<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1994
---------------------------------
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 1-6098
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DANIEL INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 74-1547355
- ------------------------------- --------------------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
9753 Pine Lake Drive, Houston, Texas 77055
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(Address of principal executive offices) (Zip Code)
713-467-6000
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(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 requirements for the past 90 days. Yes X . No .
----- -----
On February 3, 1995, there were outstanding 12,032,470 shares of
Common Stock, $1.25 par value, of the registrant.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
DANIEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1994 1994
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(in thousands)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 3,396 $ 2,520
Receivables, net of reserve of $238 and $243 38,488 38,146
Costs in excess 7,350 14,888
Inventories 45,063 45,314
Deferred taxes on income 5,051 5,126
Other 5,488 5,657
-------- --------
Total current assets 104,836 111,651
Property, plant and equipment at cost, net 68,722 69,796
Intangibles and other assets 9,509 5,890
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$183,067 $187,337
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 10,250 $ 5,900
Current maturities of long-term debt 2,857 2,857
Accounts payable 12,664 16,946
Accrued expenses 18,771 19,958
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Total current liabilities 44,542 45,661
Long-term debt 8,572 11,429
Deferred taxes on income 8,160 8,367
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Total liabilities 61,274 65,457
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Stockholders' equity:
Preferred stock, $1.00 par value,
1,000,000 shares authorized, 150,000
shares designated as Series A junior
participating preferred stock, no
shares issued or outstanding
Common stock, $1.25 par value,
20,000,000 shares authorized,
12,032,470 shares issued 15,041 15,041
Capital in excess of par value 89,675 89,675
Translation component (2,208) (2,061)
Retained earnings 19,285 19,225
-------- --------
Total stockholders' equity 121,793 121,880
-------- --------
$183,067 $187,337
======== ========
</TABLE>
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
<PAGE> 3
DANIEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands of dollars, except per share data and number of shares)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31,
----------------------------------
1994 1993
------------ ------------
<S> <C> <C>
Revenues $42,298 $40,575
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Costs and expenses:
Cost of sales 26,219 25,039
Depreciation and amortization 2,234 1,823
Selling and administrative expenses 11,662 13,485
Research and development expenses 794 968
Interest expense 525 466
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Total expenses 41,434 41,781
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Income (loss) before income
tax expense (benefit) 864 (1,206)
Income tax expense (benefit) 263 (365)
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Net income (loss) $ 601 $ (841)
======= =======
Earnings (loss) per common share $ .05 $ (.07)
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Cash dividends per common share $ .045 $ .045
======= =======
Average number of shares outstanding 12,032,470 12,028,233
========== ==========
</TABLE>
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
<PAGE> 4
DANIEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Condensed)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31,
----------------------------------
1994 1993
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(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 601 $ (841)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,234 1,823
Changes in operating assets and
liabilities 2,250 (3,959)
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Net cash provided by (used in) operating
activities 5,085 (2,977)
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Cash flows from investing activities:
Acquisition of product line (4,177)
Capital expenditures (1,016) (3,373)
Proceeds from sales of assets 55 2
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Net cash used in investing activities (5,138) (3,371)
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Cash flows from financing activities:
Net borrowings on lines of credit 4,350
Payments on long-term debt (2,857) (2,857)
Cash dividends paid (541) (542)
Activity under stock option plan 27
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Net cash provided by (used in) financing
activities 952 (3,372)
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Effect of exchange rate changes on cash (23) (51)
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Increase (decrease) in cash and cash
equivalents 876 (9,771)
Cash and cash equivalents, beginning of period 2,520 23,220
------- --------
Cash and cash equivalents, end of period $ 3,396 $ 13,449
======= ========
</TABLE>
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
<PAGE> 5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1 - General
The foregoing financial statements have been prepared from the books
and records of the Company without audit. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments necessary for a
fair statement of the results for the interim periods presented, are reflected
in such financial statements.
