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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the quarterly period ended June 30,1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the transition period from______ to _______
Commission file number: 333-17305
International Knife & Saw, Inc.
(Exact name of registrant as specified in its charter)
Delaware 57-0697252
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1299 Cox Avenue
Erlanger, Kentucky 41018
(Address of principal executive offices)
(606) 371-0333
(Registrant's telephone number, including area code)
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 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 filing requirements for
the past 90 days.
Yes [x] No [ ]
As of July 31, 1997, there were 481,971 shares of the registrant's common stock
outstanding, all of which were owned by an affiliate of the registrant.
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<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Index
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements of Income 5
Consolidated Condensed Statements of Cash Flows 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Part II. Other Information
Item 1. Legal Proceedings 15
Item 2. Change in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. (a) Exhibits 15
(b) Reports on 8-K 15
Signatures 16
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
International Knife & Saw, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(Unaudited)
(in thousands)
June 30, December 31,
1997 1996
----------------------------
Assets
Current assets:
Cash and cash equivalents $ 3,132 $ 11,701
Accounts receivable, trade, less allowances for
doubtful accounts of $2,015 and $1,500 26,067 19,703
Inventories 32,136 28,546
Other current assets 3,564 2,830
----------------------------
Total current assets 64,899 62,780
Other assets:
Goodwill 11,150 3,660
Debt issuance costs 3,750 3,967
Other noncurrent assets 2,383 2,096
----------------------------
17,283 9,723
Property, plant and equipment-net 34,862 28,772
============================
Total assets $ 117,044 $ 101,275
============================
See accompanying notes.
3
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(Unaudited)
(in thousands)
June 30, December 31,
1997 1996
-----------------------------
Liabilities and Shareholder's deficit
Current liabilities:
Notes payable $ 3,821 $ 4,732
Current portion of long-term debt 3,740 2,390
Accounts payable 11,406 5,796
Accrued liabilities 9,037 7,586
Due to parent 337 1,523
-----------------------------
Total current liabilities 28,341 22,027
Long-term debt, less current portion 101,899 92,953
Other liabilities 4,210 3,768
-----------------------------
Total liabilities 134,450 118,748
Minority interest 2,285 2,171
Shareholder's deficit:
Common stock, no par value -
authorized-580,000 shares;
issued - 526,904 shares;
outstanding - 481,971 shares 5 5
Additional paid-in capital 10,153 10,153
Retained deficit (25,136) (26,146)
Cumulative foreign currency
translation adjustment (1,281) (224)
Treasury stock, at cost (3,432) (3,432)
-----------------------------
Total shareholder's deficit (19,691) (19,644)
-----------------------------
Total liabilities and shareholder's deficit $ 117,044 $ 101,275
=============================
See accompanying notes.
4
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Consolidated Condensed Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(in thousands, except per share amounts)
Quarter ended Six months ended
June 30, June 30,
1997 1996 1997 1996
----------------------------------------------------------
Net sales $ 37,396 $ 29,267 $ 67,904 $ 59,808
Cost of sales 26,316 20,605 47,210 41,893
----------------------------------------------------------
11,080 8,662 20,694 17,915
Selling, general and administrative
expenses 7,071 6,203 12,921 12,167
----------------------------------------------------------
4,009 2,459 7,773 5,748
Other expenses (income):
Interest income (83) (100) (198) (197)
Interest expense 3,122 960 6,047 1,363
Minority interest 90 (156) 84 (172)
----------------------------------------------------------
3,129 704 5,933 994
----------------------------------------------------------
Income before income taxes 880 1,755 1,840 4,754
Provision for income taxes 392 715 830 1,405
----------------------------------------------------------
Net income $ 488 $ 1,040 $ 1,010 $ 3,349
==========================================================
Net income per common share $ 1.01 $ 2.16 $ 2.10 $ 6.95
See accompanying notes.
