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 March 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 1-8973
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
May 10, 1995:
5,616,111
<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
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
March 31, 1995 nor was there a change in independent accountants during the period.
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Income
(Unaudited, amounts in thousands except per share data)
<CAPTION>
Quarter Ended
March 31,
1995 1994
___________ ___________
<S> <C> <C>
Net sales $ 90,054 $ 70,030
Interest and other revenues 572 280
___________ ___________
TOTAL SALES AND REVENUES 90,626 70,310
___________ ___________
COSTS AND EXPENSES
Cost of sales 69,166 54,404
Selling and administrative expenses 14,709 11,355
Interest expense 487 538
Other expenses 315 336
___________ ___________
TOTAL COSTS AND EXPENSES 84,677 66,633
___________ ___________
INCOME BEFORE INCOME TAXES 5,949 3,677
INCOME TAXES 2,640 1,575
___________ ___________
NET INCOME 3,309 2,102
DIVIDENDS ON PREFERRED STOCK
(Net of income tax benefit of 149
in each period) 242 246
___________ ___________
EARNINGS APPLICABLE TO COMMON STOCK $ 3,067 $ 1,856
___________ ___________
___________ ___________
PRIMARY EARNINGS PER COMMON SHARE $ 0.51 $ 0.33
___________ ___________
___________ ___________
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.45 $ 0.28
___________ ___________
___________ ___________
Primary weighted average common
shares and equivalents 5,970 5,682
___________ ___________
___________ ___________
Dividends declared per common share $ 0.15 $ 0.12
___________ ___________
___________ ___________
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>
March 31, December 31,
1995 1994
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $12,445 $15,850
Accounts receivable less $2,129 and
$2,027 allowance for doubtful accounts 52,820 46,437
Finished goods inventory 8,784 6,362
Work-in-process inventory 9,905 10,039
Raw Material Inventory 19,751 19,864
Prepaid expenses 3,012 2,067
Deferred income tax charges 6,623 7,202
____________ ____________
TOTAL CURRENT ASSETS 113,340 107,821
____________ ____________
PROPERTY, PLANT AND EQUIPMENT
Land 2,671 2,612
Buildings 32,747 31,103
Machinery and equipment 71,949 67,518
____________ ____________
107,367 101,233
Less accumulated depreciation 62,198 58,320
____________ ____________
TOTAL PROPERTY, PLANT AND EQUIPMENT 45,169 42,913
____________ ____________
OTHER ASSETS
Goodwill, patents and other intangibles
(net of amortization of $2,725 and $2,592) 4,483 4,616
Cash value of officers' life insurance 10,719 10,623
Deferred income tax charges 5,769 5,383
Miscellaneous receivables and other assets 5,388 6,155
____________ ____________
TOTAL OTHER ASSETS 26,359 26,777
____________ ____________
TOTAL ASSETS $184,868 $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>
March 31, December 31,
1995 1994
____________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $7,859 $6,597
Accounts payable 22,883 21,122
Accrued income taxes payable 2,841 1,095
Accrued expenses and contingent liabilities 27,820 27,831
____________ ____________
TOTAL CURRENT LIABILITIES 61,403 56,645
Long-term debt, less current maturities,
plus guarantee of ESOP indebtedness 29,634 30,394
Accumulated postretirement benefit obligation 13,189 13,037
Other long-term liabilities 9,963 9,517
____________ ____________
TOTAL LIABILITIES AND DEFERRED CREDITS 114,189 109,593
____________ ____________
PREFERRED SHAREHOLDERS' EQUITY
Employee Stock Ownership Plan Preferred Stock,
shares authorized 5,000,000; outstanding
803,553 and 803,553 stated value of $24.375 19,587 19,587
Unearned deferred compensation under
employee stock ownership plan (15,094) (15,311)
____________ ____________
TOTAL PREFERRED SHAREHOLDERS' EQUITY 4,493 4,276
____________ ____________
COMMON SHAREHOLDERS' EQUITY
Common stock, $1 par value, shares authorized
30,000,000, outstanding 5,648,988
and 5,640,881 5,649 5,641
Additional paid-in capital 4,971 5,386
Retained earnings 55,670 53,443
Translation adjustment 1,356 807
Notes receivable-common stock
96,700 and 96,705 shares (1,286) (1,286)
Unearned deferred compensation under
employee stock ownership plan (174) (349)
____________ ____________
TOTAL COMMON SHAREHOLDERS' EQUITY 66,186 63,642
____________ ____________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $184,868 $177,511
____________ ____________
____________ ____________
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended Ended March 31,
