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Previous: FINA INC, 10-Q, 1995-11-13 |
Next: AMERICAN VANGUARD CORP, 10-Q, 1995-11-13 |
<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 29, 1995
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
---------- ----------
Commission file number 1-5601
AMERICAN PRECISION INDUSTRIES INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 16-1284388
- -------------------------------- -------------------------
(State or other jurisidiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2777 WALDEN AVENUE, BUFFALO, NEW YORK 14225
- ----------------------------------------- ------------------
(Address of principal executives offices) (Zip Code)
(716) 684-9700
----------------------------------------------------
(Registrant's telephone number, including area code)
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
------ ------ .
Number of shares of outstanding stock
on November 10, 1995 7,127,538
This document contains pages 1 through 11 inclusive.
1
<PAGE> 2
AMERICAN PRECISION INDUSTRIES
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
3RD QUARTER ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
1995 1994 1995 1994
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $20,800,000 $18,076,000 $60,316,000 $47,600,000
Investment Income 50,000 69,000 183,000 277,000
----------- ----------- ----------- -----------
Revenues 20,850,000 18,145,000 60,499,000 47,877,000
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of products sold 13,536,000 12,047,000 40,388,000 31,670,000
Selling and administrative 5,075,000 4,294,000 13,835,000 11,541,000
Research and product development 266,000 255,000 838,000 641,000
Interest and debt expense 54,000 60,000 171,000 167,000
----------- ----------- ----------- -----------
18,931,000 16,656,000 55,232,000 44,019,000
----------- ----------- ----------- -----------
Earnings before Income Taxes 1,919,000 1,489,000 5,267,000 3,858,000
Federal and State Income Taxes 719,000 555,000 1,903,000 1,403,000
----------- ----------- ----------- -----------
Net Earnings $ 1,200,000 $ 934,000 $ 3,364,000 $ 2,455,000
=========== =========== =========== ===========
Net Earnings per Share $0.17 $0.13 $0.48 $0.35
=========== =========== =========== ===========
Dividends Declared per Share $0.0650 $0.0625 $0.1925 $0.1750
=========== =========== =========== ===========
Average Shares Outstanding 7,101,000 7,064,000 7,078,000 7,062,000
=========== =========== =========== ===========
</TABLE>
2
<PAGE> 3
AMERICAN PRECISION INDUSTRIES
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
- --------------------------
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
SEPTEMBER DECEMBER
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 250,000 $ 2,135,000
Accounts receivable, less allowance for
doubtful accounts of $288,000 and $373,000 12,065,000 10,555,000
Marketable securities 2,529,000 1,706,000
Inventories 10,658,000 8,827,000
Prepaid expenses 697,000 862,000
Deferred income tax benefit 131,000 153,000
----------- -----------
TOTAL CURRENT ASSETS 26,330,000 24,238,000
----------- -----------
INVESTMENTS 1,321,000 3,562,000
OTHER ASSETS
Cost in excess of net assets acquired 2,300,000 2,245,000
Prepaid pension cost 2,237,000 2,005,000
Net cash value of life insurance 2,205,000 1,651,000
Other 713,000 566,000
----------- -----------
TOTAL OTHER ASSETS 7,455,000 6,467,000
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Land 211,000 211,000
Buildings and improvements 5,752,000 5,305,000
Machinery, equipment and furniture 21,438,000 20,730,000
Construction in process 1,609,000 410,000
----------- -----------
29,010,000 26,656,000
Less accumulated depreciation 17,676,000 16,454,000
----------- -----------
NET PROPERTY, PLANT AND EQUIPMENT 11,334,000 10,202,000
----------- -----------
$46,440,000 $44,469,000
=========== ===========
</TABLE>
3
<PAGE> 4
AMERICAN PRECISION INDUSTRIES
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
- --------------------------
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
SEPTEMBER DECEMBER
----------- -----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 1,165,000 $ 2,000,000
Accounts payable 4,907,000 4,609,000
Accrued compensation and payroll taxes 2,849,000 2,523,000
Other accrued expenses 692,000 898,000
Dividends payable 463,000 441,000
Current portion of long-term obligations 314,000 366,000
Federal and state income taxes 252,000 79,000
----------- -----------
TOTAL CURRENT LIABILITIES 10,642,000 10,916,000
