- --------------------------------------------------------------------------------
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 JUNE 30, 1998
or
[ ] 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 1-5581
I.R.S. Employer Identification Number 59-0778222
WATSCO, INC.
(a Florida Corporation)
2665 South Bayshore Drive, Suite 901
Coconut Grove, Florida 33133
Telephone: (305) 858-0828
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 filing
requirements for the past 90 days. YES X NO _
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date: 16,399,001 shares of the
Company's Common Stock ($.50 par value) and 2,177,275 shares of the Company's
Class B Common Stock ($.50 par value) were outstanding as of August 3, 1998.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
WATSCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(In thousands, except per share data)
JUNE 30, DECEMBER 31,
1998 1997
--------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,738 $ 7,880
Accounts receivable, net 153,546 101,727
Inventories 201,138 173,319
Other current assets 10,360 9,263
Net assets of discontinued operations 11,102 25,892
----------- -----------
Total current assets 382,884 318,081
Property, plant and equipment, net 25,711 21,870
Other assets 27,699 8,701
Intangible assets, net 84,667 77,388
----------- -----------
$ 520,961 $ 426,040
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 753 $ 958
Accounts payable 79,012 43,802
Accrued liabilities 20,780 15,562
----------- ----------
Total current liabilities 100,545 60,322
----------- ----------
Long-term obligations:
Borrowings under revolving credit agreement 170,400 134,700
Bank and other debt 2,877 2,541
----------- ----------
173,277 137,241
----------- ----------
Deferred income taxes and credits 3,423 2,879
----------- ----------
Shareholders' equity:
Common Stock, $.50 par value 7,849 7,631
Class B Common Stock, $.50 par value 1,093 1,083
Paid-in capital 174,100 163,996
Retained earnings 65,407 56,724
Unrealized gain on investments 879 -
Unearned compensation related to
outstanding restricted stock (5,612) (3,836)
----------- -----------
Total shareholders' equity 243,716 225,598
----------- -----------
$ 520,961 $ 426,040
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2 of 13
<PAGE>
<TABLE>
<CAPTION>
WATSCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Quarter and Six Months Ended June 30, 1998 and 1997
(In thousands, except per share data)
(Unaudited)
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $270,853 $164,703 $443,569 $260,974
Cost of sales 210,879 128,893 343,194 203,107
----------- ---------- ----------- -----------
Gross profit 59,974 35,810 100,375 57,867
Selling, general and administrative expenses 43,260 25,493 79,120 43,705
----------- ---------- ----------- -----------
Operating income 16,714 10,317 21,255 14,162
Interest expense, net 2,714 489 4,436 982
----------- ---------- ----------- -----------
Income from continuing operations
before income taxes 14,000 9,828 16,819 13,180
Income taxes 5,180 3,841 6,223 5,132
----------- ---------- ----------- -----------
Income from continuing operations 8,820 5,987 10,596 8,048
Loss on sale of discontinued operation,
net of income taxes (398) - (398) -
Income (loss) from discontinued operations,
net of income taxes (440) 376 (291) 597
----------- ---------- ----------- -----------
Net income 7,982 6,363 9,907 8,645
Retained earnings at beginning of period 58,040 42,543 56,724 40,784
Common stock cash dividends (615) (604) (1,224) (1,095)
Dividends on preferred stock of subsidiary - (32) - (64)
----------- ---------- ----------- -----------
Retained earnings at end of period $ 65,407 $ 48,270 $ 65,407 $ 48,270
=========== ========== =========== ===========
Basic earnings per share:
Income from continuing operations $0.50 $0.35 $0.60 $0.49
Loss on sale of discontinued operation (0.02) - (0.02) -
Income (loss) from discontinued operations (0.03) 0.02 (0.02) 0.04
------- ------- -------- --------
Net income $0.45 $0.37 $0.56 $0.53
======= ====== ======= ========
Diluted earnings per share:
Income from continuing operations $0.47 $0.33 $0.57 $0.46
Loss on sale of discontinued operation (0.02) - (0.02) -
Income (loss) from discontinued operations (0.03) 0.02 (0.02) 0.04
------- ------- -------- --------
Net income $0.42 $0.35 $0.53 $0.50
======= ====== ======= ========
Weighted average shares and equivalent shares used to calculate:
Basic earnings per share 17,797 17,217 17,639 16,256
====== ====== ====== ======
Diluted earnings per share 18,897 18,240 18,702 17,322
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3 of 13
<PAGE>
<TABLE>
<CAPTION>
WATSCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1998 and 1997
(In thousands)
(Unaudited)
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,907 $ 8,645
Loss (income) from discontinued operations,
net of income taxes 291 (597)
Loss on sale of discontinued operation,
net of income taxes 398 -
---------- -----------
Income from continuing operations 10,596 8,048
Adjustments to reconcile income from
continuing operations to net cash used
in operating activities:
Depreciation and amortization 4,492 1,822
Provision for doubtful accounts 1,252 702
Deferred income tax benefit 515 -
