FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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 0-684
GOULDS PUMPS, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 15-0321120
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
300 WillowBrook Office Park, Fairport, New York 14450
(Address of principal executive offices)
(Zip Code)
(716) 387-6600
(Registrant's telephone number, including area code)
(Former name, former 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.
As of July 31, 1995, 21,241,816 shares of $1 par value common
stock were outstanding.
<F50>
GOULDS PUMPS, INCORPORATED
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994............... 3
Condensed Consolidated Statements of Earnings -
Three Months Ended June 30, 1995 and 1994
Six Months Ended June 30, 1995 and 1994........... 4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 1995 and 1994........... 5
Notes to Condensed Consolidated Financial
Statements........................................ 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 9-14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................. 15
Item 6. Exhibits and Reports on Form 8-K..................15-16
Signature......................................... 17
<F50>
Condensed Consolidated Balance Sheets
Goulds Pumps, Incorporated
June 30, December 31,
1995 1994
(In thousands) (Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,485 $ 7,374
Receivables - net 147,643 113,777
Inventories 131,382 111,508
Deferred tax asset 13,850 12,494
Prepaid expenses and other current assets 15,261 10,898
Total current assets 315,621 256,051
Property, plant and equipment - net 168,173 152,789
Investment in Vogel -- 17,800
Investments in affiliates 1,170 1,178
Other investments 5,935 6,498
Deferred tax asset 9,042 8,125
Goodwill - net 30,549 1,634
Other assets 14,173 13,166
$544,663 $457,241
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $ 41,559 $ 10,418
Current portion of long-term debt 16,164 24,886
Trade payables 58,513 47,382
Compensation and commissions 20,333 17,552
Income taxes payable 1,404 266
Pension 3,334 2,228
Progress payments 9,371 3,170
Warranty reserves 6,093 3,937
Dividends payable 4,248 4,239
Deferred tax liability 322 391
Restructuring accrual 2,274 3,224
Other 20,617 21,510
Total current liabilities 184,232 139,203
Long-term debt 90,634 53,756
Pension 19,957 16,992
Other postretirement benefit obligation 51,158 51,681
Deferred tax liability and other 4,576 4,322
SHAREHOLDERS' EQUITY:
Common stock - $1.00 par value; authorized
90,000,000; issued and outstanding
21,241,816 and 21,193,054 shares,
respectively 21,242 21,193
Additional paid-in capital 58,421 57,622
Retained earnings 126,887 121,671
Cumulative translation adjustments and other (12,444) (9,199)
Total shareholders' equity 194,106 191,287
$544,663 $457,241
See Accompanying Notes to Condensed Consolidated Financial Statements.
<F50>
Condensed Consolidated Statements of Earnings (Unaudited)
Goulds Pumps, Incorporated
(In Thousands Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Net sales $180,693 $150,128 $340,745 $286,773
Cost and expenses:
Cost of sales 128,871 105,839 243,432 204,636
Selling, general and
administrative expenses 33,804 30,925 66,958 58,459
Research and development
expenses 2,062 2,822 4,092 5,057
Earnings from investments
and affiliates 17 (227) 15 (702)
Interest expense 3,078 1,667 5,196 3,129
Interest income (425) (349) (1,071) (773)
Other expense - net 131 117 329 1,156
Earnings before income taxes 13,155 9,334 21,794 15,811
Income taxes 4,881 3,837 8,086 6,497
Net earnings $ 8,274 $ 5,497 $ 13,708 $ 9,314
Net earnings per
common share $ .39 $ .26 $ .65 $ .44
Dividends per
common share $ .20 $ .20 $ .40 $ .40
Weighted average shares
outstanding (in thousands) 21,233 21,174 21,220 21,169
See Accompanying Notes to Condensed Consolidated Financial Statements.
