UNITED STATES 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 September 30, 1997
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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 0-9010
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ROBINSON NUGENT, INC.
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
INDIANA 35-0957603
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 East Eighth Street, New Albany, Indiana 47151-1208
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (812) 945-0211
----------------------
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
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date: As of October 31,
1997, the registrant had outstanding 4,891,765 common shares without par
value.
The Index to Exhibits is located at page 13 in the sequential numbering
system. Total pages: 14.
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
INDEX
Page No.
- --------
PART I. Financial Information:
Item 1. Financial Statements
Consolidated balance sheets at September 30, 1997,
September 30, 1996 and June 30, 1997 ...........3
Consolidated statements of operations for the three
months ended September 30, 1997 and September 30, 1996 ...........5
Consolidated statements of cash flows for the
three months ended September 30, 1997 and September 30,1996 .......... 6
Notes to consolidated financial statements ...........7
Item 2. Management's discussion and analysis of financial
condition and results of operations ...........8
PART II. Other Information .......... 11
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30 June 30
----------------------
ASSETS 1997 1996 1997
------- ------- -------
(Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,262 $ 1,338 $ 4,118
Accounts receivable, net 11,006 11,542 11,784
Inventories:
Raw materials 1,183 1,406 1,294
Work in process 6,729 6,554 5,933
Finished goods 3,716 4,886 3,873
------- ------- -------
Total inventories 11,629 12,846 11,100
Other current assets 1,538 1,649 1,371
------- ------- -------
Total current assets 27,435 27,375 28,373
Property, plant & equip-
ment, net 21,188 23,116 21,188
Other assets 147 68 135
------- ------- -------
Total assets $48,770 $50,559 $49,696
======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
September 30 June 30
-------------------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996 1997
------- ------- -------
(Unaudited)
<S> <C> <C> <C>
Current liabilities:
Current installments of long-
term debt $ 376 $ 466 $ 386
Short-term bank borrowings -- 6,400 --
Accounts payable 4,888 4,339 4,265
Accrued expenses 4,603 4,184 5,560
Income taxes 953 960 1,581
------- ------- -------
Total current liabilities 10,820 16,349 11,792
Long-term debt, excluding current
installments 6,845 2,965 5,926
Deferred income taxes 830 1,010 838
------- ------- -------
Total liabilities 18,495 20,324 18,556
------- ------- -------
Shareholders' equity:
Common shares without par value
Authorized shares 15,000,000;
issued 6,851,250 shares 20,950 20,950 20,950
Retained earnings 21,011 19,776 21,290
Equity adjustment from foreign
currency translation 1,471 2,775 2,073
Employee stock purchase plan loans
and deferred compensation (161) (270) (177)
Less 1,959,485 treasury shares (12,996) (12,996) (12,996)
------- ------- -------
Total shareholders' equity 30,275 30,235 31,140
------- ------- -------
Total liabilities and shareholders'
equity $48,770 $50,559 $49,696
======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
September 30
--------------------
1997 1996
------- -------
(Unaudited)
<S> <C> <C>
Net sales $18,543 $21,123
Cost of sales 15,157 16,396
------ -------
Gross profit 3,386 4,727
Selling, general and
administrative expenses 3,650 3,753
------- -------
Operating income (loss) (264) 974
------- -------
Other income (expense):
Interest income 31 30
Interest expense (134) (187)
Royalty income 1 30
Currency gain 156 19
------- -------
54 (108)
------- -------
Income (loss) before income
taxes (210) 866
Income taxes (benefit) (78) 464
------- -------
Net income (loss) $ (132) $ 402
======= =======
Net income (loss) per common
share $ (.03) $ .08
======= =======
Dividends per common share $ .03 $ .03
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
September 30
--------------------
1997 1996
------- -------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (132) $ 402
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,466 1,269
Losses from disposition of capital assets 2 58
(Increase) decrease in accounts receivable 778 (1,109)
(Increase) decrease in inventories (529) 600
Increase in other current assets (169) (101)
Decrease in accounts payable and
accrued expenses (334) (1,726)
Increase (decrease) in income taxes (634) 854
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Net cash provided by operating activities 448 247
------- -------
Cash flows from investing activities:
Capital expenditures (1,881) (870)
(Increase) decrease in other assets (29) 1
------- -------
Net cash used in investing activities (1,910) (869)
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Cash flows from financing activities:
Proceeds from long-term debt 1,000 --
Repayments of long-term debt (37) (290)
Cash dividends paid (147) (147)
Repayments of employee stock purchase
plan loans 14 51
------- -------
Net cash provided by (used in)
financing activities 830 (386)
------- -------
Effect of exchange rate changes on cash (224) (22)
------- -------
Decrease in cash and cash equivalents (856) (1,030)
Cash and cash equivalents at beginning of period 4,118 2,368
------- -------
Cash and cash equivalents at end of period $ 3,262 $ 1,338
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997 AND 1996, AND JUNE 30, 1997
1. In the opinion of management, the accompanying unaudited consolidated
condensed
financial statements contain all adjustments necessary (all of which are normal
and recurring) to present fairly the financial position of the Company and its
subsidiaries, results of operations, and cash flows in conformity with
generally accepted accounting principles.
