<PAGE>
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 l934
For the quarterly period ended August 31, 1994
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period From to
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Commission file number 1-1416
BINKS MANUFACTURING COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 36-0808480
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9201 WEST BELMONT AVENUE, FRANKLIN PARK, ILLINOIS 60131
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(Address of principal executive offices)
Registrant's telephone number, including area code 708-671-3000
Indicate by check mark whether the registrant (l) 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
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The number of shares outstanding of each of the issuer's classes of common
stock, as of the close of the period covered by this report:
Class Outstanding August 31, 1994
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Common, par value $1.00 3,088,837
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PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL STATEMENTS
Company or group of companies
for which report is filed:
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1994 (UNAUDITED) AND NOVEMBER 30, 1993
<TABLE>
<CAPTION>
Aug 31 Nov 30
1994 1993
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($000 omitted)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,233 10,164
Receivables, net 66,568 61,689
Inventories 79,290 70,899
Other current assets 3,000 2,786
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Total current assets 157,091 145,538
Investments and other assets 6,268 5,420
Goodwill 2,800 2,863
Property, plant and equipment, at cost 57,689 54,789
Less accumulated depreciation (31,372) (28,611)
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Net property, plant and equipment 26,317 26,178
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TOTAL ASSETS $192,476 179,999
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</TABLE>
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<PAGE>
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL STATEMENTS (Continued)
Company or group of companies
for which report is filed:
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1994 (UNAUDITED) AND NOVEMBER 30, 1993
<TABLE>
<CAPTION>
Aug 31 Nov 30
1994 1993
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($000 omitted)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, bank overdrafts
and current maturities of long-term debt $ 1,597 2,374
Accounts payable 41,963 38,209
Other current liabilities 12,877 13,715
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Total current liabilities 56,437 54,298
Deferred compensation 7,909 6,403
Deferred income taxes 265 381
Deferred revenue 40 13
Long-term debt, less current maturities 38,662 34,136
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Total liabilities 103,313 95,231
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Stockholders' equity:
Capital stock, $l.00 par value. Authorized
12,000,000 shares: issued 3,088,837 shares 3,089 3,089
Additional paid-in capital 24,505 24,505
Retained earnings 63,355 61,420
Foreign currency translation adjustment (1,786) (4,246)
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Total stockholders' equity 89,163 84,768
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $192,476 179,999
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</TABLE>
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Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
THREE AND NINE MONTHS ENDED AUGUST 31, 1994 AND AUGUST 31, 1993
(Unaudited)
<TABLE>
<CAPTION>
For the three For the nine
months ended months ended
Aug 31 Aug 31
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1994 1993 1994 1993
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($000 omitted) ($000 omitted)
<S> <C> <C> <C> <C>
Net sales $ 55,543 53,871 168,130 154,786
Cost of goods sold 35,166 35,806 111,066 100,787
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Gross profit 20,377 18,065 57,064 53,999
Selling, general and administrative expenses 18,394 16,472 51,245 48,900
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Operating income 1,983 1,593 5,819 5,099
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Other expenses (income):
Interest expense 685 610 1,973 1,971
Contribution to employees' profit
sharing funds 4 90 44 91
Other expense (income), net ( 99) ( 23) ( 1,057) ( 70)
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590 677 960 l,992
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Earnings before income taxes and equity
in earnings (loss) of unconsolidated
subsidiaries 1,393 916 4,859 3,107
Income taxes 748 661 2,307 1,742
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Earnings before equity in earnings (loss)
of unconsolidated subsidiaries 645 255 2,552 1,365
Equity in earnings (loss) of unconsolidated
subsidiaries -- -- -- ( 50)
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Net earnings $ 645 255 2,552 1,315
------- ------- ------- -------
------- ------- ------- -------
Net earnings per share $ .21 .08 .83 .44
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------- ------- ------- -------
Cash dividends declared per share $ -- -- .20 .25
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------- ------- ------- -------
</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED AUGUST 31, 1994 AND AUGUST 31, 1993
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
---- ----
($000 omitted)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,552 1,315
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 2,513 2,408
Equity in (earnings) loss of unconsolidated
subsidiaries -- 50
Deferred compensation, net of payments 322 339
Deferred income taxes 31 ( 2)
Other, net ( 833) ( 232)
Cash provided by (used in) changes in:
Receivables ( 2,505) (3,719)
Inventories ( 6,477) ( 184)
Other current assets 858 1,884
Accounts payable 1,647 4,160
Accrued employees' profit-sharing contributions ( 344) 36
Accrued expenses ( 223) (2,158)
Income taxes ( 1,008) 404
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Net cash provided by (used in) operating activities ( 3,467) 4,301
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Cash flows from investing activities:
Purchase of property, plant and equipment ( 2,076) (1,398)
Proceeds from sale of property, plant and equipment 1,143 22
Purchase of other investments and assets ( 546) ( 574)
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Net cash provided by (used in) investing activities ( 1,479) (1,950)
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Cash flows from financing activities:
Proceeds from long-term borrowings 19,388 1,108
Dividends paid ( 618) ( 766)
Net increase (decrease) in commercial paper,
notes payable and bank overdrafts ( 378) ( 925)
Principal payments on long-term debt (15,875) ( 620)
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Net cash provided by (used in) financing activities 2,517 (1,203)
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Effect of exchange rate changes on cash 498 ( 10)
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Net increase (decrease) in cash and cash equivalents ( 1,931) 1,138
Cash and cash equivalents at beginning of period 10,164 7,652
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Cash and cash equivalents at end of period $ 8,233 8,790
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</TABLE>
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Binks Manufacturing Company and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994 (UNAUDITED) AND NOVEMBER 30, 1993
NOTE 1
The accompanying financial statements are unaudited, but in the opinion of
management include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of operations and
financial position for the applicable period. Results of operations for any
interim period are not necessarily indicative of results for any other period or
for the full year. These interim financial statements should be read in
conjunction with the financial statements and related notes contained in the
Annual Report on Form 10-K for the year ended November 30, 1993.
