<PAGE> 1
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 Quarter Ended September 30, 1995 Commission file number 0-5240
VERSA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 39-1143618
- ----------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9301 Washington Avenue, Racine, Wisconsin 53406
- ------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 414/886-1174
----------------
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. X YES _______ NO
Common stock outstanding as of October 18, 1995 - 5,983,922 shares.
<PAGE> 2
FORM 10-Q 9/30/95
VERSA TECHNOLOGIES, INC.
AND SUBSIDIARIES
I-N-D-E-X
<TABLE>
<CAPTION>
Exhibit Reference
or Form 10-Q
Page Number
PART I FINANCIAL INFORMATION
<S> <C>
Item 1 Financial Statements
Consolidated Balance Sheets 10-Q, Page 3
September 30, 1995 (Unaudited)
and March 31, 1995
Consolidated Statements of Earnings 10-Q, Page 4
Six months ended September 30, 1995
and 1994 (Unaudited)
Consolidated Statements of Earnings 10-Q, Page 5
Three months ended September 30, 1995
and 1994 (Unaudited)
Consolidated Statements of Cash Flows 10-Q, Page 6
Six months ended September 30, 1995
and 1994 (Unaudited)
Notes to Consolidated Financial Statements 10-Q, Page 7
(Unaudited)
Item 2 Management's Discussion and Analysis 10-Q, Page 9
of Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 4 Submission of Matters to Vote of Security Holders 10-Q, Page 10
Item 6 Exhibits and Reports on Form 8-K 10-Q, Page 11
</TABLE>
2
<PAGE> 3
FORM 10-Q 9/30/95
VERSA TECHNOLOGIES, INC.
BALANCE SHEETS*
<TABLE>
<CAPTION>
September 30, March 31,
1995 1995
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 14,214 $ 15,967
Receivables, net of allowances 10,541 9,404
Inventories 8,466 7,808
Prepaid expenses and taxes 1,394 1,733
-------- --------
Total current assets 34,615 34,912
PROPERTY, PLANT, AND EQUIPMENT** 20,306 19,945
INTANGIBLES 1,546 1,562
OTHER ASSETS 276 361
-------- --------
$ 56,743 $ 56,780
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,664 $ 1,750
Accrued expenses 3,121 3,401
Income taxes 379 495
Employee stock savings plan 149 119
-------- --------
Total current liabilities 6,313 5,765
DEFERRED INCOME TAXES 549 485
DEFERRED PENSION, DEFERRED
COMPENSATION AND POSTRETIREMENT
BENEFITS EXPENSE 2,443 2,462
SHAREHOLDERS' EQUITY 47,438 48,068
------- -------
$ 56,743 $ 56,780
======== ========
</TABLE>
* In thousands of dollars. March 31, 1995 figures condensed from audited
financial statements.
** Net of accumulated depreciation of $24,718,000 at
September 30, 1995 and $23,231,000 at March 31, 1995.
3
<PAGE> 4
FORM 10-Q 9/30/95
VERSA TECHNOLOGIES, INC.
STATEMENTS OF EARNINGS (UNAUDITED)*
<TABLE>
<CAPTION>
Six Months ended September 30, 1995 1994
- ------------------------------ ---- ----
<S> <C> <C>
NET SALES $ 34,354 $ 33,264
Cost of Sales 24,387 22,526
------- -------
GROSS PROFIT 9,967 10,738
Selling and administrative expenses 5,744 5,878
------- -------
OPERATING INCOME 4,223 4,860
------- -------
OTHER INCOME
Interest income 432 348
Miscellaneous, net 85 28
-------- --------
517 376
------- -------
EARNINGS BEFORE INCOME TAXES 4,740 5,236
INCOME TAXES 1,715 1,940
-------- -------
NET EARNINGS $ 3,025 $ 3,296
======= =======
NET EARNINGS PER SHARE $ 0.51 $ 0.55
======== ========
Average shares outstanding 5,995 6,035
======== ========
</TABLE>
* Amounts are in thousands except earnings per share. Interim results are not
necessarily indicative of full year and are subject to audit.
4
<PAGE> 5
FORM 10-Q 9/30/95
VERSA TECHNOLOGIES, INC.
STATEMENTS OF EARNINGS (UNAUDITED)*
<TABLE>
<CAPTION>
Three Months ended September 30, 1995 1994
- -------------------------------- ---- ----
<S> <C> <C>
NET SALES $ 17,365 $ 16,481
Cost of Sales 12,625 11,041
------- -------
GROSS PROFIT 4,740 5,440
Selling and administrative expenses 2,692 2,867
------- -------
OPERATING INCOME 2,048 2,573
------- -------
OTHER INCOME
Interest income 209 164
Miscellaneous, net 55 17
-------- --------
264 181
------- -------
EARNINGS BEFORE INCOME TAXES 2,312 2,754
INCOME TAXES 835 1,015
------- --------
NET EARNINGS $ 1,447 $ 1,739
======= =======
NET EARNINGS PER SHARE $ 0.25 $ 0.29
======== ========
Average shares outstanding 5,978 6,039
======== ========
</TABLE>
*Amounts are in thousands except earnings per share. Interim results are not
necessarily indicative of full year and are subject to audit.