2. Earnings per common share for the period ending September 30, 1997 are
based only
upon the weighted-average number of shares outstanding during the period of
4,891,765 shares. Earnings per common share for the period ending September
30, 1996 are based upon the weighted-average number of shares outstanding
during the period, plus common share equivalents resulting from dilutive
stock options of 4,911,215 shares.
In February of 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share." The Company
adopted this new standard in fiscal 1998, and it shall become effective in
the quarterly report for the period ending December 31, 1997. This statement
changes the required methods used to calculate earnings per share data,
harmonizing U.S. GAAP requirements with that of International Accounting
Standards No. 33. The major change from the previous calculation is the
disclosure of basic EPS, which is computed by dividing reported earnings by
the weighted-average common shares outstanding (without any adjustments for
common stock equivalents), versus the current primary EPS calculation
required by the superseded APB Opinion No. 15.
Fully diluted EPS, now called diluted EPS, is still required, with the
average arket price of common stock used to determine common stock
equivalents rather than the greater of the average market price or period
ending closing price. The Company does not expect that the adoption of this
standard will have a material impact on its financial statements.
3. Reference is directed to the Company's consolidated financial statements
(Form 10-K), including references to the Annual Report, for the year ended
June 30,1997 and management's discussion and analysis included in Part I,
Item 2 in this report.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Net sales for the quarter ended September 30, 1997 were $18,543,000, down 12
percent from sales of $21,123,000 in the same period a year ago. Lower customer
sales in the United States and Europe, were partially offset by an increase in
customer sales in Asia. Customer sales in the United States were 18% lower
than the prior period due primarily to lower sales of cable assemblies and
high density sockets. European sales of connectors were $404,000 lower than
the prior period when measured in local currencies, while changes in currency
exchange rates reduced European sales by approximately $300,000. Customer
sales in Asia were $671,000 or 46% higher than the prior period due primarily
to higher connector sales in Southeast Asia and Japan.
Comparative sales by geographic territory for the respective periods follows:
<TABLE>
<CAPTION>
Three Months Ended
($000 omitted) September 30
--------------------
1997 1996
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<S> <C> <C>
United States:
Domestic $11,372 $13,388
Export:
Europe 21 12
Asia 7 134
Rest of world 356 769
------- -------
Total export sales 384 915
------- -------
Total sales to customers 11,756 14,303
Intercompany 2,238 2,059
------- -------
Total United States 13,994 16,362
------- -------
Europe:
Domestic 4,672 4,989
Export to Asia -- 387
------- -------
Total sales to customers 4,672 5,376
------- -------
Intercompany 1,081 981
------- -------
Total Europe 5,753 6,357
------- -------
Asia:
Domestic 2,115 1,349
Rest of world -- 95
------- -------
Total sales to customers 2,115 1,444
Intercompany 847 644
------- -------
Total Asia 2,962 2,088
------- -------
Eliminations (4,166) (3,684)
------- -------
Consolidated $18,543 $21,123
======= =======
</TABLE>
<PAGE>
Incoming customer orders for the quarter ended September 30, 1997 amounted to
$18.1 million, down 13% from orders of $20.9 million in the same quarter a year
ago. The Company ended the quarter with a backlog of unshipped orders of $14.1
million
compared to $15.7 million a year ago.
Gross profits in the quarter ended September 30, 1997 amounted to $3,386,000 or
18.3 percent of net sales, compared to $4,727,000 or 22.4 percent of net
sales in the prior year. Gross profits are net of engineering charges
associated with new product development, which amounted to $987,000 or 5.3
percent of net sales in the current quarter compared to $773,000 or 3.7
percent of net sales in the prior year. The reduction in gross profits in
the quarter compared to the prior year reflects lower sales, continued
competitive price pressures worldwide, unfavorable plant utilization
as a result of the lower sales volumes, and an unfavorable product mix. Gross
profits were favorably impacted by the effect of manufacturing cost reduction
programs.
