-----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, KEsxHAIXViC9fOOKnJ1ckj52aOwCX0v+rsWrL2/erxVG1I6ROcQzydTwl0CXtOGK vItmjIGtfrdVrVVUXSuWXA== 0000093676-96-000004.txt : 19960507 0000093676-96-000004.hdr.sgml : 19960507 ACCESSION NUMBER: 0000093676-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960323 FILED AS OF DATE: 19960506 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: 96556495 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 23, 1996 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 23, 1996 : Class A Common Shares 5,023,025 Class B Common Shares 2,032,055 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 23, 1996 and March 25, 1995 (unaudited) 3 Consolidated Balance Sheets - March 23, 1996 (unaudited) and June 24, 1995 4 Consolidated Statements of Stockholders' Equity - thirty-nine weeks ended March 23, 1996 and March 25, 1995 (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 3/23/96 3/25/95 3/23/96 3/25/95 Net sales 53,042 52,720 166,925 156,168 Cost of goods sold (36,863) (37,853) (116,816)(111,332) Selling and general (11,716) (10,944) (35,971) (31,849) Other income and expense 163 647 1,369 1,161 Earnings before income taxes 4,626 4,570 15,507 14,148 Provision for federal, foreign and state income taxes 1,296 1,751 4,987 5,324 Net earnings 3,330 2,819 10,520 8,824 Earnings per share .47 .40 1.49 1.25 Dividends per share .18 .17 .54 .51 CASH FLOWS Cash flows from operating activities: Net earnings 3,330 2,819 10,520 8,824 Noncash expenses: Depreciation and amortization 2,296 2,345 6,982 7,001 Deferred taxes 96 406 588 1,287 Unrealized translation losses(gains) 6 (182) 74 128 Working capital changes: Receivables 2,746 1,533 1,269 (2,586) Inventories (4,775) 443 (12,633) 1,879 Other assets and liabilities 1,527 1,217 5,916 6,068 Prepaid pension cost and other (216) 15 (493) (1,257) Net cash from operations 5,010 8,596 12,223 21,344 Cash flows from investing activities: Additions to plant and equipment (3,668) (3,286) (9,118) (7,579) Increase in short-term investments (1,332) (3,304) (32) (8,389) Net cash used in investing (5,000) (6,590) (9,150) (15,968) Cash flows from financing activities: Long-term debt repayments (1,000) (300) (1,300) Common stock issued 750 155 2,253 677 Treasury shares purchased (940) (802) (3,743) (2,367) Dividends (1,264) (1,137) (3,796) (3,552) Net cash used in financing (1,454) (2,784) (5,586) (6,542) Effect of translation rate changes on cash (2) 7 (29) (31) Net increase (decrease) in cash (1,446) (771) (2,542) (1,197) Cash, beginning of period 1,493 1,952 2,589 2,378 Cash, end of period 47 1,181 47 1,181 See notes to consolidated financial statements Page 3 of 8 THE L. S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) Mar. 23 June 24 1996 1995 ASSETS (unaudited) Current assets: Cash 47 2,589 Short-term investments 28,699 28,511 Accounts receivable (less allowance for doubtful accounts of $1,368,000 and $1,071,000) 36,952 38,716 Inventories: Finished goods 27,778 22,698 Goods in process and finished parts 21,588 18,928 Raw materials and supplies 19,107 14,571 68,473 56,197 Prepaid expenses and other current assets 1,106 4,625 Total current assets 135,277 130,638 Property, plant and equipment, at cost (less accumulated depreciation of $58,613,000 and $52,722,000) 60,269 58,135 Cost in excess of net assets acquired (less accumulated amortization of $3,020,000 and $2,766,000) 8,200 8,488 Prepaid pension cost 17,268 16,328 Other assets 351 351 221,365 213,940 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities 3,978 600 Accounts payable and accrued expenses 14,952 14,080 Accrued salaries and wages 4,131 5,102 Taxes payable 5,146 6,005 Employee deposits for stock purchase plan 283 378 Total current liabilities 28,490 26,165 Deferred income taxes 8,526 8,093 Long-term debt 8,400 8,700 Accumulated postretirement medical benefit obligation 14,475 14,153 Stockholders' equity: Class A Common $1 par (10,000,000 shrs. auth.) 5,023 4,951 Class B Common $1 par (10,000,000 shrs. auth.) 2,031 2,166 Additional paid-in capital 35,991 34,610 Retained earnings reinvested and employed in the business 123,422 119,506 Equity Adjustments (4,993) (4,404) Total stockholders' equity 161,474 156,829 221,365 213,940 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 23, 1996 and March 25, 1995 (in thousands of dollars) (unaudited) Common