FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-3947
Hach Company
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 42-0704420
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5600 Lindbergh Drive, Loveland, CO 80537
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(Address of principal executive offices) (Zip code)
(970) 669-3050
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(Registrant's telephone number including area code)
Not applicable
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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 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 registrant's
classes of common stock, as of the latest practicable date.
Title Outstanding
Common Stock 8,249,977
Class A Common Stock 8,235,217
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Summarized Financial Statements
The accompanying Consolidated Balance Sheet as of January 31, 1998 and the
Consolidated Statements of Income and Retained Earnings for the quarters and the
nine months ended January 31, 1998 and January 25, 1997 and the Consolidated
Statements of Cash Flows for the nine months ended January 31, 1998 and January
25, 1997 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 31, 1998 and January
25, 1997 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 L.L.P., the Registrant's
independent accountants.
<PAGE>
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
1/31/98 1/25/97 1/31/98 1/25/97
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 30,337 $ 29,481 $ 94,293 $ 88,675
Cost of sales 15,552 15,324 48,113 45,395
--------- --------- --------- ---------
Gross profit 14,785 14,157 46,180 43,280
Selling, general and administrative expense 8,521 8,015 26,189 24,268
Research and development expense 1,976 1,986 6,213 6,230
--------- --------- --------- ---------
Income from operations 4,288 4,156 13,778 12,782
Interest income 187 460 786 1,261
Interest expense (437) - (1,093) -
--------- --------- --------- ---------
Income before income taxes 4,038 4,616 13,471 14,043
Income tax expense 1,438 1,591 4,796 4,843
--------- --------- --------- ---------
Net income 2,600 3,025 8,675 9,200
Retained earnings, beginning of period $ 70,886 $ 71,988 $ 65,799 $ 67,177
Cash dividends (577) (682) (1,565) (2,046)
--------- --------- --------- ---------
Retained earnings, end of period $ 72,909 $ 74,331 $ 72,909 $ 74,331
========= ========= ========= =========
Net income per share:
Basic $ 0.16 $ 0.13* $ 0.48 $ 0.40*
Diluted $ 0.16 $ 0.13* $ 0.48 $ 0.40*
========= ========= ========= =========
Dividends per share:
Common stock $ 0.03 $ 0.06 $ 0.12 $ 0.18
Class A common stock $ 0.04 $ 0.00 $ 0.07 $ 0.00
========= ========= ========= =========
Weighted average shares outstanding
Basic 16,479,155 22,735,762 18,010,638 22,724,858
Diluted 16,613,770 22,765,113 18,124,332 22,744,284
========== ========== ========== ==========
*Restated for the two-for-one stock split effected in the form of a stock dividend.
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
January 31, 1998 April 30, 1997
---------------- --------------
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 9,757 $ 14,575
Marketable securities, held to maturity 801 19,100
Accounts receivable, less reserves
of $274 and $249, respectively 16,981 17,829
Inventories 13,765 11,798
Deferred taxes and other current assets 5,108 4,416
--------- ---------
Total current assets 46,412 67,718
Property, plant and equipment at cost:
Buildings and improvements 25,864 23,404
Machinery and equipment 49,728 46,555
--------- ---------
75,592 69,959
Less allowance for depreciation
and amortization 46,115 42,141
--------- ---------
29,477 27,818
Land 982 986
--------- ---------
Net property, plant and equipment 30,459 28,804
Marketable securities, held to maturity 1,889 7,406
Other assets 2,106 1,652
--------- ---------
Total Assets $ 80,866 $ 105,580
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
January 31, 1998 April 30, 1997
---------------- --------------
(Unaudited)
LIABILITIES
Current liabilities:
<S> <C> <C>
Accounts payable $ 3,429 $ 4,044
Current portion of capital lease obligation 76 -
Accrued liabilities:
Compensation 564 1,082
Compensated absences 3,477 3,655
Profit sharing 2,750 3,473
Income taxes payable 232 753
Other 2,174 1,379
--------- ---------
Total current liabilities 12,702 14,386
Long-term capital lease obligation, 154 -
net of current portion
Long-term debt 30,000 -
Other long term liabilities 2,200 1,726
Deferred income taxes 1,803 2,179
--------- ---------
Total liabilities 46,859 18,291