Selling, general and administrative expenses of $3,650,000 for the three months
ended September 30, 1997 decreased 3% compared to expenses of $3,753,000 in
the prior year. Lower compensation expense in the United States, coupled
with lower sales and marketing expenses in Europe, were partially offset by
higher administrative expenses in Asia.
Other income and expense for the three months ended September 30, 1997
reflected other income of $54,000 compared to other expense of $108,000 for
the comparable three-month period in the prior year. The improvement in
other income and expense reflected an increase in currency gains in the
current quarter combined with lower interest expense. Interest expense
decreased from $187,000 in the prior period to $134,000 in the current period
due primarily to a decrease in short term and long term debt. Currency gains
in the quarter totaled $156,000 compared to $19,000 in the prior period.
These currency gains were generated overseas, primarily in Malaysia,
Japan and Europe. The gains in Malaysia were a direct result of stronger US
dollar currency exchange rates in that region.
The provision for income taxes was provided using the appropriate effective
tax rates for each of the tax jurisdictions in which the Company operates.
A pretax loss was reported in the United States, Scotland, Singapore and
Japan. These losses were partially offset by taxable income in Switzerland,
Belgium, the Netherlands and Malaysia. An income tax benefit was recorded
related to the pretax loss in the United States. This tax benefit was
partially offset by income tax expenses accrued by the Company's European
operations. The income tax expense on pretax profits generated in Malaysia
was offset by the tax benefit of the utilization of net operating loss carry-
forwards from prior periods.
At September 30, 1997, certain foreign subsidiaries have accumulated net
operating loss carryforwards of approximately $2.9 million. Management is
unable at this time to project future taxable income which will utilize these
loss carryforwards. The tax benefit of these carryforwards will be
recognized when management is able to
project future taxable income of these foreign subsidiaries.
The net loss in the quarter ended September 30, 1997 amounted to $132,000 or 3
cents per share, compared to a net income of $402,000 or 8 cents per share,
in the prior period. The net loss in the United States was $227,000
compared to net incomes of $83,000 in Asia and $12,000 in Europe.
Management anticipates higher sales levels and a return to profitability as the
year progresses. This improved performance will result from a return to
higher revenue levels, and will be augmented by reductions in manufacturing
costs and operating expenses implemented in first quarter of the year.
<PAGE>
Financial Condition and Liquidity
- ---------------------------------
Working capital at September 30, 1997 amounted to $16.6 million compared to
$11.0 million at September 30, 1996 and $16.6 million at June 30, 1997. The
current ratio was 2.5 to 1 at September 30, 1997 compared to 1.7 to 1 at
September 30, 1996. The increase in working capital, compared to the prior
year, primarily reflects a reduction in short-term bank borrowings. In
February, 1997 the Company replaced its existing short-term line of credit
agreement with a new long-term credit facility. Long term borrowings under
this facility were $5.0 million as of September 30, 1997.
There were no significant changes in long-term debt in the quarter ended
September 30, 1997. Long-term debt excluding current installments, represented
$6.8 million, or 3 percent of shareholders' equity at September 30, 1997,
compared to $3.0 million or 10 percent of shareholders' equity at
September 30, 1996.
Cash and cash equivalent balances decreased by $0.9 million during the current
period. A portion of the Company's cash on hand, as well as cash generated by
operations, and $1.0 million from proceeds from the long-term credit facility
was invested in $1.9 million for capital expenditures during the period. These
investments included approximately $1.0 million in plant improvements in the
Company's facility in Dallas, Texas, investments in several new product
programs and in the development of the Company's new management information
system.
The Company believes future working capital and capital expenditure require-
ments can be met from cash provided by operating activities, existing cash
balances, and borrowings available under the existing credit facility.
Dividend Action
- ---------------------------
On July 31, 1997 the Board of Directors declared a regular quarterly
dividend of 3 cents per share, payable August 28, 1997 to shareholders of
record August 14, 1997.
Cautionary Statements for Purposes of the Safe Harbor
- ----------------------------------------------------------------------------
In addition to statements of historical fact, this quarterly report contains
forward-looking statements which are inherently subject to change, based on
known and unknown risks, including but not limited to changes in the market
and industry. Please refer to documents filed with the Securities and
Exchange Commission for additional information on factors that could
materially affect the Company's financial results.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Not applicable.
