SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q/A
Amended Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended October 28, 1994
Commission File No. 1-5590
Fluke Corporation
(Exact name of registrant as specified in its charter)
Washington
(State of incorporation of organization)
91 - 0606624
(I.R.S. Employer Identification No.)
6920 Seaway Boulevard Everett, Washington 98203
(Address of principal executive offices) (Zip Code)
(206) 347-6100
(Registrant's telephone number, including area code)
(Former name if changed since last report)
(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
As of November 25, 1994, there were 7,755,566 shares of $0.25 par value
common stock outstanding.
<PAGE>
INDEX
Fluke Corporation
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of October 28, 1994 and April 29, 1994
Consolidated Statements of Income for the quarter and two quarters
ended October 28, 1994 and October 29, 1993
Consolidated Statements of Cash Flows for the two quarters ended October 28,
1994 and October 29, 1993
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Computation of Earnings Per Share
(b) Reports on Form 8-K
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
CONSOLIDATED BALANCE SHEETS
Fluke Corporation and Subsidiaries
unaudited (in thousands except shares)
<CAPTION>
10/28/94 4/29/94
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 9,935 $ 6,520
Accounts receivable, less allowances 70,273 70,510
Inventories 54,527 54,365
Deferred income taxes 13,237 13,109
Prepaid expenses and other current assets 10,702 9,914
Total Current Assets 158,674 154,417
Property, Plant and Equipment
Land 5,980 6,181
Buildings 46,741 46,661
Machinery and equipment 99,047 93,406
Construction in progress 4,046 2,440
Less accumulated depreciation (93,359) (88,412)
Net Property, Plant and Equipment 62,455 60,276
Goodwill and Other Intangibles 25,809 24,995
Other Assets 7,256 5,913
Total Assets $ 254,194 $ 245,602
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 15,008 $ 19,413
Accrued liabilities 33,231 35,454
Accrued liabilities related to restructuring 119 676
Income taxes payable 965 665
Current maturities of long-term obligations 225 235
Total Current Liabilities 49,548 56,443
Long-term Obligations 25,513 14,712
Deferred Income Taxes 9,404 9,152
Other Liabilities 8,482 7,466
Total Liabilities 92,947 87,773
Stockholders' Equity
Common stock 2,202 2,202
Additional paid-in capital 81,012 81,081
Retained earnings 99,946 96,553
Less cost of repurchased and non-vested shares (24,228) (19,904)
Cumulative translation adjustment 2,315 (2,103)
Total Stockholders' Equity 161,247 157,829
Total Liabilities and Stockholders' Equity $ 254,194 $ 245,602
Total Shares Outstanding 7,755,626 7,898,690
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Fluke Corporation and Subsidiaries
unaudited (in thousands except shares and per share amounts)
<CAPTION>
QUARTER ENDED TWO QUARTERS ENDED
10/28/94 10/29/93 10/28/94 10/29/93
<S> <C> <C> <C> <C>
Revenues $ 91,569 $ 89,554 $177,569 $ 174,241
Cost of Goods Sold 45,364 46,370 88,542 90,662
Gross Margin 46,205 42,824 89,027 83,579
Operating Expenses
Marketing and administrative 31,886 29,399 61,847 58,857
Research and development 9,364 9,149 18,481 17,756
Total Operating Expenses 41,250 38,548 80,328 76,613
Operating Income 4,955 4,276 8,699 6,966
Non-Operating Expenses (Income)
Interest Expense 406 389 721 814
Other (550) 848 (994) 842
Total Non-Operating
Expenses (Income) (144) 1,237 (273) 1,656
Income Before Income Taxes 5,099 3,039 8,972 5,310
Provision for Income Taxes 1,937 1,140 3,409 1,991
Net Income 3,162 1,899 5,563 3,319
Earnings Per Share $ 0.40 $ 0.24 $ 0.69 $ 0.41
Net Income as a
Percentage of Revenues 3.45% 2.12% 3.13% 1.90%
Average Shares and Share
Equivalents Outstanding 7,981,902 8,029,200 8,022,837 8,021,736
Cash Dividends Per Share $ 0.14 $ 0.13 $ 0.28 $ 0.26
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fluke Corporation and Subsidiaries
unaudited (in thousands)
<CAPTION>
TWO QUARTERS ENDED
10/28/94 10/29/93
<S> <C> <C>
Operating Activities
Net Income $ 5,563 $ 3,319
Items not affecting cash:
Depreciation and amortization 7,729 8,778
Deferred income tax 220 121
Stock awards 88 217
Loss (gain) on disposal of property, plant
and equipment (518) 41
Net change in:
Accounts receivable 997 (36,607)
Inventories 407 8,046
Prepaid expenses (681) 2,434
Accounts payable (4,676) 8,576
Accrued liabilities (2,778) 5,495