<F50>
Condensed Consolidated Statements of Cash Flows (Unaudited)
Goulds Pumps, Incorporated
Six Months Ended June 30,
(In Thousands) 1995 1994
OPERATING ACTIVITIES:
Net earnings $13,708 $ 9,314
Adjustments to reconcile net earnings to net
cash provided by operations:
Depreciation 13,454 12,648
Amortization 644 616
Earnings from affiliates 15 (702)
Changes in assets and liabilities, net of
effects from acquisition:
Decrease in deferred tax liability (59) (743)
(Increase) decrease in deferred tax asset (1,645) 276
Increase in receivables-net (23,887) (16,573)
Increase in inventories (2,407) (13,024)
Increase in trade payables, accrued
expenses and other 1,375 5,359
Other - net 617 4,677
Net cash provided by operating activities 1,815 1,848
INVESTING ACTIVITIES:
Capital additions (12,980) (9,066)
Purchases of other assets (2,543) (2,873)
Other - net 87 5
Net cash applied to investing activities (15,436) (11,934)
FINANCING ACTIVITIES:
Proceeds from long-term debt 31,566 2,213
Payments on long-term debt (11,302) (465)
Increase in short-term borrowings 3,403 21,083
Proceeds from issuance of common stock 848 323
Dividends paid (8,483) (8,466)
Net cash provided by financing activities 16,032 14,688
Effect of exchange rate changes on cash (2,300) (36)
Increase in cash and cash equivalents 111 4,566
Cash and cash equivalents:
Beginning of period 7,374 7,153
End of period $ 7,485 $11,719
See Accompanying Notes to Condensed Consolidated Financial Statements.
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 1
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments necessary to fairly present the Company's
financial position as of June 30, 1995 and the results of
operations for the three and six month periods ended June 30,
1995 and 1994 and cash flows for the six month periods ended
June 30, 1995 and 1994. The results of operations for the six
month period ended June 30, 1995 are not necessarily
indicative of the results to be expected for the entire year
of 1995.
The accounting policies followed by the Company are set forth
in Note 1 to the Company's consolidated financial statements
in the 1994 Goulds Pumps, Incorporated Annual Report on Form
10-K, which is incorporated by reference.
2. During December 1994, which was subsequent to the 1994 year-
end of the Company's subsidiary Goulds Pumps Europe, B.V.
(GPE), all of the outstanding common stock of Pumpenfabrik
Ernst Vogel AG (Vogel) was acquired for $17.8 million.
Although this acquisition occurred subsequent to GPE's year-
end, the investment in Vogel was recorded as a line item on
the consolidated balance sheet at December 31, 1994 since the
borrowing for the acquisition had been completed, together
with the corresponding advance to the Company's subsidiary.
In 1995, the financial statements of Vogel are consolidated in
the Company's financial statements presented herein under the
purchase accounting method. For reporting purposes, Vogel has
an October 31 year-end, like that of its direct parent, GPE.
The excess of the allocated purchase price over the fair value
of net tangible assets acquired was recorded as goodwill in
the amount of $25.7 million and is being amortized over
periods of 30 years or less. In the accompanying consolidated
financial statements, the allocation of the purchase price to
the acquired assets and liabilities of Vogel is preliminary
and may change as various studies, evaluations, and appraisals
are completed.
The Company's pro forma unaudited results of operations for
the six months ended June 30, 1994, assuming acquisition of
Vogel had occurred as of the beginning of the year, would have
increased net sales by approximately $32.6 million and
decreased net earnings per share by approximately $.04.
Adjustments made in arriving at preliminary pro forma
unaudited results of operations included additional interest
expense of $.4 million related to the $17.8 million of
acquisition debt at 4.5% for the quarter, related income tax
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 1
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
adjustments and amortization of goodwill of $.3 million. The
unaudited pro forma results of operations are not necessarily
indicative of results that would have been attained had the
Vogel business been acquired at the beginning of 1994, nor are
they consistent with management's expectation of future
performance.
3. In the fourth quarter of 1994, the Company executed a
restructuring plan to align its continuing global operations
with management's long-term objectives. As a result, a
restructuring charge of $3.5 million pre-tax and a related
liability for such costs were recorded in the Company's
consolidated financial statements in the fourth quarter. The
restructuring plan included the downsizing of the Company's
California, Netherlands, and Mexican based operations, and the
consolidation of sales offices, PRO Service Centers, and other
Company facilities. As a result, the related cost to exit
owned and leased facilities was $1.1 million. The
restructuring included the termination of 149 employees from
manufacturing, selling, and general and administrative
departments. The related termination benefits included in the
restructuring charge were $2.4 million.
The balance in the restructuring reserve at December 31, 1994
was $3.2 million. The following charges against the
restructuring reserve were recorded in the first half of 1995
relating to the following components: costs to exit owned and
leased facilities were $.6 million; costs of termination
benefits were $.4 million; and offsetting translation impacts
were $.1 million. The Company believes the June 30, 1995
reserve balance of $2.3 million is adequate to complete the
restructuring plan. The restructuring plan is currently
anticipated to result in savings in the range of $2.2 million
pre-tax in 1995 with annual savings estimated to be $3.3
million pre-tax in 1996 and beyond.
