______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
___
: X : QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
:___: EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
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 0-1252
__________________________________________________
JOSLYN CORPORATION
______________________________________________________________________________
(Exact name of Registrant as specified in its charter)
Illinois 36-3560095
_______________________________________ _____________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
30 South Wacker Drive -
Chicago, Illinois 60606
_______________________________________ _____________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 454-2900
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.
X
YES _____ NO _____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of September 30, 1994.
$1.25 Par Value Common Stock 7,141,000 Shares
______________________________________________________________________________
Page 1 of 13
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CONDENSED FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Although certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, the Company believes that
the disclosures are adequate to make the information presented not misleading.
It is suggested that these condensed consolidated financial statements be read
in conjunction with the financial statements and the notes thereto included in
the latest Annual Report on Form 10-K of the Company for the year ended
December 31, 1933.
The condensed consolidated financial statements included herein reflect all
adjustments, consisting only of normal recurring adjustments which, in the
opinion of management, are necessary to present a fair statement of the
results for the interim periods.
The results of operations for such interim periods are not necessarily
indicative of the results for the full year.
Page 2
<PAGE>
JOSLYN CORPORATION
BALANCE SHEET
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
=====================================================================================================================
SEPTEMBER DECEMBER | LIABILITIES AND SHARE- SEPTEMBER DECEMBER
ASSETS 1994 1993 | HOLDERS' EQUITY 1994 1993
==========================================================|==========================================================
<C> <S> <S> <S> <S> <S>
Current Assets: | Current Liabilities:
|
Cash and Cash Equivalents $ 43,741 $ 41,102 | Accounts Payable $ 10,378 $ 12,308
---------- ----------| Accrued Liabilities 28,524 25,454
Receivables, Less Allowance | Income Taxes 5,786 3,295
for Doubtful Accounts $ 30,441 $ 25,676 | ---------- ----------
---------- ----------| Total Current Liabilities $ 44,688 $ 41,057
Inventories: |
Finished Goods $ 7,574 $ 6,788 | Postretirement Medical Liability 14,528 13,990
Work-In-Process 13,636 11,407 |
Raw Materials 15,305 18,165 | Environmental Accrual (Note 1) 41,500 8,000
---------- ----------| ---------- ----------
Total Inventories $ 36,515 $ 36,360 | Total Liabilities $ 100,716 $ 63,047
---------- ----------| ---------- ----------
Deferred Tax and Other | Shareholders' Equity:
Current Assets (Note 2) $ 13,174 $ 10,960 |
---------- ----------| Common Stock $1.25 Par Value
Total Current Assets $ 123,871 $ 114,098 | Authorized 20,000,000 shares
---------- ----------| Issued 7,141,000 shares in 1994
Net Deferred Tax and | and 7,104,000 shares in 1993. $ 8,926 $ 8,880
Other Assets (Note 2) $ 21,718 $ 8,200 |
---------- ----------| Retained Earnings 75,499 91,124
Plant and Equipment, at Cost $ 82,476 $ 80,330 |
Less Accumulated Depreciation (43,502) (40,346)| Equity Adjustments (578) (769)
---------- ----------| ---------- ----------
Net Plant and Equipment $ 38,974 $ 39,984 | Total Shareholders' Equity $ 83,847 $ 99,235
---------- ----------| ---------- ----------
| Total Liabilities and
Total Assets $ 184,563 $ 162,282 | Shareholders' Equity $ 184,563 $ 162,282
=====================================================================================================================
</TABLE>
Page 3
<PAGE>
JOSLYN CORPORATION
CONDENSED INCOME STATEMENT
FOR THE QUARTER AND NINE MONTHS ENDED
SEPTEMBER 30, 1994 AND 1993
(Dollar Amounts In Thousands Except Per Share Amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
(Note 1) (Note 3)
-------------------- --------------------
1994 1993 1994 1993
- - ------------------------------------------------------------------------------
Net Sales $ 55,803 $53,689 $164,194 $167,230
- - ------------------------------------------------------------------------------
Cost of Goods Sold $ 40,793 $39,502 $119,940 $121,847
Selling and General Expenses 9,140 8,528 27,330 26,722
Other Expense, Net 303 471 1,157 1,405
Investment Income (533) (394) (1,235) (934)
Environmental Charge 35,000 - 35,000 -
- - ------------------------------------------------------------------------------
Income (Loss) before Income Taxes $(28,900) $ 5,582 $(17,998) $ 18,190
