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UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
FEBRUARY 23, 2000
---------------------------
COMMERCIAL INTERTECH CORP.
(Exact name of registrant as specified in its charter)
OHIO 1-10697 34-0159880
- ------------------------------- ----------------- --------------------
(State or other jurisdiction of Commission File (I.R.S. Employer
incorporation or organization) number Identification No.)
775 LOGAN AVENUE, YOUNGSTOWN, OHIO 44501-0239
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 746-8011
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(Former name or former address, if changed since last report)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On February 23, 2000, the Registrant announced its fiscal year 2000
first quarter results. A copy of the Press Release is attached as Exhibit 99.1,
and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
99.1 Press Release dated February 23, 2000, regarding the
Registrant's fiscal year 2000 first quarter results.
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 hereunto duly authorized.
COMMERCIAL INTERTECH CORP.
Date February 29, 2000 By /s/ Steven J. Hewitt
----------------- ------------------------
Steven J. Hewitt
Senior Vice President and
Principal Financial Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Press Release of the Registrant, dated February 23, 2000.
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EXHIBIT 99.1
COMMERCIAL INTERTECH REPORTS FISCAL 2000 FIRST QUARTER RESULTS HIGHER THAN 1999
FIRST QUARTER
- EPS of $0.17 vs. Loss for First Quarter of 1999
- Commercial Hydraulics Operating Profit, Excluding Unusual Items,
Up 61 Percent
- First Quarter Bookings 28 Percent Above Comparable 1999 Period
YOUNGSTOWN, Ohio, Feb. 23 -- Commercial Intertech Corp. (NYSE: TEC) today
reported sharply increased results for the fiscal first quarter ended January
31, 2000 versus the comparable quarter of fiscal 1999.
Net income for the first quarter of 2000 was slightly below $3.0 million, or
$0.17 per diluted share, versus a loss of $0.7 million, or $0.08 per diluted
share, recorded in the first quarter of 1999. Results for the first quarter of
2000 included a gain on the sale of property in the United States of $0.02 per
diluted share and $0.04 per share in charges for unusual items associated with
the Company's announcement of a proposed merger with Parker-Hannifin Corporation
(NYSE: PH) as well as costs incurred in the implementation of major strategic
initiatives to improve long- term profit prospects for hydraulic business units
in the United Kingdom and Europe. In the first quarter of 1999 the Company
reported a nonrecurring charge of $3.3 million resulting from a number of
initiatives to reorganize certain areas of the business and reduce operating
costs. Excluding these nonrecurring charges and unusual items, normalized
comparable diluted earnings per share were $0.15 in 1999 and $0.19 in 2000.
Worldwide first quarter 2000 revenues of $120.3 million were slightly higher
than the level recorded for 1999's first period.
Commenting on the first quarter of 2000, Paul J. Powers, Chairman and Chief
Executive Officer, said, "We are generally very pleased with the Company's
overall performance for the first quarter, and particularly encouraged by the
results reported by Commercial Hydraulics. With the exception of one operation,
all of our domestic hydraulics business units reported higher first quarter
operating income compared with last year. Moreover, operating margin for
Commercial Metal Forming reached 15 percent on a revenue decline of nearly nine
percent. Astron Building Systems reported a loss for the quarter, which was
expected as extreme weather conditions in Western Europe and Russia delayed
shipments in what is historically this business unit's weakest quarter of the
year. In summary, Commercial Intertech is off to a solid start in 2000."
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COMMERCIAL HYDRAULICS
---------------------
Three Months Ended
January 31
------------------
(Millions of Dollars) 2000 1999 Change
Net Revenues $85.4 $79.9 6.8%
Operating Income $4.2 $3.32 7.8%
Percent to Revenues 4.9% 4.1%
The Company indicated that earnings were up nearly 28 percent compared with last
year's first quarter primarily due to increased domestic customer demand in the
truck, refuse, material handling, turf care and recreational marine equipment
markets. Excluding merger and strategic initiative expenses recorded in the
first quarter of 2000, operating income was $5.2 million, representing an
increase of 61 percent over last year's comparable quarter. Operating margin,
excluding these unusual expenses, was 6.1 percent in the first quarter of 2000.
The combined German operations reported their best quarterly performance ever
while results in the United Kingdom were disappointing, reflecting continued
erosion in industrial markets.
First quarter bookings of nearly $96 million were 19 percent above the $80
million recorded for last year on a currency adjusted basis. Orders for the
first period of 2000 were 15 percent higher than the fourth quarter of fiscal
1999. The backlog of orders for Commercial Hydraulics at the close of the first
quarter of 2000 was $116 million, up approximately nine percent from the level
at the beginning of the fiscal year.
