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 31 March 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4400
FISCHER & PORTER COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0582516
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 East County Line Road, Warminster, Pennsylvania 18974
(Address of principal executive offices) (Zip Code)
215 - 674-6000
(Registrant's telephone number, including area code )
(Former name and address and former fiscal year, if changed since last
report)
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 practicable date.
Common Stock 5,295,250 shares
(Class) (Outstanding at 29 April 1994)
FISCHER & PORTER COMPANY AND SUBSIDIARIES
INDEX
Page
PART I. Financial Information:
Consolidated Statements of Income -
Three Months Ended 31 March 1994 and 1993 2
Consolidated Balance Sheets -
31 March 1994 and 31 December 1993 3
Consolidated Statements of Cash Flows -
Three Months Ended 31 March 1994 and 1993 4
Notes to Consolidated Financial Statements -
31 March 1994 5-6
Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three
Month Period ended 31 March 1994 7
PART II. Other Information 8-9
FISCHER & PORTER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands except Per Share Amounts)
(Unaudited)
Three Months Ended
31 March
1994 1993
Net sales $48,334 $53,808
Costs and expenses:
Cost of sales 29,835 33,206
Research and development 2,741 3,109
Selling, general &
administrative expenses 17,100 16,103
49,676 52,418
(Loss) income from operations (1,342) 1,390
Interest expense, net 709 823
Foreign exchange losses - 34
(Loss) income before provision for income taxes (2,051) 533
Provision for income taxes (Note 4) 29 459
Net(loss) income $(2,344) $ 74
(Loss) earnings per share (Note 2) $ (.44) $ .01
Average shares (in thousands) 5,295 5,293
Dividends per share:
Cash - -
Stock - -
See accompanying Notes.
FISCHER & PORTER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
ASSETS
(Unaudited)
31 March 31 December
1994 1993
Current Assets:
Cash and cash equivalents $ 5,633 $ 5,565
Receivables 39,835 42,114
Inventories, at lower of cost (principally
first-in, first-out) or market 41,728 37,666
Prepaid expenses 2,370 2,107
Total current assets 89,566 87,452
Property, plant and equipment, net 36,739 36,638
Other assets 7,794 7,903
$134,099 $131,993
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,754 $ 1,779
Notes payable 8,275 9,795
Accounts payable 13,550 12,355
Accrued salaries and wages 14,602 13,674
Other accrued expenses 6,294 5,053
Accrued (prepaid) taxes on income (2,222) (944)
Total current liabilities 42,253 41,712
Long-term debt 19,508 17,266
Other noncurrent liabilities 35,871 34,846
Shareholders' equity:
Series Preference stock, $1 par,
authorized 1,000,000 shares - -
Common stock, $1 par
authorized 8,000,000 shares 5,295 5,295
Paid-in surplus 61,935 61,935
Accumulated deficit (25,561) (23,217)
Pension liability adjustment (3,317) (3,317)
Cumulative translation adjustments (1,885) (2,527)
Total shareholders' equity 36,467 38,169
$134,099 $131,993
See accompanying Notes
FISCHER & PORTER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
31 March
1994 1993
Operating Activities:
Net (loss) income $(2,344) $ 74
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 1,498 1,668
Amortization 137 128
Provision for doubtful accounts receivable 109 60
Provision for inventory reserves 175 323
(Gain) loss on property dispositions (76) 9
Accounting change (Note 4) - (94)
Changes in assets and liabilities:
Decrease (increase) in receivables 2,992 (2,224)
(Increase) in inventories (3,533) (3,857)
(Increase) in prepaid expenses (240) (278)
Increase in accounts payable and accrued
expenses 3,713 2,921
(Decrease) in income taxes payable (876) (750)
(Decrease) increase in noncurrent liabilities (95) 386
(Decrease) increase in other assets 9 (199)
Net cash provided by (used for) operating
activities 1,469 (1,833)
Investing Activities:
Capital expenditures (1,113) (914)
Cash received from property dispositions 109 5
Net cash (used for) investing
activities (1,004) (909)
Financing Activities:
Sale of common stock - -
Cash dividend on preferred stock - (16)
Long-term debt borrowings 3,106 -
Reduction in long-term debt (996) (1,540)
Net short-term borrowings (repayments) (2,661) 3,385
Net cash (used for) provided by financing
activities (551) 1,829
Effect of exchange rate changes on cash 154 (224)
Net increase (decrease) in cash and cash
equivalents 68 (1,137)
Cash and cash equivalents,
beginning of period 5,565 6,565
Cash and cash equivalents,
end of period $5,633 $5,428
See accompanying Notes.