Income Tax Provision (Benefit) (11,900) 1,750 (8,100) 6,500
- - ------------------------------------------------------------------------------
Net Income (Loss) $(17,000) $ 3,832 $ (9,898) $ 11,690
==============================================================================
Per Share of Common Stock:
Net Income (Loss) $ ( 2.39) $ .54 $ (1.39) $ 1.65
- - ------------------------------------------------------------------------------
Dividends $ .30 $ .29 $ .90 $ .87
==============================================================================
Average Number of Shares
Outstanding 7,130,000 7,086,000 7,116,000 7,081,000
==============================================================================
Page 4
<PAGE>
JOSLYN CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Dollar Amounts in Thousands)
1994 1993
- - --------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net Income(Loss) from Operations $(9,898) $11,690
Adjustments to Reconcile Net Income to Net Cash
Flows from Operating Activities:
Depreciation and Amortization 4,037 3,942
Deferred Income Taxes (Note 2) (15,419) (1,182)
Change in Assets and Liabilities,
Net of Effects of Acquisitions:
(Increase) in Receivables (4,766) (2,941)
Decrease in Inventories 1,467 1,707
Increase(Decrease) in Current and Long-term
Environmental Accruals (Note 1) 38,600 (1,277)
Other, Net (1,260) (512)
- - --------------------------------------------------------------------------
Net Cash Flows from Operating Activities $13,061 $11,427
- - --------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital Expenditures $(2,673) $(2,786)
Acquisitions of Businesses (2,500) (414)
Other, Net 432 758
- - --------------------------------------------------------------------------
Net Cash Flows from Investing Activities $(4,741) $(2,442)
- - --------------------------------------------------------------------------
Cash Flows from Financing Activities:
Dividends Paid $(6,405) $(6,164)
Other, Net 724 560
- - --------------------------------------------------------------------------
Net Cash Flows from Financing Activities $(5,681) $(5,604)
- - --------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents $ 2,639 $ 3,381
==========================================================================
Supplemental Disclosures:
Income Taxes Paid $ 4,820 $ 7,165
Interest Paid 111 72
==========================================================================
Page 5
<PAGE>
JOSLYN CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1:
In the 1994 third quarter, Joslyn recorded a special environmental
charge of $35.0 million ($21.0 million after tax or $2.95 per share)
for increased environmental reserves. The 1994 third quarter
special charge relates principally to the clean-up of a former
wood treating site located at Panama, Oklahoma. Joslyn was
first notified by the U.S. Environmental Protection Agency
(USEPA) on July 27, 1994 that it is a potentially responsible
party (PRP) at the Oklahoma site. Joslyn sold the site in
1955, after operating it for 16 years. Although one prior and
three subsequent owners have operated a wood treating facility
at the site, it initially appears that Joslyn may be the only
significant financially viable PRP and Joslyn's insurance
coverage during such period may be minimal. Joslyn believes
that 10% to 20% of the remediation costs at the Oklahoma site
will be expended over the next couple of years and that most
of the remediation will take place during a period five to ten
years from now.
Determining Joslyn's ultimate cost associated with remediating
former wood treating sites is subject to many variables,
including the availability of economical remediation
technologies, the volume of contaminated soil, contributions
from other PRPs, insurance recoveries and changes in
applicable laws and regulations. Joslyn's investigation of
the Oklahoma site is still in the preliminary stages. Most of
the special charge reflects an estimate prepared by Joslyn's
environmental consultants of the costs for environmental
response at the Oklahoma site, based on the limited data about
the Oklahoma site that is currently available, Joslyn's
experience with nearly completed clean-ups and recent actions
by USEPA at other sites. This estimate assumes that Joslyn
will be allowed to apply the remediation technologies at the
Oklahoma site that it has applied elsewhere. Certain of such
technologies are among the least expensive of various
alternatives. The balance of the special charge reflects
estimates of Joslyn's exposure at certain other locations, for
which very little information is available, that are not
currently known to be under investigation by environmental
agencies. Accordingly, there can be no assurance that
Joslyn's estimates of its environmental liabilities will not
change. For instance, if technologies other than those
assumed to be available are utilized at the Oklahoma site, or
if the volume of contaminated soil at that site is
significantly greater than that suggested by preliminary data,
remediation costs could more than double.