NOTE 2
On July 2, 1993, a judgment was entered against the Company in a civil action
instituted by Graco, Inc. in the United States District Court in Houston, Texas,
alleging infringement of a U.S. Patent held by Graco. The judgment provides for
a total award of $2.75 million against the Company. The Company is appealing
the judgment and has furnished an appeal bond in an amount equal to the judgment
which has been secured by a letter of credit. After consulting with counsel,
the Company has determined that it is not possible at this time to estimate the
amount of damages, if any, that may ultimately be incurred. Accordingly, no
provision has been made in the accompanying consolidated financial statements.
NOTE 3
In the second quarter of 1994, the Company sold a parcel of undeveloped land
adjacent to one of its facilities that was not being utilized. The pretax gain
on this sale amounted to $960,000, representing an after tax gain of $575,000.
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Binks Manufacturing Company and Consolidated Subsidiaries
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Revenue generated from operations constitutes the primary source of the
Company's liquidity. Short-term funds are also provided for current operations
through bank loans and the issuance of bankers acceptances. The Company
maintains substantial lines of credit for general corporate purposes and to
provide support for the issuance of bankers acceptances. The unused lines of
credit were approximately $28,280,000 at August 31, 1994.
The Company's cash balances decreased $1,931,000 during the nine months ended
August 31, 1994. The net decrease was the result of $3,467,000 used in
operations due to higher sales volumes resulting in greater uncollected billings
and work in process inventory, $1,479,000 used for investing activities
principally for purchases of property, plant and equipment which was offset by a
sale of land more fully described in note 3, $2,517,000 provided by financing
activities from the net increase in borrowings as more fully described below and
a $498,000 increase based on the changes in foreign exchange rates during the
period.
On November 30, 1993 the Company agreed to issue $15,000,000 of 7.14% senior
notes with a final maturity in 2008. Funding of the notes took place on
December 6, 1993 and the proceeds were used to repay a portion of the debt
outstanding under one of the Company's lines of credit. The Company will repay
the principal in 11 annual installments beginning in 1998.
A dividend was declared on September 29, 1994 at the rate of $.10 per share to
stockholders of record on October 18, 1994 with a payment date of November l,
1994.
RESULTS OF OPERATIONS
Net sales increased 9%, or $13,344,000, to a total of $168,130,000 for the nine
months ended August 31, 1994, as compared with $154,786,000 for the same period
in 1993. In the third quarter ended August 31, 1994, net sales increased 3% to
$55,543,000 as compared to $53,871,000 in the third quarter of 1993. Higher
sales in France and the United States were responsible for the increase.
Gross profit increased 6% to a total of $57,064,000 for the nine months ended
August 31, 1994 as compared to the first nine months in 1993 mainly because of
the higher sales. The gross profit percentage was 34% in 1994 and 35% in 1993.
The gross profit percentage decrease resulted from an increase in the amount of
larger contracts with lower margins and an interim provision for estimated
inventory shrinkage.
Selling, general and administrative expenses increased $2,345,000 or 5% as
compared to the first nine months in 1993. As a percentage of net sales, these
expenses decreased to 30% in 1994 from 32% in 1993. Interest expense for the
first nine months of 1994 was consistent with the same period in 1993 because of
reductions in short-term borrowings offset by higher prevailing interest rates.
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Other income increased $987,000 in the first nine months ended August 31, 1994
when compared to the corresponding period in 1993. This increase was primarily
the result of the sale of an unused parcel of land by the Company in the second
quarter of 1994. The pretax gain on the sale of the land amounted to $960,000,
or $575,000 after tax.
The percentage of income taxes to pretax earnings was 47% in 1994 as compared
with 56% in 1993. The change relates to the geographic mix of profitability.
Net income for the nine months ended August 31, 1994 totalled $2,552,000, an
increase of 94% over the $1,315,000 earned in the corresponding period of 1993.
The increase is the result of all of the factors described above.
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PART II - OTHER INFORMATION
Items 1 through 5 Not applicable
Item 6 (a) None
(b) None
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 enclosed financial statements include
all adjustments, including normal and recurring adjustments, which are necessary
to a fair presentation of the results of operations for the periods presented.
BINKS MANUFACTURING COMPANY
/s/ Jeffrey W. Lemajeur
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Jeffrey W. Lemajeur, Treasurer
/s/ Burke B. Roche
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Burke B. Roche, President
Date October 14, 1994
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-01-1993
<PERIOD-END> AUG-31-1994
<CASH> 8,233
<SECURITIES> 0
<RECEIVABLES> 66,568
<ALLOWANCES> 0
<INVENTORY> 79,290
<CURRENT-ASSETS> 157,091
<PP&E> 57,689
<DEPRECIATION> 31,372
<TOTAL-ASSETS> 192,476
<CURRENT-LIABILITIES> 56,437
<BONDS> 38,662
<COMMON> 3,089
0
0
<OTHER-SE> 86,074
<TOTAL-LIABILITY-AND-EQUITY> 192,476
<SALES> 168,130
<TOTAL-REVENUES> 168,130
<CGS> 111,066
<TOTAL-COSTS> 111,066
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,973
<INCOME-PRETAX> 4,859
<INCOME-TAX> 2,307
<INCOME-CONTINUING> 2,552
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,552
<EPS-PRIMARY> .83
<EPS-DILUTED> .83
</TABLE>
