UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the period ended October 31, 1995
Commission File Number 1-7891
DONALDSON COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-0222640
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1400 West 94th Street
Minneapolis, Minnesota 55431
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code (612) 887-3131
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, 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 practicable date.
Common Stock, $5 Par Value -- 25,815,087 shares as of November 30, 1995
- ------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
DONALDSON COMPANY, INC. AND SUBSIDIARIES
(Thousands of Dollars Except Per Share Amounts)
(Unaudited)
Three Months Ended
October 31
1995 1994
-------- --------
Net Sales $ 188,867 $ 164,175
Cost of Sales 134,968 118,842
----------- ------------
Gross Margin 53,899 45,333
Operating Expenses 36,246 29,836
Other Expense (Income) 333 (422)
Interest Expense 711 783
----------- ------------
Earnings Before Income Taxes 16,609 15,136
Income Taxes 6,478 5,631
----------- ------------
Net Earnings $ 10,131 $ 9,505
=========== ============
Average Shares and
Equivalents Outstanding
During Period 26,251,614 26,795,987
=========== ============
Net Earnings per Share $ .39 $ .35
=========== ============
Dividends Paid Per Share $ .07 $ .07
=========== ============
See Notes to Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DONALDSON COMPANY, INC. AND SUBSIDIARIES
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
October 31, July 31,
1995 1995
----------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 28,213 $ 28,565
Accounts Receivable, Net 143,086 137,155
Inventories
Materials 30,291 32,225
Work in Process 11,451 12,168
Finished Products 27,359 29,035
-------- --------
Total Inventories 69,101 73,428
Prepaids and Other Current Assets 8,167 8,756
-------- --------
TOTAL CURRENT ASSETS 248,567 247,904
Property, Plant and Equipment, at Cost 288,704 292,192
Less Accumulated Depreciation 178,897 181,552
-------- --------
Property, Plant and Equipment, Net 109,807 110,640
Other Assets 21,897 22,498
-------- --------
TOTAL ASSETS $ 380,271 $ 381,042
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-Term Debt $ 21,269 $ 17,802
Current Maturities of Long-Term Debt 3,079 2,998
Trade Accounts Payable 54,308 53,576
Accrued Employee Compensation & Related Taxes 20,918 23,114
Other Current Liabilities 26,503 26,257
-------- --------
TOTAL CURRENT LIABILITIES 126,077 123,747
Long-Term Debt 13,593 10,167
Deferred Income Taxes 5,232 5,233
Other Long-Term Liabilities 19,803 20,722
SHAREHOLDERS' EQUITY
Preferred Stock, $1 par value,
1,000,000 shares authorized, no shares issued -- --
Common Stock, $5 par value, 40,000,000 shares authorized,
27,063,407 issued on October 31, 1995 and July 31, 1995 135,317 135,317
Capital Surplus 4,074 2,639
Retained Earnings 102,060 93,746
Cumulative Translation Adjustment 8,593 14,824
Treasury Stock - 1,243,376 and 878,243 shares, at cost (29,228) (20,103)
Receivable from ESOP (5,250) (5,250)
--------- --------
TOTAL SHAREHOLDERS' EQUITY 215,566 221,173
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 380,271 $ 381,042
========= ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
DONALDSON COMPANY, INC. AND SUBSIDIARIES
(Thousands of Dollars)
(Unaudited)
Three Months Ended
October 31
1995 1994
-------- --------
OPERATING ACTIVITIES
Net Earnings $ 10,131 $ 9,505
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 5,127 4,174
Property, Plant and Equipment Write-down 330 2,247
Changes in Operating Assets and Liabilities (5,215) (2,363)
Other 680 749
-------- --------
11,053 14,312
INVESTING ACTIVITIES
Net Expenditures on PP&E (7,123) (5,570)
FINANCING ACTIVITIES
Purchase of Treasury Stock (9,175) (5,162)
Net Change in Debt 7,376 3,649
Dividends Paid (1,818) (1,850)
Other 122 (46)
-------- --------
(3,495) (3,409)
Effect of Exchange Rate Changes on Cash (787) 973
-------- --------
(Decrease)Increase in Cash and Cash Equivalents (352) 6,306
Cash and Cash Equivalents-Beginning of Year 28,565 22,945
-------- --------
Cash and Cash Equivalents-End of Period $ 28,213 $ 29,251
======== ========
See Notes to Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - The accompanying unaudited condensed consolidated 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 only normal recurring accruals) considered necessary for a fair
presentation have been included.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
A. Financial Condition
During the first quarter of fiscal 1996, $11.1 million of cash and cash
equivalents was generated from operating activities and $7.4 million of cash was
obtained from additional borrowings. These cash inflows were used to support
$7.1 million of capital expenditures, $9.2 million of treasury stock purchases
and $1.8 million of dividend payments. Cash and cash equivalents decreased $.4
million during the first quarter.