Addi- Stock Out- tional Equity standing Paid-in Retained Adjust- ($1 Par) Capital Earnings ments Total Balance June 25,1994 (1,251,378 Class A and 133,397 Class B shares in treasury) 7,107 32,272 113,147 (5,878) 146,648 Net earnings 8,824 8,824 Dividends ($.51) (3,552) (3,552) Treasury shares: Purchased (109) (535) (1,723) (2,367) Issued 15 309 324 Options exercised 20 333 353 ESOP loan repayments 543 543 Translation gain, net 1,121 1,121 Investment valuation (300) (300) Balance Mar. 25, 1995 (1,327,337 Class A and 151,841 Class B shares in treasury) 7,033 32,379 116,696 (4,514) 151,594 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 Mar. 23, 1996 (899,272 Class A and 209,917 Class B shares in treasury) 7,054 35,991 123,422 (4,993) 161,474 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 23, 1996 and June 24, 1995; the results of operations and cash flows for the thirteen weeks and thirty-nine weeks ended March 23, 1996 and March 25, 1995; and changes in stockholders' equity for the thirty-nine weeks ended March 23, 1996 and March 25, 1995. 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 Thirty-nine Weeks Ended March Ended March 1996 1995 1996 1995 Interest income 412 507 1,411 1,168 Interest expense and com- mitment fees (296) (192) (694) (625) Realized and unrealized ex- change gains (losses) (17) 396 (162) 409 Other 64 (64) 814 209 163 647 1,369 1,161 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 March 23, 1996, and June 25, 1995, total inventories are $25,847,000 and $25,627,000 less, respectively, than if determined on a FIFO basis. Long-term debt is comprised of the following (in thousands): March June 1996 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 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 1% for the quarter and 7% year to date. The modest increase in the quarterly comparison is due to a slowdown in sales in the month of January that was subsequently reversed. The year to date improvement is in all locations, particularly domestic, and reflects an overall improvement in business conditions. Earnings Before Taxes Pretax earnings are up 1% for the quarter and 10% year to date. This is primarily the result of the sales volume changes mentioned above and the resulting increase in factory hours and overhead absorption. The quarter and year to date pretax earnings improvement was moderated by state mandated wage increases in Brazil that, in the short term, have not been passed on in the form of increased selling prices. Income Taxes The effective income tax rate is 28% for the quarter and 32% year to date compared to 38% in each of the same periods in the prior year. The decreases are mainly attributable to the lower contribution to pretax earnings from Brazil, where the effective tax rate is higher than in the U.S., and, in fiscal 1995, 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 4.7 to 1 on March 23, 1996 and 5.0 to 1 on June 24, 1995. The increase in inventories is mainly in Brazil where shipments did not meet forecast. The fact that changes in receivables and payables in the Statement of Cash Flows do not match the changes in the balance sheet is mainly because of in- flation in Brazil. These differences are not uses and sources of cash, but rather are noncash adjustments to net income to arrive at cash generated from operations. They 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 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 3/23/96 3/25/95 3/23/96 3/25/95 Average number of shares out- standing during the period 7,046,911 7,051,267 7,061,774 7,079,108 Incremental shares computed on the assumption that dilutive stock options had been exercised with the proceeds used to purchase treasury stock 13,756 10,150 11,046 7,961 Average common and common equiva- lent shares outstanding 7,060,667 7,061,417 7,072,820 7,087,069 6(b) 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 May 6, 1996 S/ R. U. Wellington, Jr. R. U. Wellington, Jr. (Treasurer and Chief Financial Officer) Date May 6, 1996 S/ S. G. Thomson S. G. Thomson (Chief Accounting Officer) Page 8 of 8 EX-27 2
5 1000 9-MOS JUN-29-1996 MAR-23-1996 47 28,699 38,320 1,368 68,473 135,277 118,882 58,613 221,365 28,490 8,400 0 0 7,054 154,420 221,365 166,925 166,925 116,816 116,816 0 0 694 15,507 4,987 10,520 0 0 0 10,520 1.49 1.49
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