<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, 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 May 31, 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
MAY 31, 1996 (UNAUDITED) AND NOVEMBER 30, 1995
May 31 Nov 30
1996 1995
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($000 omitted)
ASSETS
Current assets:
Cash and cash equivalents $ 14,935 8,527
Receivables, net 73,649 90,726
Inventories 97,649 86,207
Other current assets 4,499 5,221
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Total current assets 190,732 190,681
Investments and other assets 6,625 7,098
Goodwill 2,653 2,695
Property, plant and equipment, at cost 65,840 65,186
Less accumulated depreciation 36,166 34,559
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Net property, plant and equipment 29,674 30,627
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TOTAL ASSETS $229,684 231,101
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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, 1996 (UNAUDITED) AND NOVEMBER 30, 1995
May 31 Nov 30
1996 1995
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($000 omitted)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, bank overdrafts
and current maturities of long-term debt $ 6,009 11,040
Accounts payable 59,678 53,969
Other current liabilities 17,128 19,070
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Total current liabilities 82,815 84,079
Deferred compensation 9,015 8,725
Deferred income taxes 435 490
Long-term debt, less current maturities 44,007 43,202
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Total liabilities 136,272 136,496
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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 66,879 66,671
Foreign currency translation adjustment ( 1,061) 340
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Total stockholders' equity 93,412 94,605
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $229,684 231,101
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Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
SIX MONTHS ENDED MAY 31, 1996 AND MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
For the three For the six
months ended months ended
----------------- -----------------
May 31 May 31 May 31 May 31
1996 1995 1996 1995
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($000 omitted) ($000 omitted)
<S> <C> <C> <C> <C>
Net Sales $ 62,877 64,374 128,306 123,368
Cost of goods sold 42,087 42,634 86,370 81,045
------- ------- ------- -------
Gross profit 20,790 21,740 41,936 42,323
Selling, general and administrative
expenses 20,466 19,230 38,511 36,650
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Operating income 324 2,510 3,425 5,673
Other expenses (income):
Interest expense 1,019 1,016 2,139 1,980
Contribution to employee's profit
sharing funds 9 8 15 14
Other expense (income), net ( 15) ( 16) ( 44) ( 164)
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1,013 1,008 2,110 1,830
Earnings before income taxes and equity
in earnings (loss) of unconsolidated
subsidiaries ( 689) 1,502 1,315 3,843
Income taxes ( 398) 633 488 1,565
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Net earnings (loss) $( 291) 869 827 2,278
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------- ------- ------- -------
Net earnings (loss) per share $( .09) .28 .27 .74
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------- ------- ------- -------
Cash dividends declared per share $ .10 .20 .20 .30
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------- ------- ------- -------
</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MAY 31, 1996 AND MAY 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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($000 omitted)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 827 2,278
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 2,188 1,898
Deferred compensation, net of payments 445 126
Deferred income taxes (47) 2
Other, net 160 (270)
Cash provided by (used in) changes in:
Receivables 14,173 ( 9,635)
Inventories (12,527) ( 8,266)
Other current assets 1,030 452
Accounts payable 7,186 13,392
Accrued employees' profit-sharing contributions 49 (275)
Accrued expenses (578) 631
Income taxes (716) 665
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Net cash provided by (used in) operating activities 12,190 998
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Cash flows from investing activities:
Purchase of property, plant and equipment ( 1,656) ( 2,411)
Proceeds from sale of equipment 61 1,492
Decrease in other investments and assets 277 7
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Net cash provided by (used in) investing activities ( 1,318) (912)
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Cash flows from financing activities:
Proceeds from long-term borrowings 966 2,277
Dividends paid (309) (309)
Net increase (decrease) in commercial paper,
notes payable and bank overdrafts ( 4,498) ( 1,915)
Principal payments on long-term debt (373) (406)
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Net cash provided by (used in) financing activities ( 4,214) (353)
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Effect of exchange rate changes on cash (250) 665
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Net increase (decrease) in cash and cash equivalents 6,408 398
Cash and cash equivalents at beginning of period 8,527 8,564
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Cash and cash equivalents at end of period $ 14,935 8,962
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</TABLE>
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<PAGE>
Binks Manufacturing Company and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED) AND NOVEMBER 30, 1995
NOTE l
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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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 $27,320,000 at May 31, 1996.
