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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(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 27, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 1-5641
INSTRON CORPORATION
(Exact name of registrant as specified in its Charter)
Massachusetts 04-2057203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Royall Street 02021
Canton, Massachusetts (Zip Code)
(Address of Principal executive offices)
(781) 828-2500
(Registrant's telephone number, including area code)
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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 periods 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
--- ----
The number of shares outstanding of each of the issuer's classes of common
stock as of August 5, 1998.
Common Stock, $1 par value -- 6,928,269 shares
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Part I. Item 1. of this report on Form 10-Q is hereby amended and restated in
full below to correct the following inadvertent oversight: (i) the weighted
average number of basic common shares for the three months ended June 28,
1997, (ii) the weighted average number of basic common shares for the six
months ended June 28, 1997, (iii) earnings per share of basic common shares for
the three months ended June 28, 1997, and (iv) earnings per share of basic
common shares for the six months ended June 28, 1997 were each correctly stated
in Note 2 to Consolidated Financial Statements, but inaccurately stated in the
text of Item 1. The correct weighted average number of basic common shares for
the three months ended June 28, 1997 is 6,445 (not 6,236 as previously stated
under the caption "Consolidated Statement of Income" in Item 1). The correct
earnings per share of basic common shares for the three months ended June 28,
1997 is $0.23 (not $0.24 as previously stated under the caption "Consolidated
Statement of Income" in Item 1.) The correct weighted average number of basic
common shares for the six months ended June 28, 1997 is 6,445 (not 6,216 as
previously stated under the caption "Consolidated Statement of Income" in Item
1.) The correct earnings per share of basic common shares for the six months
ended June 28, 1997 is $0.37 (not $0.38 as previously stated under the caption
"Consolidated Statement of Income" in Item 1.)
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INSTRON CORPORATION FORM 10-Q/A
Consolidated Statement of Income PART I
(Unaudited) ITEM 1
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the three months ended
-------------------------------------
June 27, 1998 June 28, 1997
-------------------------------------
<S> <C> <C>
Revenue:
Sales $30,933 $30,977
Service 6,828 6,147
------- -------
Total revenue 37,761 37,124
------- -------
Cost of revenue:
Sales 17,573 17,890
Service 4,454 4,107
------- -------
Total cost of revenue 22,027 21,997
------- -------
Gross Profit 15,734 15,127
------- -------
Operating expenses:
Selling and administrative 11,014 10,794
Research and development 1,718 1,760
------- -------
Total operating expenses 12,732 12,554
------- -------
Income from operations 3,002 2,573
------- -------
Other (income) expense:
Interest (income) expense (89) 231
Foreign exchange (gains) losses 177 (34)
------- -------
Total other expense 88 197
------- -------
Income before income taxes 2,914 2,376
Provision for income taxes 1,107 906
------- -------
Net income $ 1,807 $ 1,470
======= =======
Weighted average number of basic common shares 6,623 6,445
======= =======
Earnings per share - basic $ 0.27 $ 0.23
======= =======
Weighted average number of diluted common shares 7,151 6,584
======= =======
Earnings per share - diluted $ 0.25 $ 0.22
======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements
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<TABLE>
<CAPTION>
INSTRON CORPORATION FORM 10-Q/A
Consolidated Statement of Income PART I
(Unaudited) ITEM 1
(In thousands, except per share data)
For the six months ended
------------------------------
June 27, 1998 June 28, 1997
------------------------------
<S> <C> <C>
Revenue:
Sales $ 58,437 $ 60,800
Service 13,193 12,347
-------- --------
Total revenue 71,630 73,147
-------- --------
Cost of revenue:
Sales 33,176 34,949
Service 8,978 8,365
-------- --------
Total cost of revenue 42,154 43,314
-------- --------
Gross Profit 29,476 29,833
-------- --------
Operating expenses:
Selling and administrative 21,075 21,653
Research and development 3,167 3,668
Special items charge 4,975 0
-------- --------
Total operating expenses 29,217 25,321
-------- --------
Income from operations 259 4,512
-------- --------
Other (income) expense:
Interest (income) expense (15) 560
Foreign exchange losses 277 94
Gain on sale of land (11,076) 0
-------- --------
Total other (income) expense (10,814) 654