5
<PAGE> 6
FORM 10-Q 9/30/95
VERSA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)*
Decrease in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Six months ended September 30, 1995 1994
- ------------------------------- ---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,025 $ 3,296
Depreciation and amortization 1,610 1,527
Provision for losses on accounts receivable 34 31
Increase in current assets other than cash
and cash equivalents (1,488) (1,093)
Increase in current liabilities 548 151
Increase in deferred liabilities 45 158
(Gain) Loss on disposition of equipment (33) 2
-------- -------
Net cash provided by operating activities 3,741 4,072
-------- -------
Cash flows from investing activities:
Capital expenditures (1,971) (1,903)
Proceeds from sale of plant and equipment 50 10
Other 84 7
-------- -------
Net cash used in investing activities (1,837) (1,886)
-------- -------
Cash flows from financing activities:
Dividends paid (3,231) (3,020)
Purchase of treasury stock (624)
Sale of stock under option plans 198 202
------- -------
Net cash used in financing activities (3,657) (2,818)
-------- -------
Decrease in cash and cash equivalents (1,753) (632)
Cash and cash equivalents at beginning of period 15,967 17,611
------- -------
Cash and cash equivalents at end of period $14,214 $16,979
======= =======
Supplemental Disclosures of Cash Flow Information
Cash paid during period for:
Income taxes $ 1,768 $ 2,087
</TABLE>
* Amounts are in thousands.
6
<PAGE> 7
FORM 10-Q 9/30/95
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies --
The consolidated balance sheet as of September 30, 1995, the
consolidated statements of earnings for the three-month and six-month
periods ended September 30, 1995 and 1994, and the consolidated
statements of cash flows for the six-month period ended September 30,
1995 and 1994 are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such financial
statements have been included. Such adjustments consisted only of
normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented as permitted by Form
10-Q, and do not contain certain information included in the annual
financial statements and notes of Versa Technologies, Inc. and
subsidiaries for the year ended March 31, 1995.
2. Inventories --
Interim inventories are based on perpetual records which are partially
verified by interim physical counts.
3. Shareholders' Equity --
Shareholders' equity is composed of the following elements (in
thousands):
<TABLE>
<CAPTION>
September 30, March 31,
1995 1995
---- ----
<S> <C> <C>
Common stock, par value $.01 per share $ 61 $ 61
Additional paid-in capital 18,668 18,710
Retained earnings 29,793 29,997
------- -------
48,522 48,768
Less treasury shares at cost 1,084 700
------- -------
$47,438 $48,068
======= =======
</TABLE>
Total shares of common stock outstanding net of treasury shares was
5,983,922 at September 30, 1995 and 6,011,822 at March 31, 1995.
7
<PAGE> 8
FORM 10-Q 9/30/95
During the six months ended September 30, 1995, 17,100 shares of
treasury stock were re-issued under the provision of the Company's
1982 Incentive Stock Option Plan (the 1982 Plan), the Company's 1992
Incentive Stock Option Plan (the 1992 Plan) and the Company's 1993
Employee Stock Purchase and Payroll Savings Plan (the 1993 Plan).
Treasury stock cost basis in excess of the proceeds received was
charged to additional paid-in capital.
As of September 30, 1995, 96,744 shares of common stock were reserved
for issue under the Company's 1982 Plan; 292,000 shares were reserved
for issue under the Company's 1992 Plan; 13,135 shares were reserved
for issue under the Company's 1993 Plan; and 40,100 shares were
reserved for non-qualified stock options held by outside directors and
an outside officer of the Company.
During the six months ended September 30, 1995, retained earnings was
credited with net income of $3,025,000 and charged with $3,231,000 for
dividends paid (which included a $.35 per share special dividend).
4. Earnings Per Share Calculation --
Earnings per share have been computed on the basis of weighted average
shares outstanding during the respective interim periods. Common
share equivalents were excluded because their dilutive effect is not
significant.
8
<PAGE> 9
FORM 10-Q 9/30/95
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Consolidated sales for the six months increased $1,090,000, or 3.3% from the
prior year. For the quarter, sales increased $884,000, or 5.4%. On a business
group basis, the comparative sales in thousands were as follows:
<TABLE>
<CAPTION>
Six Months Three Months
----------- ------------
1995 1994 1995 1994
---- ----- ---- ----
<S> <C> <C> <C> <C>
Custom Components $10,836 $14,579 $5,148 $7,174
Fluid Power 16,318 13,760 8,437 6,811
Medical 7,742 5,483 4,045 2,777
Less - interdivisional sales (542) (558) (265) (281)
----- ----- ----- -----
$34,354 $33,264 $17,365 $16,481
======= ======= ======= ========
</TABLE>
For the Custom Components Group, sales were down $3,743,000, or 26% for the six
months. This drop in volume resulted in a small operating loss. Volume
decreased due primarily to three factors. First, automotive related business
was down $1,692,000. Second, on a comparative basis, a project for the
business machine market which was lost during the third quarter of fiscal 1995,
had shipments of $1,083,000 during the first six months last year. Third,
shipments for an end-of-life project for the business machine market were down
$483,000.