<CAPTION>
1995 1994
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $3,309 $2,102
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 2,346 2,271
Provision for losses on accounts receivable 103 63
(Gain) Loss on sales of fixed assets (19) (5)
Deferred compensation (ESOP) 391 391
Deferred income taxes 193 (501)
Changes in assets and liabilities providing
(consuming) cash:
Accounts receivable (6,485) (6,992)
Inventories (2,175) (3,809)
Prepaid expenses (945) (190)
Accounts payable 2,041 2,380
Accrued expenses and contingent liabilities (13) (196)
Accrued income taxes payable 2,297 1,235
Other long-term liabilities 599 (57)
------ -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,642 (3,308)
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Additions to property, plant and equipment (3,734) (2,113)
Proceeds from sales of property and equipment 10 157
Acquisitions, net of cash acquired - (4,128)
Decrease (Increase) in other long-term assets 671 129
Unrealized translation gain (loss) (177) 50
------- -------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (3,230) (5,905)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Current borrowings 1,426 891
Principal payments against long-term debt (924) (924)
Proceeds from issuance of Common Stock 1,135 572
Purchase of Common Stock (1,936) -
Common Stock and Preferred Stock dividends paid (1,518) (1,447)
------ -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,817) (908)
------ --------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (3,405) (10,121)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 15,850 21,339
------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $12,445 $11,218
======= =======
The accompanying notes are an integral part of the financial statements.
</TABLE>
[FN]
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 March 31,
1995, and the related consolidated statements of income
and cash flows for the three-month periods ended March 31, 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.
April 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
first quarter 1995 were $90.6 million, up 29% from the $70.3 million
reported for the same period in 1994. Net income, for the first quarter,
rose 57% to $3.3 million from $2.1 million reported for the same period
last year. This equates to primary earnings per share of $.51 for the
quarter ended March 31, 1995 compared to $.33 for the same period
in 1994.
The Transportation Products Group net sales increased
26% to $43.1 million for the quarter compared to the $34.3 million
reported in the same period a year ago. Operating profit for the
Transportation Products Group for the first quarter 1995 increased
44% to $6.1 million from the $4.3 million reported for the same period
in 1994. This segment continues to benefit from strong demand for
medium and heavy-duty trucks.
The Commercial Products Group net sales increased
32% to $47.0 million for the quarter compared to $35.7 million reported
for the same period a year ago. Operating profit increased 38% to
$3.2 million including an operating loss for Kysor's German subsidiary,
Kysor/Warren GmbH, of $1.3 million.
In the first quarter of 1995, Kysor/Asia Ltd. commenced
operations. The subsidiary, located in Changwon, South Korea, will
manufacture injection molded polymer engine fans for the Far East
commercial vehicle market.
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.
Liquidity and Capital Resources
At March 31, 1995, the Company had cash and
equivalents of $12.4 million compared to $15.9 million at December
31, 1994. Additions to property, plant and equipment for the three-month
period ended March 31, 1995, totaled $3.7 million compared to
$2.1 million during the same period in 1994. Working capital
requirements for the first quarter consumed cash, which is typical as
business activity generally increases after the year-end shutdowns
that many of our major customers experience.
At March 31, 1995, the Company had no outstanding
borrowing on its $20.0 million revolving line of credit.
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. During the quarter ended
March 31, 1995, the Company completed the groundwater
remedial design work with respect to contamination at the Cadillac
Industrial Park in Cadillac, Michigan (the "Site"). Initial steps of the
remedial action have begun in compliance with the unilateral
administrative order issued by the U.S. EPA with respect to the
Site. Except as described in this paragraph, there have been no
material changes in the legal proceedings described in the Form
10-K.