Accrued liabilities related to restructuring (557) (2,255)
Accrued Pension 696 (565)
Income taxes payable 304 (36)
Other assets and liabilities 223 781
Net Cash Provided (Used) by Operating Activities 7,017 (1,655)
Investing Activities
Additions to property, plant and equipment (9,627) (4,824)
Proceeds from disposal of property, plant
and equipment 1,420 186
Purchase of Philips test and measurement business --- (23,600)
Net Cash Provided (Used) By Investing Activities (8,207) (28,238)
Financing Activities
Proceeds from short-term debt --- 1,390
Payments on short-term debt --- (935)
Proceeds from long-term debt 16,401 31,960
Payments on long-term obligations (5,891) (16,902)
Cash dividends paid (2,112) (1,919)
Repurchase of common stock (4,579) ---
Other financing activities, net 116 7
Net Cash Provided (Used) By Financing
Activities 3,935 13,601
Effect of Foreign Currency Exchange Rates on
Cash and Cash Equivalents 670 (167)
Net Increase (Decrease) In Cash and Cash
Equivalents 3,415 (16,459)
Cash and Cash Equivalents at Beginning of Year 6,520 24,415
Cash and Cash Equivalents at End of Quarter $ 9,935 $ 7,956
Supplemental Cash Flow Information
Income Taxes Paid $ 2,064 $ 1,281
Interest Paid $ 722 $ 814
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fluke Corporation and Subsidiaries
1. The accompanying unaudited Consolidated Financial Statements do not
purport to be full presentations and do not include all information and
disclosures required for fair presentation by generally accepted
accounting principles, but rather include only that information required
by the instructions to Form 10-Q. However, in the opinion of
management, the accompanying unaudited Consolidated Financial Statements
contain all adjustments (consisting of normal recurring accruals)
considered necessary to present fairly the Consolidated Balance Sheets
of the Company at October 28, 1994 and April 29, 1994 and the
Consolidated Statements of Income for the quarter and two quarters ended
October 28, 1994 and October 29, 1993 and the Statements of Cash Flows
for the two quarters ended October 28, 1994 and October 29, 1993.
2. The results of operations for the quarters ended October 28, 1994
and October 29, 1993 are not necessarily indicative of the results to be
expected for the full year.
3. The Company paid a $0.14 per share quarterly cash dividend on August
19, 1994 to stockholders of record on July 29, 1994. On September 15,
1994, the Company's Board of Directors declared a $ 0.14 per share
quarterly cash dividend for stockholders of record on October 28, 1994
which was paid on November 18, 1994.
4. The components of inventories are as follows:
<TABLE>
(in thousands)
<CAPTION>
October 28, 1994 April 29, 1994
<S> <C> <C>
Finished Goods $17,664 $17,904
Work-in-Process 10,274 10,390
Purchased Parts and Materials 26,589 26,071
Total Inventories $54,527 $54,365
</TABLE>
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Fluke Corporation and Subsidiaries
RESULTS OF OPERATIONS
Quarter Ended October 28, 1994 Versus October 29, 1993
The Company sells products and incurs expenses in many currencies. In
general, the U.S. dollar was weaker against all the major currencies
compared to the same quarter a year ago. On a weighted average, the
foreign currencies, in which the Company has transactions, were
approximately 6 percent stronger than the same quarter a year ago. The
impact of the change in currency rates on the financial results is
discussed below.
Revenues of $91.6 million in the quarter ended October 28, 1994, were
2.3 percent higher than the revenues of $89.6 million in the quarter
ended October 29, 1993. Revenues in the United States declined 1.8
percent and international revenues increased 6.1 percent. The order
volume decline in the first quarter, which was discussed in the Form 10Q
for the first quarter, contributed to the lower revenues in the second
quarter in the United States.
The increase in international revenues was generated primarily in Asia
and Latin America. Countries that had significant revenue growth
included Korea, Mexico, and Taiwan. Although the business conditions
within Europe have improved somewhat from a year ago as indicated by the
increase in order levels, revenues in Europe declined 2.0 percent. In
the local currencies, revenues in Europe actually declined by more than
the 2.0 percent since the stronger European currencies versus the U.S.
dollar helped the European revenues when converted to U.S. dollars.