STOCKHOLDERS' EQUITY
Common stock, $1 par value; (authorized
25,000,000 shares; issued 11,622,953 shares 11,623 11,623
Class A Common stock, $1 par value; (authorized
20,000,000 shares; issued 11,622,953 shares 11,623 -
Capital contributed in excess of par value - 453
Retained earnings 72,909 76,944
Cumulative currency translation adjustment (191) 338
--------- ---------
95,964 89,358
Less: Shares held in treasury at cost:
(6,760,712 at January 31, 1998 and
254,356 at April 30, 1997) (61,957) (2,069)
--------- ---------
Total Stockholders' Equity 34,007 87,289
--------- ---------
Total Liabilities and Stockholders' Equity $ 80,866 $ 105,580
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
January 31, 1998 January 25, 1997
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,675 $ 9,200
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation & amortization 4,673 4,567
Provision for deferred income taxes (376) 426
Loss on disposal of property, plant & equipment 4 33
(Increase) decrease in accounts receivable 848 (1,869)
(Increase) in inventories (1,967) (80)
(Increase) in prepaid expenses & other assets (692) (1,605)
Increase (decrease) in accounts payable (615) 613
Increase (decrease) in accrued liabilities (671) 1,118
-------- --------
Net cash provided by operating activities 9,879 12,403
Cash flows from investing activities:
Capital expenditures (6,412) (4,950)
Purchases of investments held-to-maturity (2,737) (12,929)
Proceeds from the maturity of short-term investments 26,554 11,736
(Increase) in long-term assets (454) (366)
-------- --------
Net cash provided (used) by investing activities 16,951 (6,509)
Cash flows from financing activities:
Dividends paid (1,565) (2,046)
Proceeds from borrowings 30,000 -
Capital lease obligations 230 -
Purchases of treasury stock (60,532) (206)
Exercise of stock options 669 327
-------- --------
Net cash used by financing activities (31,198) (1,925)
Effects of exchange rate changes (450) (470)
-------- --------
Net increase (decrease) in cash & cash equivalents (4,818) 3,499
Cash & cash equivalents at the beginning of the period 14,575 8,487
-------- --------
Cash & cash equivalents at the end of the period $ 9,757 $ 11,986
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
HACH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statements
The consolidated balance sheet at January 31, 1998 and the consolidated
statements of income and retained earnings for the quarters and nine months
ended January 31, 1998 and January 25, 1997 and the consolidated statements of
cash flows for the nine months ended January 31, 1998 and January 25, 1997 have
been prepared by the Company, without audit. The April 30, 1997 balance sheet
was derived from audited financial statements and as presented does not include
all the disclosures required by generally accepted accounting principles. In the
opinion of management, all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the consolidated financial position,
results of operations and cash flows have been made. These financial statements
include forward looking information as defined by the Private Securities
Litigation Reform Act of 1995 and therefore results of operations for the
interim periods are not necessarily indicative of the operating results for a
full year of future operations.
Certain amounts in the financial statements for April 30, 1997 have been
reclassified to conform with the current periods presentation.
2. Inventories
The components of inventories are: (Thousands of Dollars)
January 31, 1998 April 30,1997
---------------- -------------
Raw materials and purchased parts $ 5,992 $ 2,811
Work-in-progress 1,482 1,534
Finished goods 5,826 7,031
Resale 465 422
------- -------
$ 13,765 $ 11,798
======= =======
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 31, 1998 and January 25, 1997 were 35.6% and 34.5% respectively.
<PAGE>
4. Earnings Per Share
The Company has adopted the Statement of Financial Accounting Standards No.
128, "Earnings Per Share" in the quarter ended January 31, 1998 and all
historical net income per share data presented has been restated to conform to
the provisions of this statement. The standard established a different method of
computing net income per share than was required under the provisions of
Accounting Principles Board Opinion No. 15. The following table reconciles the
numerator and the denominators of the basic and diluted earnings per share (EPS)
computations as shown on the Consolidated Statement of Income included in this
report on Form 10-Q.