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable (47,167) (26,670)
Inventories (20,099) (22,649)
Accounts payable and accrued liabilities 31,281 15,886
Other, net (2,414) (4,213)
---------- -----------
Net cash used in operating activities
of continuing operations (21,544) (27,074)
---------- -----------
Cash flows from investing activities:
Business acquisitions, net of cash acquired (6,163) (57,061)
Capital expenditures, net (5,713) (3,437)
Net purchases of marketable securities - (693)
---------- -----------
Net cash used in investing activities
of continuing operations (11,876) (61,191)
---------- -----------
Cash flows from financing activities:
Net borrowings under revolving credit agreement 35,700 9,900
Net repayments of bank and other debt (710) (657)
Net proceeds from issuances of common stock 1,060 85,749
Common stock dividends (1,224) (1,095)
Other - (207)
---------- -----------
Net cash provided by financing activities
of continuing operations 34,826 93,690
---------- -----------
Net cash used in discontinued operations (2,548) (1,785)
---------- -----------
Net increase (decrease) in cash and cash equivalents (1,142) 3,640
Cash and cash equivalents at beginning of period 7,880 2,882
---------- -----------
Cash and cash equivalents at end of period $ 6,738 $ 6,522
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4 of 13
<PAGE>
WATSCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(In thousands, except share data)
(Unaudited)
1. The condensed consolidated balance sheet as of December 31, 1997, which
has been derived from the Company's audited financial statements, and
the unaudited interim condensed consolidated financial statements, have
been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and note disclosures
normally included in the annual financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations, although
the Company believes the disclosures made are adequate to make the
information presented not misleading. In the opinion of management, all
adjustments necessary for a fair presentation have been included in the
condensed consolidated financial statements herein.
2. The results of operations for the quarter and six month period ended
June 30, 1998 are not necessarily indicative of the results for the
year ending December 31, 1998. The sale of the Company's products is
seasonal with revenue generally increasing during the months of May
through August.
3. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
4. Basic earnings per share is computed by dividing net income, less
subsidiary preferred stock dividends, by the total of the weighted
average number of shares outstanding. Subsidiary preferred stock
dividends were $32 and $64 for the quarter and six months ended June
30, 1997, respectively. Diluted earnings per share additionally assumes
any added dilution from common stock equivalents.
Shares used to calculate earnings per share are as follows:
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding 17,796,676 17,216,799 17,638,710 16,255,645
Dilutive stock options and warrants 1,100,722 1,023,187 1,062,902 1,066,432
------------- ------------ ------------ ----------
Shares for diluted earnings per share 18,897,398 18,239,986 18,701,612 17,322,077
============= ============ ============ ==========
</TABLE>
The Company's Board of Directors declared a three-for-two stock split for
both classes of common stock payable on August 14, 1998 to shareholders of
record as of July 31, 1998.
5 of 13
<PAGE>
5. The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," effective January
1, 1998. SFAS No. 130 establishes standards for reporting and display
of comprehensive income and its components in financial statements. The
components of the Company's comprehensive income are as follows:
<TABLE>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $7,982 $6,363 $ 9,907 $8,645
Unrealized gain on investments,
net of tax 879 - 879 -
-------- -------- ---------- --------
Comprehensive income $8,861 $6,363 $10,786 $8,645
======== ======== ========== ========
</TABLE>
6. Discontinued operations include a personnel staffing business, Dunhill
Staffing Systems, Inc., and, until May 1998, a manufacturing operation,
Watsco Components, Inc. ("Components"). In May 1998, the Company sold
substantially all the operating assets of Components to International
Comfort Products Corporation ("ICP") for approximately $16,649 of ICP's
common stock. Summarized results for the discontinued operations are as
follows:
<TABLE>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -----------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 16,104 $ 17,670 $ 32,522 $ 32,711
========= ========= ========= =========
Income (loss) before income taxes $ (698) $ 611 $ (462) $ 970
Income tax expense (benefit) (258) 235 (171) 373
--------- --------- --------- ---------
Income (loss) from discontinued operations $ (440) $ 376 $ (291) $ 597
========= ========= ========= =========
</TABLE>
Income before income taxes includes allocated interest expense of $108
and $70 and $248 and $167 for the quarters and six months ended June
30, 1998 and 1997, respectively. Interest expense was allocated to the
discontinued operations based on a ratio of net assets of the
discontinued operations to the total Company's consolidated net assets.
