<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 February 29, 1996
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 847-671-3000
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 February 29, 1996
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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
FEBRUARY 29, 1996 (UNAUDITED) AND NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Feb 29 Nov 30
1996 1995
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($000 omitted)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,333 8,527
Receivables, net 89,480 90,726
Inventories 86,762 86,207
Other current assets 5,021 5,221
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Total current assets 187,596 190,681
Investments and other assets 6,427 7,098
Goodwill 2,674 2,695
Property, plant and equipment, at cost 65,114 65,186
Less accumulated depreciation 35,345 34,559
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Net property, plant and equipment 29,769 30,627
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TOTAL ASSETS $226,466 231,101
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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
FEBRUARY 29, 1996 (UNAUDITED) AND NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Feb 29 Nov 30
1996 1995
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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 $ 8,102 11,040
Accounts payable 54,047 53,969
Other current liabilities 17,264 19,070
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Total current liabilities 79,413 84,079
Deferred compensation 8,762 8,725
Deferred income taxes 458 490
Long-term debt, less current maturities 43,129 43,202
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Total liabilities 131,762 136,496
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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 67,480 66,671
Foreign currency translation adjustment ( 370) 340
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Total stockholders' equity 94,704 94,605
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $226,466 231,101
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</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
(Unaudited)
<TABLE>
<CAPTION>
For the three
months ended
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Feb 29 Feb 28
1996 1995
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($000 omitted)
<S> <C> <C>
Net sales $65,429 58,994
Cost of goods sold 44,283 38,411
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Gross profit 21,146 20,583
Selling, general and administrative expenses 18,045 17,420
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Operating income 3,101 3,163
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Other expenses (income):
Interest expense 1,120 964
Contribution to employees profit sharing fund 6 6
Other expense (income), net ( 29) ( 148)
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1,097 822
Earnings before income taxes and equity in
earnings (loss) of unconsolidated subsidiaries 2,004 2,341
Income taxes 886 932
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Earnings before equity in earnings (loss) of
unconsolidated subsidiaries 1,118 1,409
Equity in earnings (loss) of unconsolidated
subsidiaries - -
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Net earnings $ 1,118 1,409
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Net earnings per share $ .36 .46
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Cash dividends declared per share $ .10 .10
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</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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($000 omitted)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,118 1,409
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,056 917
Equity in (earnings) loss of unconsolidated
subsidiaries - -
Deferred compensation, net of payments 76 58
Deferred income taxes ( 32) 6
Other, net 161 ( 196)
Cash provided by (used in) changes in:
Receivables ( 399) (1,584)
Inventories (1,006) (2,400)
Other current assets 430 ( 370)
Accounts payable ( 187) ( 808)
Accrued employees' profit-sharing contributions 32 ( 213)
Accrued expenses ( 963) (1,380)
Income taxes 170 268
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Net cash provided by (used in) operating activities 456 (4,293)
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Cash flows from investing activities:
Purchase of property, plant and equipment ( 368) (1,174)
Proceeds from sale of equipment 14 1,481
Other investments and assets 480 153
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Net cash provided by (used in) investing activities 126 460
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Cash flows from financing activities:
Proceeds from long-term borrowings 24 200
Dividends paid - -
Net increase (decrease) in commercial paper,
notes payable and bank overdrafts (2,551) 1,501
Principal payments on long-term debt ( 199) ( 236)
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Net cash provided by (used in) financing activities (2,726) 1,471
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Effect of exchange rate changes on cash ( 50) 133
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Net increase (decrease) in cash and cash equivalents (2,194) (2,229)
Cash and cash equivalents at beginning of period 8,527 8,564
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Cash and cash equivalents at end of period $ 6,333 6,335
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</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 1996 (UNAUDITED) AND NOVEMBER 30, 1995
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, 1995.
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 $258,000 and are included
in other income in the consolidated statement of earnings. The after tax gains
on these sales were $127,000.
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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 $24,581,000 at February 29, 1996.
The Company's cash balances decreased $2,194,000 during the three months ended
February 29, 1996. The net decrease was the result of $456,000 provided by
operations due to higher sales volumes, $126,000 provided by investing
activities from decreases in other long term assets offset by purchases of
property, plant and equipment, $2,726,000 used in financing activities from
reductions in borrowings and a $50,000 decrease 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 paid April 8, 1996 at the rate of $.10 per share, to stockholders
of record March 8, 1996.
RESULTS OF OPERATIONS
Net sales in the first quarter of 1996 amounted to $65,429,000, an increase of
11% or $6,435,000 as compared to the first quarter of 1995. Strong demand for
products produced by Sames SA, the Company's wholly owned subsidiary in France,
was chiefly responsible for the increase.
Gross profit increased 3% to a total of $21,146,000 for the quarter ended
February 29, 1996 as compared to the first quarter in 1995 mainly because of the
higher sales. The gross profit percentage decreased to 32% in 1996 from 35% in
1995 because of the product mix which included more lower margin large contracts
in 1996.
Selling, general and administrative expenses increased $625,000 or 4% as
compared to the first quarter in 1995. As a percentage of net sales these
expenses decreased to 28% in 1996 from 29% in 1995. Interest expense
increased $156,000 when compared to the first quarter in 1995 because of an
increase in interest bearing debt.
As discussed in Note 3, first quarter 1995 other income includes $258,000 of
gains from the sale of two buildings in the United States. One building was
sold after the completion of a new facility. The second building was sold after
production was shifted to the Company's main plant in an effort to reduce
manufacturing costs.
The percentage of income taxes to pretax earnings was 44% in the first quarter
of 1996 as compared with 40% in 1995. The change relates to the geographic mix
of profitability.
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<PAGE>
PART II - OTHER INFORMATION
Items l 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.
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 April 12, 1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 6,333
<SECURITIES> 0
<RECEIVABLES> 89,480
<ALLOWANCES> 0
<INVENTORY> 86,762
<CURRENT-ASSETS> 187,596
<PP&E> 65,114
<DEPRECIATION> 35,345
<TOTAL-ASSETS> 226,466
<CURRENT-LIABILITIES> 79,413
<BONDS> 43,129
0
0
<COMMON> 3,089
<OTHER-SE> 91,615
<TOTAL-LIABILITY-AND-EQUITY> 226,466
<SALES> 65,429
<TOTAL-REVENUES> 65,429
<CGS> 44,283
<TOTAL-COSTS> 44,283
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,120
<INCOME-PRETAX> 2,004
<INCOME-TAX> 886
<INCOME-CONTINUING> 1,118
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,118
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