4. Supplemental Schedule of Cash Flow Information (in thousands):
For the six months ended
June 30, 1995 June 30, 1994
Interest paid $ 4,528 $2,976
Income taxes paid $10,299 $3,988
5. Net earnings per share of common stock are based upon the
weighted average number of shares of common stock outstanding
during the period. No effect has been given to options
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 1
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
outstanding under the Company's Stock Option Plans as no
significant dilutive effect would result from the exercise of these
options. See Exhibit XI on page 22 of 23.
6. Inventories were as follows (in thousands):
June 30, December 31,
1995 1994
(Unaudited) (Audited)
Raw Materials $ 42,071 $ 40,608
Work-in-Process 53,588 39,895
Finished Goods 67,001 61,895
Inventories Valued at FIFO 162,660 142,398
LIFO Allowance (31,278) (30,890)
Inventories Less LIFO Allowance $131,382 $111,508
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company's second quarter 1995 results reflected the
highest quarterly orders and sales levels in its history with
increases of 28.4% and 20.4% respectively over the second quarter
of 1994. Earnings per share rose 50.0% over second quarter 1994
results.
Second quarter 1995 net sales were a record $180.7 million,
compared with $150.1 million for the second quarter of 1994.
Without the effect of the Company's latest acquisition, Vogel,
Austria's leading pump manufacturer, sales would have increased
9.8% and net earnings would have increased 49.3% for the same
period. Second quarter orders in 1995 were $187.3 million compared
with 1994 second quarter orders of $145.9 million. Without Vogel's
second quarter orders, orders would have increased 16.9% compared
to the second quarter of 1994. Backlog at June 30, 1995 was a
record $151.7 million, 66.8% higher than backlog of $90.9 million
at June 30, 1994. Without Vogel's backlog of $28.6 million, the
increase would have been 35.3%.
For the first six months of the year, orders of $351.2 million
increased 24.7%; sales of $340.7 million increased 18.8% and net
earnings of $13.7 million increased 47.2% over the first half of
1994. Without Vogel, orders would have increased 15.1%; sales
would have increased 9.3% and net income would have increased
48.7%.
On July 29, 1995, members of the United Steelworkers of
America Local Union #3298 voted to ratify new four-year contracts
with the Company by a six-to-one margin. The new agreements, which
took effect August 1, cover approximately 800 hourly employees at
the Company's Engineered Products and Water Systems plants in
Seneca Falls, New York. The current contract was due to expire
November 10, 1995. For the first time in the Company's history,
the different business operating needs of the Industrial Products
and Water Technologies segments have been recognized by the
establishment of two separate collective bargaining agreements.
Written into the new agreements are important commitments by both
the Union and the Company to continue working together to improve
efficiency, quality of work life and employee productivity through
methods changes and innovative work practices in the two Seneca
Falls plants. These cooperative approaches will provide more
flexibility in moving toward cellular manufacturing and focused
factories. The contracts also include a number of other changes
which will yield productivity gains, including how standards are
set for incentive compensation. The settlements call for wage
increases on base pay only, excluding incentive pay, of 3% in each
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
of the first three years of the contracts and 3.5% in the last
year, increased pension benefits, and a no-layoff provision for
employees with six or more years of service. The contracts also
state that if the Company needs to expand or modify its current
Water Technologies manufacturing facility in Seneca Falls, it will
do so in Seneca County, New York.
In July 1995, Michael T. Tomaino joined the Company as Vice
President, General Counsel and Secretary, assuming the
responsibilities of Eugene B. Bradshaw who will be retiring later
this year.
On August 2, 1995, John Morphy, Group Vice President -
Industrial Products, notified the Company of his intention to
resign effective August 31, 1995. Until a successor is named,
Thomas C. McDermott, Chairman and Chief Executive Officer, will
assume overall responsibility for the Company's Industrial Products
sector.
The Company expects the continuation of broad-based strength
in its core markets through the remainder of 1995. Management
remains focused on its strategic imperatives and continues to
believe that current actions will lead to stronger performance for
the remainder of 1995 compared with last year.
