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 31,1996
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
April 30, 1996:
5,772,069
KYSOR INDUSTRIAL CORPORATION
Part I - FINANCIAL INFORMATION
<TABLE>
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
March 31, 1996 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
March 31,
1996 1995
___________ ___________
<S> <C> <C>
Net sales $ 81,865 $ 90,054
Interest and other revenues 1,318 572
___________ ___________
TOTAL SALES AND REVENUES 83,183 90,626
___________ ___________
COSTS AND EXPENSES
Cost of sales 63,542 69,166
Selling and administrative expenses 13,610 14,709
Interest expense 475 487
Other expenses (76) 315
___________ ___________
TOTAL COSTS AND EXPENSES 77,551 84,677
___________ ___________
INCOME BEFORE INCOME TAXES 5,632 5,949
INCOME TAXES 2,050 2,640
___________ ___________
NET INCOME 3,582 3,309
DIVIDENDS ON PREFERRED STOCK
(Net of tax benefits) 239 242
___________ ___________
EARNINGS APPLICABLE TO COMMON STOCK $ 3,343 $ 3,067
___________ ___________
___________ ___________
PRIMARY EARNINGS PER COMMON SHARE $ 0.56 $ 0.51
___________ ___________
___________ ___________
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.49 $ 0.45
___________ ___________
___________ ___________
Primary weighted average common
shares and equivalents 5,970 5,682
___________ ___________
___________ ___________
Dividends declared per common share $ 0.15 $ 0.15
___________ ___________
___________ ___________
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,
1996 1995
____________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $8,620 $16,942
Accounts receivable less $2,202 and
$2,211 allowance for doubtful accounts 48,141 45,733
Finished goods inventory 8,764 5,391
Work-in-process inventory 10,492 9,404
Raw Material Inventory 21,395 19,621
Prepaid expenses 1,904 2,485
Deferred income tax charges 8,170 8,860
____________ ____________
TOTAL CURRENT ASSETS 107,486 108,436
____________ ____________
PROPERTY, PLANT AND EQUIPMENT
Land 3,266 3,243
Buildings 32,797 32,042
Machinery and equipment 81,949 75,794
____________ ____________
118,012 111,079
Less accumulated depreciation 64,209 62,518
____________ ____________
TOTAL PROPERTY, PLANT AND EQUIPMENT 53,803 48,561
____________ ____________
INVESTMENT IN AFFILIATE 18,816 0
OTHER ASSETS
Goodwill, patents and other intangibles 9,283 5,327
Cash value of officers' life insurance 11,720 11,644
Deferred income tax charges 6,968 6,576
Miscellaneous receivables and other assets 5,988 6,429
____________ ____________
TOTAL OTHER ASSETS 33,959 29,976
____________ ____________
TOTAL ASSETS $214,064 $186,973
____________ ____________
____________ ____________
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, amounts in thousands)
<CAPTION>
Three Months Ended March 31,
1996 1995
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $3,583 $3,309
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 2,427 2,346
Provision for losses on accounts receivable 104 103
(Gain) Loss on sales of fixed assets (13) (19)
Deferred compensation (ESOP) 378 391
Deferred income taxes 298 193
Changes in assets and liabilities providing
(consuming) cash:
Accounts receivable (569) (6,485)
Inventories (3,785) (2,175)
Prepaid expenses 608 (945)
Accounts payable (1,795) 2,041
Accrued expenses and contingent liabilities (2,314) (13)
Accrued income taxes payable 4,721 2,297
Other long-term liabilities 626 599
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,269 1,642
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Additions to property and equipment (6,786) (3,734)
Proceeds from sales of property and equipment 91 10
Acquisitions, net of cash acquired 9 -
Investment in affiliate (18,823) -
Decrease (Increase) in other long-term assets 373 671
Unrealized translation gain (loss) (175) (177)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (25,311) (3,230)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Current borrowings 19,000 1,426
Principal payments against long-term debt (5,657) (924)
Proceeds from issuance of common stock 998 1,135
Purchase of Common Stock - (1,936)
Common stock and preferred stock dividends paid (1,621) (1,518)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 12,720 (1,817)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (8,322) (3,405)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 16,942 15,850
CASH AND EQUIVALENTS AT END OF PERIOD $8,620 $12,445
The accompanying notes are an integral part of the financial statements.
