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This report contains
13 pages.
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended January 27, 1996
Commission File Number 0-3947
HACH COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 42-0704420
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(State of other jurisdiction of (I.R.S.Employer Identification Number)
incorporation or organization)
5600 Lindbergh Drive, Loveland, CO 80537
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (970) 669-3050
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N/A
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(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 twelve months (or such shorter period that the
registrant was required to file such reports) and (2) has been subject to the
filing requirements for the past 90 days.
YES X NO
------------------------------------ ----------------------------------
At March 8, 1996 the registrant had 11,372,710 shares of its common stock
outstanding.
Index of Exhibits - See Page 10 .
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PART I - FINANCIAL INFORMATION
ITEM I - SUMMARIZED FINANCIAL STATEMENTS
Companies for which report is filed: Hach Company and Subsidiaries
The accompanying Consolidated Balance Sheet as of January 27, 1996, and the
Consolidated Statements of Income and Retained Earnings for the quarters and the
nine months ended January 27, 1996 and January 28, 1995 and the Consolidated
Statements of Cash Flows for the nine months ended January 27, 1996 and January
28, 1995 are unaudited; however, in the opinion of management all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation of the results of such periods have been made. The results of
operations for the quarters and nine months ended January 27, 1996 and January
28, 1995 are not necessarily indicative of the results of operations to be
expected for the full year.
The financial data included herein pursuant to Rule 10-01 of Regulation S-X
has been subjected to a review by Coopers & Lybrand LLP, the Registrant's
independent accountants.
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HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Thousands of Dollars Except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
------------- -----------------
1/27/96 1/28/95 1/27/96 1/28/95
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 27,999 $ 25,953 $ 83,904 $ 77,107
Cost of sales 14,262 12,776 42,047 37,904
-------------- ------------- ------------- -------------
Gross profit 13,737 13,177 41,857 39,203
Selling, general and administrative expense 8,087 8,157 24,606 23,899
Research and development expense 1,832 1,748 5,492 5,074
-------------- ------------- ------------- -------------
Income from operations 3,818 3,272 11,759 10,230
Interest income 385 230 999 442
Interest expense (2) 0 (5) (1)
-------------- ------------- ------------- -------------
Income before income taxes 4,201 3,502 12,753 10,671
Income tax expense 1,451 1,217 4,453 3,711
-------------- ------------- ------------- -------------
Net income 2,750 2,285 8,300 6,960
Retained earnings, beginning of period 62,838 54,853 58,425 51,090
Cash dividends (683) (454) (1,820) (1,366)
-------------- ------------- ------------- -------------
Retained earnings, end of period $ 64,905 $ 56,684 $ 64,905 $ 56,684
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Net income per common share $ 0.24 $ 0.20 $ 0.73 $ 0.61
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Dividends per common share $ 0.06 $ 0.04 $ 0.16 $ 0.12
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Weighted average shares outstanding 11,372,396 11,375,159 11,369,527 11,388,707
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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HACH COMPANY AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
January 27, 1996 April 30, 1995
---------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,534 $ 13,050
Marketable securities, held-to-maturity 10,748 3,925
Accounts receivable, less reserves
of $215 and $247, respectively 15,965 16,336
Inventories 13,202 11,731
Prepaid expenses and other
current assets 3,279 4,414
------------ ------------
Total current assets 50,728 49,456
Property, plant and equipment at cost:
Buildings and improvements 23,487 23,387
Machinery and equipment 42,591 42,305
------------ ------------
66,078 65,692
Less allowance for depreciation
and amortization 37,947 37,586
------------ ------------
28,131 28,106
Land 999 1,022
------------ ------------
Net property, plant and equipment 29,130 29,128
Marketable securities, held-to-maturity 10,842 4,385
Other assets 1,657 1,289
------------ ------------
Total Assets $ 92,357 $ 84,258
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Continued
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<PAGE>
HACH COMPANY AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
January 27, 1996 April 30, 1995
---------------- --------------
(Unaudited)
<S> <C> <C>
LIABILITIES
Current liabilities:
Accounts payable $ 3,515 $ 2,835
Accrued liabilities:
Compensation 1,027 381
Compensated absenses 3,228 3,487
Profit sharing 2,320 2,435
Other 1,790 1,474
---------- ----------
Total current liabilities 11,880 10,612
Deferred income taxes 2,131 2,070
Long term liabilities 1,325 248
---------- ----------
Total liablities 15,336 12,930
STOCKHOLDERS' EQUITY
Common stock, $1 par value; authorized
40,000,000 shares; issued 11,622,953 shares 11,623 11,623
Capital contributed in excess of par value 316 148
Retained earnings 64,905 58,425
Cumulative currency translation adjustment 1,972 2,405
---------- ----------
78,816 72,601
Less: Shares held in treasury at cost:
(250,243 at January 27, 1996 and
246,479 at April 30, 1995) (1,795) (1,273)
---------- ----------