<TABLE>
KYSOR INDUSTRIAL CORPORATION
FINANCIAL INFORMATION BY SEGMENT
(Unaudited, amounts in thousands)
<CAPTION>
Quarter Ended
March 31,
_____________________
1994 1994
________ ________
<S> <C> <C>
NET SALES
Commercial Products
United States $41,628 $33,197
Europe 5,323 2,504
________ ________
Total Commercial Products 46,951 35,701
Transportation Products
United States 39,765 32,600
Europe 3,338 1,729
________ ________
Total Transportation Products 43,103 34,329
________ ________
NET SALES $90,054 $70,030
________ ________
________ ________
OPERATING PROFIT
Commercial Products
United States $4,478 $3,013
Europe (1,272) (689)
________ ________
Total Commercial Products 3,206 2,324
Transportation Products
United States 5,990 4,345
Europe 155 (81)
________ ________
Total Transportation Products 6,145 4,264
________ ________
TOTAL OPERATING PROFIT 9,351 6,588
Corporate Administrative Expense (Net) (2,915) (2,373)
Interest Expense (487) (538)
________ ________
INCOME BEFORE INCOME TAXES $5,949 $3,677
________ ________
________ ________
</TABLE>
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 three months ended March 31, 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: May 12, 1995 By s\Terry M. Murphy
Terry M. Murphy
Vice President,
Chief Financial Officer
(principal financial officer and duly
authorized signatory for registrant)
Date: May 12, 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>
Three Months
Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE CALCULATION
Net Income $3,309,068 $2,101,886
Less dividends on preferred stock 391,444 394,851
Plus tax benefit from preferred dividends 149,000 149,000
---------- ----------
Earnings (Loss) applicable to common stock 3,066,624 1,856,035
========== ==========
Weighted average common shares outstanding 5,569,287 5,394,126
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based
on year to date average price 400,986 288,311
-------- --------
Weighted average common shares and common
equivalent shares outstanding 5,970,273 5,682,437
========= =========
Primary earnings per share $0.51 $0.33
======== ========
FULLY DILUTED EARNINGS PER SHARE CALCULATION
A.
Weighted average common shares outstanding 5,569,287 5,394,126
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 400,986 288,311
-------- --------
Weighted average common shares and common
equivalent shares outstanding 5,970,273 5,682,437
======== ========
Fully diluted earnings per share (A) $0.51 $0.33
======== ========
B.
Assuming preferred stock converted to common
Vested Preferred shares issued 184,295 155,442
Non-vested Preferred shares issued 619,258 654,722
---------- ----------
Total Preferred shares issued 803,553 810,163
Vested Preferred shares issued 184,295 155,442
Guaranteed floor price for involuntary conversions $24.375 $24.375
---------- ----------
Subtotal $4,492,180 $3,788,894
The lower of year to date average or end of period common
stock price $20.3750 $16.8750
-------- --------
Required common shares to be issued assuming involuntary
conversion of vested shares at guaranteed floor price 220,475 224,527
Required common shares to be issued assuming voluntary
conversion of non-vested shares on one-for-one basis 619,258 654,722
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part A. 5,970,273 5,682,437
---------- ----------
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part B. 6,810,006 6,561,686
========== ==========
Net Income $3,309,068 $2,101,886
Additional ESOP expense presently funded by preferred dividend (391,444) (394,851)
Plus tax benefit on additional ESOP expense 21,330 18,803
Common stock dividends to reduce ESOP expense 126,000 106,000
-------- --------
Adjusted Net Income $3,064,954 $1,831,838
========= =========
Fully diluted earnings per share (B) $0.45 $0.28
======== ========
Fully diluted earnings (loss) per share (Lower of (A) or (B)) $0.45 $0.28
======== ========
</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, 33-59412 and
33-71758 on Form S-8
We are aware that our report dated April 14, 1995 on our review
of interim financial information of Kysor Industrial Corporation
and Subsidiaries for the periods ended March 31, 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.
April 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
uaudited consolidated condensed financial statements of Kysor Industrial and
Subsidiaries for the quarter ended March 31, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000202356
<NAME> KYSOR INDUSTRIAL CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 12,445
<SECURITIES> 0
<RECEIVABLES> 54,949
<ALLOWANCES> 2,129
<INVENTORY> 38,440
<CURRENT-ASSETS> 113,340
<PP&E> 107,367
<DEPRECIATION> 62,198
<TOTAL-ASSETS> 184,868
<CURRENT-LIABILITIES> 61,403
<BONDS> 29,634
<COMMON> 5,649
0
19,587
<OTHER-SE> 45,443
<TOTAL-LIABILITY-AND-EQUITY> 184,868
<SALES> 90,054
<TOTAL-REVENUES> 90,626
<CGS> 69,166
<TOTAL-COSTS> 83,772
<OTHER-EXPENSES> 315
<LOSS-PROVISION> 103
<INTEREST-EXPENSE> 487
<INCOME-PRETAX> 5,949
<INCOME-TAX> 2,640
<INCOME-CONTINUING> 3,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,309
<EPS-PRIMARY> .51
<EPS-DILUTED> .45
</TABLE>
