<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
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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 May 31, 1995
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 1-1416
BINKS MANUFACTURING COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 36-0808480
- ------------------------------- --------------------------
(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 to 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
----- -----
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 May 31, 1995
----------------------- ------------------------
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
MAY 31, 1995 (UNAUDITED) AND NOVEMBER 30, 1994
<TABLE>
<CAPTION>
May 31 Nov 30
1995 1994
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($000 omitted)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,962 8,564
Receivables, net 81,237 68,214
Inventories 84,886 74,911
Other current assets 3,562 4,308
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Total current assets 178,647 155,997
Investments and other assets 7,305 7,204
Goodwill 2,737 2,779
Property, plant and equipment, at cost 61,452 59,164
Less accumulated depreciation 33,930 31,780
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Net property, plant and equipment 27,522 27,384
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TOTAL ASSETS $216,211 193,364
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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
MAY 31, 1995 (UNAUDITED) AND NOVEMBER 30, 1994
<TABLE>
<CAPTION>
May 31 Nov 30
1995 1994
--------- ---------
($000 omitted)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, bank overdrafts
and current maturities of long-term debt $ 4,721 6,424
Accounts payable 51,067 35,286
Other current liabilities 16,072 15,048
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Total current liabilities 71,860 56,758
Deferred compensation 8,315 7,833
Deferred income taxes 453 431
Long-term debt, less current maturities 40,616 38,114
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Total liabilities 121,244 103,136
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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 65,260 63,909
Foreign currency translation adjustment 2,113 ( 1,275)
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Total stockholders' equity 94,967 90,228
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $216,211 193,364
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</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
SIX MONTHS ENDED MAY 31, 1995 AND MAY 31, 1994
(unaudited)
<TABLE>
<CAPTION>
For the three For the six
months ended months ended
---------------------- ----------------------
May 31 May 31 May 31 May 31
1995 1994 1995 1994
------ ------ ------ ------
($000 omitted) ($000 omitted)
<S> <C> <C> <C> <C>
Net Sales $64,374 59,347 123,368 112,587
Cost of goods sold 42,634 39,802 81,045 75,900
------ ------ ------- -------
Gross profit 21,740 19,545 42,323 36,687
Selling, general and administrative expenses 19,230 17,456 36,650 32,851
------ ------ ------- -------
Operating income 2,510 2,089 5,673 3,836
Other expenses (income):
Interest expense 1,016 673 1,980 1,288
Contribution to employee's profit
sharing funds 8 4 14 40
Other expense (income), net ( 16) ( 928) ( 164) ( 958)
------ ------ ------- -------
1,008 ( 251) 1,830 370
Earnings before income taxes and equity
in earnings (loss) of unconsolidated
subsidiaries 1,502 2,340 3,843 3,466
Income taxes 633 1,160 1,565 1,559
------ ------ ------- -------
Earnings before equity in earnings (loss)
of unconsolidated subsidiaries 869 1,180 2,278 1,907
Equity in earnings (loss) of unconsolidated
subsidiaries - - - -
------ ------ ------- -------
Net earnings $ 869 1,180 2,278 1,907
------ ------ ------- -------
------ ------ ------- -------
Net earnings per share $ .28 .38 .74 .62
------ ------ ------- -------
------ ------ ------- -------
Cash dividends declared per share $ .20 .10 .30 .20
------ ------ ------- -------
------ ------ ------- -------
</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MAY 31, 1995 AND MAY 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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($000 omitted)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,278 1,907
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,898 1,647
Equity in (earnings) loss of unconsolidated
subsidiaries - -
Deferred compensation, net of payments 126 224
Deferred income taxes 2 14
Other, net ( 270) ( 946)
Cash provided by (used in) changes in:
Receivables ( 9,635) (11,120)
Inventories ( 8,266) ( 1,709)
Other current assets 452 282
Accounts payable 13,392 5,162
Accrued employees' profit-sharing contributions ( 275) ( 362)
Accrued expenses 631 ( 8)
Income taxes 665 ( 34)
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Net cash provided by (used in) operating activities 998 ( 5,507)
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Cash flows from investing activities:
Purchase of property, plant and equipment ( 2,411) ( 1,342)
Proceeds from sale of equipment 1,492 1,118
Purchase of other investments and assets 7 ( 51)
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Net cash provided by (used in) investing activities ( 912) ( 275)
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Cash flows from financing activities:
Proceeds from long-term borrowings 2,277 18,464
Dividends paid ( 309) ( 618)
Net increase (decrease) in commercial paper,
notes payable and bank overdrafts ( 1,915) 41
Principal payments on long-term debt ( 406) (15,693)
-------- --------
Net cash provided by (used in) financing activities ( 353) 2,194
-------- --------
Effect of exchange rate changes on cash 665 212
-------- --------
Net increase (decrease) in cash and cash equivalents 398 ( 3,376)
Cash and cash equivalents at beginning of period 8,564 10,164
-------- --------
Cash and cash equivalents at end of period $ 8,962 6,788
-------- --------
-------- --------
</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995 (UNAUDITED) AND NOVEMBER 30, 1994
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, 1994.