Sales and operating income at the Fluid Power Group grew 19% and 12%,
respectively during the first six months. These results are ahead of
expectations, even though profit margins were somewhat lower due to start-up
costs associated with the introduction of Power Gear's slide-out systems for
recreational vehicles. The slide-out product which was introduced during the
first quarter has been well received by several key customers.
Sales at the Company's Medical Silicone business increased 41% with operating
income increasing at a faster pace. The sales growth came from the company's
core medical business assisted by increased sales of consumer related products.
Product mix combined with higher volume resulted in improved operating income.
The demand from this unit's core medical customers has created capacity
constraints. The Company is in the early phases of implementing a two step plan
to expand manufacturing capacity, during the next quarter and into fiscal 1997.
On a consolidated basis, while sales have increased 3% for the six months,
operating income has declined 13%, or $637,000. The decline in operating
income is attributable to Custom Components, where a 26% reduction in sales
resulted in poor absorption of costs causing an over $2 million drop in
operating income.
9
<PAGE> 10
FORM 10-Q 9/30/95
Cash Flows and Liquidity
Cash provided from operating activities was $3.7 million for the six months,
down from $4.1 million for the same period last year. This decrease was due to
the drop in earnings versus the comparable period last year. Significant
changes within current assets and liabilities since March 31, 1995 included
increases of $1,171,000 and $658,000 in receivables and inventory,
respectively, offset by a $914,000 increase in accounts payable. The growth in
all three of the above noted categories was at our Fluid Power and Medical
groups, where sales have increased significantly. The ratios of days sales in
receivables and inventory turnover showed only slight deterioration from a year
ago at the Fluid Power and Medical groups. As business has slowed at the
Customer Components Group the same two ratios have slipped, with an increase in
days sales outstanding of 7 days to 62, and a decrease in inventory turns of
1.2 to 6.2
Commitments for capital expenditures (investing activities) did not include any
significant amounts in excess of a normal level of replacement and improvements
to facilities and equipment.
Under the Company's program to repurchase up to 10% of its shares, 45,000
shares were acquired for $624,000 during the six months ended September 30,
1995 (all during the first quarter). To date 87,500 shares have been
repurchased under the plan at a cost of $1,193,000.
At September 30, 1995, the Company had working capital of $28,302,000.
Included in working capital was $14,214,000 of cash and cash equivalents.
Management anticipates that this liquidity plus internally generated funds
provided by operations will be sufficient to cover known demands for uses of
working capital.
Outlook
Order backlog on September 30, 1995 was $11,962,000 versus $11,322,000 one year
ago. Backlog at Medical increased, while it was flat at Fluid Power and down
at Custom Components. Management is confident that our Fluid Power and Medical
businesses will continue to generate steadily improving results. However, our
optimism for the balance of the fiscal year is somewhat tempered by a lingering
weakness in the automotive segment of our Custom Components Group.
PART II OTHER INFORMATION
Item 4 - Submission of Matters to Vote of Security Holders
(a) The Annual Meeting of Stockholders of the Registrant was held on July
25, 1995.
(b) William P. Killian and Joan R. Lloyd were elected to serve as Class III
directors with terms expiring in 1998. The terms of James E.
Mohrhauser and Denis H. Carroll (Class I directors) and
10
<PAGE> 11
FORM 10-Q 9/30/95
Herman B. McManaway, Morris W. Reid and Thomas J. Magulski (Class II
directors), continued after the meeting.
(c) The appointment of Deloitte & Touche, L.L.P. as independent auditors for
the year ending March 31, 1996 was ratified.
Item 6 - Exhibits and Reports on Form 8-K
(a) There are no documents filed as part of this report.
(b) Reports on Form 8-K
There were no form 8-K's filed during the quarter.
SIGNATURE
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 to sign on behalf of the registrant and
as principal financial officer.
VERSA TECHNOLOGIES, INC.
---------------------------------
(Registrant)
Date: October 31, 1995 /s/ Robert M. Sukalich
---------------------------------
Vice President-Finance, Treasurer
and Principal Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 14,214,000
<SECURITIES> 0
<RECEIVABLES> 10,740,000
<ALLOWANCES> (199,000)
<INVENTORY> 8,466,000
<CURRENT-ASSETS> 34,615,000
<PP&E> 45,024,000
<DEPRECIATION> (24,718,000)
<TOTAL-ASSETS> 56,743,000
<CURRENT-LIABILITIES> 6,313,000
<BONDS> 0
<COMMON> 61,000
0
0
<OTHER-SE> 47,377,000
<TOTAL-LIABILITY-AND-EQUITY> 56,743,000
<SALES> 34,354,000
<TOTAL-REVENUES> 34,354,000
<CGS> 24,387,000
<TOTAL-COSTS> 24,387,000
<OTHER-EXPENSES> 5,744,000
<LOSS-PROVISION> 34,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,740,000
<INCOME-TAX> 1,715,000
<INCOME-CONTINUING> 4,025,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,025,000
<EPS-PRIMARY> .51
<EPS-DILUTED> .51
</TABLE>