</TABLE>
<F1>
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 solely 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, 1995.
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, 1996, and the related
consolidated statements of income and cash flows for the three-month
periods ended March 31, 1996 and 1995. 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, 1995 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 January 30, 1996 we
expressed an unqualified opinion on those consolidated financial statements.
By s/COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
April 17, 1996
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 1996 were $83.2 million, an 8% decrease from the
$90.6 million reported for the period in 1995. Net income, for the first
quarter, rose 10% to $3.6 million from $3.3 million reported for the
same period last year. This equates to primary earnings per share of
$.56 for the quarter ended March 31, 1996 compared to $.51 for the
same period in 1995.
Although the Commercial Products Group reported net
sales of $46.9 million for both the quarters ended March 31, 1996 and
1995, sales for 1995 included $5.3 million of unprofitable sales from
Kysor's German subsidiary which was sold in the fourth quarter of
1995. The increase in sales of the remaining operations in this
segment reflect market penetration gains and are supported by
continuing strong backlogs. Operating profit increased 47% to $4.7
million compared to $3.2 million reported for the same period in 1995.
The Transportation Products Group net sales decreased
18% to $34.9 million for the quarter compared to the $43.1 million
reported in the same period a year ago. Operating profit for the
Transportation Products Group for the first quarter 1996 decreased
47% to $3.2 million from the $6.1 million reported for the same period
in 1995. This segment experienced decreases in both sales and
earnings as a result of the expected downturn in heavy-duty truck
production.
Included in Interest and other revenues for the quarter ended
March 31, 1996 is a favorable litigation judgement amounting to $430,000
and the collection of a note receivable previously written off of $350,000.
In the first quarter of 1996, Kysor completed the
acquisition of a 24.255% minority interest in Austral Refrigeration, Pty.
Ltd., located in Sydney, Australia. Austral has been and will continue
to be a licensee of Kysor. In March, Kysor closed the acquisition of
NAX Corporation, a European-style deli and hot-food case
manufacturer located in Des Moines, Iowa.
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, 1995 ("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, 1996, the Company had cash and
equivalents of $8.6 million compared to $ 16.9 million at December
31, 1995. Additions to property, plant and equipment for the three-month
period ended March 31, 1996, totaled $6.8 million compared
to $3.7 million during the same period in 1995. 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.
During the quarter, the Company borrowed $19 million
of its $20 million revolving line of credit to finance the purchase of its
minority interest in Austral Refrigeration, Pty. Ltd.
<TABLE>
KYSOR INDUSTRIAL CORPORATION
FINANCIAL INFORMATION BY SEGMENT
(Unaudited, amounts in thousands)
<CAPTION>
Quarter Ended
March 31,
_____________________
1996 1995
________ ________
<S> <C> <C>
NET SALES
Commercial Products
United States $46,913 $41,628
Europe 0 5,323
________ ________
Total Commercial Products 46,913 46,951
Transportation Products
United States 31,398 39,765
Europe 3,554 3,338
________ ________
Total Transportation Products 34,952 43,103
________ ________
NET SALES $81,865 $90,054
________ ________
________ ________
OPERATING PROFIT
Commercial Products
United States $4,735 $4,478
Europe 0 (1,272)
________ ________
Total Commercial Products 4,735 3,206
Transportation Products
United States 2,879 5,990
Europe 346 155
________ ________
Total Transportation Products 3,225 6,145
________ ________
TOTAL OPERATING PROFIT 7,960 9,351
Corporate Administrative Expense (Net) (1,853) (2,915)
Interest Expense (475) (487)
________ ________
INCOME BEFORE INCOME TAXES $5,632 $5,949
________ ________
________ ________
</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. During the quarter ended March 31,