Page 6
<PAGE>
In addition to the $35 million charge taken in the 1994 third
quarter, Joslyn currently has approximately a net $14 million
reserve remaining (after expenditures and recoveries, includ-
ing $5.8 million received in the 1994 third quarter from
insurance and other sources) from a $30 million charge in 1987
for estimated remediation costs for known sites then under
investigation by environmental agencies. None of the 1987
charge relates to the sites covered by the 1994 third quarter
special charge.
NOTE 2:
The increases in current and long-term deferred tax assets
pertain primarily to expected future tax benefits related to
the environmental accruals.
NOTE 3:
In the 1993 third quarter, Congress enacted the Revenue
Reconciliation Act of 1993 (RRA) which, among other things,
increased the federal statutory rate to 35% retroactive to
January 1, 1993. In the 1993 third quarter, the Corporation
recorded the tax effects of the RRA which increased net income
and earnings per share by approximately two cents ($.02).
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- - ---------------------------------------------
Financial Condition
- - -------------------
As of September 30, 1994, the working capital ratio for the Corporation
remained strong at 2.77 to 1 compared to 2.78 to 1 at December 31, 1993.
The most significant Balance Sheet fluctuations were related to the
recording, in the 1994 third quarter, of a special $35 million
environmental charge ($21 million after tax) to increase environmental
reserves pertaining principally to the clean-up of a former wood treating
site located at Panama, Oklahoma. The related deferred taxes of $14
million were charged to Deferred Tax and Other Current Assets and Net
Deferred Tax and Other Assets. Joslyn believes that 10% to 20% of the
remediation costs at the Oklahoma site will be expended over the next
couple of years and that most of the remediation will take place during a
period five to ten years from now. The remediation is currently expected
to be financed out of cash flow. See Note 1 in Notes to Consolidated
Condensed Financial Statements for additional discussion of environmental
matters.
Cash and Cash Equivalents increased $2.6 million as summarized in the
Condensed Statement of Cash Flows. The $35 million environmental charge
and increased related deferred taxes did not affect cash flow during the
period because the expeditures will be made in future periods as
described above. During 1994, the Corporation received $5.8 million (in
the third quarter) of environmental cash recoveries from insurance and other
sources (which were credited to the environmental reserve), while it
disbursed $1.9 million of cash for environmental items, resulting in a
net $3.9 million positive environmental cash flow. This, combined with
income before the environmental charge and cash flows from depreciation
and a small decrease in inventories, more than offset negative cash flows
related to dividends, an increase in accounts receivable and expenditures
of $2.7 million for routine capital asset purchases and $2.5 million
related to the purchase of the assets of the Poleline Hardware Division
of Stanley G. Flagg Company.
Significant Balance Sheet fluctuations between September 30, 1994 and
December 31, 1993 not related to environmental matters include
Receivables that were $4.8 million greater than December 31,1993
primarily because sales in August and September 1994 were $5.7 million,
or 17.4%, greater than in November and December 1993 and Accounts
Payable that were $1.9 million, or 15.7%, less on September 30th due to
differences in the short-term timing of payments. Up to $7.2 million of
environmental payments may be made within the next 12 months and,
accordingly, $7.2 million is the current environmental reserve included
in Accrued Liabilities at September 30,1994, as compared to $1.9 million
at December 31, 1993.
Results of Operations
- - ---------------------
In the 1994 third quarter, the Corporation recorded a special charge of
$35 million ($21 million after tax or $2.95 per share) for increased
environmental reserves as discussed in "Financial Condition" section of
this analysis and in Notes 1 and 2 in the Notes to Consolidated
Condensed Financial Statements. All references below to "operating
income" refer to operating income before this special charge.
