<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 December 31, 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 January 17, 1996 - 5,948,722 shares.
<PAGE> 2
FORM 10-Q 12/31/95
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
December 31, 1995 (Unaudited)
and March 31, 1995
Consolidated Statements of Earnings 10-Q, Page 4
Nine months ended December 31, 1995
and 1994 (Unaudited)
Consolidated Statements of Earnings 10-Q, Page 5
Three months ended December 31, 1995
and 1994 (Unaudited)
Consolidated Statements of Cash Flows 10-Q, Page 6
Nine months ended December 31, 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 5 Management Change 10-Q, Page 11
Item 6 Exhibits and Reports on Form 8-K 10-Q, Page 11
</TABLE>
2
<PAGE> 3
FORM 10-Q 12/31/95
Versa Technologies, Inc.
BALANCE SHEETS*
<TABLE>
<CAPTION>
December 31, March 31,
1995 1995
------------ -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $15,821 $15,967
Receivables, net of allowances 9,281 9,404
Inventories 7,630 7,808
Prepaid expenses and taxes 1,230 1,733
------------ -----------
Total current assets 33,962 34,912
PROPERTY, PLANT, AND EQUIPMENT** 20,585 19,945
INTANGIBLES 1,537 1,562
OTHER ASSETS 272 361
------------ -----------
$56,356 $56,780
============ ===========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $2,086 $1,750
Accrued expenses 3,043 3,401
Income taxes 438 495
Employee stock savings plan 168 119
------------ -----------
Total current liabilities 5,735 5,765
DEFERRED INCOME TAXES 632 485
DEFERRED PENSION, DEFERRED COMPENSATION
AND POSTRETIREMENT BENEFIT EXPENSE 2,395 2,462
SHAREHOLDERS' EQUITY 47,594 48,068
------------ -----------
$56,356 $56,780
============ ===========
</TABLE>
* In thousands of dollars. March 31, 1995 figures condensed from audited
financial statements.
** Net of accumulated depreciation of $25,321,000 at December 31, 1995 and
$23,231,000 at March 31, 1995.
3
<PAGE> 4
FORM 10-Q 12/31/95
Versa Technologies, Inc.
STATEMENTS OF EARNINGS (Unaudited)*
<TABLE>
<CAPTION>
Nine months ended December 31, 1995 1995 1994
---- ----
<S> <C> <C>
NET SALES $50,840 $49,418
Cost of Sales 36,542 33,527
------------ -----------
GROSS PROFIT 14,298 15,891
Selling and administrative expenses 8,295 8,707
------------ -----------
OPERATING INCOME 6,003 7,184
------------ -----------
OTHER INCOME
Interest income 620 521
Miscellaneous, net 90 34
------------ -----------
710 555
------------ -----------
EARNINGS BEFORE INCOME TAXES 6,713 7,739
Income Taxes 2,430 2,861
------------ -----------
NET EARNINGS $4,283 $4,878
============ ===========
NET EARNINGS PER SHARE $0.72 $0.81
============ ===========
Average shares outstanding 5,985 6,040
============ ===========
</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 12/31/95
Versa Technologies, Inc.
STATEMENTS OF EARNINGS (Unaudited)*
<TABLE>
<CAPTION>
Three Months ended December 31, 1995 1995 1994
---- ----
<S> <C> <C>
NET SALES $16,486 $16,154
Cost of Sales 12,155 11,001
------------ -----------
GROSS PROFIT 4,331 5,153
Selling and administrative expenses 2,551 2,829
------------ -----------
OPERATING INCOME 1,780 2,324
------------ -----------
OTHER INCOME)
Interest income 188 173
Miscellaneous, net 5 6
------------ -----------
193 179
------------ -----------
EARNINGS BEFORE INCOME TAXES 1,973 2,503
Income Taxes 715 921
------------ -----------
NET EARNINGS $1,258 $1,582
============ ===========
NET EARNINGS PER SHARE $0.21 $0.26
============ ===========
Average shares outstanding 5,964 6,048
============ ===========
</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 12/31/95
Versa Technologies, Inc.
