-----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, CuFO4PegGxmAUOdwzcNgIkCSrjW9gDOg0+eVfdP+U8UayvQs2XLHScMMsPPoZ0PU 6wcuxwqYVR/sGIgVZpQgDQ== 0000093676-97-000002.txt : 19970225 0000093676-97-000002.hdr.sgml : 19970225 ACCESSION NUMBER: 0000093676-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970204 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: 97517738 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 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 December 28, 1996 : Class A Common Shares 5,063,904 Class B Common Shares 1,947,434 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 twenty-six weeks ended December 28, 1996 and December 23, 1995 (unaudited) 3 Consolidated Balance Sheets - December 28, 1996 (unaudited) and June 29, 1996 4 Consolidated Statements of Stockholders' Equity - twenty-six weeks ended December 28, 1996 and December 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 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 26 Weeks Ended EARNINGS 12/28/96 12/23/95 12/28/96 12/23/95 Net sales 64,587 61,883 123,223 113,883 Cost of goods sold (43,898) (43,178) (84,468) (79,953) Selling and general (12,597) (12,222) (24,849) (24,255) Other income and expense 394 452 765 1,206 Earnings before income taxes 8,486 6,935 14,671 10,881 Provision for federal, foreign and state income taxes 2,809 2,308 4,952 3,691 Net earnings 5,677 4,627 9,719 7,190 Earnings per share .81 .66 1.38 1.02 Dividends per share .18 .18 .36 .36 CASH FLOWS Cash flows from operating activities: Net earnings 5,677 4,627 9,719 7,190 Noncash expenses: Depreciation and amortization 2,542 2,332 5,045 4,686 Deferred taxes 66 88 258 492 Unrealized translation losses 13 70 43 68 Working capital changes: Receivables 543 (5,166) (3,217) (1,477) Inventories 231 (339) (2,570) (7,858) Other assets and liabilities 2,356 3,277 224 2,867 Prepaid pension cost and other (139) (141) (147) 277 Net cash from operations 11,289 4,748 9,355 5,691 Cash flows from investing activities: Additions to plant and equipment (3,136) (2,806) (5,773) (5,450) (Increase)decrease in short-term investments (1,369) (407) 1,331 1,300 Net cash used in investing (4,505) (3,213) (4,442) (4,150) Cash flows from financing activities: Short-term borrowings, net (4,150) 1,522 (1,424) 1,522 Long-term debt repayments (300) (300) (300) (300) Common stock issued 1,062 880 1,893 1,503 Treasury shares purchased (1,845) (891) (3,196) (2,803) Dividends (1,258) (1,265) (2,519) (2,532) Net cash used in financing (6,491) (54) (5,546) (2,610) Effect of translation rate changes on cash 36 (17) 31 (27) Net increase (decrease) in cash 329 1,464 (602) (1,096) Cash, beginning of period 486 29 1,417 2,589 Cash, end of period 815 1,493 815 1,493 See notes to consolidated financial statements Page 3 of 8 THE L. S. STARRETT COMPANY Consolidated Balance Sheets (in thousands of dollars) Dec. 28 June 29 1996 1996 ASSETS (unaudited) Current assets: Cash 815 1,417 Investments 26,817 27,794 Accounts receivable (less allowance for doubtful accounts of $1,357,000 and $1,284,000) 41,811 37,745 Inventories: Finished goods 28,732 27,692 Goods in process and finished parts 28,182 22,858 Raw materials and supplies 17,004 19,746 73,918 70,296 Prepaid expenses and other current assets 1,204 4,746 Total current assets 144,565 141,998 Property, plant and equipment, at cost (less accumulated depreciation of $60,662,000 and $55,876,000) 60,973 59,602 Cost in excess of net assets acquired (less accumulated amortization of $3,345,000 and $3,117,000) 7,966 8,115 Prepaid pension cost 17,839 17,246 Other assets 351 351 231,694 227,312 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities 1,775 3,199 Accounts payable and accrued expenses 14,591 14,432 Accrued salaries and wages 5,133 6,149 Taxes payable 3,640 5,545 Employee deposits for stock purchase plan 378 528 Total current liabilities 25,517 29,853 Deferred income taxes 8,260 8,001 Long-term debt 6,800 7,100 Accumulated postretirement medical benefit obligation 15,533 15,073 Stockholders' equity: Class A Common $1 par (10,000,000 shrs. auth.) 5,064 5,051 Class B Common $1 par (10,000,000 shrs. auth.) 1,947 2,004 Additional paid-in capital 37,763 36,650 Retained earnings reinvested and employed in the business 133,100 128,272 Foreign currency translation adjustment (2,364) (4,716) Other equity adjustments 74 24 Total stockholders' equity 175,584 167,285 231,694 227,312 See Notes to Consolidated Financial Statements Page 4 of 8 THE L. S. STARRETT COMPANY Consolidated Statements of Stockholders' equity For the Twenty-six Weeks Ended December 28, 1996 and December 23, 1995 (in thousands of dollars) (unaudited) Common Addi- Stock Out- tional Equity standing Paid-in Retained Adjust- ($1 Par) Capital Earnings ments Total Balance June 24, 1995 (883,556 Class A and 155,628 Class B shares in treasury) 7,117 34,610 119,506 (4,404) 156,829 Net earnings 7,190 7,190 Dividends ($.