Results of Operations
The increase in sales of $54.0 million in the first half of
1995 compared with the first six months of 1994 is composed of an
$11.6 million or a 7.2% increase in Industrial Products sector
sales and a $42.4 million or 33.4% increase in Water Technologies
sector sales. Without Vogel sales, the Industrial Products sales
increase would have been 1.0% over 1994. This increase included
the strong shipments performance of the PRO Shops and Goulds Pumps
Canada which reflected the resurgence of the Canadian economy and
growth in the pulp and paper core market. Within the sector, the
Engineered Products manufacturing facility, located in Seneca
Falls, was impacted by production issues and the Vertical Products
facility in California had a difficult quarter with lower sales
than 1994, due to delays in customer acceptance of two large
shipments and temporary production scheduling matters. Both are
expected to increase their output in the third and fourth quarters
of 1995 and beyond as the implementation of a comprehensive
manufacturing strategy based primarily on the focused factory
concept progresses and the other manufacturing issues are resolved.
If Vogel's results were excluded, the Water Technologies
sales increase would have been 19.7% compared with 1994's first
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
half. Leading the sector's increases was WTG-Europe (WTG-E) which
achieved sales growth of 22.9% on a translated basis.
Second quarter sales results are discussed in the "Overview"
section of Management's Discussion and Analysis above.
Gross margin as a percentage of sales remained relatively
constant at 28.6% for the first six months of 1995 compared with
the first half of 1994. Excluding Vogel, the Industrial Products
sector gross profit percentage increased to 28.3% in 1995 from
27.8% for the first half of 1994, primarily due to margin
improvements at the PRO Shops. For the first half of 1995,
excluding Vogel, the Water Technologies sector's gross profit
percentage decreased to 29.0% from 29.7% in the first half of 1994.
Gross margins were impacted by higher raw material costs in Europe
due to the recent weakness of the Italian lira.
Gross margin as a percentage decreased to 28.7% in the second
quarter of 1995 compared with 29.5% for the second quarter of 1994.
Excluding Vogel, the Industrial Products sector gross profit
percentage decreased to 27.6% in 1995 from 28.3% for the second
quarter of 1994, primarily due to margin declines at the Vertical
Product Division. For the second quarter of 1995, excluding Vogel,
the Water Technologies sector's gross profit percentage decreased
to 29.2% from 31.0% in the second quarter of 1994. Gross margins
again were impacted by higher raw material costs in Europe due to
the recent weakness of the Italian lira.
As a percentage of sales, SG&A expenses were 19.7% and 18.7%
for the first six months and second quarter of 1995 respectively,
compared with 20.4% and 20.6% for the same periods a year ago,
reflecting the reversal of the remaining legal reserve of $.8
million in the second quarter for litigation related to submersible
water pumps recorded. (See litigation discussion in "Legal
Proceedings", below.) SG&A expenses in the first half and second
quarter of 1994 also reflected the negative impact of a non-
recurring $1.5 million management restructuring charge recorded in
June, 1994.
Research and development (R&D) expenses decreased 19.1% and
26.9% compared with the first six months and second quarter,
respectively, of 1994. The higher level of R&D expenses in 1994
relates primarily to Environamics which did not begin shipping
product until late 1994. In 1995, the Company anticipates that it
will continue to invest in new product development, as well as in
enhancements to existing products, but at a slightly lower
percentage of sales than in 1994 due to the reduction in R&D
expense at Environamics.
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Earnings from affiliates decreased $.7 million and $.2 million
for the first half and second quarter of 1995 compared with the
same periods in 1994. This decrease is due primarily to the shift
in control of Oil Dynamics, Inc. (ODI), formerly a 50%-owned joint
venture, to Franklin Electric Co. in late 1994. In 1995, the
Company's investment in ODI, currently at 3%, is recorded under the
"cost method" of accounting and therefore ODI's results are not
reflected in the Company's financial statements.
Interest expense increased $2.1 million and $1.4 million in
the first six months and second quarter, respectively, of 1995
compared with the first half and second quarter 1994. These
increases were primarily accounted for by the bank and capital
lease debt of Vogel assumed in connection with the acquisition.
Interest income increased $.3 million for the first six months of
1995 over the same period in 1994 primarily due to Vogel's impact
on reported results.
Other expense decreased $.8 million for the first six months
of 1995 compared with the first half of 1994. This decrease is due
primarily to the May 1994 devaluation of the Venezuelan bolivar
which increased 1994 Other expense by $.6 million.
The provision for income taxes represents 37.1% and 41.1% of
earnings before income taxes in the first half of 1995 and 1994,
respectively, and the second quarter of both years. The higher tax
rate in 1994 was largely due to the negative tax impact associated
with adjustments for Mexican accounting irregularities recorded in
the first quarter of 1994.