The Company's cash balances increased $6,408,000 during the six months ended May
31, 1996. The net increase was the result of $12,190,000 provided by
operations due to improved receivables collections, $1,318,000 used for
investing activities principally for purchases of property, plant and equipment,
$4,214,000 used in financing activities mainly for reducing short term debt and
the payment of dividends and a $250,000 decrease based on the changes in
foreign exchange rates during the period.
A dividend was paid June 24, 1996 at the rate of $.10 per share to stockholders
of record on May 17, 1996. A dividend was declared at a Board of Director's
meeting on June 28, 1996 at the rate of $.10 per share payable on August 2, 1996
to stockholder's of record on July 19, 1996.
RESULTS OF OPERATIONS
Net sales increased 4% or $4,938,000 to a total of $128,306,000 for the six
months ended May 31, 1996, as compared with $123,368,000 for the same period in
1995. In the second quarter ended May 31, 1996, sales decreased 2% to
$62,877,000 as compared to the second quarter of 1995. Lower sales in England
were chiefly responsible for the second quarter decrease.
Gross profit decreased 1% to a total of $41,936,000 for the six months ended May
31, 1996 as compared to the first six months in 1995 mainly because of the
product mix. The gross profit percentage was 33% in 1996 and 34% in 1995. The
gross profit percentage varies depending on the amount of larger contracts that
have inherently lower margins.
Selling, general and administrative expenses increased $1,861,000 or 5% as
compared to the first six months in 1995 mainly to support the increase in
sales. As a percentage of net sales, these expenses were 30% in 1996 and 1995.
Interest expense increased $159,000 when compared to the same period in 1995
because of higher levels of interest bearing debt.
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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 $120,000 in the first six months ended May 31, 1996 when
compared to the corresponding period in 1995. This decrease was primarily the
result of the sales of buildings by the Company in the first quarter of 1995.
The 1995 pretax gains on the sales of the buildings amounted to $258,000, or
$127,000 after tax.
The percentage of income taxes to pretax earnings was 37% in 1996 as compared
with 41% in 1995. The change relates to the geographic mix of profitability.
Net income for the six months ended May 31, 1996 totalled $827,000, a decrease
of 64% over the $2,278,000 earned in the corresponding period of 1995. The
decrease is the result of all of the factors described above.
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<PAGE>
PART II - OTHER INFORMATION
Items 1 thru 5 Not applicable
Item 6
(a) None
(b) On June 18, 1996 the Company filed a Form 8-K
dated June 6, 1996 reporting changes in management
under Item 5.
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/
Chief Financial Officer
/s/ Doran J. Unschuld
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Doran J. Unschuld, President/
Chief Executive Officer
Date July 15, 1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 14,935
<SECURITIES> 0
<RECEIVABLES> 73,649
<ALLOWANCES> 0
<INVENTORY> 97,649
<CURRENT-ASSETS> 190,732
<PP&E> 65,840
<DEPRECIATION> 36,166
<TOTAL-ASSETS> 229,684
<CURRENT-LIABILITIES> 82,815
<BONDS> 44,007
0
0
<COMMON> 3,089
<OTHER-SE> 90,323
<TOTAL-LIABILITY-AND-EQUITY> 229,684
<SALES> 128,306
<TOTAL-REVENUES> 128,306
<CGS> 86,370
<TOTAL-COSTS> 86,370
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,139
<INCOME-PRETAX> 1,315
<INCOME-TAX> 488
<INCOME-CONTINUING> 827
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 827
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