FISCHER & PORTER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31 MARCH 1994
(Unaudited)
1. SUMMARIZED FINANCIAL INFORMATION AND RESULTS OF OPERATIONS
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial
position as of 31 March 1994 and the results of operations for the
three month periods ended 31 March 1994 and 1993 and cash flows for
the three months ended 31 March 1994 and 1993.
The results of operations for the three month period ended 31 March
1994 are not necessarily indicative of the results to be expected for
the full year.
Interest expense is net of interest income of $81,000 in the three month
period ended 31 March 1994 and $84,000 in the three month period
ended 31 March 1993.
2. EARNINGS PER SHARE
Primary earnings per share is based on the monthly weighted average
number of shares of Common stock, Common stock equivalents and (for
1993) Class B stock outstanding during the respective periods.
Common stock equivalents are not considered in the calculation of
primary loss per Common share in the three month period ended 31
March 1994, since they would be antidilutive. Primary earnings per
share in 1993 is based on earnings after payment of the quarterly
dividend on preferred stock of $16,000. The computation of fully
diluted earnings or loss per share would have been antidilutive for
the three month periods ended 31 March 1994 and 1993. The monthly
weighted average number of shares was 5,295,000 and 5,293,000 for
primary earnings per share and 5,295,000 and 5,359,000 for fully diluted
earnings per share in the three month periods ended 31 March 1994 and
1993, respectively.
3. SALE OF THE COMPANY/SUBSEQUENT EVENTS
On April 13, 1994, the Company entered into a definitive merger
agreement with Elsag Bailey Process Automation N.V. (Bailey) which
provides for Bailey to acquire the Company in an all cash merger at a
price, on a fully-diluted basis, of $24.25 a share, or approximately
$157.0 million.
On April 25, 1994, the Company tendered a $5.4 million check to Moorco
International Inc. ("Moorco") in full satisfaction of all obligations
arising from the termination of the definitive merger agreement
previously entered into between Moorco and the Company (The "Moorco
Merger Agreement"). Bailey has loaned the Company $5.3 million for
the payment tendered to Moorco. Moorco rejected the Company's tender
and demanded payment of a termination fee under the terminated
agreement of $7.3 million. The Company and Bailey instituted suit in
the Court of Common Pleas of Bucks County, Pennsylvania seeking a
declaration of the correct amount due Moorco in respect of the termina-
tion of the Moorco Merger Agreement and that the plaintiffs have no
further obligations to Moorco in respect of that Agreement. Moorco
subsequently filed suit against the Company in the United States
District Court for the Southern District of Texas (the "Texas Action")
seeking damages of $7.3 million in respect of the termination of the
Moorco merger agreement, and seeking an injunction to prevent the
Company from selling certain of its subsidiaries to Bailey, which
FISCHER & PORTER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31 MARCH 1994
(continued)
sales are conditions to Bailey's obligation to close on the merger
agreement between Bailey and the Company.
In connection with the sale, the Company will incur a fee of
approximately $2.8 million for services of its investment banker
which will be paid at closing of the transaction. The estimated fee
has not been reflected in the 31 March 1994 consolidated financial
statements.