</TABLE>
5
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands)
Six months ended
June 30,
1997 1996
--------------------------
Operating activities
Net income $ 1,010 $ 3,349
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 2,671 2,070
Deferred income taxes - (214)
Gain on sale of fixed assets (23) (9)
Minority interest in income (loss) of subsidiary 84 (172)
Changes in operating assets and liabilities net
of effects from purchases of operations:
Accounts receivable (2,529) (1,703)
Inventories (1,550) (911)
Accounts payable 3,966 (1,502)
Accrued liabilities (4,313) 1,830
Other (707) (942)
--------------------------
Net cash (used) provided by operating activities (1,391) 1,796
Investing activities
Purchases of operations, net of cash acquired (13,463) (282)
Purchases of fixed assets (2,252) (4,566)
Proceeds from sale of fixed assets 43 83
Decrease (increase) in notes receivable and other
assets 33 (129)
--------------------------
Net cash used in investing activities (15,639) (4,894)
Financing activities
Increase (decrease) in amounts due to parent (1,285) 7,020
Increase in notes payable and long-term debt 13,825 -
Repayment of notes payable and long-term debt (3,628) (1,020)
Cash received from investment 19 189
Dividends paid - (1,205)
--------------------------
Net cash provided by financing activities 8,931 4,984
Effect of exchange rate on cash (470) (87)
--------------------------
Increase (decrease) in cash and cash equivalents (8,569) 1,799
Cash and cash equivalents at beginning of period 11,701 10,273
--------------------------
Cash and cash equivalents at end of period $ 12,072 $ 3,132
==========================
</TABLE>
See accompanying notes.
6
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements
(Unaudited)
(in thousands)
1. Basis of Presentation
The unaudited interim consolidated condensed financial statements contain all
adjustments, consisting of normal recurring adjustments, which are, in the
opinion of the management of International Knife & Saw, Inc. and its
consolidated subsidiaries, ("the Company"), necessary to present fairly the
consolidated financial position and consolidated results of operations and cash
flows of the Company. Results of operations for the periods presented are not
necessarily indicative of the results for the full fiscal year.
Beginning in the second quarter of 1997, the captions Sundry-net and Other,
which previously were line items in the Statements of Income, have been included
in selling, general and administrative expenses. Related amounts and certain
other amounts reported for prior periods have been reclassified to conform to
the 1997 presentation.
These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 1996. The consolidated condensed Balance Sheet at December 31, 1996, has
been derived from the audited consolidated financial statements at that date.
2. Acquisitions
In April, 1997, the Company purchased the assets of Systi Matic Company and
affiliated entities ("Systi Matic") for $6.4 million in cash, post-closing
contingent payments of $.9 million for achieving certain annualized earnings
levels which is included in accrued liabilities at June 30, 1997, and $1.1
million in assumed debt, subject to post-closing adjustments. Additional
consideration of approximately $.3 million is contingent upon Systi Matic
achieving certain annual earnings levels and is payable quarterly over the next
9 months. Headquartered in Seattle, Washington, Systi Matic is the largest U.S.
producer of carbide edger saws and the largest independent provider of stock
saws for the secondary industry in North America with annual sales of
approximately $18.0 million. The acquisition was accounted for under the
purchase method and was financed from available cash balances. Goodwill totaled
$3.9 million on this acquisition and will be amortized on the straight-line
method over 40 years. The consolidated financial statements include the results
of operations generated by and financial position of the Systi Matic assets from
the date of acquisition.
7
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements
(Unaudited)
(in thousands)
2. Acquisitions(Continued)
In April, 1997, the Company purchased the assets of Rolf Meyer Company ("Rolf
Meyer") for DM 8.2 million (approximately $4.7 million) in cash, a promissory
note to the seller in the amount of DM 4.3 million (approximately $2.5 million)
and DM .4 million (approximately $.2 million) in assumed debt, subject to
post-closing adjustments. Headquartered in Germany, Rolf Meyer is a producer and
specialist in knives and spare parts for the printing industry, with annual
sales of approximately DM 15.0 million (approximately $8.7 million). The
acquisition was accounted for under the purchase method and was financed from
borrowings under the Company's existing revolving credit facilities. Goodwill
totaled $2.7 million on this acquisition and will be amortized on the
straight-line method over 40 years. The consolidated financial statements
include the results of operations generated by and financial position of the
Rolf Meyer assets from the date of acquisition.
