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 1934 for the quarterly period
ended June 30, 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 1-8973
KYSOR INDUSTRIAL CORPORATION
(exact name of registrant as specified in its charter)
Michigan (state or other jurisdiction of incorporation or organization)
38-1909000 (I.R.S. Employer Identification Number)
One Madison Avenue, Cadillac, Michigan 49601
(Address of principal executive offices) ( Zip Code)
(616) 779-2200
(Registrant's telephone number, including area code)
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 requirement 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 latest practicable date.
Common stock, $1.00 par value, number of shares outstanding as of
July 12, 1995:
5,509,566
<TABLE>
KYSOR INDUSTRIAL CORPORATION
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
The interim financial data presented herein is unaudited but, in the opinion of the
management, reflects all adjustments (none of which was other than a normal recurring
adjustment) necessary for a fair presentation of such information. Results for interim
periods should not be considered indicative of results for a full year. There were no
undisclosed material unusual charges or credits to income during the quarter ended June 30,
1995 nor was there a change in independent accountants during the period.
Consolidated Statement of Income
(Unaudited, amounts in thousands except per share data)
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
___________ ___________ ____________ ____________
<S> <C> <C> <C> <C>
Net sales $ 94,746 $ 76,083 $ 184,800 $ 146,113
Interest and other revenues 518 442 1,090 722
___________ ___________ ____________ ____________
TOTAL SALES AND REVENUES 95,264 76,525 185,890 146,835
___________ ___________ ____________ ____________
COSTS AND EXPENSES
Cost of sales 72,781 58,744 141,947 113,148
Selling and administrative expenses 13,489 12,088 28,198 23,443
Interest expense 435 502 922 1,040
Other expenses 276 270 591 606
___________ ___________ ____________ ____________
TOTAL COSTS AND EXPENSES 86,981 71,604 171,658 138,237
___________ ___________ ____________ ____________
INCOME BEFORE INCOME TAXES 8,283 4,921 14,232 8,598
INCOME TAXES 3,650 1,925 6,290 3,500
___________ ___________ ____________ ____________
NET INCOME 4,633 2,996 7,942 5,098
DIVIDENDS ON PREFERRED STOCK
(Net of income tax benefits) 245 244 487 490
___________ ___________ ____________ ____________
EARNINGS (LOSS) APPLICABLE TO COMMON STOCK $ 4,388 $ 2,752 $ 7,455 $ 4,608
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
PRIMARY EARNINGS PER COMMON SHARE $ 0.75 $ 0.48 $ 1.26 $ 0.81
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.65 $ 0.41 $ 1.10 $ 0.69
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Primary weighted average common
shares and equivalents 5,849 5,707 5,912 5,699
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Dividends declared per common share $ 0.15 $ 0.13 $ 0.30 $ 0.25
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited, dollars in thousands)
<CAPTION>
June 30, December 31,
1995 1994
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $16,952 $15,850
Accounts receivable less $2,234 and
$2,027 allowance for doubtful accounts 52,784 46,437
Finished goods inventory 8,188 6,362
Work-in-process inventory 10,468 10,039
Raw Material Inventory 18,850 19,864
Prepaid expenses 3,165 2,067
Deferred income tax charges 6,894 7,202
____________ ____________
TOTAL CURRENT ASSETS 117,301 107,821
____________ ____________
PROPERTY, PLANT AND EQUIPMENT
Land 2,782 2,612
Buildings 32,868 31,103
Machinery and equipment 73,521 67,518
____________ ____________
109,171 101,233
Less accumulated depreciation 63,798 58,320
____________ ____________
TOTAL PROPERTY, PLANT AND EQUIPMENT 45,373 42,913
____________ ____________
OTHER ASSETS
Goodwill, patents and other intangibles 4,350 4,616
Cash value of officers' life insurance 10,795 10,623
Deferred income tax charges 6,155 5,383
Miscellaneous receivables and other assets 5,660 6,155
____________ ____________
TOTAL OTHER ASSETS 26,960 26,777
____________ ____________
TOTAL ASSETS $189,634 $177,511
____________ ____________
____________ ____________
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(continued)
(Unaudited, dollars in thousands)
<CAPTION>
June 30, December 31,
1995 1994
____________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $7,959 $6,597
Accounts payable 24,426 21,122
Accrued income taxes payable 2,882 1,095
Accrued expenses and contingent liabilities 29,088 27,831
____________ ____________
TOTAL CURRENT LIABILITIES 64,355 56,645
Long-term debt, less current maturities,
plus guarantee of ESOP indebtedness 29,565 30,394
Accumulated postretirement benefit obligation 13,333 13,037
Other long-term liabilities 10,277 9,517
____________ ____________
TOTAL LIABILITIES AND DEFERRED CREDITS 117,530 109,593
____________ ____________
PREFERRED SHAREHOLDERS' EQUITY
Employee Stock Ownership Plan Preferred Stock,
shares authorized 5,000,000; outstanding
800,870 and 810,163 stated value of $24.375 19,521 19,587
Unearned deferred compensation under
employee stock ownership plan (14,878) (15,311)
____________ ____________
TOTAL PREFERRED SHAREHOLDERS' EQUITY 4,643 4,276
____________ ____________
COMMON SHAREHOLDERS' EQUITY