1996, 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.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
11 Computation of Consolidated Earnings Per Share
15 Coopers & Lybrand L.L.P. letter regarding unaudited
Financial Statements
27 Financial Data Schedule
(b) The Company filed a Form 8-K Current Report on
February 29, 1996 relating to the purchase of 24.255%
interest in Austral
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 2, 1996 By s\Terry M. Murphy
Terry M. Murphy
Vice President,
Chief Financial Officer
(principal financial officer and duly
authorized signatory for registrant)
Date: May 2, 1996 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
EXHIBIT 11 - S-K Item 601 (b) (11)
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
<CAPTION>
Three Months
Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER SHARE CALCULATION
Net Income $3,582,603 $3,309,068
Less dividends on preferred stock 385,345 391,444
Plus tax benefit from preferred dividends 146,000 149,000
---------- ----------
Earnings (Loss) applicable to common stock 3,343,258 3,066,624
========== ==========
Weighted average common shares outstanding 5,604,797 5,569,287
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based
on year to date average price 386,852 400,986
-------- --------
Weighted average common shares and common
equivalent shares outstanding 5,991,649 5,970,273
========= =========
Primary earnings per share $0.56 $0.51
======== ========
FULLY DILUTED EARNINGS PER SHARE CALCULATION
A.
Weighted average common shares outstanding 5,604,797 5,569,287
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 435,025 400,986
-------- --------
Weighted average common shares and common
equivalent shares outstanding 6,039,822 5,970,273
======== ========
Fully diluted earnings per share (A) $0.55 $0.51
======== ========
B.
Assuming preferred stock converted to common
Vested Preferred shares issued 222,443 184,295
Non-vested Preferred shares issued 575,074 619,258
---------- ----------
Total Preferred shares issued 797,517 803,553
Vested Preferred shares issued 222,443 184,295
Guaranteed floor price for involuntary conversions $24.375 $24.375
---------- ----------
Subtotal $5,422,038 $4,492,180
The lower of year to date average or end of period common
stock price $24.6429 $20.3750
-------- --------
Required common shares to be issued assuming involuntary
conversion of vested shares at guaranteed floor price 220,024 220,475
Required common shares to be issued assuming voluntary
conversion of non-vested shares on one-for-one basis 575,074 619,258
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part A. 6,039,822 5,970,273
---------- ----------
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part B. 6,834,920 6,810,006
========== ==========
Net Income $3,582,603 $3,309,068
Additional ESOP expense presently funded by preferred dividend (385,345) (391,444)
Plus tax benefit on additional ESOP expense 25,939 21,330
Common stock dividends to reduce ESOP expense 119,000 126,000
-------- --------
Adjusted Net Income $3,342,197 $3,064,954
========= =========
Fully diluted earnings per share (B) $0.49 $0.45
======== ========
Fully diluted earnings (loss) per share (Lower of (A) or (B)) $0.49 $0.45
======== ========
</TABLE>
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 17, 1996 on our review of interim
financial information of Kysor Industrial Corporation and Subsidiaries for the
periods ended March 31, 1996 and 1995 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 1933, 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.
Arpil 17, 1996
<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 ended March 31, 1996 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-31-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 8,620
<SECURITIES> 0
<RECEIVABLES> 50,343
<ALLOWANCES> 2,202
<INVENTORY> 40,651
<CURRENT-ASSETS> 107,486
<PP&E> 118,012
<DEPRECIATION> 64,209
<TOTAL-ASSETS> 214,064
<CURRENT-LIABILITIES> 60,456
<BONDS> 43,488
0
19,439
<COMMON> 5,736
<OTHER-SE> 59,406
<TOTAL-LIABILITY-AND-EQUITY> 214,064
<SALES> 81,865
<TOTAL-REVENUES> 83,183
<CGS> 63,542
<TOTAL-COSTS> 77,046
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 475
<INCOME-PRETAX> 5,632
<INCOME-TAX> 2,050
<INCOME-CONTINUING> 3,582
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,582
<EPS-PRIMARY> .56
<EPS-DILUTED> .49
</TABLE>