In June, 1997, the Company purchased the assets of Cascade/Southern Saw Corp.
("Cascade") for $2.3 million in cash, subject to post-closing adjustments.
Located in Milwaukie, Oregon, Cascade is a wood saw and wood saw machinery
distributor with annual sales of approximately $7.9 million. The acquisition was
accounted for under the purchase method. Goodwill totaled $1.3 million on this
acquisition and will be amortized on the straight-line method over 40 years. The
consolidated financial statements include the results of operations generated by
and financial position of the Cascade assets from the date of acquisition.
3. Foreign Currency Risk
The Company's operating results are subject to fluctuations in foreign currency
exchange rates as well as the currency translation of its foreign operations
into U.S. dollars. The Company manufactures products in the U.S., Germany,
Canada, and China and exports products to more than 75 countries. The Company's
foreign sales, the majority of which occur in European countries, are subject to
exchange rate volatility. The Company has not historically hedged its foreign
currency risk.
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
(Unaudited)
(in thousands)
4. Notes Payable and Long-Term Debt
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1997 1996
----------------------------------------
Notes payable:
Notes payable on demand in Deutsche Marks to German
banks, issued under revolving credit agreements,
interest payable quarterly $ 1,119 $ 2,680
Notes payable on demand in Chinese Renminbi to Chinese
banks, issued under revolving credit agreements that are
non-recourse to the Company, interest payable monthly 2,702 2,052
========================================
$ 3,821 $ 4,732
========================================
Long-term debt:
11-3/8% Senior Subordinated Notes due 2006 $ 90,000 $ 90,000
Notes payable in Deutsche Marks to a German bank 10,373 3,532
Notes payable in Chinese Renminbi to a Chinese
bank 1,711 1,811
Capitalized lease obligations in U.S. dollars to a U.S.
bank 1,047 -
Promissory note payable in Deutsche Marks to a former 2,508 -
shareholder of the Rolf Meyer Company
----------------------------------------
105,639 95,343
Less current portion 3,740 2,390
========================================
$ 101,899 $ 92,953
========================================
</TABLE>
The 11 3/8 % Notes are senior subordinated indebtedness of the Company ranking
pari passu with all other existing and future senior subordinated indebtedness
of the Company. Dividend payments are restricted under the covenants of the
indenture in connection with the notes.
The notes payable of $10,373 have maturities that extend to 2003 at rates of
2.5% to 6.5%. Land and buildings in Germany with a net book value of $3,778 are
pledged as collateral for the German revolving credit agreements and the German
bank notes payable.
The note payable of $1,711 matures in 1997 at a rate of 7.25% and is
non-recourse to the Company. Plant and equipment in China with a net book value
of $1,530 are pledged as collateral for the Chinese revolving credit agreements
and the Chinese bank note payable.
The capitalized lease obligations of $1,047 are for capital leases on equipment
that have maturities that extend to 2002 at rates of 8.1% to 8.7% Included in
property, plant and equipment-net is equipment under capital lease of $1,227.
9
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements (continued)
(Unaudited)
(in thousands)
4. Notes Payable and Long-Term Debt (Continued)
The promissory note to an individual is due in three equal, annual installments
beginning February, 1998 at a rate of 5%, and is in connection with the Rolf
Meyer acquisition.
At June 30, 1997 and December 31, 1996, the Company had a revolving credit
facility totaling $20,000, of which $ 18,663 and $ 20,000 was available at such
dates. In addition, the Company had a revolving credit facility totaling DM
7,500 of which DM 0 and DM 7,500 was available at such dates.