Common stock, $1 par value, shares authorized
30,000,000, outstanding 5,532,878
and 5,467,840 5,533 5,641
Additional paid-in capital 2,593 5,386
Retained earnings 59,224 53,443
Translation adjustment 1,344 807
Notes receivable-common stock
96,755 and 99,116 shares (1,059) (1,286)
Unearned deferred compensation under
employee stock ownership plan (174) (349)
____________ ____________
TOTAL COMMON SHAREHOLDERS' EQUITY 67,461 63,642
____________ ____________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $189,634 $177,511
____________ ____________
____________ ____________
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Six Months Ended June 30,
1995 1994
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $7,942 $5,098
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 4,526 4,548
Provision for losses on accounts receivable 227 253
(Gain) Loss on sales of fixed assets (27) (143)
Deferred compensation (ESOP) 608 608
Deferred income taxes (464) (1,078)
Changes in assets and liabilities providing
(consuming) cash:
Accounts receivable (6,574) (8,629)
Inventories (1,241) (4,854)
Prepaid expenses (1,097) (180)
Accounts payable 3,211 3,814
Accrued expenses and contingent liabilities 1,255 2,385
Accrued income taxes payable 2,570 (234)
Other long-term liabilities 1,056 210
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 11,992 1,798
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Additions to property and equipment (6,036) (3,727)
Proceeds from sales of property and equipment 61 399
Acquisitions, net of cash acquired - (4,128)
Decrease (Increase) in other long-term assets 323 (358)
Unrealized translation gain (loss) (181) 291
------- -------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (5,833) (7,523)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Current borrowings 2,247 940
Principal payments against long-term debt (1,714) (1,674)
Proceeds from issuance of common stock 1,384 1,004
Purchase of Common Stock (4,609) -
Common stock and preferred stock dividends paid (2,365) (2,113)
------- -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (5,057) (1,843)
------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 1,102 (7,568)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 15,850 21,339
------- -------
CASH AND EQUIVALENTS AT END OF PERIOD $16,952 $13,771
======= ========
The accompanying notes are an integral part of the financial statements.
</TABLE>
Notes to the financial statements
Note A - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
fair presentation have been included. For further information, refer to the
consolidated financial statements and footnotes included in the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1994.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Kysor Industrial Corporation:
We have reviewed the accompanying consolidated balance sheet of
Kysor Industrial Corporation and Subsidiaries as of June 30,
1995, and the related consolidated statements of income and cash
flows for the three-month and six-month periods ended June 30,
1995 and 1994. These financial statements are the
responsibility of the company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
Kysor Industrial Corporation and Subsidiaries as of December 31,
1994 and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended
(none of which are presented herein); and in our report dated
February 13, 1995 we expressed an unqualified opinion on those
consolidated financial statements.
By s/COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
July 14, 1995
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Kysor Industrial Corporation's sales and revenues for the
second quarter 1995 were $95.3 million, up 24% from the $76.5 million
reported for the same period in 1994. Net income for the second quarter
of 1995 rose 55% to $4.6 million from $3.0 million reported for the same
period last year. This equates to primary earnings per share of $.75 for
the quarter ended June 30, 1995 compared to $.48 for the same period
in 1994.
The Transportation Products Group net sales increased 14%
to $43.7 million for the second quarter of 1995 compared to the $38.5
million reported in the same period a year ago. Operating profit for the
Transportation Products Group for the second quarter 1995 increased
10% to $6.0 million from the $5.5 million reported for the same period in
1994. The Transportation Products Group has continued to take
advantage of the strong medium- and heavy-duty truck markets. While
incoming truck orders have softened during the second quarter, truck
manufacturers' current backlogs should be sufficient to provide increased
overall production levels in 1995.
The Commercial Products Group net sales increased 36%
to $51.0 million for the second quarter of 1995 compared to $37.6 million
reported for the same period a year ago. Operating profit for the
Commercial Products Group for the second quarter of 1995 increased
139% to $5.6 million from the $2.4 million reported for the same period in
1994. The German Commercial Refrigeration Operations have continued
to sustain operating losses. The Company is exploring various options
regarding this subsidiary and it is anticipated that a decision regarding the
future of this European business will be made during the second half of
1995.