ASTRON BUILDING SYSTEMS
-----------------------
Three Months Ended
January 31
------------------
(Millions of Dollars) 2000 1999 Change
Net Revenues $22.0 $26.1 (15.9%)
Operating Income $(0.2) $1.6 --
Percent to Revenues (1.1%) 6.1%
Astron Building Systems reported a loss of $0.2 million compared with operating
income of $1.6 million for the first quarter of fiscal 1999. Revenues for the
quarter were nearly 16 percent (four percent on a currency adjusted basis) below
1999's first quarter. The Company indicated the loss was primarily the result of
severe winter weather conditions in Western Europe and Russia which adversely
affected shipment levels. First quarter 1999 results, which represented the
highest earnings for a first quarter in ten years, also included the shipment of
two large and highly profitable but non-repeating contracts.
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Bookings for Astron Building Systems in the first quarter of fiscal 2000 of $42
million, were 64 percent above the $26 million of last year's comparable
quarter. Compared with the fourth quarter of fiscal 1999, orders for the first
quarter of 2000 were 34 percent higher. Backlog for Astron was 53 percent higher
than the level reported at the beginning of the fiscal year.
COMMERCIAL METAL FORMING
------------------------
Three Months Ended
January 31
------------------
(Millions of Dollars) 2000 1999 Change
Net Revenues $12.9 $14.2 (8.8%)
Operating Income $1.9 $2.1 (6.1%)
Percent to Revenues 15.0% 14.6%
Operating income for the first quarter of 2000 of $1.9 million was six percent
lower than the $2.1 million recorded in the first quarter of 1999. Operating
margin in 2000 of 15 percent represented one of the highest performances in the
Company. The moderately lower levels of revenues and income versus the same
period in 1999 were the result of a general downturn in customer demand from
certain industry segments, including truck equipment and distribution center
markets. Offsetting the lower demand from such segments was increased sales to
new customers and new product introductions.
Bookings for Commercial Metal Forming for the first quarter of fiscal 2000 of
$14 million were seven percent above the $13 million for the comparable period
of 1999. Backlog at the close of the first quarter of $8 million was nearly the
same as the beginning of the year.
OUTLOOK
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Regarding the outlook for the remainder of fiscal 2000, Mr. Powers commented,
"The positive momentum we began to experience on a sequential basis in 1999
accelerated in the first quarter of fiscal 2000. Total bookings for Commercial
Intertech for the first quarter were 28 percent above 1999's first quarter and
17 percent above the fourth quarter of 1999. Order backlog of $178 million has
increased nearly $28 million or 19 percent since the beginning of the year.
"Current business conditions suggest growth in revenues and income in fiscal
2000 for Commercial Hydraulics and Astron Building Systems. Orders for both
businesses have been particularly robust with high levels of demand being
reported by our domestic hydraulics units from customers in the important truck,
construction, refuse and marine equipment industries. Astron bookings are
extremely strong and we expect significant improvements in shipments and profits
as the year unfolds.
"Looking to the future, a worldwide effort is underway to tap the potential of
our workforce through utilization of self-directed work teams and a heightened
focus on lean manufacturing while
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our Systems Engineering organization in Commercial Hydraulics will help
identify, develop and market state-of-the-art integrated hydraulic systems to
solve complex customer needs in the mobile equipment industry. A number of
special purpose teams have also been created in Commercial Hydraulics and
Commercial Metal Forming to address new product development and customer service
needs in the marketplace while Building Systems will be putting into place
additional infrastructure necessary to capitalize on market opportunities in
Eastern Europe, an area where Astron has enjoyed substantial growth in revenues
and income in recent years.
"While we have made substantial progress toward our goal of achieving
profitability at our German hydraulics units, these facilities as well as our
units in the United Kingdom have performed far below acceptable levels. We are
in the process of refining and implementing strategic initiatives to move these
operations toward acceptable profit performance in fiscal 2000.
"Although it is premature to speculate as to profit levels for the year, the
fundamentals suggest that Commercial Intertech is positioned for strong earnings
potential in 2000."
On January 17, 2000, Commercial Intertech and Parker-Hannifin Corporation
announced that their Boards of Directors had approved a definitive agreement to
merge in a cash and stock transaction whereby Parker would acquire all
outstanding stock of Commercial Intertech. The merger is subject to approval of
the shareholders of Commercial Intertech; regulatory approvals in the United
States, Europe and other countries; and other closing conditions.
Commercial Intertech is an international manufacturer of engineered metal
products and systems comprising Commercial Hydraulics, Astron Building Systems
and Commercial Metal Forming. The Company employs 3,800 men and women at 27
facilities in seven countries.