HACH COMPANY AND SUBSIDIARIES
EARNINGS PER SHARE
(Thousands of Dollars Except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
------------- -----------------
1/31/98 1/25/97 1/31/98 1/25/97
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic EPS Computation
Numerator:
Net income $ 2,600 $ 3,025 $ 8,675 $ 9,200
Denominator:
Common shares outstanding 16,479,155 22,735,762 18,010,638 22,724,858
---------- ---------- ---------- ----------
Basic EPS $ 0.16 $ 0.13 $ 0.48 $ 0.40
========== ========== ========== ==========
Diluted EPS Computation
Numerator:
Net income $ 2,600 $ 3,025 $ 8,675 $ 9,200
Denominator:
Common shares outstanding 16,479,155 22,735,762 18,010,638 22,724,858
Stock Options 134,615 29,351 113,694 19,426
---------- ---------- ---------- ----------
16,613,770 22,765,113 18,124,332 22,744,284
---------- ---------- ---------- ----------
Diluted EPS $ 0.16 $ 0.13 $ 0.48 $ 0.40
========== ========== ========== ==========
</TABLE>
Options to purchase shares of the Company's common stock of 93,500 for the
quarter and nine months ended January 31, 1998 and 109,898 for the quarter and
nine months ended January 25, 1997 were outstanding during the respective
periods but were not included in the computation of diluted EPS because the
price of the options, which range from $8.0625 to $10.90 per share for the
quarter ended January 31, 1998 and January 25, 1997, respectively, was greater
than the average market price of the common stock for the period reported. The
outstanding options not included in the calculation for the quarter ended
January 31, 1998 will expire in February 1998. The outstanding options not
included in the calculation for the quarter ended January 25, 1997 will expire
in between February 1998 and February 2006.
<PAGE>
5. Capital Stock
On July 8, 1997, the Company repurchased the entire block of Hach Company
common stock which was owned by Lawter International. This stock represented
approximately 28% ownership in Hach Company. The Company purchased the 3,157,223
shares for $19.00 per share. On June 26, 1997, the date the transaction with
Lawter was first announced, the Company's Common Stock price closed at $18.25
per share. The price paid to Lawter represented a 4% premium to the closing
price on June 26, 1997. Among other factors, the Company's Board of Directors
reviewed numerous financial models and information, including the impact on
earnings per share, in arriving at the $19.00 per share price. The purchase of
the shares from Lawter was financed with $30 million of existing cash and
investments and $30 million in bank financing. Prior to the transaction with
Lawter, approximately $23 million of investments used in the transaction had
been classified as held-to-maturity. Upon the sale of these investments, the
Company realized losses totaling $44,000.
On May 19, 1997, the Board of Directors approved a proposal to amend the
Company's Certificate of Incorporation. At the Company's annual meeting on
September 9, 1997 the shareholders approved a new class of stock designated as
Class A Common Stock. The Class A stock is non-voting except under certain
limited circumstances. All common shares and per share amounts in this report
have been adjusted to give retroactive effect to a two for one stock split
effected in the form of a stock dividend distributed on October 2, 1997 to
holders of record on September 22, 1997. The distribution on October 2, 1997,
increased the number of shares outstanding from 8,228,581 to 16,457,162.
6. Long-Term Debt
During the first quarter of 1998, the Company entered into a revolving
credit agreement with Colorado National Bank. Under the Revolving Credit
Agreement, the Company may borrow up to $40,000,000 under a five-year unsecured
revolving credit facility, which matures on July 1, 2002. The Agreement has
restrictions on amounts outstanding which consist of (i) $40,000,000 to June 30,
2000; (ii) $32,500,000 from July 1, 2000 to June 30, 2001; and (iii) $22,500,000
from July 1, 2001 to the Revolving Credit Maturity Date of July 1, 2002. At
November 1, 1997, the Company had $30 million outstanding. The Revolving Credit
Agreement allows the Company to borrow at interest rates that vary based on the
Banks Reference Rate or the London Interbank Offered Rate (LIBOR), at the option
of the Company. The interest rate as of November 1, 1997, on the $30 million was
6.73%. The interest period for the loan is 90 days, which began on October 6,
1997. The Company is also required to pay a commitment fee of 12.5 or 25.0 basis
points per annum, depending on certain financial ratios, on the average daily
amount of unused funds.
The Revolving Credit Agreement contains covenants and provisions that
restrict, among other things, the ability of the Company and its material
subsidiaries to: (i) create liens on any of its property or assets or assign any
rights to security interests in future revenues; (ii) engage in sale and
leaseback transactions; (iii) engage in mergers, consolidations and sales of all
or substantially all of their assets on a consolidated basis; (iv) enter into
agreements restricting dividends and advances by the subsidiaries; and, (v)
engage in transactions with affiliates other than those based on arm's-length
negotiations. The Revolving Credit Agreement also limits the ability of the
Company and or subsidiaries to purchase capital items, incur indebtedness or
issue preferred stock. The Revolving Credit Agreement also requires the Company
to satisfy certain financial performance criteria.