The Company has agreements with nine executives and certain other key
employees which provide for separation pay and other related expenses if
there is a change in control of the Company and the individual is
terminated or duties are changed materially within two years after
such a change. If all parties were compensated under these
arrangements, payments would be required in the range of $5.0 to $5.5
million.
4. INCOME TAXES
Pretax income and the related income tax provision can be summarized as
follows:
(Thousands of
Dollars)
Three Months
Ended
31 March
1994 1993
Income (loss) before provision for income taxes
U. S. $ (1,318) $ (13)
International (733) 546
Total $ (2,051) $ 533
Income tax provision
U. S. $ 22 $ (213)
International 271 672
Total $ 293 $ 459
Reconciliation
Expected U. S. Federal
provision (benefit) $ (697) $ 181
Adoption of FASB #109 - (94)
Foreign dividend tax 53 88
Alternative minimum tax 22 37
Absence of U. S. tax
benefit on operating loss 448 -
Adjustment of U.S. tax accrual - (246)
Absence of full foreign tax
benefit on operating losses 487 475
Difference between U.S.
and foreign tax rates (20) 17
Other - 1
Actual tax provision $ 293 $ 459
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED 31 MARCH 1994
MATERIAL CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Reference is made to Note 3)
Sales in the first quarter of 1994 were $5.5 million less than the sales
reported for the same period of 1993. Sales in the United States increased $2.8
million but decreased by $8.3 million for the International Units; at comparable
currency exchange rates, the decrease in International sales would have been
approximately $6.7 million. The increase in sales in the United States was
mainly in the instrument business. Sales in International decreased, compared
to last year, mainly due to an exceptionally high level of DCI System SixTM
distributed control system sales in the first quarter of 1993. Income from
operations declined approximately $2.7 million from the prior year level. In
addition to the negative effect on income from operations due to lower sales,
the Company incurred approximately $500,000 of unusual administrative expenses
for various fees (banking, legal, accounting, etc.) in connection with the
sale of the Company. Also, approximately $100,000 of additional expenses
resulted from the impact on stock appreciation rights of increased market
value of the Company's common stock.
Orders received in the first quarter of 1994 were $54.5 million, or 1.8% less
than the $55.5 million reported in the first quarter of 1993. Orders received
in the fourth quarter of 1993 were also $55.5 million.
At 31 March 1994, the available credit under the U.S. revolver was $13.2 million
of which $9.4 million was outstanding; at 13 May 1994, the available credit was
$13.0 million and the amount outstanding was $11.0 million.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Refer to Note 3 of the Notes to the Consolidated Financial Statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits to be filed:
None.
(b) Reports on Form 8-K:
In a report filed on Form 8-K dated 31 March 1994, the Company reported
that a definitive merger agreement was reached with Moorco International
Inc. (Moorco). The agreement provided for Moorco to acquire the Company
in an all cash merger at a price, on a fully-diluted basis, of
approximately $150.0 million, or $23.25 per share. The transaction was
conditional upon, among other things, the approval of the Company's
shareholders.
In a report filed on Form 8-K dated 21 April 1994, the Company reported
the termination of the Moorco agreement and the signing of a definitive
merger agreement with Elsag Bailey Process Automation N.V. (Bailey).
The agreement provides for Bailey to acquire the Company in an all cash
merger at a price, on a fully-diluted basis, of $24.25 per share. The
transaction is conditional upon, among other things, the approval of
the Company's shareholders.
Refer to Note 3 of the Notes to the Consolidated Financial Statements.
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.
FISCHER & PORTER COMPANY
(Registrant)
Date: 16 May 1994 By: LAURENCE P. FINNEGAN, JR.
Laurence P. Finnegan, Jr.
Senior Vice President - Finance
and Treasurer
(Chief Financial Officer)
By: NATHAN T. SCHELLE
Nathan T. Schelle
Vice President-Controller
(Chief Accounting Officer)