NOTE 2
On June 30, 1995, the Court of Appeals for the Federal Circuit, in GRACO, INC.
V. BINKS MANUFACTURING COMPANY, vacated a judgment of infringement and an award
of $2.75 million against the Company regarding certain pumps sold prior to June
1993. The United States District Court for the Southern District of Texas
previously found that the Company had "willfully" infringed a patent and awarded
Graco treble damages, attorney fees and costs. The Federal Circuit reversed the
district court's finding that Binks "willfully" infringed Graco's patent and the
resulting enhancement of damages and award of attorneys' fees. The Federal
Circuit remanded the case for findings on the issues of whether the patent was
valid and infringed. Graco asserts that on remand it will seek damages and
interest of approximately $750,000. The Company believes that there are
meritorious defenses to these claims and thus no provision for any liability has
been made in the financial statements.
NOTE 3
In the first quarter of 1995, the Company sold two buildings in the United
States. The pretax gains on these sales amounted to $251,000 and are included
in other income in the consolidated statement of earnings. The after tax gains
on these sales were $122,000.
NOTE 4
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 and is included in other income in the
consolidated statement of earnings. The after tax gain on this sale was
$575,000.
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<PAGE>
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 $34,900,000 at May 31, 1995.
The Company's cash balances increased $398,000 during the six months ended May
31, 1995. The net increase was the result of $998,000 provided by operations
due to higher sales volumes, $912,000 used for investing activities principally
for purchases of property, plant and equipment which was offset by sales of real
estate more fully described in note 3, $353,000 used in financing activities
mainly from the payment of dividends and a $665,000 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 maturing 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 paid June 22, 1995 at the rate of $.20 per share to stockholders
of record on May 17, 1995.
RESULTS OF OPERATIONS
Net sales increased 10% or $10,781,000 to a total of $123,368,000 for the six
months ended May 31, 1995, as compared with $112,587,000 for the same period in
1994. In the second quarter ended May 31, 1995, sales increased 9% to
$64,374,000 as compared to the second quarter of 1994. Higher sales in the
United States, Canada and England were chiefly responsible for the increase.
Gross profit increased 15% to a total of $42,323,000 for the six months ended
May 31, 1995 as compared to the first six months in 1994 mainly because of the
higher sales. The gross profit percentage was 34% in 1995 and 33% in 1994. The
gross profit percentage varies depending on the amount of larger contracts that
have inherently lower margins.
Selling, general and administrative expenses increased $3,799,000 or 12% as
compared to the first six months in 1994 mainly to support the increase in
sales. As a percentage of net sales, these expenses increased to 30% in 1995
from 29% in 1994. Interest expense increased $692,000 when compared to the same
period in 1994 because of sharply higher domestic 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 decreased $794,000 in the first six months ended May 31, 1995 when
compared to the corresponding period in 1994. This decrease was primarily the
result of the sale of an unused parcel of land by the Company in the second
quarter of 1994. The 1994 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 41% in 1995 a compared
with 45% in 1994. The change relates to the geographic mix of profitability.
Net income for the six months ended May 31, 1995 totalled $2,278,000, an
increase of 20% over the $1,907,000 earned in the corresponding period of 1994.
The increase is the result of all of the factors described above.
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<PAGE>
PART II - OTHER INFORMATION
Item 1
On June 30, 1995, the Court of Appeals for the Federal Circuit, in
GRACO, INC. V. BINKS MANUFACTURING COMPANY, vacated a judgment of
infringement and an award of $2.75 million against the Company
regarding certain pumps sold prior to June 1993. The United States
District Court for the Southern District of Texas previously found
that the Company had "willfully" infringed Graco's patent and awarded
Graco treble damages, attorneys fees and costs. The Federal Circuit
reversed the district court's finding that Binks "willfully" infringed
Graco's patent and the resulting enhancement of damages and award of
attorneys' fees. The Federal Circuit remanded the case for findings
on the issues of whether the patent was valid and infringed. Graco
asserts that on remand it will seek damages and interest of
approximately $750,000. The Company believes that there are
meritorious defenses to these claims and thus no provision for any
liability has been made in the financial statements.
Items 2 thru 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
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/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 July 14, 1995
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 8,962
<SECURITIES> 0
<RECEIVABLES> 81,237
<ALLOWANCES> 0
<INVENTORY> 84,886
<CURRENT-ASSETS> 178,647
<PP&E> 61,452
<DEPRECIATION> 33,930
<TOTAL-ASSETS> 216,211
<CURRENT-LIABILITIES> 71,860
<BONDS> 40,616
<COMMON> 3,089
0
0
<OTHER-SE> 91,878
<TOTAL-LIABILITY-AND-EQUITY> 216,211
<SALES> 123,368
<TOTAL-REVENUES> 123,368
<CGS> 81,045
<TOTAL-COSTS> 81,045
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,980
<INCOME-PRETAX> 3,843
<INCOME-TAX> 1,565
<INCOME-CONTINUING> 2,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,278
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