Page 8
<PAGE>
Consolidated sales and operating income by business segment for the
quarter ended September 30, 1994 and 1993 are as follows (000 omitted):
Quarter Ended Increase
September 30, (Decrease)
--------------------- -------------------
1994 1993 Dollars Percent
--------- --------- -------- -------
Net Sales
- - ---------
Electrical Technologies $34,335 $35,764 $(1,429) (4)%
Utility Systems 21,468 17,925 3,543 20
--------- --------- --------
Total $55,803 $53,689 $ 2,114 4
========= ========= ========
Operating Income
- - ----------------
Electrical Technologies $ 5,367 $ 5,618 $ (251) (4)
Utility Systems 1,595 1,082 513 47
--------- --------- --------
Total $ 6,962 $ 6,700 $ 262 4
========= ========= ========
On a consolidated basis, both sales and operating income improved 4% for
the 1994 third quarter compared to the corresponding quarter of 1993 due
to improved performance by the Utility Systems segment which more than
offset weakness in the Electrical Technologies segment.
The Electrical Technologies segment net sales and operating income both
decreased 4% for the third quarter of 1994 compared to the corresponding
quarter in 1993. Improved performances by Joslyn Jennings and ADK
Pressure Equipment did not offset declines by Joslyn Power Products and
Joslyn Electronic Systems. Joslyn Hi-Voltage and Joslyn Clark Controls
had increased operating income despite sales that were slightly less
than the third quarter of 1993, while Joslyn Sunbank and Air-Dry are
contending with difficult defense markets.
The Utility Systems business segment's net sales and operating income
increased 20% and 47%, respectively, in the third quarter of 1994
compared to the third quarter of 1993 as sales of the Hardware products
and sales of the new product line of fiberglass conductor and iron
poleline hardware contributed to improved performance.
Joslyn's gross profit margin in the third quarter of 1994 increased
1/2% as a percent of sales to 26.9% from the corresponding quarter of
1993 primarily due to shifts in product mix and expense controls.
The provision for income taxes for the third quarter of 1994 includes a $14.0
million benefit related to the special environmental charge. Excluding the
environmental charge and the related tax benefit, the income tax provision for
the quarter is $2.1 million which is an effective rate of 34.4% compared to
31.4% in the corresponding quarter of 1993. The income tax provision for the
Page 9
<PAGE>
third quarter of 1993 included a benefit described in Note 3 of The Notes to
Consolidated Condensed Financial Statements related to the enactment of the
Revenue Reconciliation Act of 1993.
- - ----------------------------------------------------------------------------
Consolidated sales and operating income by business segments for the
nine months ended September 30, 1994 and 1993 are as follows (000
omitted):
Nine Months Ended Increase
September 30, (Decrease)
--------------------- -------------------
1994 1993 Dollars Percent
--------- --------- -------- -------
Net Sales
- - ---------
Electrical Technologies $100,896 $110,197 $(9,301) (8)%
Utility Systems 63,298 57,033 6,265 11
--------- --------- --------
Total $164,194 $167,230 $(3,036) (2)
========= ========= ========
Operating Income
- - ----------------
Electrical Technologies $ 15,946 $ 18,089 $(2,143) (12)
Utility Systems 4,300 3,747 553 15
--------- --------- --------
Total $ 20,246 $ 21,836 $(1,590) (7)
========= ========= ========
Overall, the net sales and operating income decreased 2% and 7%,
respectively, for the nine months ended September 30, 1994 compared to
the corresponding period of 1993 as improvements by the Utility
Systems segment did not fully offset the weaknesses within some units
of the Electrical Technologies segment.
For the nine months ended September 30, 1994, net sales and operating
income of the Electrical Technologies segment decreased 8% and 12%,
respectively, from the nine months ended September 30, 1993 primarily
due to disappointing performances by Joslyn Power Products, Joslyn
Electronic Systems and the defense businesses due to weak markets and
slower than anticipated introduction and customer acceptence of new
products. Joslyn Jennings partially offset the disappointing
performances with significant improvement in sales and income.