7. In April 1998, the Company completed the acquisitions of the common
stock of two wholesale distributors of air conditioning and heating
products. Aggregate consideration for these acquisitions consisted of
cash payments of $2,984, debt assumption of $2,463 and the issuance of
148,692 shares of Common Stock having a fair value of $3,613 and is
subject to adjustment upon the completion of audits of the assets
purchased and the liabilities assumed.
The acquisitions have been accounted for under the purchase method of
accounting and, accordingly, their results of operations have been
included in the unaudited condensed consolidated statements of income
beginning on their respective dates of acquisition. The excess of the
aggregate purchase prices over the net assets acquired is being
amortized on a straight-line basis over 40 years.
6 of 13
<PAGE>
The Company's unaudited pro forma consolidated results of operations,
assuming all significant acquisitions occurred on January 1, 1997, are
as follows:
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ---------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $273,208 $230,398 $453,490 $401,989
Income from continuing operations $ 8,789 $ 7,264 $ 10,283 $ 8,256
Diluted earnings per share from
continuing operations $0.46 $0.39 $0.55 $0.44
</TABLE>
The unaudited pro forma consolidated results of operations is not
necessarily indicative of either the results of operations that would
have occurred had the above companies been acquired on January 1, 1997
for the years presented or of future results of operations.
8. In July 1998, the Company completed the acquisition of Kaufman Supply,
Inc. ("Kaufman"), a wholesale distributor of air conditioning and other
products to the manufactured housing industry which operates 12
locations and serving over 2,500 dealers and contractors throughout the
southeastern United States. Kaufman's revenue was approximately
$102,000 in 1997.
9. In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which is effective for
fiscal years beginning after June 15, 1999. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or
liability measured at fair value. The Company has not yet determined
the timing of or method of adoption of SFAS No. 133 and believes that
the adoption of this statement will not be material to the Company's
consolidated financial position or results of operations.
10. Certain amounts for 1997 have been reclassified to conform to the 1998
presentation.
7 of 13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents the Company's consolidated financial
statements from continuing operations for the quarter and six months ended June
30, 1998 and 1997, expressed as a percentage of revenue:
<TABLE>
QUARTER SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0%
Cost of sales 77.9 78.3 77.4 77.8
------- ------- ------- -------
Gross profit 22.1 21.7 22.6 22.2
Selling, general and administrative expenses 15.9 15.4 17.8 16.8
------- ------- ------- -------
Operating income 6.2 6.3 4.8 5.4
Interest expense, net 1.0 .3 1.0 .3
Income taxes 1.9 2.4 1.4 2.0
------- ------- ------- -------
Income from continuing operations 3.3% 3.6% 2.4 % 3.1%
======= ======= ======= =======
</TABLE>
The above table and following narrative includes the results of
operations of wholesale distributors of air conditioning, heating and
refrigeration equipment and related parts and supplies acquired during 1998 and
1997. These acquisitions were accounted for under the purchase method of
accounting and, accordingly, their results of operations have been included in
the consolidated results of the Company beginning on their respective dates of
acquisition.
QUARTER ENDED JUNE 30, 1998 VS. QUARTER ENDED JUNE 30, 1997
Revenue for the three months ended June 30, 1998 increased $106.2
million, or 64%, compared to the same period in 1997. Excluding the effect of
acquisitions, revenue increased $24.8 million, or 15%. Such increase was
primarily due to additional sales generated from market share gains and
increased sales generated by expanded product lines of parts and supplies.
Gross profit for the three months ended June 30, 1998 increased $24.2
million, or 67%, as compared to the same period in 1997, primarily as a result
of the aforementioned revenue increases. Excluding the effect of acquisitions,
gross profit increased $5.1 million, or 14%. Gross profit margin in the second
quarter increased to 22.1% in 1998 from 21.7% in 1997. Excluding the effect of
acquisitions, gross profit margin decreased to 21.6% in 1998 from 21.7% in 1997.