Consolidated Statements of Cash Flows (Unaudited)*
Decrease in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Nine months ended December 31: 1995 1994
---- ----
<S> <C> <C>
Net earnings $ 4,283 $ 4,878
Depreciation and amortization 2,420 2,281
Provision for losses on accounts receivable 52 51
Decrease (Increase) in current assets other than cash
and cash equivalents 752 (396)
Decrease in current liabilities (31) (34)
Increase in deferred liabilities 80 313
(Gain) Loss on disposition of equipment (20) 2
----- -----
Net cash provided by operating activities 7,536 7,095
----- -----
Cash flows from investing activities:
Capital expenditures (3,068) (5,156)
Proceeds from sale of plant and equipment 53 10
Other 89 13
----- -----
Net cash used in investing activities (2,926) (5,133)
----- -----
Cash flows from financing activities:
Dividends paid (3,829) (3,564)
Purchase of treasury stock (1,205)
Sale of stock under option plans 278 331
----- -----
Net cash used in financing activities (4,756) (3,233)
----- -----
Decrease in cash and cash equivalents (146) (1,271)
Cash and cash equivalents at beginning of period 15,967 17,611
------ ------
Cash and cash equivalents at end of period $15,821 $16,340
======= =======
Supplemental Disclosures of Cash Flow Information
Cash paid during period for:
Income taxes $ 2,342 $ 3,070
</TABLE>
* Amounts are in thousands.
6
<PAGE> 7
FORM 10-Q 12/31/95
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies --
The consolidated balance sheet as of December 31, 1995, the
consolidated statements of earnings for the three-month and nine-month
periods ended December 31, 1995 and 1994, and the consolidated
statements of cash flows for the nine-month period ended December 31,
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>
December 31, March 31,
1995 1995
---- ----
<S> <C> <C>
Common stock, par value $.01 per share $ 61 $ 61
Additional paid-in capital 18,663 18,710
Retained earnings 30,450 29,997
------- -------
49,174 48,768
Less treasury shares at cost 1,580 700
------- -------
$47,594 $48,068
------- -------
</TABLE>
Total shares of common stock outstanding net of treasury shares was
5,948,772 at December 31, 1995 and 6,011,822 at March 31, 1995.
7
<PAGE> 8
FORM 10-Q 12/31/95
During the nine months ended December 31, 1995, 23,450 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 December 31, 1995, 90,394 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; 12,935 shares were reserved
for issue under the Company's 1993 Plan; and 35,100 shares were
reserved for non-qualified stock options held by outside directors and
an outside officer of the Company.
During the nine months ended December 31, 1995, retained earnings was
credited with net income of $4,283,000 and charged with $3,829,000 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 12/31/95
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Consolidated sales for the nine months increased $1,422,000, or 2.9% from the
prior year. For the quarter, sales increased $332,000, or 2.1%. On a business
group basis, the comparative sales in thousands were as follows:
<TABLE>
<CAPTION>
Nine Months Three Months
----------- ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Custom Components $15,336 $20,458 $4,500 $5,879
Fluid Power 24,907 21,329 8,619 7,569
Medical 11,282 8,425 3,541 2,942
Less - interdivisional sales (685) (794) (174) (236)
------- ------- ------ -------
$50,840 $49,418 $16,486 $16,154
======= ======= ======= =======
</TABLE>
For the Custom Component Group, sales were down $5,122,000, or 25% for
the nine months. This drop in volume resulted in an operating loss.
Year-to-date volume decreased due primarily to two factors: first, automotive
related business was down $2,353,000; and second, on a comparative basis, a
project for the business machine market which ended during the third quarter of
fiscal 1995, had shipments of $1,271,000 during the first nine months last
year. For the third quarter of fiscal 1996, sales were down $1,379,000 or 23%.
This decline was due, primarily to a $660,000 decline in automotive-related
business at our industrial silicone company, Moxness Products, Inc. and a
$354,000 drop in volume at Moxness Thermoplastics.