The Company is presently involved in certain environmental
proceedings with respect to soil and groundwater contamination in
Cadillac, Michigan, as described in Note 10, Contingent Liabilities, to the
Financial Statements included in the Company's Annual Report on Form
10-K for the year ended December 31, 1994 ("the Form 10-K"). In
addition, as disclosed in Note 10 and under the heading "Legal
Proceedings" in the Form 10-K and below, the Company is also involved
in various other legal proceedings including certain proceedings involving
allegedly contaminated sites to which the Company has been named a
potentially responsible party ("PRP") under the Federal Superfund law or
comparable state laws. Although discovery in certain of these
proceedings has not been completed, subject to the contingencies
discussed in Note 10, management does not believe, based on
information presently available to it, that the ultimate aggregate cost to the
Company of such proceedings would have a material adverse effect on
its financial condition, results of operations, or liquidity.
<PAGE>
Liquidity and Capital Resources
At June 30, 1995, the Company had cash and equivalents
of $17.0 million compared to $15.9 million at December 31, 1994.
Additions to property, plant and equipment for the six-month period ended
June 30, 1995, totaled $6.0 million compared to $3.7 million during the
same period in 1994. Working capital is sufficient for current
requirements.
At June 30, 1995, the Company had no outstanding
borrowings on its $20.0 million revolving line of credit.
<TABLE>
KYSOR INDUSTRIAL CORPORATION
FINANCIAL INFORMATION BY SEGMENT
(Unaudited, amounts in thousands)
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
_____________________ _____________________
1995 1994 1995 1994
________ ________ ________ ________
<S> <C> <C> <C> <C>
NET SALES
Commercial Products
United States $46,636 $32,949 $88,264 $66,146
Europe 4,391 4,680 9,714 7,184
________ ________ ________ ________
Total Commercial Products 51,027 37,629 97,978 73,330
Transportation Products
United States 40,006 36,210 79,771 68,810
Europe 3,713 2,244 7,051 3,973
________ ________ ________ ________
Total Transportation Products 43,719 38,454 86,822 72,783
________ ________ ________ ________
NET SALES $94,746 $76,083 $184,800 $146,113
________ ________ ________ ________
________ ________ ________ ________
OPERATING PROFIT
Commercial Products
United States $6,407 $2,639 $10,885 $5,652
Europe (773) (284) (2,045) (973)
________ ________ ________ ________
Total Commercial Products 5,634 2,355 8,840 4,679
Transportation Products
United States 5,752 5,424 11,742 9,769
Europe 249 50 404 (31)
________ ________ ________ ________
Total Transportation Products 6,001 5,474 12,146 9,738
________ ________ ________ ________
TOTAL OPERATING PROFIT 11,635 7,829 20,986 14,417
Corporate Administrative Expense (Net) (2,917) (2,406) (5,832) (4,779)
Interest Expense (435) (502) (922) (1,040)
________ ________ ________ ________
INCOME BEFORE INCOME TAXES $8,283 $4,921 $14,232 $8,598
________ ________ ________ ________
________ ________ ________ ________
</TABLE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is presently involved in various legal
proceedings, including certain environmental proceedings, as
described in Note 10, Contingent Liabilities, to the Financial
Statements included in the Form 10-K and under the heading "Legal
Proceedings" in the Form 10-K. Except as described in the
Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1995, there have been no material changes in the legal
proceedings described in the Form 10-K.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
On April 28, 1995, the Company held its 1995 Annual
Meeting of Shareholders. The purpose of the meeting was to elect three
directors for three-year terms expiring in 1998. Three candidates
nominated by management were elected by the shareholders to serve as
directors of the Company at the meeting. The following sets forth the
results of voting with respect to each candidate:
Name of Candidate Shares Voted
Stephen I. D'Agostino For: 5,843,336
Authority Withheld: 40,845
Robert J. Ratliff For: 5,843,336
Authority Withheld: 40,845
Frederick W. Schwier For: 5,838,647
Authority Withheld: 45,534
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
11 Statement Regarding Computation of Earnings Per
Share
15 Letter from Coopers & Lybrand regarding unaudited
Financial Statements
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed by the registrant
during the quarter ended June 30, 1995.
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.
KYSOR INDUSTRIAL CORPORATION
Date: August 11, 1995 By s\Terry M. Murphy
Terry M. Murphy
Vice President,
Chief Financial Officer
(principal financial officer and duly
authorized signatory for registrant)
Date: August 11, 1995 By s\Robert L. Joseph
Robert L. Joseph
Comptroller
(Chief Accounting Officer)
EXHIBIT INDEX
DESCRIPTION EXHIBIT NO.