Selling, general and administrative expenses for the three months ended
June 30, 1998 increased $17.8 million, or 70%, compared to the same period in
1997, primarily due to higher selling and delivery costs related to acquired
companies and increased sales. Excluding the effect of acquisitions, selling,
general and administrative expenses increased $3.1 million, or 12%, primarily
due to revenue increases, higher costs related to new locations and the
expansion of existing locations. Selling, general and administrative expenses as
a percent of revenue increased to 15.9% in 1998 from 15.4% in 1997, primarily
due to the higher cost structures of acquired companies and startup costs
related to the opening of new distribution locations. Excluding the effect of
acquisitions, selling, general and administrative expenses as a percent of
revenue decreased to 15.1% in 1998 from 15.4% in 1997, primarily due to the
leveraging of these expenses on increased same store sales.
8 of 13
<PAGE>
Interest expense, net for the second quarter in 1998 increased
approximately $2.2 million, or 455%, compared to the same period in 1997,
primarily due to higher average borrowings that were used to complete business
acquisitions.
The effective tax rate for the three months ended June 30, 1998 was
37.0% compared to 39.1% for the same period in 1997. This decrease was primarily
due to the implementation of certain tax planning strategies.
SIX MONTHS ENDED JUNE 30, 1998 VS. SIX MONTHS ENDED JUNE 30, 1997
Revenue for the six months ended June 30, 1998 increased $182.6
million, or 70%, compared to the same period in 1997. Excluding the effect of
acquisitions, revenue increased $32.4 million, or 12%. Such increase was
primarily due to additional sales generated from market share gains and
increased sales generated by expanded product lines of parts and supplies.
Gross profit for the six months ended June 30, 1998 increased $42.5
million, or 73%, as compared to the same period in 1997, primarily as a result
of the aforementioned revenue increases. Excluding the effect of acquisitions,
gross profit increased $6.9 million, or 12%. Gross profit margin for the six
month period increased to 22.6% in 1998 from 22.2% in 1997. Excluding the effect
of acquisitions, gross profit margin decreased to 22.1% in 1998 from 22.2% in
1997.
Selling, general and administrative expenses for the six months ended
June 30, 1998 increased $35.4 million, or 81%, compared to the same period in
1997, primarily due to higher selling and delivery costs related to acquired
companies and increased sales. Excluding the effect of acquisitions, selling,
general and administrative expenses increased $4.9 million, or 11%, primarily
due to revenue increases, higher costs related to new locations and the
expansion of existing locations. Selling, general and administrative expenses as
a percent of revenue increased to 17.8% in 1998 from 16.8% in 1997, primarily
due to the higher cost structures of acquired companies and startup costs
related to the opening of new distribution locations. Excluding the effect of
acquisitions, selling, general and administrative expenses as a percent of
revenue decreased to 16.6% in 1998 from 16.8% in 1997, primarily due to the
leveraging of these expenses on increased same store sales.
Interest expense, net for the six months ended June 30, 1998 increased
approximately $3.5 million, or 352%, compared to the same period in 1997,
primarily due to higher average borrowings that were used to complete business
acquisitions.
The effective tax rate for the six months ended June 30, 1998 was 37.0%
compared to 38.9% for the same period in 1997. This decrease was primarily due
to the implementation of certain tax planning strategies.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains a bank-syndicated revolving credit agreement that
provides for borrowings of up to $260 million, expiring on August 8, 2002.
Borrowings under the unsecured agreement are used to fund seasonal working
capital needs and for other general corporate purposes, including acquisitions.
Borrowings under the agreement, which totaled $170.4 million at June 30, 1998,
bear interest at primarily LIBOR-based rates plus a spread that is dependent
upon the Company's financial performance (LIBOR plus .375% at June 30, 1998).
The agreement contains financial covenants with respect to the Company's
consolidated net worth, interest and debt coverage ratios and limits capital
expenditures and dividends in addition to other restrictions.
9 of 13
<PAGE>
At June 30, 1998, the Company had various interest rate swap agreements
with an aggregate notional amount of $100 million to manage its net exposure to
interest rate changes related to a portion of the borrowings under the revolving
credit agreement. The interest rate swap agreements effectively convert a
portion of the Company's LIBOR-based variable rate borrowings into fixed rate
borrowings. The Company continuously monitors developments in the capital
markets and only enters into swap transactions with established counterparties
having investment-grade ratings.
Working capital increased to $282.3 million at June 30, 1998 from
$257.8 million at December 31, 1997. This increase was funded primarily by
borrowings under the Company's revolving credit agreement.
Cash and cash equivalents decreased $1.1 million during the six month
period ended June 30, 1998. Principal sources of cash were borrowings under the
revolving credit agreement and profitable operations. The principal uses of cash
were to fund working capital needs, including the addition of inventory to
expand the product offerings of both existing and newly acquired locations, and
finance acquisitions and capital expenditures.