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. Not applicable.
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) See Index to Exhibits.
(b) The Company filed an amended Form 8-K/A report on October 3, 1997
relating to a change in the Company's certifying accountant.
<PAGE>
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.
ROBINSON NUGENT, INC.
--------------------------------------
(Registrant)
Date /s/ Larry W. Burke
----------------------- ------------------------------------
Larry W. Burke
President and Chief Executive Officer
Date /s/ Robert L. Knabel
----------------------- ------------------------------------
Robert L. Knabel
Vice President, Treasurer and Chief
Financial Officer
<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
Number of Sequential
Item Numbering
Assigned in System
Regulation S-K Page Number
Item 601 Description of Exhibit of Exhibit
- -------------- ------------------------------------- ------------
(2) Not applicable.
(4) 4.1 Specimen certificate for Common Shares,
without par value. (Incorporated by
reference to Exhibit 4 to Form S-1
Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988
between Robinson Nugent, Inc. and Bank
One, Indianapolis, N.A. (Incorporated
by reference to Exhibit I to Form 8-A
Registration Statement dated May 2,
1988.)
4.3 Amendment No. 1 to Rights Agreement
dated September 26, 1991 between
Robinson Nugent, Inc. and Bank One,
Indianapolis, N.A. (Incorporated by
reference to Exhibit 4.3 to Form 10-K
Report for year ended June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement
dated June 11, 1992. (Incorporated by
reference to Exhibit 4.4 to Form 8-K
Current Report dated July 6, 1992.)
(10) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified
Incentive Stock Option Plan.
(Incorporated by reference to Exhibit
10.1 to Form 10-K Report for year ended
June 30, 1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax-
Qualified Incentive Stock Option Plan.
(Incorporated by reference to Exhibit
10.2 to Form 10-K Report for year ended
June 30, 1983.)
<PAGE>
10.3 1993 Robinson Nugent, Inc. Employee and
Non-Employee Director Stock Option Plan.
(Incorporated by reference to Exhibit
19.1 to Form 10-K Report for year ended
June 30, 1993.)
10.4 Summary of the Robinson Nugent, Inc.
Employee Stock Purchase Plan
(Incorporated by reference to Exhibit
19.2 to Form 10-K Report for year ended
June 30, 1993.)
10.5 Deferred compensation agreement dated
May 10, 1990 between Robinson Nugent,
Inc. and Larry W. Burke, President and
Chief Executive Officer. (Incorporated
by reference to Exhibit 19.1 to Form
10-K Report for year ended June 30, 1990.)
10.6 Rabbi Trust Agreement dated July 1, 1996
between Robinson Nugent, Inc. and Dean
Witter Trust Company, related to the
deferred compensation agreement between
Robinson Nugent, Inc. and Larry W. Burke
President and Chief Executive Officer.
(Incorporated by reference to Exhibit
10.6 to Form 10-K Report for year ended
June 30, 1997.)
10.7 Summary of Robinson Nugent, Inc. Bonus
Plan for the fiscal year ended June 30,
1998. (Incorporated by reference to
Exhibit 10.7 to Form 10-K Report for
year ended June 30, 1997.)
(11) Not applicable.
(15) Not applicable.
(18) Not applicable.
(19) Not applicable.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Financial Data Schedule
(99) Not applicable.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ROBINSON
NUGENT, INC. 10-Q FOR THE PERIOD ENDING SEPTEMBER 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,262
<SECURITIES> 0
<RECEIVABLES> 11,578
<ALLOWANCES> 572
<INVENTORY> 11,629
<CURRENT-ASSETS> 27,435
<PP&E> 60,980
<DEPRECIATION> 39,792
<TOTAL-ASSETS> 48,770
<CURRENT-LIABILITIES> 10,820
<BONDS> 0
<COMMON> 20,950
0
0
<OTHER-SE> 9,325
<TOTAL-LIABILITY-AND-EQUITY> 48,770
<SALES> 18,543
<TOTAL-REVENUES> 18,543
<CGS> 15,157
<TOTAL-COSTS> 15,157
<OTHER-EXPENSES> 3,650
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134
<INCOME-PRETAX> (210)
<INCOME-TAX> (78)
<INCOME-CONTINUING> (132)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (132)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
