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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
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For Quarter Ended June 30, 1996 Commission file number 0-5240
VERSA TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 39-1143618
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9301 Washington Avenue, Racine, Wisconsin 53406
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 414/886-1174
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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
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Common stock outstanding as of July 29, 1996 - 5,578,298 shares.
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VERSA TECHNOLOGIES, INC.
AND SUBSIDIARIES
I-N-D-E-X
Exhibit Reference
or Form 10-Q
Page Number
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PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets 10-Q, Page 3
June 30, 1996 (Unaudited)
and March 31, 1996
Consolidated Statements of Earnings 10-Q, Page 4
Three months ended June 30, 1996
and 1995 (Unaudited)
Consolidated Statements of Cash Flows 10-Q, Page 5
Three months ended June 30, 1996
and 1995 (Unaudited)
Notes to Consolidated Financial Statements 10-Q, Page 6
(Unaudited)
Item 2 Management's Discussion and Analysis 10-Q, Page 8
of Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 10-Q, Page 9
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VERSA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS*
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June 30, March 31,
1996 1996
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $12,218 $14,746
Receivables, net of allowances 10,410 11,410
Inventories 8,444 7,743
Prepaid expenses and taxes 1,162 1,183
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Total current assets 32,234 35,082
PROPERTY, PLANT, AND EQUIPMENT** 21,372 20,517
INTANGIBLES 1,521 1,530
OTHER ASSETS 205 309
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$55,332 $57,438
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LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,767 $ 3,691
Accrued expenses 3,448 3,391
Income taxes 757 87
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Total current liabilities 6,972 7,169
DEFERRED INCOME TAXES 785 820
DEFERRED PENSION, DEFERRED
COMPENSATION AND POSTRETIREMENT
BENEFITS EXPENSE 2,523 2,465
SHAREHOLDERS' EQUITY 45,052 46,984
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$55,332 $57,438
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* In thousands of dollars. March 31, 1996 figures condensed from audited
financial statements.
** Net of accumulated depreciation of $26,389,000 at June 30, 1996 and
$25,556,000 at March 31, 1996.
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VERSA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)*
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Three Months ended June 30, 1996 1995
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NET SALES $19,365 $16,989
Cost of Sales 14,000 11,762
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GROSS PROFIT 5,365 5,227
Selling and administrative expenses 2,940 3,052
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OPERATING INCOME 2,425 2,175
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OTHER INCOME
Interest income 160 223
Miscellaneous, net 34 30
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194 253
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EARNINGS BEFORE INCOME TAXES 2,619 2,428
INCOME TAXES 975 880
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NET EARNINGS $ 1,644 $ 1,548
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NET EARNINGS PER SHARE $ 0.29 $ 0.26
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Average shares outstanding 5,729 6,012
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*Amounts are in thousands except earnings per share. Interim results are not
necessarily indicative of full year and are subject to audit.
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VERSA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)*
(Decrease) Increase in Cash and Cash Equivalents
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Three months ended June 30, 1996 1995
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Cash flows from operating activities:
Net earnings $ 1,644 $ 1,548
Depreciation and amortization 857 816
Provision for losses on accounts receivable 15 18
Decrease (Increase) in current assets other than cash
and cash equivalents 279 (763)
(Decrease) Increase in current liabilities (207) 911
Increase in deferred liabilities 139 67
Gain on disposition of equipment 1 -
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Net cash provided by operating activities 2,728 2,597
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Cash flows from investing activities:
Capital expenditures (1,704) (1,154)
Other 24 79
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Net cash used in investing activities (1,680) (1,075)
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Cash flows from financing activities:
Dividends paid (580) (541)
Purchase of treasury stock (3,105) (624)
Sale of stock under option plans 109 80
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Net cash used in financing activities (3,576) (1,085)
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(Decrease) Increase in cash and cash equivalents (2,528) 437
Cash and cash equivalents at beginning of period 14,746 15,967
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Cash and cash equivalents at end of period $12,218 $16,404
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Supplemental Disclosures of Cash Flow Information
Cash paid during period for:
Income taxes $ 356 $ 430
* Amounts are in thousands.
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NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies --
The consolidated balance sheet as of June 30, 1996 and the consolidated
statements of earnings and cash flows for the three-month periods ended
June 30, 1996 and 1995 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, 1996.
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):
June 30, March 31,
1996 1996
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Common stock, par value $.01 per share $ 61 $ 61
Additional paid-in capital 18,633 18,681
Retained earnings 32,535 31,471
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51,229 50,213
Less treasury shares at cost 6,177 3,229
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$45,052 $46,984
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Total shares of common stock outstanding net of treasury shares was
5,608,298 at June 30, 1996 and 5,829,164 at March 31, 1996.