Liquidity and Capital Resources
As reflected on the Condensed Consolidated Statements of Cash
Flows, $16.0 million of cash generated by net financing activities
and $1.8 millon of cash generated from operating activities
combined with a $2.3 million negative translation effect were
utilized to fund $15.4 million of net investing activities while
increasing cash and cash equivalents by $.1 million.
Significant items impacting cash flow from operating
activities (net of the effects of Vogel's opening balance sheet) in
1995 include a $23.9 million increase in receivables-net due to the
high level of second quarter shipments, and a $2.4 million increase
in inventories primarily at WTG-E, to support its expanded European
sales presence and at EPD which is currently experiencing
production difficulties.
In the first six months of 1995, capital additions were $13.0
million. Significant projects included equipment and building
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
additions, primarily at WTG-E. The Company expects to spend
approximately $30 million in total capital expenditures for the
year.
The Company expects that debt levels by the end of 1995 will
be higher than those at December 31, 1994, due primarily to the
bank and capital lease debt assumed in connection with the
acquisition of Vogel. The Company believes cash from operations
and available credit facilities are sufficient to meet its
liquidity needs during 1995.
Cumulative translation adjustments on the accompanying
consolidated balance sheet at June 30, 1995 were $12.4 million
compared to $9.2 million at December 31, 1994, reflecting the
weakening of the Italian lira and the Mexican peso against the U.S.
dollar since the fourth quarter of 1994. Future currency
devaluations could occur at some of the Company's international
locations, including Venezuela. The Company evaluates on an on-
going basis methods to minimize the impact of devaluations on
operations and reported operating results.
In the fourth quarter of 1994, the Company executed a
restructuring plan to align its continuing global operations with
management's long-term objectives. See Note 3 to the consolidated
financial statement for a more detailed discussion.
Environmental Matters
The Company announced on June 15, 1995, the settlement of the
submersible water pump litigation in California. This settlement
resulted in the reversal of certain previously recorded legal fee
accruals for the vigorous defense of this litigation and such
reversal, amounting to approximately $.02 per share, is included in
these reported financial results. (See "Legal Proceedings",
below.)
The Company recorded a $2.0 million provision in the fourth
quarter of 1991 for estimated environmental costs to monitor and
remediate an inactive Company landfill site in Seneca Falls, New
York. At June 30, 1995, the remaining reserve was $1.8 million.
The remediation plan has been approved by the New York State DEC
and is expected to be completed in 1995 or early 1996. The Company
does not currently expect any additional material expenses in
future years associated with this site.
Apart from issues discussed above for which reserves have been
established in respect of environmental matters, the Company is not
currently aware of other environmental matters which would have any
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part I, Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
material impact on recurring costs, capital expenditures, or
mandated expenditures.
Orders and Backlog
For the second quarter of 1995, orders were a record $187.3
million, a 28.4% increase compared with orders for the second
quarter of 1994 of $145.9 million. Without Vogel, total second
quarter 1995 orders were $170.6 million or a 16.9% increase over
second quarter 1994 orders levels. The increase in orders,
excluding Vogel, is composed of a $12.0 million or 17.6% increase
in Water Technologies orders while Industrial Products orders
increased $12.7 million or 16.4% year over year.
For the first six months of 1995, orders of $351.2 million
represented a 24.7% increase over orders of $281.7 million for the
first half of 1994. Without Vogel, total first half 1995 orders
were $324.1 million or a 15.1% over first half 1994 orders levels.
The first half orders increase, excluding Vogel, is composed of a
$19.9 million or 15.4% increase in Water Technologies orders while
Industrial Products orders increased $22.5 million or 14.7% year
over year. Industrial orders increases reflect a continuation of
higher capital spending and higher operating activities in the
Company's core markets, especially the chemical and pulp and paper
markets. Order levels at all the sector's major segments showed
increases well into double digits for the first six months of 1995
compared to the first half of 1994. Water Technologies orders
reflected broad-based global strength with increases in orders
reported in the Asia-Pacific region, Latin America, and Europe
which complemented North American increases.
Backlog increased from $90.9 million at June 30, 1994 to a
record $151.7 million at June 30, 1995. Without Vogel's backlog of
$28.6 million, backlog would have been $123.1 million at June 30,
1995. Excluding Vogel, Industrial Products backlog increased $28.8
million while the Water Technologies backlog increased $3.4 million
from June 30, 1994 levels. Consolidated backlog at December 31,
1994 was $113.8 million.