5. Income Taxes
IKS Corporation, of which the Company is a wholly-owned subsidiary, files a
consolidated Federal income tax return which includes the Company. The Company's
provision for income taxes includes U.S. federal, state, and local income taxes
as well as non-U.S. income taxes in certain jurisdictions. The Company's 1996
effective tax rate was favorably affected by increased profits in the Company's
European operations for which no tax provision was recorded because of the
availability $1,200 of net operating loss carry forwards ("NOLs") of which only
$65 existed at the beginning of 1997. The preceding factor, combined with
additional non-U.S. operations incurring losses for which no benefits are being
recognized, results in a consolidated effective tax rate that is greater than
the statutory rate and greater than the 1996 rate. The current and deferred tax
expense and benefit for the Company are recorded as if it files on a stand-alone
basis. All participants in the consolidated income tax return are separately
liable for the full amount of the taxes, including penalties and interest, if
any, which may be assessed against the consolidated group. The current provision
for United States income taxes is recorded to the inter company account with IKS
Corporation.
6. Inventories
Jun. 30, December 31,
1997 1996
----------------------------------------
Purchased finished goods $ 6,768 $ 5,188
Manufactured finished goods 13,005 11,625
Work in process 5,107 4,519
Raw materials and supplies 7,256 7,214
----------------------------------------
$ 32,136 $ 28,546
========================================
<PAGE>
International Knife & Saw, Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements (continued)
(Unaudited)
(in thousands)
7. Organization
The Company's operations are principally in North America representing
approximately 70% of net sales for the six months ended June 30, 1997.
The following table summarizes the Company's North American and other
international operations.
Six months ended
June 30,
-------------------------------------
1997 1996
------------------ ------------------
North American Operations
Sales to unaffiliated companies 48,952 $ 44,401
Operating income 6,197 5,234
Assets 64,220 57,867
Capital expenditures 1,297 2,986
Depreciation and amortization 1,654 1,504
Other International Operations
Sales to unaffiliated companies 18,952 15,407
Operating income 1,576 514
Assets 52,824 43,408
Capital expenditures 955 1,580
Depreciation and amortization 890 566
11
<PAGE>
Item 2. Management's discussion and analysis of financial condition and
results of operations
The following discussion should be read in conjunction with the
Consolidated Financial Statements and related notes included in the Company's
Form 10-K as of and for each of the three years in the period ended December 31,
1996.
General
The Company is a global leader in the manufacturing, servicing and marketing of
industrial and commercial machine knives and saws. Together with its
predecessor, the Company has been manufacturing knives and saws for nearly 100
years, beginning in Europe and expanding its presence to the United States in
the 1960s. The Company operates on an international basis with facilities in
North America, Europe, Asia and Latin America and products sold in over 75
countries. The Company offers a broad range of products, used for various
applications in numerous markets.
Presence outside the U.S.
The Company's North American operations account for approximately 70% of
its net sales and 80% of its operating income while the Company's other
international operations account for the remainder and are spread throughout
Europe and Asia. Historically, the Company had focused its sales efforts in
North America and Europe, only recently establishing itself in other areas of
the world and has increased sales in these other markets from 1% in 1995 to 7%
of net sales for the first six months of 1997. During 1994, 1995 and 1996, the
Company entered into joint ventures to establish itself in these emerging
markets.
The Company's operating results are subject to fluctuations in foreign
currency exchange rates as well as the currency translation of its foreign
operations into U.S. dollars. The Company manufactures products in the U.S.,
Germany, Canada and China and exports products to more than 75 countries. The
Company's foreign sales, the majority of which occur in European countries, are
subject to exchange rate volatility. In addition, the Company consolidates
German, Canadian and China operations and changes in exchange rates relative to
the U.S. dollar have impacted financial results. As a result, a decline in the
value of the dollar relative to these other currencies can have a favorable
effect on the profitability of the Company and an increase in the value of the
dollar relative to these other currencies can have a negative effect on the
profitability of the Company. Comparing exchange rates for the first half of
1997 to the first half of 1996, the weaker German Mark had the translation
effect of decreasing the first half 1997 sales by approximately $1.8 million. In
addition, in the first half of 1997 there was a decrease in shareholder's equity
due to a $1.1 million change in the foreign currency translation adjustment. The
Company has not historically hedged its foreign currency risk.
Results of Operations
As used in the following discussion of the Company's results of operations,
(i) the term "gross profit" means the dollar difference between the Company's
net sales and cost of sales and (ii) the term "gross margin" means the Company's
gross profit divided by its net sales.