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 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 9,719 9,719 Dividends ($.36) (2,519) (2,519) Treasury shares: Purchased (125) (699) (2,372) (3,196) Issued 61 1,480 1,541 Options exercised 20 332 352 Translation gain, net 2,352 2,352 Investment valuation 50 50 Balance Dec. 28, 1996 (938,027 Class A and 241,930 Class B shares in treasury) 7,011 37,763 133,100 (2,290) 175,584 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 December 28, 1996 and June 29, 1996; the results of operations and cash flows for the thirteen weeks and twenty-six weeks ended December 28, 1996 and December 23, 1995; and changes in stockholders' equity for the twenty-six weeks ended December 28, 1996 and December 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 Twenty-six Weeks Ended December Ended December 1996 1995 1996 1995 Interest income 464 483 936 999 Interest expense and com- mitment fees (179) (222) (364) (398) Realized and unrealized ex- change gains and losses (35) (117) (84) (145) Other 144 308 277 750 394 452 765 1,206_ Approximately 80% of all inventories are valued on the LIFO method. At December 28, 1996, and June 29, 1996, total inventories are $25,984,000 and $25,852,000 less, respectively, than if determined on a FIFO basis. Long-term debt is comprised of the following (in thousands): December June 1996 1996 Industrial revenue bond 2,400 2,700 Revolving credit agreement 5,000 5,000 7,400 7,700 Less current portion 600 600 6,800 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 are up 4% for the quarter and 8% year to date. The increases in the quarterly and year to date comparisons are primarily in domestic operations and reflect an overall improvement in business conditions. The first and second quarter sales comparison was affected by approximately $2.5 million in sales that are seasonal in nature and occurred in the first quarter in fiscal 1997, but in the second quarter in fiscal 1996. Earnings Before Taxes Pretax earnings are up 22% for the quarter and 35% year to date. This is a result of the increase in sales volume mentioned above, the related efficiencies from the increased manufacturing activity, 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 34% year to date. The rates were approximately the same in the corresponding periods in the prior year. The effect of lower rates in Brazil in fiscal 1997 has been offset by domestic income mix changes resulting in higher income taxes in Puerto Rico. LIQUIDITY AND CAPITAL RESOURCES 13 Weeks Ended 26 Weeks Ended 12/28/96 12/23/95 12/28/96 12/23/95 Cash provided by operations 11,289 4,748 9,355 5,691 Cash used in investing activities (4,505) (3,213) (4,442) (4,150) Cash used in financing activities (6,491) (54) (5,546) (2,610) Cash effect of translation rate changes 36 (17) 31 (27) Net increase (decrease) in cash 329 1,464 (602) (1,096) 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 reduce short-term borrowings. 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 5.7 to 1 as of December 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 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 26 Weeks Ended 12/28/96 12/23/95 12/28/96 12/23/95 Average number of shares out- standing during the period 7,018,606 7,051,542 7,029,014 7,069,205 Incremental shares computed on the assumption that dilutive stock options had been exercised with the proceeds used to purchase treasury stock 7,501 8,785 9,916 9,691 Average common and common equiva- lent shares outstanding 7,026,107 7,060,327 7,038,930 7,078,896 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 4, 1997 S/R.U.WELLINGTON, JR. R. U. Wellington, Jr. (Treasurer and Chief Financial Officer) Date February 4, 1997 S/S.G.THOMSON S. G. Thomson (Chief Accounting Officer) Page 8 of 8 EX-27 2
5 1000 6-MOS JUN-28-1997 DEC-28-1996 815 26,817 43,168 1,357 73,918 144,565 121,635 60,662 231,694 25,517 6,800 0 0 7,011 168,573 231,694 123,223 123,223 84,468 84,468 0 0 364 14,671 4,952 9,719 0 0 0 9,719 1.38 1.38
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