Total Liabilities and Stockholders' Equity $ 92,357 $ 84,258
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
HACH COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
JANUARY 27, 1996 JANUARY 28, 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,300 $ 6,960
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation & amortization 4,487 4,352
Provision for deferred income taxes 61 20
Loss on disposal of equipment 122 7
Decrease in accounts receivable 371 317
(Increase) in inventories (1,521) (926)
(Increase) decrease in prepaid expenses & other assets 1,135 (1,231)
Increase (decrease) in accounts payable 680 (218)
Increase in accrued liabilities 1,665 548
---------- ---------
Net cash provided by operating activities 15,300 9,829
Cash flows from investing activities:
Proceeds from sale of property, plant & equipment 255 53
Capital expenditures (4,887) (4,288)
Purchases of investments held-to-maturity (18,949) (3,777)
Proceeds from the maturity of short-term investments 5,670 1,714
(Increase) in long-term assets (368) (35)
---------- ---------
Net cash used by investing activities (18,279) (6,333)
Cash flows from financing activities:
Dividends paid (1,820) (1,366)
Exercise of stock options 245 33
Purchases of treasury stock (599) (445)
---------- ---------
Net cash used by financing activities (2,174) (1,778)
Effects of exchange rate changes (363) 578
---------- ---------
Net increase in cash & cash equivalents (5,516) 2,296
Cash & cash equivalents at the beginning of the period 13,050 9,037
---------- ---------
Cash & cash equivalents at the end of the period $ 7,534 $ 11,333
---------- ---------
---------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $ 3,384 $ 4,689
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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HACH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated balance sheet at January 27, 1996, and the consolidated
statements of income and retained earnings, cash flows, and stockholders' equity
for the interim periods ended January 27, 1996 and January 28, 1995, have been
prepared by the Company, without audit. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the consolidated financial position, results of operations and
cash flows have been made. The results of operations for the interim periods
are not necessarily indicative of the operating results for a full year or of
future operations.
Certain amounts in the financial statements for April 30, 1995 have been
reclassified to conform with the current periods presentation.
2. INVENTORIES
The components of inventories are:
<TABLE>
<CAPTION>
(Thousands of Dollars)
January 27, 1996 April 30, 1995
<S> <C> <C>
Raw materials and purchased parts $ 2,806 $ 2,832
Work-in-process 1,950 1,785
Manufactured finished goods 7,158 6,635
Purchased for resale 1,288 479
------- -------
$13,202 $11,731
-------- --------
-------- --------
</TABLE>
3. INCOME TAXES
For both periods presented, the provision for income taxes is based upon an
expected annual effective income tax rate. The rates utilized for the quarter
ended January 27, 1996 and January 28, 1995 were 34.9% and 34.8% respectively.
4. NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of
common shares outstanding during the period. Common stock equivalents do not
have a dilutive effect on net income per common share.
5. RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" in
October of 1995. This statement, which is required to be adopted in fiscal year
1997, introduces a fair-value based method of accounting for stock-based
compensation. The Company has not yet adopted the statement, and has not yet
determined the impact it may have on the Company's financial statements or on
the financial statement disclosures, if adopted.
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Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
ANALYSIS OF FINANCIAL CONDITION:
There was no material change in the liquidity of the Company during the quarter
ended January 27, 1996. Cash and short-term investments increased $176,000
during the quarter to $18,282,000.
The Company monitors cash flow and capital expenditures in great detail as part
of its total budgeting process. Capital needs in the near future will be for
production equipment and computer and peripheral equipment to support
production, research and development, and administration.
In September, 1994, the Company's Board of Directors authorized the Company to
repurchase up to $2,000,000 in value of the Company's common stock.
On November 21, 1995, the Company's Board of Directors voted to increase the
Company's regular quarterly cash dividend from 5 cents per share to 6 cents per
share effective with the January 30, 1996 dividend.
The Company intends to finance its capital projects, dividend payments, and
stock buy back through existing cash and cash equivalents, short-term
investments and projected cash flow from operations.
RESULTS OF OPERATIONS: Quarter ended January 27, 1996 compared to quarter ended
January 28, 1995.
Net sales increased 8% to $27,999,000 from $25,953,000. The Company's domestic
net sales increased 2% while its international net sales increased 18%. Both
the domestic and international net sales increases were due primarily to unit
volume increases in most of the Company's major product lines.
Cost of sales increased 12% to $14,262,000 from $12,776,000. This item,
composed of material, labor and product overhead, increased primarily because of
unit volume increases. The gross profit percent decreased to 49% from 50.7%.
The gross profit percent for the company's wholly owned subsidiary, Hach Europe,
increased due to favorable exchange rates, while the gross profit percent for
the remainder of the Company's operations decreased due to the mix of products
sold.