-------- --------
Income before income taxes 11,073 3,858
Provision for income taxes 5,355 1,469
-------- --------
Net income $ 5,718 $ 2,389
======== ========
Weighted average number of basic common shares 6,553 6,445
======== ========
Earnings per share - basic $ 0.87 $ 0.37
======== ========
Weighted average number of diluted common shares 7,106 6,563
======== ========
Earnings per share - diluted $ 0.80 $ .36
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
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<TABLE>
<CAPTION>
INSTRON CORPORATION FORM 10-Q/A
Consolidated Balance Sheet PART I
(In thousands, except per share data) ITEM 1
June 27, December 31,
1998 1997
---------- ------------
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 7,194 $ 2,566
Accounts receivable (net of
allowance for doubtful accounts of
$1,007 in 1998 and $1,071 in 1997) 41,292 46,404
Inventories 30,771 24,024
Deferred income taxes 3,412 3,314
Prepaid expenses and other current assets 2,602 3,767
-------- --------
Total current assets 85,271 80,075
Property, plant and equipment, net 21,935 21,207
Deferred income taxes 845 806
Other assets 17,463 16,897
-------- --------
Total assets $125,514 $118,985
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 10,191 $ 6,059
Accounts payable 8,288 11,095
Accrued liabilities 17,523 14,083
Accrued employee compensation and benefits 3,977 6,220
Accrued income taxes 1,584 957
Advance payments received on contracts 2,630 1,541
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Total current liabilities 44,193 39,955
Long-term debt 2,550 7,600
Other long-term liabilities 5,677 5,176
-------- --------
Total liabilities 52,420 52,731
-------- --------
Stockholders' equity:
Preferred stock, $1 par value; 1,000,000
shares authorized, none issued 0 0
Common stock, $1 par value; 10,000,000 shares
authorized, 7,036,531 and 6,823,698 shares
issued, respectively 7,037 6,824
Additional paid in capital 8,572 6,972
Deferred compensation (2,944) (3,235)
Retained earnings 67,288 62,097
Cumulative translation adjustment (5,529) (5,690)
-------- --------
74,424 66,968
Less: Treasury stock of 108,262 and 74,952
shares, respectively, at cost 1,330 714
-------- --------
Total stockholders' equity 73,094 66,254
-------- --------
Total liabilities and stockholders' equity $125,514 $118,985
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
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INSTRON CORPORATION FORM 10-Q/A
Consolidated Statement of Cash Flows PART I
(Unaudited) ITEM 1
<TABLE>
<CAPTION>
(In thousands) For the six months ended
------------------------------------
June 27, 1998 June 28, 1997
------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,718 $ 2,389
Adjustments to reconcile net income to
net cash provided by operating activities:
(Gain) loss on the sale of property, plant
and equipment (6,895) 10
Depreciation and amortization 3,250 3,244
Provision for losses on accounts receivable 23 145
Deferred taxes (235) (14)
Changes in assets and liabilities, excluding
the effects from purchase of business:
Decrease in accounts receivable 4,754 6,598
(Increase) decrease in inventories (6,729) 539
(Increase) decrease in prepaid expenses
and other current assets 1,165 (145)
Decrease in accounts
payable and accrued expenses (5,426) (2,437)
Increase in other long-term liabilities 764 157
Other (697) (1,918)
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Net cash provided (used) by operating activities (4,308) 8,568
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Cash flows from investing activities:
Proceeds from the sale of property, plant
and equipment 13,471 118
Capital expenditures (3,695) (1,302)
Purchase of business 0 (2,010)
Capitalized software costs (635) (133)
Other 7 95
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Net cash provided (used) by investing activities 9,148 (3,232)
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Cash flows from financing activities:
Net payments under revolving credit and
term loan facility (5,050) (2,901)
Net short-term borrowings (payments) 4,174 (2,250)
Cash dividends paid (527) (526)
Proceeds from exercise of stock options 1,814 0
Treasury stock purchases (616) 0
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Net cash used in financing activities (205) (5,677)
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Effect of exchange rate changes on cash (7) (59)
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Net increase (decrease) in cash and cash equivalents 4,628 (400)
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Cash and cash equivalents at beginning of year 2,566 2,541
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Cash and cash equivalents at end of period $ 7,194 $ 2,141
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 873 $ 744