The Utility Systems segment net sales and operating income improved 11%
and 15%, respectively, on a year-to-date basis over the corresponding
period of 1993. The Hardware operations contributed strong increases in
sales and earnings. The Electrical Apparatus sales were greater but the
earnings were lower due to a shift in product mix to lower margin
products and startup costs related to integrating the acquisition of The
Stanley G. Flagg product line into the existing Electrical Apparatus
operations.
Page 10
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
On July 27, l994, the Company was first notified that
it is a potentially responsible party for the clean-up
of a former wood treating site located at Panama,
Oklahoma. Further information with respect to this
matter is set forth in Notes 1 and 2 to the
Consolidated Condensed Financial Statements in Item 1
of Part I and the "Financial Condition" section of Item
2, all of which is incorporated in this Item 1 by this
reference.
Item 2. Changes in Securities
On September 2, 1994, the Company and The First
National Bank of Chicago, as rights agent, amended the
Rights Agreement, dated as of February 10, 1988 (the
"Rights Agreement"), pursuant to which the Company's
Common Stock Purchase Rights were issued.
The amendment (i) reduces from 20% to 15% (or, in the
case of any person who beneficially owned 15% or more
of the Company's Common Stock as of September 2, 1994
(an "Existing Holder"), a percentage equal to or
greater than the amount beneficially owned by such
Existing Holder on September 2, 1994, plus 1% (the
"Increased Percentage")), the beneficial ownership
threshold that results in a person becoming an
"Acquiring Person" under the Rights Agreement and (ii)
reduces from 30% to 15% (or, in the case of an Existing
Holder, the Increased Percentage) the percentage of the
Company's Common Stock sought in a tender offer the
commencement of which would result in a distribution of
rights under the Rights Agreement. The amendment also
(a) provides that the "flip-in" provision under the
Rights Agreement is operative immediately once anyone
becomes an Acquiring Person (all other triggers to the
"flip-in" provision and certain exceptions are
deleted), (b) allows the Board of Directors to delay
the distribution of rights certificates if any such
tender or exchange offer has been commenced so long as
no one has become an Acquiring Person and (c) excludes
from the definition of "Acquiring Person" anyone who
the Board of Directors determines has inadvertently
become an Acquiring Person and who promptly divests a
sufficient number of shares of the Company's Common
Stock so as to no longer be an Acquiring Person.
Copies of the amendment to the Right Agreement and the
press release of the Company announcing such amendment
are filed as exhibits to the Company's Current Report
on Form 8-K dated September 2, 1994 and are
incorporated in this Item 2 by this reference.
Page 11
<PAGE>
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
During the quarter ended September 30, l994, the
following reports on Form 8-K have been filed:
Date of Report Items Reported
September 2, l994 5 (Other Events)
September 16, l994 5 (Other Events)
October 20, l994 5 (Other Events)
No financial statements were filed with any of such
reports.
Page 12
<PAGE>
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.
JOSLYN CORPORATION
Registrant
Date: November 11, l994 /s/ Raymond E. Micheletti
Raymond E. Micheletti
President and Chief
Executive Officer
Date: November 11, l994 /s/ Lawrence G. Wolski
Lawrence G. Wolski
Executive Vice President
and Chief Financial Officer
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-START> Jan-01-1994
<PERIOD-END> Sep-30-1994
<PERIOD-TYPE> 9-MOS
<CASH> 43,741
<SECURITIES> 0
<RECEIVABLES> 30,441
<ALLOWANCES> 0
<INVENTORY> 36,515
<CURRENT-ASSETS> 123,871
<PP&E> 82,476
<DEPRECIATION> 43,502
<TOTAL-ASSETS> 184,563
<CURRENT-LIABILITIES> 44,688
<BONDS> 0
0
0
<COMMON> 8,926
<OTHER-SE> 74,921
<TOTAL-LIABILITY-AND-EQUITY> 184,563
<SALES> 164,194
<TOTAL-REVENUES> 164,194
<CGS> 119,940
<TOTAL-COSTS> 119,940
<OTHER-EXPENSES> 36,157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17,998)
<INCOME-TAX> (8,100)
<INCOME-CONTINUING> (9,898)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,898)
<EPS-PRIMARY> (1.39)
<EPS-DILUTED> (1.39)
</TABLE>