Selling, general and administrative expense decreased 1% to $8,087,000 from
$8,157,000. The decrease was primarily due to lower payroll and related expenses
due to a reduction in the number of employees.
Research and development expense increased 5% to $1,832,000 from $1,748,000.
The increase was due to an increased emphasis on research and development
efforts.
Interest income increased to $385,000 from $230,000. The increase was due to
higher average investment balances and higher interest rates in the current
quarter.
The effective income tax rate was 34.5% in the current period compared to 34.8%
in the prior year's third quarter.
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<PAGE>
RESULTS OF OPERATIONS: Nine months ended January 27, 1996 compared to nine
months ended January 28, 1995.
Net sales increased 9% to $83,904,000 from $77,107,000. The Company's domestic
net sales increased 5% while its international net sales increased 16%. The
international net sales increase was due primarily to unit volume increases in
most of the Company's major product lines.
Cost of sales increased 11% to $42,047,000 from $37,904,000. This item,
composed of material, labor and product overhead, increased primarily because of
unit volume increases. The gross profit percent decreased to 49.9% from 50.8%.
The gross profit percent for the company's wholly owned subsidiary, Hach Europe,
increased due to favorable exchange rates, while the gross profit percent for
the remainder of the Company's operations decreased due to the mix of products
sold.
Selling, general and administrative expense increased 3% to $24,606,000 from
$23,899,000. The increase was primarily due to normal wage and salary increases
and increased advertising costs.
Research and development expense increased 8% to $5,492,000 from $5,074,000. The
increase was due to and increased emphasis on research and development efforts.
Interest income increased to $999,000 from $442,000. The increase was due to
higher average investment balances and higher interest rates in the current
period.
The effective income tax rate was 34.9% in the current period compared to 34.8%
in the prior year's first nine months.
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<PAGE>
INDEX OF EXHIBITS
Page
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Report of Independent Accountants 12
Awareness Letter of Independent Accountants 13
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<PAGE>
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Report of Independent Accountants
Awareness Letter of Independent Accountants
(b) Reports on Form 8-K
During the quarter ended January 27, 1996 the Registrant filed no
report on Form 8-K.
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 thereunder duly authorized.
HACH COMPANY
Registrant
DATED: March 8, 1996 BY: Bruce J. Hach /s/
----------------------- -----------------------------
Bruce J. Hach
President and Chief Operating Officer
DATED: March 8, 1996 BY: Gary R. Dreher /s/
---------------------- ------------------------------
Gary R. Dreher
Vice President and Chief Financial
Officer
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[Letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and
Board of Directors of
Hach Company:
We have reviewed the accompanying consolidated balance sheet of Hach Company and
Subsidiaries as of January 27, 1996, the related consolidated statements of
income and retained earnings for the three and nine month periods ended January
27, 1996 and January 28, 1995, and the related consolidated statements of cash
flow for the nine month periods ended January 27, 1996 and January 28, 1995.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of the interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Denver, Colorado
February 15, 1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated statements of income and consolidated balance sheets
on page 3, 4 and 5 of the Company's Form 10Q for the quarterly period
ending January 27, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JAN-27-1996
<CASH> 7,534
<SECURITIES> 21,590
<RECEIVABLES> 16,180
<ALLOWANCES> 215
<INVENTORY> 13,202
<CURRENT-ASSETS> 50,728
<PP&E> 67,077
<DEPRECIATION> 37,947
<TOTAL-ASSETS> 92,357
<CURRENT-LIABILITIES> 11,880
<BONDS> 0
0
0
<COMMON> 11,623
<OTHER-SE> 316
<TOTAL-LIABILITY-AND-EQUITY> 92,357
<SALES> 83,904
<TOTAL-REVENUES> 83,904
<CGS> 42,047
<TOTAL-COSTS> 29,805
<OTHER-EXPENSES> 231
<LOSS-PROVISION> 62
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 12,753
<INCOME-TAX> 4,453
<INCOME-CONTINUING> 8,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,300
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
<PAGE>
Exh. 99
[Letterhead]
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Hach Company and Subsidiaries
Registration on Form S-8
Gentlemen:
We are aware that our report dated February 15, 1996 on our review of interim
financial information on Hach Company and Subsidiaries for the three and nine
months ended January 27, 1996, and included in this quarterly report on Form 10-
Q for the quarter and nine months then ended, is incorporated by reference into
the registration statements of Hach Company and Subsidiaries on Form S-8 (File
No. 33-39019), Form S-8 (File No. 33-90584), and Form S-8 (File No. 33-64793).
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not
be considered a part of the registration statements prepared or certified by us
within the meaning of Section 7 and 11 of that Act.
COOPERS & LYBRAND L.L.P.
Denver, Colorado
February 15, 1996
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