Income taxes 4,214 1,996
Supplemental disclosures of non-cash investing
and financing activities:
Liabilities incurred or assumed
in business acquisition $ 0 $ 639
</TABLE>
See accompanying Notes to Consolidated Financial Statements
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INSTRON CORPORATION FORM
10-Q/A
Statements of Comprehensive Income PART I
(Unaudited) ITEM 1
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
June 27, 1998 June 28, 1997
--------------------------------
<S> <C> <C>
Net income $1,807 $1,470
Other comprehensive income, net of tax:
Foreign currency translation adjustments (339) 188
------ ------
Comprehensive income $1,468 $1,658
====== ======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------
June 27, 1998 June 28, 1997
--------------------------------
<S> <C> <C>
Net income $5,718 $2,389
Other comprehensive income, net of tax:
Foreign currency translation adjustments 103 (879)
------ ------
Comprehensive income $5,821 $1,510
====== ======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
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INSTRON CORPORATION FORM 10-Q/A
PART I
Notes to Consolidated Financial Statements ITEM 1
June 27, 1998
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. Certain
reclassifications were made to the prior year amounts to conform with the
1998 presentation. For further information, refer to the consolidated
financial statements and footnotes included in the Company's annual report
on Form 10-K for the year ended December 31, 1997.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that effect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported periods. Actual
results could differ from those estimates.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 27,
1998 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1998.
2. EARNINGS PER SHARE
Under the new requirements of FAS No. 128, primary and fully diluted
earnings per share are replaced by basic and diluted earnings per share.
Basic earnings per share is computed based only on the weighted average
number of common shares outstanding during the period and the diluted
effect of stock options is excluded. Diluted earnings per share is based on
the weighted average number of common shares and common share equivalents
outstanding.
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INSTRON CORPORATION FORM 10-Q/A
PART I
Notes to Consolidated Financial Statements ITEM 1
June 27, 1998
(Unaudited)
The following is a reconciliation of the basic and diluted EPS calculations:
<TABLE>
<CAPTION>
For the three months ended
(In thousands, except per share data) ------------------------------
- ------------------------------------- June 27, 1998 June 28, 1997
------------- -------------
<S> <C> <C>
Net income $1,807 $1,470
====== ======
Weighted average number of basic common
shares outstanding 6,623 6,445
Dilutive effect of common stock
equivalents outstanding 528 139
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Weighted average of common and
dilutive shares 7,151 6,584
====== ======
Basic earnings per share $ 0.27 $ 0.23
====== ======
Diluted earnings per share $ 0.25 $ 0.22
====== ======
</TABLE>
<TABLE>
<CAPTION>
For the six months ended
(In thousands, except per share data) -------------------------------
- ------------------------------------- June 27, 1998 June 28, 1997
------------- -------------
<S> <C> <C>
Net income $5,718 $2,389
====== ======
Weighted average number of basic common
shares outstanding 6,553 6,445
Dilutive effect of common stock
equivalents outstanding 553 118
------ ------
Weighted average of common and
dilutive shares 7,106 6,563
====== ======
Basic earnings per share $ 0.87 $ 0.37
====== ======
Diluted earnings per share $ 0.80 $ 0.36
====== ======
</TABLE>
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INSTRON CORPORATION FORM 10-Q/A
PART I
Notes to Consolidated Financial Statements ITEM 1
June 27, 1998
(unaudited)
<TABLE>
<CAPTION>
3. INVENTORIES
(In thousands) June 27, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Raw Materials $16,468 $12,742
Work-in-process 8,047 5,156
Finished goods 6,256 6,126
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$30,771 $24,024
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</TABLE>
Inventories are valued at the lower of cost or market (net realizable
value). The last-in, first-out (LIFO) method of determining cost is
principally used for inventories in the United States and the Asian
branches. The Company uses the first-in, first-out (FIFO) method for
all other inventories. Inventories valued at LIFO amounted to
$16,106,000 and $9,395,000 at June 27, 1998 and December 31, 1997,
respectively. The excess of current cost over stated LIFO value was
$5,442,000 at June 27, 1998 and $5,247,000 at December 31, 1997.