These condensed statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1994.
Note 2 - Acquisition
In October 1994, the Company acquired certain assets of another
company relating to its orifice metering product line. Acquisition and
related costs of $4,177,000 were paid in cash. The operations related to this
acquisition, which was accounted for under the purchase method, are not
material to the Company's results of operations.
Note 3 - Inventories
Major components of inventories include:
<TABLE>
<CAPTION>
December 31, September 30,
1994 1994
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(in thousands)
<S> <C> <C>
Raw materials $15,248 $16,412
Work-in-process 9,771 8,854
Finished goods 27,582 27,490
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52,601 52,756
Less LIFO reserve 7,538 7,442
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$45,063 $45,314
======= =======
</TABLE>
Note 4 - Accrued Expenses
Accrued expenses are summarized as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1994 1994
------------ -------------
(in thousands)
<S> <C> <C>
Other accrued expenses $13,284 $14,873
Accrued taxes other than income 3,491 2,809
Salaries and wages 1,996 2,276
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$18,771 $19,958
======= =======
</TABLE>
<PAGE> 6
Note 5 - Notes Payable
At December 31, 1994, the Company had uncommitted short-term lines of
credit aggregating approximately $40,000,000. Loans under these lines may be
made in such amounts and at such maturities and interest rates as are offered
by banks and accepted by the Company at the time of each borrowing. At
December 31, 1994, borrowings under these lines were $10,250,000. These
borrowings were at a weighted average interest rate of 6.65% and were due on
January 3, 1995. These borrowings were subsequently replaced with other
borrowings under these lines.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended December 31, 1994 vs. Three Months Ended December 31, 1993
Consolidated revenues increased 4% to $42,298,000 for the three months
ended December 31, 1994. Revenues in the flow measurement segment were
$29,716,000 for the current quarter compared to revenues of $29,816,000 for the
same period last year. Within the flow measurement segment, the mix of
revenues among metering equipment, electronics products and flow measurement
systems remained at approximately 50%, 25% and 25% of revenues, respectively,
unchanged from the same period last year. The energy products segment posted
an 18% increase in revenues to $12,532,000 benefitting in the current period
from the shipment of three large orders for gate valves and price increases for
fastener products.
The consolidated gross profit margin for the three months ended
December 31, 1994, was 38%, unchanged from the gross profit margin for the same
period last year. The gross profit margin in the flow measurement segment
declined slightly to 41% of revenues in the current period, compared to 42% of
revenues last year. The gross profit margin in the energy products segment
improved significantly to 30% of revenues in the current period, from 26% last
year benefitting from the price increases for fastener products.
Depreciation and amortization expenses increased 23% to $2,234,000
from the prior year due primarily to the amortization of intangibles associated
with the acquisition in fiscal 1995 (see Note 2 of NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS).
Selling and administrative expenses declined 14% to $11,662,000 for
the three months ended December 31, 1994 compared to the same period last year.
These expenses declined to 28% of revenues in the current period, compared to
33% of revenues last year principally as a result of cost reduction efforts
initiated in early fiscal 1995.
Interest expense increased 13% to $525,000 for the three months ended
December 31, 1994 due to increased short- term borrowing levels, partially
offset by lower long-term debt levels.
The effective tax rate of 30% for the three months ended December 31,
1994, is consistent with the rate for the same period last year.
<PAGE> 7
In February 1995, the Company announced the adoption of a strategic
restructuring plan. This plan is being undertaken to improve the Company's
overall profitability through a greater focus on high margin and market leading
product lines. The plan identifies product lines in the metering equipment,
electronics, gas metering systems and valve groups as core products for further
development. The plan also identifies non-core business groups and product
lines which the Company intends to divest or discontinue, including Daniel
Industrial, Inc. and Daniel En-Fab Systems, Inc. It is anticipated that
annualized savings from restructuring will be in the range of $8 to $10
million, in addition to proceeds from the divested business groups and product
lines. The Company expects personnel reductions in the corporate headquarters
and in the core business groups to be in excess of 100 people. The Company
will announce more specific cost reduction estimates later and expects a
one-time restructuring charge to be taken in fiscal 1995 when the amount is
finalized.
