-----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, CET6Sz9mV41EzkGl5s8tHBeyRV8z4DYcReIK6Q+ibgzR/VVUy++hbNcZAKK5zc6b LE+V6p1taQxO4OTuAJaF+A== 0000093676-96-000009.txt : 19961113 0000093676-96-000009.hdr.sgml : 19961113 ACCESSION NUMBER: 0000093676-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 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: 96658683 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 28, 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 September 28, 1996 : Class A Common Shares 5,056,091 Class B Common Shares 1,978,488 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 weeks ended September 28, 1996 and September 23, 1995 (unaudited) 3 Consolidated Balance Sheets - September 28, 1996 (unaudited) and June 29, 1996 4 Consolidated Statements of Stockholders' Equity - thirteen weeks ended September 28, 1996 and September 23, 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 4. Submission of Matters to a Vote of Security Holders 8 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 EARNINGS 9/28/96 9/23/95 Net sales 58,636 52,000 Cost of goods sold (40,570) (36,775) Selling and general (12,252) (12,033) Other income and expense 371 754 Earnings before income taxes 6,185 3,946 Provision for federal, foreign and state income taxes 2,143 1,383 Net earnings 4,042 2,563 Earnings per share .57 .36 Dividends per share .18 .18 CASH FLOWS Cash flows from operating activities: Net earnings 4,042 2,563 Noncash expenses (income): Depreciation and amortization 2,503 2,354 Deferred taxes 192 404 Unrealized translation losses (gains) 30 (2) Working capital changes: Receivables (3,760) 3,689 Inventories (2,801) (7,519) Other current assets and liabilities (2,132) (410) Prepaid pension cost and other (8) (136) Net cash from operating activities (1,934) 943 Cash flows from investing activities: Additions to plant and equipment (2,637) (2,644) Decrease in short-term investments 2,701 1,707 Net cash used in investing activities 64 (937) Cash flows from financing activities: Short-term borrowings, net 2,726 Common stock issued 831 623 Treasury shares purchased (1,352) (1,912) Dividends (1,261) (1,267) Net cash used in financing activities 944 (2,556) Effect of translation rate changes on cash (5) (10) Net increase (decrease) in cash (931) (2,560) Cash, beginning of period 1,417 2,589 Cash, end of period 486 29 See notes to consolidated financial statements Page 3 of 8 THE L. S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) Sept. 28 June 29 1996 1996 ASSETS (unaudited) Current assets: Cash 486 1,417 Investments 25,173 27,794 Accounts receivable (less allowance for doubtful accounts of $1,312,000 and $1,284,000) 41,524 37,745 Inventories: Finished goods 29,579 27,692 Goods in process and finished parts 25,957 22,858 Raw materials and supplies 17,640 19,746 73,176 70,296 Prepaid expenses and other current assets 2,281 4,746 Total current assets 142,640 141,998 Property, plant and equipment, at cost (less accumulated depreciation of $57,723,000 and $55,876,000) 59,791 59,602 Cost in excess of net assets acquired (less accumu- lated amortization of $3,211,000 and $3,117,000) 8,027 8,115 Prepaid pension cost 17,554 17,246 Other assets 351 351 228,363 227,312 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities 5,925 3,199 Accounts payable and accrued expenses 12,449 14,432 Accrued salaries and wages 4,779 6,149 Taxes payable 4,288 5,545 Employee deposits for stock purchase plan 630 528 Total current liabilities 28,071 29,853 Deferred income taxes 8,121 8,001 Long-term debt 7,100 7,100 Accumulated postretirement medical benefit obligation 15,303 15,073 Stockholders' equity: Class A Common $1 par (10,000,000 shrs. auth.) 5,056 5,051 Class B Common $1 par (10,000,000 shrs. auth.) 1,978 2,004 Additional paid-in capital 37,148 36,650 Retained earnings reinvested and employed in the business 130,055 128,272 Foreign currency translation adjustment (4,543) (4,716) Other equity adjustments 74 24 Total stockholders' equity 169,768 167,285 228,363 227,312 See Notes to Consolidated Financial Statements Page 4 of 8 THE L. S. STARRETT COMPANY Consolidated Statements of Stockholders' equity For the Thirteen Weeks Ended