12
<PAGE>
Second quarter and six months ended June 30, 1997 compared to second
quarter and six months ended June 30, 1996
Net Sales: Net sales increased 27.8% and 13.5% to $37.4 and $67.9 million
for the second quarter and first half of 1997, respectively from $29.3 and $59.8
million for the same periods in 1996. Excluding the second quarter acquisitions,
the Company's second quarter and first half 1997 sales were $30.6 and $61.2
million, respectively, a 4.4% and 2.2% increase over the same periods in 1996.
The Company experienced sales improvements in its North American (16% to $49.0
million) and other (7.4% to $18.9 million) operations for the first half of 1997
compared to the first half of 1996, primarily attributable to the second quarter
acquisitions which accounted for $4.5 and $2.2 million of both North America's
and other operations' second quarter and first half of 1997 sales. Excluding the
Systi Matic and Cascade Southern acquisitions, net sales for the North American
operations grew 6.7% and 5.2% to $22.3 and $44.4 million for the second quarter
and first half of 1997, respectively, from $20.9 and $42.2 million for the same
periods in 1996. The sales growth in North America was due to the addition of
new products and an increase in product sales by its service centers. Excluding
the Rolf Meyer acquisition, net sales for the Company's other operations
remained constant at $8.3 million and declined 5.1% to $16.7 million for the
second quarter and first half of 1997, respectively, from $8.3 and $17.6 million
for the same periods in 1996. The effects of a weaker German Mark in the second
quarter and first half of 1997 compared to the same periods in 1996 resulted in
a translation effect that reduced the second quarter and first half of 1997
sales (including Rolf Meyer) by $1.0 and $1.8 million, respectively.
Gross Profit: Gross profit increased to $11.1 and $20.7 million for the
second quarter and first half of 1997 up from $8.7 and $17.9 million for the
same periods in 1996. Excluding the second quarter acquisitions, gross profit
increased to $9.2 and $18.8 million from the same periods in 1996. Gross margin
stayed constant at 29.6% for the second quarter of 1997 compared to the second
quarter of 1996 while gross margin increased to 30.5% in the first half of 1997
compared to 30.0% in the first half of 1996. The Company experienced gross
profit improvements in its North American and other operations primarily
attributable to the second quarter acquisitions which accounted for $1.2 million
and $.7 million of North America's and other operations' second quarter and
first half of 1997 gross profit, respectively. Excluding the second quarter
acquisitions, gross profit for the North American operations declined to $5.2
and $12.5 million for the second quarter and first half of 1997, respectively,
from $6.2 and $13.1 million for the same periods in 1996 and gross margin
decreased to 23.3% and 28.2% from 29.7% and 31.0% for the same periods in 1996.
Excluding the second quarter acquisitions, North America's gross profit and
gross margin decline was a result of increased price competition and one time
costs associated with the introduction of new products. Excluding the Rolf Meyer
acquisition, gross profit for the Company's other operations increased slightly
to $2.4 and $4.1 million for the second quarter and first half of 1997,
respectively, from $2.3 and $4.0 million for the same periods in 1996, while
gross margin also increased to 28.9% and 24.6% from 27.7% and 22.7% for the same
periods in 1996.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses were $7.1 and $12.9 million for the second quarter and
first half of 1997 as compared to $6.2 and $12.2 million for the same periods in
1996 and decreased to 18.9% and 19.0% of sales from 21.2% and 20.3% of sales for
the respective periods.
Interest Expense, net: As expected, net interest expense increased to $3.0
and $5.8 million for the second quarter and first half of 1997 from $.9 and $1.2
million for the same periods in 1996 due to the issuance of $90 million in
aggregate principal amount of 11 3/8% Senior Subordinated Notes due 2006 (the
"Notes") on November 6, 1996 under an indenture dated November 6, 1996 by and
between the Company and the United States Trust Company of New York, as trustee
(the "Recapitalization").
Income before income taxes: As expected, income before income taxes of $.9
and $1.8 million for the second quarter and first half of 1997 was down
significantly from $1.8 and $4.8 million for the same periods in 1996. Excluding
the increase in net interest expense of $2.1 and $4.6 million in the
13
<PAGE>
second quarter and first half of 1997 over the same periods of 1996 would have
resulted in income before income taxes of approximately $3.0 and $6.4 million
respectively.