4. SPECIAL ITEMS CHARGE
During the first quarter of 1998, the Company recorded a special items
Pre-tax charge of $5.0 million to operations to undertake a
consolidation of its European operations and write-down the value of
certain non-performing assets. The special items charge includes
termination benefits, the costs to exit a manufacturing facility, other
asset impairments and other related costs. The Company is currently in
the process of consolidating its German operations and moving the
manufacturing operation to the United Kingdom. These actions are
expected to be completed and paid for by the end of the first quarter
of 1999. The Company does not anticipate any significant benefits in
1998 from these actions, however, operating margins are expected to
improve in 1999.
5. SALE OF LAND
On March 27, 1998, the Company completed the sale of 42 acres of its 66
acre site off Route 128 in Canton, Massachusetts for $13.5 million. As
a result of this transaction, a non-operating pre-tax gain of $11.1
million was recorded in the first quarter of 1998.
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INSTRON CORPORATION FORM 10-Q/A
PART I
Notes to Consolidated Financial Statements ITEM 1
March 28, 1998
(unaudited)
6. SALE OF LMS
On April 14, 1997, the Company sold its Laboratory MicroSystems
division, known as LMS, to Axiom Systems. The net assets associated
with LMS at the time of the sale were approximately $2.9 million,and
there was no significant gain or loss recorded as a result of this
disposition. The proforma results of this transaction is not disclosed
as the results were immaterial.
7. NEW ACCOUNTING STANDARD
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, ("SFAS 131") "Disclosure
about Segments of an Enterprise and Related Information." SFAS 131
specifies new guidelines for determining a company's operating segments
and related requirements for disclosure. SFAS 131 will become effective
for fiscal years beginning after December 15, 1997. The Company will
adopt the new standard for the fiscal year ending December 31, 1998,
and is in the process of evaluating the impact of the new standard on
the presentation of its financial statements and the disclosures
therein.
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132 ("SFAS 132"),
"Employees' Disclosures about Pensions and Other Postretirement
Benefits." The new requirements require increased disclosures for
public entities. SFAS No. 132 only affects disclosure issues and does
not change any existing measurement or recognition provisions
previously required. The statement is effective for fiscal years
beginning after December 15, 1997. Reclassification for earlier periods
is required for comparative purposes. The Company will adopt SFAS No.
132 for its fiscal year ended December 31, 1998.
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INSTRON CORPORATION FORM 10-Q/A
PART I
Notes to Consolidated Financial Statements ITEM 1
March 28, 1998
(unaudited)
8. SUBSEQUENT EVENT
As of August 1, 1998, the Company acquired substantially all the assets
of Satec Systems, Inc. of Grove City, Pennsylvania, for approximately
$12.8 million in cash. Satec is a manufacturer of a range of materials
testing equipment sold primarily in the United States with annual sales
of approximately $18 million. This acquisition will be accounted for
under the purchase method of accounting and, accordingly, the acquired
assets and liabilities will be recorded at their estimated fair values
at the date of acquisition. The Company expects to take a non-recurring
charge in connection with the related purchased incomplete technology.
The operating results of Satec will be included in the Company's
consolidated results of operations from the date of acquisition.
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FORM 10-Q/A
SIGNATURES
- ----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSTRON CORPORATION
Date: August 17, 1998 By /s/ James M. McConnell
----------------------------------------
James M. McConnell
President and
Chief Executive Officer
Date: August 17, 1998 By /s/ Linton A. Moulding
----------------------------------------
Linton A. Moulding
Chief Financial Officer
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