) (792) (277) (1,272) Net cash from operations 6,270 8,406 7,213 12,748 Cash flows from investing activities: Additions to plant and equipment (2,806) (2,323) (5,450) (4,293) (Increase)decrease in short-term investments (407) (2,304) 1,300 (5,085) Net cash used in investing (3,213) (4,627) (4,150) (9,378) Cash flows from financing activities: Long-term debt repayments (300) (300) (300) (300) Common stock issued 880 507 1,503 522 Treasury shares purchased (891) (1,090) (2,803) (1,565) Dividends (1,265) (1,208) (2,532) (2,415) Net cash used in financing (1,576) (2,091) (4,132) (3,758) Effect of translation rate changes on cash (17) 19 (27) (38) Net increase (decrease) in cash 1,464 1,707 (1,096) (426) Cash, beginning of period 29 245 2,589 2,378 Cash, end of period 1,493 1,952 1,493 1,952 See notes to consolidated financial statements Page 3 of 9 THE L. S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) Dec. 23 June 24 1995 1995 ASSETS (unaudited) Current assets: Cash 1,493 2,589 Short-term investments 27,120 28,511 Accounts receivable (less allowance for doubtful accounts of $1,293,000 and $1,071,000) 39,738 38,716 Inventories: Finished goods 26,605 22,698 Goods in process and finished parts 19,203 18,928 Raw materials and supplies 17,903 14,571 63,711 56,197 Prepaid expenses and other current assets 1,195 4,625 Total current assets 133,257 130,638 Property, plant and equipment, at cost (less accumulated depreciation of $56,454,000 and $52,722,000) 58,804 58,135 Cost in excess of net assets acquired (less accumulated amortization of $2,935,000 and $2,766,000) 8,286 8,488 Prepaid pension cost 16,946 16,328 Other assets 350 351 217,643 213,940 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities 2,122 600 Accounts payable and accrued expenses 13,144 14,080 Accrued salaries and wages 5,297 5,102 Taxes payable 6,445 6,005 Employee deposits for stock purchase plan 131 378 Total current liabilities 27,139 26,165 Deferred income taxes 8,377 8,093 Long-term debt 8,400 8,700 Accumulated postretirement medical benefit obligation 14,352 14,153 Stockholders' equity: Class A Common $1 par (10,000,000 shrs. auth.) 5,004 4,951 Class B Common $1 par (10,000,000 shrs. auth.) 2,057 2,166 Additional paid-in capital 35,470 34,610 Retained earnings reinvested and employed in the business 122,060 119,506 Equity Adjustments (5,216) (4,404) Total stockholders' equity 159,375 156,829 217,643 213,940 See Notes to Consolidated Financial Statements Page 4 of 9 THE L. S. STARRETT COMPANY Consolidated Statements of Stockholders' equity For the Twenty-six Weeks Ended December 23, 1995 and December 24, 1994 (in thousands of dollars) (unaudited) Common Addi- Stock Out- tional Equity standing Paid-in Retained Adjust- ($1 Par) Capital Earnings ments Total Balance June 25,1994 (1,251,378 Class A and 133,397 Class B shares in treasury) 7,107 32,272 113,147 (5,878) 146,648 Net earnings 6,005 6,005 Dividends ($.34) (2,415) (2,415) Treasury shares: Purchased (73) (361) (1,131) (1,565) Issued 8 161 169 Options exercised 20 333 353 ESOP loan repayments 543 543 Translation gain, net 819 819 Investment valuation (292) (292) Balance Dec. 24, 1994 (1,306,060 Class A and 143,969 Class B shares in treasury) 7,062 32,405 115,606 (4,808) 150,265 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 7,190 7,190 Dividends ($.36) (2,532) (2,532) Treasury shares: Purchased (123) (576) (2,104) (2,803) Issued 60 1,301 1,361 Options exercised 7 135 142 Translation loss, net (879) (879) Investment valuation 67 67 Balance Dec. 23, 1995 (900,881 Class A and 201,433 Class B shares in treasury) 7,061 35,470 122,060 (5,216) 159,375 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 26 Weeks Ended 12/23/95 12/24/94 12/23/95 12/24/94 Average number of shares out- standing during the period 7,051,542 7,086,749 7,069,205 7,093,029 Incremental shares computed on the assumption that dilutive stock options had been exercised with the proceeds used to purchase treasury stock 8,785 4,826 9,691 6,866 Average common and common equiva- lent shares outstanding 7,060,327 7,091,575 7,078,896 7,099,895 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 December 23, 1995 and June 24, 1995; the results of operations and cash flows for the thirteen weeks and twenty-six weeks ended December 23, 1995 and December 24, 1994; and changes in stockholders' equity for the twenty-six weeks ended December 23, 1995 and December 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 Twenty-six Weeks Ended December Ended December 1995 1994 1995 1994 Interest income 483 333 999 661 Interest expense and com- mitment fees (222) (212) (398) (433) Realized and unrealized ex- change gains and losses (117) 249 (145) 13 Other 308 63 750 273 452 433 1,206 514 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 December 23, 1995, and June 24, 1995, total inventories are $25,789,000 and $25,627,000 less, respectively, than if determined on a FIFO basis. Long-term debt is comprised of the following (in thousands): December June 1995 1995 Industrial revenue bond 3,000 3,300 Revolving credit agreement 6,000 6,000 9,000 9,300 Less current portion 600 600 8,400 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 are up 10% for the quarter as well as year to date. The increase in the quarterly and year to date comparisons is in all locations, with the exception of Brazil, where there was a slight decrease in sales in the December quarter. Earnings Before Taxes Pretax earnings are up 11% for the quarter and 14% year to date. This is primarily the result of the foreign and domestic sales volume changes mentioned above and increased factory operating hours that result in higher overhead absorption. The quarter and year to date improvement over the prior year was moderated somewhat by state mandated wage increases in Brazil that, in the short term, have not been able to be passed on in the form of increased selling prices. Income Taxes The effective income tax rate is 33% for the quarter and 34% year to date compared to 39% and 37% for the same periods in the prior year. The decrease is attributable mainly to the lower contribution to pretax earnings from Brazil, where the effective tax rate is higher than in the U.S., and, in 1994, was particularly high as a result of the monetary program instituted by the Brazilian government. LIQUIDITY AND CAPITAL RESOURCES The Company continues to maintain a strong financial position with a working capital ratio of 4.9 to 1 on December 23, 1995 and 5.0 to 1 on June 24, 1995. Cash and short-term investments are down slightly reflecting a temporary increase in inventories in Brazil. The fact that 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 instruments. These temporary cash investments should be considered when analyzing overall cash flow. Page 8 of 9 THE L. S. STARRETT COMPANY PART II. OTHER INFORMATION 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 February 6, 1995 S/ R. U. WELLINGTON, JR. R. U. Wellington, Jr. (Treasurer and Chief Financial Officer) Date February 6, 1995 S/ S. G. THOMSON S. G. Thomson (Chief Accounting Officer) Page 9 of 9 EX-27 2
5 1,000 6-MOS JUN-29-1996 DEC-23-1995 1,493 27,120 41,031 1,293 63,711 133,257 115,258 56,454 217,643 27,139 8,400 7,061 0 0 152,314 217,643 113,883 113,883 79,953 79,953 0 0 398 10,881 3,691 7,190 0 0 0 7,190 1.02 1.02
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