Cost of goods sold declined 2.9 percent in the quarter ended October 28,
1994 from the quarter ended October 29, 1993. The decline in cost of
goods sold from last year was partially due to the cost of inventory
sold in the second quarter of last year which was related to the
acquisition of the test and measurement business of Philips Electronics
N.V. (Philips). This inventory was carried at a higher acquisition
value, as compared to current cost, and the majority of the inventory
was shipped during fiscal 1994. In addition, factory operating costs
were favorably affected by several process improvement initiatives by
factory management, product mix sold and a refund of state sales and use
tax, which also had a small, favorable impact on operating expenses.
Operating expenses increased 7.0 percent in the quarter ended October
28, 1994 over the quarter ended October 29, 1993. The strengthened
currencies, mentioned above, had a negative impact on expenses. Of the
7.0 percent increase in operating expense, approximately 3 percent of
the increase was a result of the stronger currencies.
Marketing and administrative expense increased 8.5 percent. The
stronger European currencies caused approximately 3 percent of the
increase, while the rest resulted from operating issues. The increase
from operating activities was caused by several factors, none that had a
significant impact individually. These factors included additional
administrative expense in Europe, increased intellectual property costs,
and higher commissions to reps and distributors.
<PAGE>
Nonoperating expense (income) was a slight income amount in the quarter
ended October 28, 1994, compared to $1.2 million of expense in the
quarter ended October 29, 1993. This swing was caused primarily by
foreign currency losses a year ago, versus gains recorded this year and
secondarily by gains on the sale of excess buildings this year.
Two Quarters Ended October 28,1994 Versus Two Quarters Ended October 29,
1993
The currency impact for the two-quarter period was not as pronounced as
in the one quarter period, with the local currencies strengthening
approximately 2 percent against the U.S. dollar.
Revenues of $177.6 million were 1.9 percent higher than revenues of
$174.2 million a year ago. Revenues in the United States decreased 2.2
percent and international revenues increased 5.8 percent from a year
ago. Revenues in Europe were down less than 1 percent, while revenues
from intercontinental regions increased 23.3 percent.
Cost of goods sold decreased 2.3 percent in the two quarters ended
October 28, 1994 from the two quarters ended October 29, 1993 primarily
due to the same reasons mentioned above.
Operating expense increased 4.8 percent in the two quarters ended
October 28, 1994 over the two quarters ended October 29, 1993. In the
first quarter ended July 29, 1994, the Company received a $617,000
arbitration award and related interest of $170,000. Operating expenses
were reduced by the $617,000 arbitration award, while the interest
income reduced nonoperating expenses. The increase in operating
expense, after excluding the arbitration award, was caused by the
factors mentioned above, as well as increased research and development
in the first quarter of fiscal 1994.
Nonoperating expense (income) went from a $1.6 million expense in the
two quarters ended October 29, 1993, to a small income amount in the two
quarters ended October 28, 1994. The primary cause of this change was
foreign currency losses in fiscal 1994 versus gains recorded in fiscal
1995 and secondarily by gains on the sale of excess buildings this year.
LIQUIDITY AND CAPITAL RESOURCES
At October 28, 1994, $25.2 million of the Company's long term lines of
credit were outstanding compared to $14.3 million at April 29, 1994.
The Company made a stock purchase and had capital expenditures and
working capital requirements in the two quarters ended October 28, 1994
that required the additional borrowing. The Company does not
anticipate any significant borrowings over the remainder of the fiscal
year.
On June 24, 1994, the Company purchased 150,000 shares of common stock
from Philips for $4.5 million or $30.53 per share. The purchase of the
shares was made according to an agreement between the two companies
which allows Philips to sell a set number of shares over a defined
period. Under the agreement, the Company has the right to purchase any
shares Philips offers for sale or can allow them to be sold on the open
market under certain conditions. After the transaction, Philips owns
approximately 1.4 million shares.
<PAGE>
The Company made capital expenditures of $5.1 million in the quarter and
$9.6 million in the two quarters ended October 28, 1994 compared to $1.7
million in the quarter and $4.7 million in the two quarters ended
October 29, 1993. Increased investment in new manufacturing equipment
and computer systems for the new European operations are the causes of
the increase in capital expenditures.
The current ratio was 3.20 to 1 at October 28, 1994, 2.74 to 1 at April
29, 1994 and 2.84 to 1 at October 29, 1993.