Statement Regarding Computation of Earnings Per Share 11
Letter from Coopers & Lybrand Regarding Unaudited Financial
Statements 15
Financial Data Schedule 27
<TABLE>
EXHIBIT 11 - S-K Item 601 (b) (11)
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
<CAPTION>
Six Months
Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE CALCULATION
Net Income $7,942,079 $5,098,316
Less dividends on preferred stock 783,785 789,878
Plus tax benefit from preferred dividends 297,000 300,000
---------- ----------
Earnings (Loss) applicable to common stock 7,455,294 4,608,438
========== ==========
Weighted average common shares outstanding 5,538,421 5,417,486
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based
on year to date average price 373,208 281,322
-------- --------
Weighted average common shares and common
equivalent shares outstanding 5,911,629 5,698,808
========= =========
Primary earnings per share $1.26 $0.81
======== ========
FULLY DILUTED EARNINGS PER SHARE CALCULATION
A.
Weighted average common shares outstanding 5,538,421 5,417,486
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based on
the greater of year to date average or end of period price 373,208 304,216
-------- --------
Weighted average common shares and common
equivalent shares outstanding 5,911,629 5,721,702
======== ========
Fully diluted earnings per share (A) $1.26 $0.81
======== ========
B.
Assuming preferred stock converted to common stock
Vested preferred shares issued 190,478 160,325
Non-vested preferred shares issued 610,392 645,856
---------- ----------
Total Preferred shares issued 800,870 806,181
Vested Preferred shares issued 190,478 160,325
Guaranteed floor price for involuntary conversions $24.375 $24.375
---------- ----------
Subtotal $4,642,898 $3,907,918
The lower of year to date average or end of period common
stock price $20.7500 $16.9150
-------- --------
Required common shares to be issued assuming involuntary
conversion of vested shares at guaranteed floor price 223,754 231,033
Required common shares to be issued assuming voluntary
conversion of non-vested shares on one-for-one basis 610,392 645,856
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part A. 5,911,629 5,721,702
---------- ----------
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part B. 6,745,775 6,598,591
========== ==========
Net Income $7,942,079 $5,098,316
Additional ESOP expense presently funded by preferred dividend (783,785) (789,878)
Plus tax benefit on additional ESOP expense 44,476 38,581
Common stock dividends to reduce ESOP expense 250,000 219,000
-------- --------
Adjusted Net Income $7,452,770 $4,566,019
========= =========
Fully diluted earnings per share (B) $1.10 $0.69
======== ========
Fully diluted earnings (loss) per share (Lower of (A) or (B)) $1.10 $0.69
======== ========
</TABLE>
Exhibit 15
To the Board of Directors and Shareholders
Kysor Industrial Corporation
Re: Kysor Industrial Corporation Registration Statement Nos.
2-67607, 2-86346, 2-99855, 33-18438, 33-30463,
33-27360, 33-59420, 33-59412 and 33-71758 on Form S-8
We are aware that our report dated July 14, 1995 on our review
of interim financial information of Kysor Industrial Corporation
and Subsidiaries for the periods ended June 30, 1995 and 1994
and included in the Company's quarterly report on Form 10-Q for
the quarters then ended are incorporated by reference in these
registration statements. Pursuant to Rule 436(c) under the
Securities Act of 1993, this report should not be considered a
part of the registration statements prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
By s/COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
July 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
unaudited consolidated condensed financial statements of Kysor Industrial
Corporation and Subsidiaries for the quarter and six months ended June 30, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 16,952
<SECURITIES> 0
<RECEIVABLES> 55,018
<ALLOWANCES> 2,234
<INVENTORY> 37,506
<CURRENT-ASSETS> 117,301
<PP&E> 109,171
<DEPRECIATION> 63,798
<TOTAL-ASSETS> 189,634
<CURRENT-LIABILITIES> 64,355
<BONDS> 29,565
<COMMON> 5,533
0
19,521
<OTHER-SE> 47,050
<TOTAL-LIABILITY-AND-EQUITY> 189,634
<SALES> 184,800
<TOTAL-REVENUES> 185,890
<CGS> 141,947
<TOTAL-COSTS> 170,736
<OTHER-EXPENSES> 591
<LOSS-PROVISION> 227
<INTEREST-EXPENSE> 922
<INCOME-PRETAX> 14,232
<INCOME-TAX> 6,290
<INCOME-CONTINUING> 7,942
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,942
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.10
</TABLE>