Liquidity and Capital Resources
The primary sources of the Company's liquidity for the three months
ended December 31, 1994 were internally generated funds, short-term borrowings
and cash and cash equivalents available at the beginning of the year. These
funds were used primarily for the acquisition of certain assets related to a
product line (see Note 2 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS), payments on long-term debt, capital expenditures and the payment
of dividends.
Net cash provided by operations for the three months ended December
31, 1994 was $5,085,000 due to profitable operations and a decline in unbilled
costs incurred on long-term construction contracts, partially offset by
decreased accounts payable.
In fiscal 1995 and fiscal 1994, the Company relied upon short-term
borrowings under its bank lines of credit to supplement its working capital and
other cash requirements. At December 31, 1994, the Company had uncommitted
short- term lines of credit aggregating approximately $40,000,000. At December
31, 1994 and February 3, 1995, borrowings under these lines were $10,250,000
and $8,000,000, respectively, at weighted average interest rates of 6.65% and
6.48%, respectively. While the Company expects its borrowing requirements to
generally decrease in fiscal 1995 from current levels, the timing of one or
several major expenditures or receipts may affect the level of borrowings at a
particular point in time.
Working capital at December 31, 1994, included $45,063,000 of
inventory, which is not as liquid as other current assets.
The Company anticipates capital expenditures in fiscal 1995 of
approximately $6,000,000. Capital expenditures for the three months ended
December 31, 1994 were $1,016,000.
The Company considers its financial position to be strong, with a
working capital ratio of 2.4 to 1.0 and debt to total capitalization of 15%.
As previously mentioned, the Company adopted a strategic restructuring plan.
The Company expects to have considerable flexibility with cash proceeds from
divestitures as well as borrowing capacity to make acquisitions to complement
its core business groups.
<PAGE> 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject to legal proceedings and claims which arise in
the ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position of the Company. Additionally, in the ordinary course of
business, the Company issues standby letters of credit and bank guarantees as
security for advances, progress payments and performance on long-term
contracts. The Company is contingently liable for such obligations which
amounted to approximately $32,000,000 at December 31, 1994.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) The Company did not file any report on Form 8-K during the
quarter for which this report is filed.
<PAGE> 9
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.
DANIEL INDUSTRIES, INC.
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(Registrant)
Date February 10, 1995 By /s/ W. A. Griffin, III
----------------------- ----------------------------
W. A. Griffin, III
President
(Chief Executive Officer)
Date February 10, 1995 By /s/ Henry G. Schopfer, III
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Henry G. Schopfer, III
Vice President, Finance
(Chief Financial Officer)
<PAGE> 10
INDEX TO EXHIBITS
Exhibits
27 - Financial Data Schedule
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000026821
<NAME> DANIEL INDUSTRIES, INC.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,396
<SECURITIES> 0
<RECEIVABLES> 38,488
<ALLOWANCES> 238
<INVENTORY> 45,063
<CURRENT-ASSETS> 104,836
<PP&E> 125,292
<DEPRECIATION> 56,570
<TOTAL-ASSETS> 183,067
<CURRENT-LIABILITIES> 44,542
<BONDS> 0
<COMMON> 15,041
0
0
<OTHER-SE> 89,675
<TOTAL-LIABILITY-AND-EQUITY> 183,067
<SALES> 42,298
<TOTAL-REVENUES> 42,298
<CGS> 26,219
<TOTAL-COSTS> 26,219
<OTHER-EXPENSES> 14,690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 525
<INCOME-PRETAX> 864
<INCOME-TAX> 263
<INCOME-CONTINUING> 601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 601
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