Forward-looking statements contained in this press release are made pursuant to
the safe harbor provision of the Private Securities Litigation Reform Act of
1995. Commercial Intertech Corp. has tried, wherever possible, to identify these
"forward looking" statements by using such words as "suggest," "anticipate,"
"estimate," "expect" and similar expressions. The Company cautions that a number
of important factors could cause the Company's actual results for 2000 and
beyond to differ materially from those expressed in any forward looking
statements made by or on behalf of the Company. These important factors include,
without limitation, demand for the Company's products; competition by rival
developers of hydraulic systems and building systems and metal products; changes
in technology; customer preferences; growth in the hydraulic systems and
building systems and metal products industries; and general economic and
business conditions. These important factors and other factors which could
affect the Company's results are detailed in the Company's filings with the
Securities and Exchange Commission and are included herein by reference. The
Company assumes no obligation to update the information in this press release.
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COMMERCIAL INTERTECH CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited)
(Thousands of dollars) January 31, October 31,
2000 1999
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 21,988 $ 27,046
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Accounts receivable, less allowance
(2000-$2,702; 1999-$2,768) 68,370 82,918
Inventories 61,800 61,305
Deferred income tax benefits 14,931 15,742
Prepaid expenses and other current assets 3,399 4,834
TOTAL CURRENT ASSETS 170,488 191,845
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PROPERTY, PLANT AND EQUIPMENT 243,657 246,821
Less allowance for depreciation 134,987 134,173
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TOTAL 108,670 112,648
NONCURRENT ASSETS:
Intangible assets 39,223 40,249
Pension assets 55,581 53,536
Other assets 2,418 3,732
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TOTAL NONCURRENT ASSETS 97,222 97,517
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TOTAL ASSETS $376,380 $402,010
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LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Bank loans $ 3,270 $ 4,892
Accounts payable and accrued expenses 81,177 99,335
Accrued income taxes 3,428 5,591
Dividends payable 2,713 2,968
Current portion of long-term debt 1,446 2,024
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TOTAL CURRENT LIABILITIES 92,034 114,810
NONCURRENT LIABILITIES:
Long-term debt 100,920 100,215
Deferred income taxes 23,338 22,666
Postretirement benefits 28,361 28,372
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TOTAL NONCURRENT LIABILITIES 152,619 151,253
SHAREHOLDERS' EQUITY:
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Preferred stock, no par value:
Authorized: 10,000,000 shares
Series A participating preferred shares 0 0
Series B ESOP convertible preferred shares
Issued: 2000 - 893,343 shares
1999 - 893,343 shares 20,770 20,770
Common stock, $1 par value:
Authorized: 30,000,000 shares
Issued: 2000 - 14,626,958 shares
(excluding 1,805,031 in treasury);
1999 - 14,695,136 shares
(excluding 1,787,615 in treasury) 14,627 14,695
Capital surplus 8,030 8,414
Retained earnings 119,772 119,224
Deferred compensation (12,565) (13,822)
Accumulated other comprehensive income:
Translation adjustment (18,907) (13,334)
TOTAL SHAREHOLDERS'
EQUITY 131,727 135,947
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 376,380 $402,010
========= ========
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COMMERCIAL INTERTECH CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
Three Months Ended
January 31,
(Thousands of dollars except ------------------
per share data) 2000 1999
Net sales $120,337 $120,290
Less costs and expenses:
Cost of products sold 92,520 91,648
Selling, administrative and
general expenses 21,954 21,726
Nonrecurring costs 0 5,392
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114,474 118,766
Operating income 5,863 1,524
Nonoperating income (expense):
Interest income 240 356
Interest expense (2,076) (2,407)
Foreign currency (losses) (17) (779)
Other 557 259
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(1,296) (2,571)
Income (loss) before income taxes 4,567 (1,047)
Income taxes (benefit) 1,593 (335)
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Net income(loss) $ 2,974 $ (712)
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Preferred stock dividends (441) (458)
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Net income (loss) applicable to
common stock $ 2,533 $ (1,170)
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Earnings per share of common stock:
Net income (loss):
Basic $ 0.18 $ (0.08)
Diluted $ 0.17 $ (0.08)
Dividends per common share $ 0.15 $ 0.15
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COMMERCIAL INTERTECH CORP. AND SUBSIDIARIES
SEGMENT REPORTING (unaudited)
Three Months Ended
January 31,
------------------
2000 1999
(Thousands of dollars)
Commercial Hydraulics
Net Sales $ 85,371 $ 79,927
Operating Income 4,153 3,249
Percent To Sales 4.9% 4.1%
Building Systems
Net Sales $ 22,012 $ 26,162
Operating Income (232) 1,599
Percent To Sales (1.1)% 6.1%
Metal Forming
Net Sales $ 12,954 $ 14,201
Operating Income 1,942 2,068
Percent To Sales 15.0% 14.6%
Nonrecurring Costs $ 0 $ (5,392)
TOTAL COMPANY
Net Sales $ 120,337 $120,290
Operating Income 5,863 1,524
Percent To Sales 4.9% 1.3%
SOURCE Commercial Intertech Corp.
CONTACT: Steven J. Hewitt or Bruce C. Wheatley of Commercial Intertech Corp.,
330-746- 8011, or fax, 330-746-1148