The Company has adequate availability of capital from operations and
its revolving credit agreement to fund present operations and anticipated
growth, including expansion in its current and targeted market areas. The
Company continually evaluates potential acquisitions and has held discussions
with a number of acquisition candidates; however, the Company currently has no
binding agreement with respect to any acquisition candidates. Should suitable
acquisition opportunities or working capital needs arise that would require
additional financing, the Company believes that its financial position and
earnings history provide a solid base for obtaining additional financing
resources at competitive rates and terms.
SAFE HARBOR STATEMENT
This quarterly report contains statements which, to the extent they are
not historical fact, constitute "forward looking statements" under the
securities laws. All forward looking statements involve risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company to differ materially from those contemplated or projected,
forecasted, estimated, budgeted, expressed or implied by or in such forward
looking statements. The forward looking statements in this document are intended
to be subject to the safe harbor protection provided under the securities laws.
For additional information identifying some other important factors
which may affect the Company's operations and markets and could cause actual
results to vary materially from those anticipated in the forward looking
statements, see the Company's Securities and Exchange Commission filings,
including but not limited to, the discussion included in the Business section of
the Company's Form 10-K under the heading "Other Information".
10 of 13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no significant changes from the information reported in
the Annual Report on Form 10-K for the period ended December 31, 1997,
filed on March 31, 1998.
Item 2. Changes in the Rights of the Company's Security Holders
None
Item 3. Defaults by the Company on its Senior Securities
None
Item 4. Results of Votes of Securities Holders
(a) The Company's 1998 Annual Meeting of Shareholders was held on
June 3, 1998.
(b) Proxies were solicited by the Company's management pursuant to
Regulation 14 under the Securities Exchange Act of 1934. There
was no solicitation in opposition to the management's nominees
as listed in the proxy statement. The following nominees were
elected as indicated in the proxy statement pursuant to the
vote of the shareholders as follows:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
COMMON STOCK
Mr. Robert J. Novello 12,809,829 34,766
CLASS B COMMON STOCK
Mr. Ronald P. Newman 1,866,988 2,985
Mr. David B. Fleeman 1,866,988 2,985
Mr. Bob Moss 1,866,988 2,985
</TABLE>
(c) Two additional proposals were voted upon at the Annual Meeting
of Shareholders as follows:
(1) To ratify the action of the Board of Directors
amending the Company's Amended and Restated 1996
Qualified Employee Stock Purchase Plan and
(2) To ratify the reappointment of Arthur Andersen LLP as
the Company's independent certified public
accountants for the year ended December 31, 1998.
The combined vote of the Company's Common Stock and Class B
Common Stock was as follows:
PROPOSAL 1
For 31,388,755
Against 108,324
Abstained 47,246
PROPOSAL 2
For 31,511,594
Against 15,269
Abstained 17,462
11 of 13
<PAGE>
As of April 3, 1998, the record date for the Annual Meeting of
Shareholders, the total number of shares of the Company's Common Stock, $.50 par
value, and Class B Common Stock, $.50 par value, outstanding was 15,438,163 and
2,163,153, respectively, representing 37,069,693 combined votes.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
12 of 13
<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.
WATSCO, INC.
----------------------------
(Registrant)
By: /S/ BARRY S. LOGAN
----------------------------
Barry S. Logan
Vice President and Secretary
(Chief Financial Officer)
August 13, 1998
13 of 13
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27. Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE WATSCO, INC. FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 6,738
<SECURITIES> 0
<RECEIVABLES> 159,274
<ALLOWANCES> 5,728
<INVENTORY> 201,138
<CURRENT-ASSETS> 382,884
<PP&E> 45,055
<DEPRECIATION> 19,344
<TOTAL-ASSETS> 520,961
<CURRENT-LIABILITIES> 100,545
<BONDS> 173,277
<COMMON> 8,942
0
0
<OTHER-SE> 234,774
<TOTAL-LIABILITY-AND-EQUITY> 520,961
<SALES> 443,569
<TOTAL-REVENUES> 443,569
<CGS> 343,194
<TOTAL-COSTS> 343,194
<OTHER-EXPENSES> 77,868
<LOSS-PROVISION> 1,252
<INTEREST-EXPENSE> 4,436
<INCOME-PRETAX> 16,819
<INCOME-TAX> 6,223
<INCOME-CONTINUING> 10,596
<DISCONTINUED> (689)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,907
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.53
</TABLE>