Income Taxes: The Company's provision for income taxes decreased to $.4 and
$.8 million for the second quarter and first half of 1997 down from $.7 and $1.4
million for the same periods in 1996 while the Company's effective tax rate
increased to 44.5% and 45.1% from 40.7% and 29.6% for those same periods. The
Company's 1996 effective tax rate was favorably affected by increased profits in
the Company's European operations for which no tax provision was recorded
because of the availability of net operating loss carry forwards ("NOLs") of
which only $65,000 existed at the beginning of 1997. In 1997, due to the minimal
amount of NOLs available to offset European income and additional non-U.S.
losses for which no benefits are being recognized because it is more likely than
not that they will not be realized in certain non-U.S. jurisdictions, the 1997
effective tax rate exceeds the U.S. statutory rate and the prior year
consolidated effective tax rate.
Net Income: Net income decreased to $.5 and $1.0 million or $1.01 and $2.10
per share for the second quarter and first half of 1997 from $1.0 and $3.3
million or $2.16 and $6.95 per share for the same periods in 1996,as a result of
the factors discussed above.
Liquidity and Capital Resources
The Company's principal capital requirements are to fund working capital
needs, to meet required debt payments, and to complete planned maintenance and
expansion expenditures. The Company anticipates that its operating cash flow,
together with available borrowings of $18.7 million under existing credit
facilities, will be sufficient to meet its working capital requirements, capital
expenditure requirements and interest service requirements on its debt
obligations. As of June 30, 1997, the Company's total debt and shareholder's
deficit was $108.4 million and $19.7 million, respectively.
Net cash flow used in operations aggregated $1.4 million for the first half
of 1997 compared to $1.8 million provided for the first half of 1996. The
decrease was primarily attributable to a $1.9 million increase in working
capital needs and a $2.3 million decrease in net income, offset by a $.6 million
increase in depreciation and amortization.
Cash used in investing activities for the first half of 1997 was $15.6
million as compared to $4.9 million for the first half of 1996. The increased
use of cash in the first half of 1997 is primarily due to the second quarter
acquisitions, offset by a $2.3 million reduction in fixed asset purchases.
Cash provided by financing activities for the first half of 1997 was $8.9
million as compared to $5.0 million provided for the first half of 1996. The
cash provided by financing activities in the first half of 1997 primarily
represents a $10.2 million net increase in debt borrowings primarily due to the
second quarter acquisitions and a $1.3 million decrease in amount due to parent
whereas the the cash provided by financing activities for the first half of 1996
primarily represents an increase in amounts due to parent of $7.0 million offset
by a net decrease in debt borrowings of $1.0 million and dividends paid of $1.2
million..
Concurrent with Recapitalization, the Company entered into a $20.0 million
senior credit facility and its German subsidiary entered into a DM7.5 million
German credit facility. At June 30, 1997, $18.7 million was available under the
U.S. dollar line and DM 0 was available under the DM line. The Company did not
draw upon these facilities in connection with the Recapitalization or in the
first quarter of 1997, but did draw upon these facilities for the Rolf Meyer and
Cascade acquisitions. The Notes impose, and other debt instruments of the
Company may impose, various restrictions and covenants on the Company which
could potentially limit the Company's ability to respond to market conditions,
to provide for unanticipated capital investments or to take advantage of
business opportunities.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time involved in legal proceedings arising in
the normal course of business. The Company believes there is no outstanding
litigation which could have a material impact on its financial position or
results of operations.
Item 2. Change in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit
No. Description
------- ------------------------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
15
<PAGE>
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.
INTERNATIONAL KNIFE & SAW, INC.
By: /s/ William M. Schult
--------------------------------------
William M. Schult
Vice President-Finance, Chief
Financial Officer, Treasurer and
Secretary (Principal Financial and
Accounting Officer
August 13, 1997
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
------- ---------------------------------
27 Financial Data Schedule
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
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0
0
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</TABLE>