At the end of the first quarter, the Company held $28.2 million in cash and cash
equivalents. Cash balances net of short-term debt and current maturities of
long-term debt totaled $3.9 million, down from $7.8 million at the end of Fiscal
1995. Long-term debt of $13.6 million at October 31, 1995, represented 5.9
percent of total long-term capital, up from 4.4 percent at the end of last
quarter.
B. Results of Operations
For the first quarter ended October 31, 1995, net sales increased 15 percent to
$188.9 million from $164.2 million in the same period last year. Net earnings of
$10.1 million were up 7 percent from prior-year earnings of $9.5 million.
Earnings per share of 39 cents were up 11 percent compared to 35 cents last
year.
Revenue increases continue to be broad-based; healthy gains have been recorded
across all markets and geographic segments. Worldwide net sales of engine
products totaled $123.1 million in the first quarter of 1996, up 10 percent from
the same period last year. Worldwide net sales of industrial products totaled
$65.8 million, up 27 percent from last year.
Gross margins were 28.5 percent in the first quarter of 1996 compared to 27.6 in
the same period last year. The increase primarily related to a $1.8 million
charge in the prior year against cost of sales for the residual net book value
of certain production lines which depressed last year's results. Excluding the
$1.8 million charge, fiscal 1995 margins would have been 28.7 percent.
Operating expenses as a percent of sales were 19.2 percent in the first quarter,
1 point above the comparable period last year. The increase is primarily due to
higher research and development spending in fiscal 1996. In addition, last
year's first quarter operating expense level of 18.2 percent was low compared to
the 18.8 percent recorded for all of fiscal 1995.
Hard order backlogs - goods scheduled for delivery in 90 days - of $124.3
million were up 6 percent from last year primarily due to increased orders in
the worldwide off-road market. Hard order backlogs are down 7 percent from July
31, 1995 primarily due to a decline in gas turbine backlog caused by strong
first quarter sales and generally soft market conditions.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security holders
(a) The Annual meeting of shareholders of Registrant was held on November
17, 1995. A total of 25,954,964 shares were outstanding and entitled
to vote at the meeting.
(b) Not Applicable
(c) Of the total outstanding 2,868,681 shares were general abstentions and
broker nonvotes resulting in a shareholder vote as follows:
(i) Election of Directors:
Vote Tabulation
Name of Nominee For Withheld
William A. Hodder 22,495,727 590,556
Kendrick B. Melrose 22,623,355 462,928
Stephen W. Sanger 22,612,657 473,626
(ii) Ratified selection of Ernst & Young LLP as Registrant's
independent public auditors for the fiscal year ending July 31,
1996, with the following vote: For - 22,820,297; Against -
85,738; Abstaining - 180,248.
(d) Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
None
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended October 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.
DONALDSON COMPANY, INC.
(Registrant)
Date 12/13/95 By /s/James R. Giertz
James R. Giertz
Vice President - Chief
Financial Officer
Date 12/13/95 By /s/Raymond F. Vodovnik
Raymond F. Vodovnik
Vice President-Legal
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<PERIOD-START> AUG-01-1995
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