Sales and operating income at the Fluid Power Group grew 17% and 11%
respectively for the nine months. Sales, on both a year-to-date and quarterly
basis, were up due to Power Gear's slide-out system for recreational vehicles,
which was introduced during the first quarter. While gross profit dollars have
increased, gross margin as a percentage of sales is down slightly, primarily for
two reasons: first, start-up costs associated with the introduction of the
slide-out; and second, a shift in product mix to more Power Gear systems. Gross
margins at Power Gear have historically been below those of Milwaukee Cylinder.
Volume at Power Gear has been growing more rapidly than at Milwaukee Cylinder.
It now accounts for approximately 50% of the Fluid Power Group's total sales.
Sales and operating income at the Company's medical silicone business
increased 34% and 38% respectively for the nine months. The sales growth, on
both a year-to-date and quarterly basis, came from the Company's core medical
business and increased sales of consumer related products. For the nine months,
higher volume resulted in improved operating income. For the quarter, sales
were up 20% while operating income was down. The decrease in operating income
was due to a temporary shift in
9
<PAGE> 10
FORM 10-Q 12/31/95
product mix along with higher expenses associated with investments made in
engineering and technical resources. Management expects operating income will
return to historical levels during the fourth quarter.
On a consolidated basis, while sales have increased 2.9% for the nine months,
operating income has declined 16% or $1,181,000. The decline in operating
income is due to Custom Components, where a 25% reduction in sales resulted in
poor absorption of costs causing a $2.9 million drop in operating income.
Cash Flows and Liquidity
Cash provided from operating activities was $7.5 million for the nine months,
up from $7.1 million for the same period last year. This increase, in spite
of a $595,000 drop in earnings, was due to changes within two categories:
first, prepaids decreased $503,000. This change related to the reduction of
in-progress tool projects at our Moxness Thermoplastics division. Second,
accounts payable increased $336,000.
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, 86,500 shares
were acquired for $1,205,000 during the nine months ended December 31, 1995. To
date, 129,000 shares have been repurchased under the plan at a cost of
$1,774,000.
At December 31, 1995, the Company had working capital of $28,227,000. Included
in working capital was $15,821,000 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 December 31, 1995 was $13,608,000 versus $14,685,000 one year
ago. Backlog at both Medical and Fluid Power increased, while it was down $3.0
million at Custom Components. Management is confident that our Fluid Power and
Medical businesses will finish out the year on a strong note. However, the
overall results for the fourth quarter will be down from the same period last
year due to the current situation at the Custom Components Group.
10
<PAGE> 11
FORM 10-Q 12/31/95
PART II OTHER INFORMATION
Item 5 - Management Change
Subsequent to the end of the quarter, effective January 3, 1996, Raymond T.
Aexel resigned as President and Chief Operating Officer of Mox-Med/Moxness.
Thomas J. Magulski, President and Chief Operating Officer of the Company will
assume the responsibilities associated with the position until a replacement has
been found.
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: January 31, 1996 /s/ Robert M. Sukalich
------------------------
Vice President-Finance, Treasurer
and Principal Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 15,821,000
<SECURITIES> 0
<RECEIVABLES> 9,496,000
<ALLOWANCES> (215,000)
<INVENTORY> 7,630,000
<CURRENT-ASSETS> 33,962,000
<PP&E> 45,906,000
<DEPRECIATION> (25,321,000)
<TOTAL-ASSETS> 56,356,000
<CURRENT-LIABILITIES> 5,735,000
<BONDS> 0
<COMMON> 61,000
0
0
<OTHER-SE> 47,533,000
<TOTAL-LIABILITY-AND-EQUITY> 56,356,000
<SALES> 50,840,000
<TOTAL-REVENUES> 50,840,000
<CGS> 36,542,000
<TOTAL-COSTS> 36,542,000
<OTHER-EXPENSES> 8,295,000
<LOSS-PROVISION> 52,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,713,000
<INCOME-TAX> 2,430,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,283,000
<EPS-PRIMARY> .72
<EPS-DILUTED> .72
</TABLE>