The Company's exposure to foreign exchange currency fluctuations has
increased since the addition of operations in Europe resulting from the
purchase of the Philips test and measurement business on May 1, 1993.
The currencies of most of the countries in which the Company operates
have strengthened during fiscal 1995. As mentioned above, this causes
foreign exchange gains to be recorded in the income statement. It also
causes the local currency assets to increase when stated in U.S.
dollars. Goodwill and intangible assets, which are primarily Dutch
guilder denominated, increased approximately $2.4 million as a result of
the change in the currency translation rate.
The Company has a program to hedge some of its foreign exchange exposure
using forward exchange contracts. The contracts can not be speculative
and are limited to actual currency risk. The Company does not currently
use any other form of derivatives in managing its financial risk.
<PAGE>
PART II. OTHER INFORMATION
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Fluke Corporation and Subsidiaries
At the Annual Meeting of Stockholders of the Company held on September
14, 1994, the stockholders voted to elect the following Directors to
serve terms as noted below:
DIRECTOR TOTAL VOTE TOTAL VOTE WITHHELD
FOR EACH DIRECTOR FROM EACH DIRECTOR
For three year terms expiring at the 1997 Annual Meeting:
John D. Durbin 5,988,088 25,330
John M. Fluke, Jr. 5,982,890 30,528
N. Stewart Rogers 5,988,288 25,130
Stephen C. Tumminello 5,959,257 54,161
Continuing Directors
J. Peter Bingham William G. Parzybok, Jr.
Philip M. Condit David S. Potter
David L. Fluke James E. Warjone
Robert S. Miller, Jr. George M. Winn
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Computation of Earnings Per Share
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for
which this report is filed.
<PAGE>
SIGNATURES
Fluke Corporation and Subsidiaries
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.
FLUKE CORPORATION
Registrant
December 22, 1994 /s/John R. Smith
Date John R. Smith
Vice President, Treasurer
Chief Accounting Officer
<PAGE>
<TABLE>
Exhibit 11 COMPUTATION OF EARNINGS PER SHARE
Fluke Corporation and Subsidiaries
<CAPTION> QUARTER ENDED TWO QUARTERS ENDED
10/28/94 10/29/93 10/28/94 10/29/93
<C> <C> <C> <C>
<S>
Shares issued at beginning
of period 8,807,391 8,807,391 8,807,391 8,807,391
Less repurchased shares at
beginning of period (1,057,641) (927,202) (908,701) (2,464,936)
Shares outstanding at
beginning of period 7,749,750 7,880,189 7,898,690 6,342,455
Issuance of shares for
acquisition, weighted average --- --- --- 1,000,000
Conversion of preferred shares --- --- --- 538,144
Repurchase of common shares
weighted average --- --- (103,846) ---
Net issuance of shares
under employee stock plans,
weighted average 2,464 (234) 1,948 (440)
Weighted average common
shares outstanding 7,752,214 7,879,955 7,796,792 7,880,159
Assumed exercise of stock
options, weighted average
of incremental shares 229,688 149,245 226,045 141,577
Average shares and
share equivalents
outstanding 7,981,902 8,029,200 8,022,837 8,021,736
Earnings per share $ 0.40 $ 0.24 $ 0.69 $ 0.41
Net Income $3,162,000 $1,899,000 $5,563,000 $3,319,000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and Income Statement and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> APR-28-1995<F1>
<PERIOD-START> JUL-29-1994
<PERIOD-END> OCT-28-1994
<CASH> 9,935
<SECURITIES> 0
<RECEIVABLES> 71,111
<ALLOWANCES> (838)
<INVENTORY> 54,527
<CURRENT-ASSETS> 158,674
<PP&E> 155,814
<DEPRECIATION> (93,359)
<TOTAL-ASSETS> 254,194
<CURRENT-LIABILITIES> 49,548
<BONDS> 25,513
<COMMON> 2,202
0
0
<OTHER-SE> 159,045
<TOTAL-LIABILITY-AND-EQUITY> 254,194
<SALES> 91,569
<TOTAL-REVENUES> 91,569
<CGS> 45,364
<TOTAL-COSTS> 41,250
<OTHER-EXPENSES> (144)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 406
<INCOME-PRETAX> 5,099
<INCOME-TAX> 1,937
<INCOME-CONTINUING> 3,162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,162
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
<FN>
<F1>All amounts in this column are in thousands except per share amounts.
</FN>
</TABLE>