<F50>
Goulds Pumps, Incorporated Form 10-Q
Part II, Item 1 and 6
PART II. Other Information
Item 1. Legal Proceedings
On June 15, 1995, the Company reached an agreement in
principle to settle two consolidated legal actions in the Superior
Court of California in which the legality of its past sales of
submersible water pumps made with brass components was challenged.
On July 21, 1995, a Consent Judgment incorporating the terms of the
agreement was approved by the Court and filed. Both lawsuits were
filed April 18, 1994; one by the California Attorney General and
the other by two environmental groups. The lawsuits alleged the
unlawful discharge of lead into sources of drinking water through
leaching from pumps manufactured by the Company and other
manufacturers, as well as failure to warn consumers of potential
exposure to lead.
The Consent Judgment, which provides that the Company does not
admit, and specifically denies, any violation of law, provides that
the Company will pay a total of $343,750, a substantial portion of
which is to cover attorneys' fees and costs incurred by some
plaintiffs.
Although the Company believes that it had never violated
California's Proposition 65 standards or other legal requirements,
the Company believes it was in the best interests of its
shareholders and customers to resolve these issues, rather than
continue lengthy and costly litigation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit XI (Earnings Per Share Computation)
(b) No reports on Form 8-K were filed for the three months
ended June 30, 1995.
<F50>
<TABLE>
EXHIBIT XI
GOULDS PUMPS, INCORPORATED AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <S> <C> <C> <C> <C>
a. Net earnings - as reported $ 8,274 $ 5,497 $13,708 $ 9,314
b. Decrease in interest expense (net of tax
benefit) based upon issuance of all shares
of common stock under Deferred Common
Stock Agreement $ -- $ -- $ -- $ --
c. Restated net earnings (a + b) $ 8,274 $ 5,497 $13,708 $ 9,314
d. Actual weighted average number of shares
outstanding 21,233 21,174 21,220 21,169
e. Primary earnings per share based on actual
average shares outstanding (c / d) (1) $ .39 $ .26 $ .65 $ .44
f. Shares exercisable under outstanding options 793 419 677 563
g. Proceeds assuming exercise of outstanding
options $16,273 $ 7,827 $13,572 $11,164
Reinvestment of proceeds under "Treasury Stock Method":
h. Average market price per share during each
period or market price at period-end
(whichever is higher) $ 23.41 $ 21.75 $ 22.51 $ 23.41
i. Shares to be acquired (g / h) 695 360 603 477
j. Net increase in outstanding shares relative
to stock options (f - i) 98 59 74 86
k. Adjusted weighted average shares outstanding
(d + j) 21,331 21,233 21,294 21,255
l. Earnings per share assuming exercise of
outstanding options (c / k) $ .39 $ .26 $ .64 $ .44
m. Dilutive (Anti-dilutive) effect on earnings
per share (e - l)(2) $ -- $ -- $ .01 $ --
<F54>
(1) Earnings per share information is based on weighted average number of shares of common
stock outstanding during each period. No effect has been given to options outstanding
under the Company's Stock Option Plans as no material dilutive effect would result from
the exercise of these options.
(2) This calculation is submitted in accordance with Securities Exchange Act of 1934
Release No. 9038 although not required by APB Opinion No. 15 since no material dilutive
effect would result from the exercise of these items.
</TABLE>
<F54>
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.
GOULDS PUMPS, INCORPORATED
(Registrant)
Date: August 11, 1995 /S/John P. Murphy
John P. Murphy
Vice President - Finance
(Mr. Murphy is the Chief
Financial Officer.)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> $7,485
<SECURITIES> 0
<RECEIVABLES> 147,643
<ALLOWANCES> 0
<INVENTORY> 131,382
<CURRENT-ASSETS> 315,621
<PP&E> 168,173
<DEPRECIATION> 0
<TOTAL-ASSETS> 544,663
<CURRENT-LIABILITIES> 148,232
<BONDS> 0
<COMMON> 21,242
0
0
<OTHER-SE> 172,864
<TOTAL-LIABILITY-AND-EQUITY> 544,663
<SALES> 340,745
<TOTAL-REVENUES> 340,745
<CGS> 243,432
<TOTAL-COSTS> 243,432
<OTHER-EXPENSES> 71,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,125
<INCOME-PRETAX> 21,794
<INCOME-TAX> 8,086
<INCOME-CONTINUING> 13,708
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,708
<EPS-PRIMARY> .65
<EPS-DILUTED> 0
</TABLE>