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During the three months ended June 30, 1996, 11,694 shares of treasury
stock were re-issued under the provision of the Company's 1982 Incentive
Stock Option Plan (the 1982 Plan), and the Company's 1992 Incentive Stock
Option Plan (the 1992 Plan). Treasury stock cost basis in excess of the
proceeds received was charged to additional paid-in capital.
As of June 30, 1996, 78,700 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; and 35,100 shares were reserved for
non-qualified stock options held by outside directors and an outside
officer of the Company.
During the three months ended June 30, 1996, retained earnings was
credited with net income of $1,644,000 and charged with $580,000 for
dividends paid.
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.
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Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Consolidated sales for the three months increased $2,376,000, or 14% from the
prior year. On a divisional basis, the comparative sales in thousands were as
follows:
Three Months
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1996 1995
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Custom Components $ 5,375 $ 5,688
Fluid Power 10,969 7,881
Medical 3,227 3,697
Less - interdivisional sales (206) (277)
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$19,365 $16,989
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The Custom Components Group was down approximately 5% in sales and incurred a
modest operating loss. The decline in sales was at Moxness Products and was
related to the drop in volume on end of life automotive projects.
Sales and operating income at the Fluid Power group grew 39% and 35%
respectively. Both Milwaukee Cylinder and Power Gear posted double digit gains
in both sales and operating income. The fastest growth came from Power Gear
where sales of its proprietary leveling and slide-out systems for the
recreational vehicle market continue to be a major contributor.
Sales and operating income at the Company's medical business for the first
quarter decreased 13% and 32% respectively. These results were directly linked
to significant inventory adjustments made by key customers. Our relationships
with these customers remain strong and we expect their volume to return to
historical levels during the second half of our fiscal year. The decrease in
operating income was due primarily to two factors: 1) the lower volume and
resulting under absorption of cost and 2) higher operating expenses due to this
business now being fully staffed versus the same period a year ago.
On a consolidated basis while sales dollars were up 17%, gross profit dollars
increased only 3%. Gross profit as a percentage of sales decreased from 31% to
28% for the quarter ended June 30, 1996. There were two primary reasons for
this drop. First, gross profit at our medical business declined by over
$500,000 for the same reasons previously stated relating to operating income.
Second, while gross profit dollars at Fluid Power have increased substantially,
as a percentage of sales it has declined slightly due to the continued shift in
product mix to more Power Gear systems. Gross margins at Power Gear have
historically been below those of Milwaukee Cylinder. Power Gear accounted for
approximately 60% of the Fluid Power Group's total sales during the first
quarter.
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Cash Flows and Liquidity
Cash provided from operating activities was $2.7 million for the quarter, up
from $2.6 million for the same period last year. This modest improvement was
due to higher earnings. Significant changes in the balance sheet since March
31, 1996, offset each other, with a decrease in accounts receivable and an
increase in income taxes being offset by increased inventory and decreased
accounts payable.
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.
On May 20, 1996 the Board of Directors expanded the company's stock buy back
program to 15% of outstanding shares from 10% authorized in February 1995.
During the quarter 232,600 shares were acquired for $3,105,000. Through June
30, 1996, 492,300 shares of the total 900,000 authorized have been repurchased
under the plan at a cost of $6,676,000.
At June 30, 1996 the Company had working capital of $25,262,000. Included in
working capital consisted of $12,218,000 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 June 30, 1996 was $12,734,000 versus $15,447,000 one year ago.
Backlog at both Medical and Custom Components decreased while Fluid Power's
backlog was flat. Management expects that sales and earnings for the balance
of fiscal 1997 will improve versus the same period last year.
PART II OTHER INFORMATION
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.
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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: August 12, 1996 /s/ Robert M. Sukalich
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Vice President-Finance, Treasurer
and Principal Financial Officer
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,218,000
<SECURITIES> 0
<RECEIVABLES> 10,633,000
<ALLOWANCES> (223,000)
<INVENTORY> 8,444,000
<CURRENT-ASSETS> 32,234,000
<PP&E> 47,761,000
<DEPRECIATION> (26,389,000)
<TOTAL-ASSETS> 55,332,000
<CURRENT-LIABILITIES> 6,972,000
<BONDS> 0
0
0
<COMMON> 61,000
<OTHER-SE> 44,991,000
<TOTAL-LIABILITY-AND-EQUITY> 55,332,000
<SALES> 19,365,000
<TOTAL-REVENUES> 19,365,000
<CGS> 14,000,000
<TOTAL-COSTS> 14,000,000
<OTHER-EXPENSES> 2,940,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,619,000
<INCOME-TAX> 975,000
<INCOME-CONTINUING> 1,644,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,644,000
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
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