September 28, 1996 and September 23, 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 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 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 4,042 4,042 Dividends ($0.18) (1,261) (1,261) Treasury shares: Purchased (56) (298) (998) (1,352) Issued 35 796 831 Translation gain, net 173 173 Investment valuation 50 50 Balance Sept. 28 1996 (903,308 Class A and 233,590 Class B shares in treasury) 7,034 37,148 130,055 (4,469) 169,768 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 September 28, 1996 and June 29, 1996; and also the results of operations, cash flows and changes in stockholders' equity for the thirteen weeks ended September 28, 1996 and September 23, 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 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 Thirteen Weeks September 1996 September 1995 Interest income 472 516 Interest expense and com- mitment fees (185) (176) Realized and unrealized ex- change losses (49) (28) Other 133 442 371 754 Approximately 80% of all inventories are valued on the LIFO method. At September 28, 1996, and June 29, 1996, total inventories are $25,892,000 and $25,852,000 less, respectively, than if determined on a FIFO basis. Long-term debt is comprised of the following (in thousands): September June 1996 1996 Industrial revenue bond 2,700 2,700 Revolving credit agreement 5,000 5,000 7,700 7,700 Less current maturities 600 600 7,100 7,100 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 for the September quarter are 13% above the corresponding quarter of a year ago. The increase is primarily in domestic operations and reflects an overall improvement in business conditions. Earnings Before Taxes Pretax earnings are up 57% from the September 1995 quarter. This is a result of the increase in sales volume mentioned above, the related efficiencies from increased manufacturing activity, and the fact that selling and general expenses increased at a lower rate than sales. Income Taxes The overall effective income tax rate is 35% in the current quarter as well as the prior year's quarter. The effect of lower rates in Brazil in fiscal 1997 have been offset by domestic income mix changes resulting in higher income taxes in Puerto Rico. LIQUIDITY AND CAPITAL RESOURCES 13 Weeks Ended 9/28/96 9/23/95 Cash provided by operations (1,934) 943 Cash used in investing activities 64 (937) Cash used in financing activities 944 (2,556) Effect of translation rate changes on cash (5) (10) Net increase (decrease) in cash (931) (2,560) Cash flow provided by the increase in net earnings in the current quarter was more than used up in financing increases in receivables and inventory that resulted from the overall improvement in business activity. Short-term borrowings were also used to finance these increases. 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 5.1 to 1 as of September 28, 1996 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 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 18, 1996. (c) The following directors were elected: abstentions Votes Votes and broker For Withheld non-votes A shares voting as separate class: Andrew B. Sides, Jr. 4,420,989 19,472 N/A A and B shares voting together: Douglas R. Starrett 22,503,458 83,043 N/A Roger U. Wellington, Jr. 22,508,932 77,569 N/A 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 9/28/96 9/23/95 Average number of shares outstanding during the period 7,039,422 7,086,868 Incremental shares computed on the assumption that dilutive stock options had been exercised with the proceeds used to purchase treasury stock 12,331 10,596 Average common and common equivalent shares outstanding 7,051,753 7,097,464 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 11, 1996 S/ R. U. WELLINGTON, JR. R. U. Wellington, Jr. (Treasurer and Chief Financial Officer) Date November 11, 1996 S/ S. G. THOMSON S. G. Thomson (Chief Accounting Officer) Page 8 of 8 EX-27 2
5 1000 3-MOS JUN-28-1997 SEP-28-1996 486 25,173 42,836 1,312 73,176 142,640 117,514 57,723 228,363 28,071 7,100 0 0 7,034 162,734 228,363 58,636 58,636 40,570 40,570 0 0 185 6,185 2,143 4,042 0 0 0 4,042 .57 .57
-----END PRIVACY-ENHANCED MESSAGE-----