7. Recently Issued Financial Accounting Standards
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 129, "Information about Capital Structure,"
in February 1997. As the Company is already subject to the disclosures of SFAS
129, no additional disclosures are required. The FASB also issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income," in
June 1997. This statement, which is required to be adopted in the first quarter
of fiscal year 1999, establishes standards for reporting of comprehensive income
and its components (such as revenues, expenses, gains and losses). At this time,
the Company believes it will not be impacted by this statement. The FASB also
issued Statement of Financial Accounting Standards No. 131, "Segments of an
Enterprise and Related Information," in June 1997. This statement, establishes
standards for the way public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. The Company will adopt SFAS 131 for
the fiscal year ending April 30, 1999. The Company anticipates SFAS 131 will not
have a significant disclosure impact on the Company.
<PAGE>
8. Current Event
On January 21, 1998, Hach Company and Environmental Test Systems, Inc.
(ETS) jointly signed a definitive merger agreement, the principal terms by which
ETS will become a wholly owned subsidiary of Hach Company. Under terms of the
transaction, at closing, Hach will distribute to ETS shareholders an aggregate
of $16,000,000 in cash, Hach Common Stock and Hach Class A Common Stock in
exchange for all outstanding common stock of ETS. The transaction is expected to
be completed in April 1998 and is subject to regulatory approval.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Analysis of Financial Condition:
The Company experienced substantial change in the capital structure during
the nine months ended January 31, 1998. On July 8, 1997, the Company purchased
3,157,223 shares of its common stock from Lawter International. The purchase
price was approximately $60 million. The Company used $30 million of existing
cash and $30 million of bank borrowings to finance the stock purchase. The bank
borrowings provide for a revolving line of credit of up to $40 million.
The acquisition of ETS for an aggregate of $16,000,000 in cash, Common
Stock and Class A Common Stock is expected to be completed in April 1998.
The Company monitors cash flow and capital expenditures in great detail as
part of its total budgeting process. During fiscal year 1998, the Company
expects to spend approximately $10,000,000 on capital items. These expenditures
include the construction of a 66,000 square foot building at the Loveland,
Colorado site, in addition to expenditures made for production equipment as well
as computer hardware and software to support distribution, research and
development and administration.
The Company intends to finance its capital projects, acquisition and
dividend payments through existing cash and cash equivalents, short-term
investments, projected cash flow from operations and bank borrowings.
Year 2000 Computer Systems Compliance
The Company is in the process of the modification or conversion of Company
computer systems to provide for proper functioning beyond calendar year 1999. It
is anticipated that substantially all of these Year 2000 costs will be incurred
during fiscal 1998 and 1999. Maintenance or modification costs will be expensed
as incurred, while the costs of new software will be capitalized and amortized
over the software's useful life. Management believes that resources are
available to complete the modification and conversion and that its costs will
not materially affect the Company's operating results or financial condition.
Management believes that the Year 2000 compliance will be completed well before
the end of fiscal year 1999. The Company cannot predict the nature or
materiality of the impact on its operations or operating results of
noncompliance by parties outside of its control.
<PAGE>
Results of Operations: Quarter ended January 31, 1998 compared to quarter ended
January 25, 1997.
Net sales increased 2.9% to $30,337,000 from $29,481,000. The Company's
domestic net sales increased 7.4% while its international net sales decreased
4.6%. The domestic net sales increase was due primarily to unit volume increases
in most of the Company's major product lines. Sales for the Company's European
subsidiary were adversely affected by a stronger U.S. dollar. In addition,
international sales were adversely affected by economic conditions in Asia.
Sales throughout Asia, which represent approximately 9% of consolidated sales,
decreased 17% from the prior year's third quarter.
Cost of sales increased 1.5% to $15,552,000 from $15,324,000. This item,
composed of material, labor and product overhead, increased primarily because of
unit volume increases. The gross profit percent decreased to 48.7% from 48% due
to the mix of products sold.
Selling, general and administrative expense increased 6.3% to $8,521,000
from $8,015,000. The increase was due to higher payroll and related expenses and
implementation costs related to implementation of new software.
Research and development expense decreased .5% to $1,976,000 from
$1,986,000. The decrease was due to lower payroll and related expenses and lower
outside development costs.
Interest income decreased to $187,000 from $460,000. The decrease was due
to lower average investment balances in the current period.
Interest expense increased to $437,000. The increase was due to interest on
a long-term loan used to repurchase Hach Company common stock owned by Lawter
International.
The effective income tax rate was 35.6% in the current period compared to
34.5% in the prior year's first quarter.
<PAGE>
Results of Operations: Nine months ended January 31, 1998 to nine months ended
January 25, 1997
Net sales increased 6.3% to $94,293,000 from $88,675,000. The Company's
domestic net sales increased 8.8% while its international net sales increased
2.1%. Both the domestic and international net sales increases were due primarily
to unit volume increases in most of the Company's major product lines. Sales for
the nine months ended January 31, 1998 were adversely affected by the strong US
dollar and economic conditions in Asia. Sales for the company's European
subsidiary measured in Belgium Francs increased 6%, but the strong dollar had
the effect of reducing the European dollar sales by 9% when compared to the
prior year's first nine months.
Cost of sales increased 6% to $48,113,000 from $45,395,000. This item,
composed of material, labor and product overhead, increased primarily because of
unit volume increases. The gross profit percent increased to 49% from 48.8% due
to the mix of products sold.
Selling, general and administrative expense increased 7.9% to $26,189,000
from $24,268,000. The increase was due to higher payroll and related expenses
and implementation costs related to implementation of new software.
Research and development expense decreased 0.3% to $6,213,000 from
$6,230,000. The decrease was due to lower payroll and related expenses and lower
outside development costs.
Interest income decreased to $786,000 from $1,261,000. The decrease was due
to lower average investment balances in the current period.
Interest expense increased to $1,093,000. The increase was due to interest
on a long-term loan used to repurchase Hach Company common stock owned by Lawter
International.
The effective income tax rate was 35.6% for the current nine month period
compared to 34.5% in the prior year's period.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
At the Company's annual stockholder's meeting held on September 9,
1997, stockholders approved an amendment to the Company's Certificate of
Incorporation to create a new class of common stock, designated as Class A
Common Stock, which is nonvoting except in certain limited circumstances.
Item 4. Submission of Matters to a Vote of Security Holders
On September 9, 1997, Hach Company held its annual meeting of
stockholders. At this meeting, the stockholders were asked to consider and vote
upon a proposal to amend Article Fourth of the Company's Restated Certificate of
Incorporation to: (i) authorize a new class of common stock designated as Class
A Common Stock, $1.00 par value which would be non-voting (except in certain
limited circumstances); (ii) increase the number of authorized shares of capital
stock from 25,000,000 to 45,000,000 consisting of 25,000,000 shares of Common
Stock and 20,000,000 shares of Class a Common Stock; and (iii) establish the
rights, powers and limitations of the Class A Common Stock. A total of 7,614,652
votes were cast of which 7,351,060 were affirmative, 251,995 were negative and
1,597 abstained.
Item 6. Exhibits and Reports on Form 8-K
(a) 1. Report of Independent Accountants
2. Awareness Letter of Independent Accountants
3. Financial Data Schedule
(b) During the quarter ended January 31, 1998, 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, thereunto duly authorized.
Hach Company
By: /s/ Bruce J. Hach
----------------------------------------------------
Bruce J. Hach, President and Chief Operating Officer
March 2, 1998
Date
By: /s/ Gary R. Dreher
----------------------------------------------------------
Gary R. Dreher, Vice President and Chief Financial Officer
March 2, 1998
Date
[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 18, 1998 on our review of interim
financial information on Hach Company and Subsidiaries for the three-month and
nine-month periods ended January 31, 1998, and included in this quarterly report
on Form 10-Q for the three 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
March 2, 1998
[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 31, 1998, the related consolidated statements of
income and retained earnings for the three- and nine-month periods ended January
31, 1998 and January 25, 1997 and the related consolidated statements of cash
flow for the nine month periods ended January 31, 1998 and January 25, 1997.
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 18, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS ON
PAGES 3, 4 AND 5 OF THE COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDING
JANUARY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000044764
<NAME> HACH COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 9,757
<SECURITIES> 801
<RECEIVABLES> 17,255
<ALLOWANCES> 274
<INVENTORY> 13,765
<CURRENT-ASSETS> 46,412
<PP&E> 76,574
<DEPRECIATION> 46,115
<TOTAL-ASSETS> 80,866
<CURRENT-LIABILITIES> 12,702
<BONDS> 0
0
0
<COMMON> 23,246
<OTHER-SE> 10,761
<TOTAL-LIABILITY-AND-EQUITY> 80,866
<SALES> 94,293
<TOTAL-REVENUES> 94,293
<CGS> 48,113
<TOTAL-COSTS> 48,113
<OTHER-EXPENSES> 32,402
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,093
<INCOME-PRETAX> 13,471
<INCOME-TAX> 4,796
<INCOME-CONTINUING> 8,675
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,675
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