----------- -----------
OTHER NONCURRENT LIABILITIES 95,000 176,000
LONG-TERM OBLIGATIONS, LESS CURRENT PORTION 2,350,000 2,472,000
SHAREHOLDERS' EQUITY
Common stock, par value
$.66-2/3 per share:
Authorized - 10,000,000 shares
Issued - 7,499,580 and 7,442,048 shares 5,000,000 4,961,000
Additional paid-in capital 9,449,000 9,098,000
Retained earnings 21,725,000 19,726,000
Net unrealized gain (loss) on marketable
securities and investments 17,000 (18,000)
----------- -----------
36,191,000 33,767,000
Less cost of 374,262 and 378,262 treasury shares 2,838,000 2,862,000
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 33,353,000 30,905,000
----------- -----------
$46,440,000 $44,469,000
=========== ===========
</TABLE>
4
<PAGE> 5
AMERICAN PRECISION INDUSTRIES
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
- ------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------------
1995 1994
SEPTEMBER SEPTEMBER
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 3,364,000 $ 2,455,000
Adjustments to reconcile net income to cash
and cash equivalents provided by operating activities:
Depreciation and amortization 2,025,000 1,581,000
Gain on sale of investments and fixed assets 10,000 (3,000)
Increase in supplemental benefit program 101,000 74,000
Recognition of pension income under FASB #87 (233,000) (123,000)
Change in various allowance accounts (66,000) 309,000
Treasury stock issued as bonus 24,000 -
(Increase) Decrease in:
Accounts receivable (1,428,000) (2,105,000)
Inventories (1,852,000) (1,220,000)
Prepaid expenses 189,000 (74,000)
Prepaid income taxes - 58,000
Net cash value of life insurance (554,000) (524,000)
Other assets, net (325,000) 10,000
Increase (Decrease) in:
Accounts payable 315,000 616,000
Accrued expenses 120,000 747,000
Federal and state income taxes 173,000 269,000
Other noncurrent liabilities (81,000) 239,000
-------------- --------------
Net cash provided by Operating Activities 1,782,000 2,309,000
-------------- --------------
Cash Flows from Investing Activities
Purchases of investments and marketable securities - (6,254,000)
Additions to property, plant and equipment (3,098,000) (1,398,000)
Proceeds from investments 1,474,000 6,315,000
Proceeds from sale of fixed assets 20,000 -
-------------- --------------
Net cash (used) by Investing Activities (1,604,000) (1,337,000)
-------------- --------------
Cash Flows from Financing Activities
Exercise of stock options 389,000 28,000
Payment of long-term obligations, including current maturities (274,000) (434,000)
Dividends paid (1,343,000) (1,289,000)
Short-term borrowings, net of repayments (835,000) -
-------------- --------------
Net cash provided (used) by Financing Activities (2,063,000) (1,695,000)
-------------- --------------
Net Decrease in Cash and Cash Equivalents (1,885,000) (723,000)
Cash and Cash Equivalents at Beginning of Year 2,135,000 1,455,000
-------------- --------------
Cash and Cash Equivalents at End of Period $ 250,000 $ 732,000
============== ==============
5
</TABLE>
<PAGE> 6
AMERICAN PRECISION INDUSTRIES
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Third Quarter Ended September 29, 1995
--------------------------------------
Note A Consolidated Financial Statements
- ------ ---------------------------------
The Consolidated Balance Sheet as of September 29, 1995, and
the Consolidated Statement of Earnings, and the Consolidated
Statement of Cash Flows for the periods ended September 29,
1995 and September 30, 1994 have been prepared by the Company
without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations,
and changes in cash flow at September 29, 1995 and for all
periods presented have been made. The Consolidated Balance
Sheets as of September 29, 1995 and December 30, 1994 include
the assets, liabilities, and resulting goodwill of Harowe
Servo Controls, Inc. ("Harowe") acquired June 30, 1994. The
Consolidated Statements of Earnings and Cash Flows for the
periods ended September 29, 1995 and September 30, 1994 also
include the results of Harowe since the date of acquisition.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with Generally
Accepted Accounting Principles have been condensed or omitted.
It is suggested these condensed consolidated financial
statements be read in conjunction with the financial
statements and the notes thereto included in the Company's
December 30, 1994 Annual Report to Shareholders.
NOTE B Marketable Securities and Investments
- ------ -------------------------------------
In connection with the Management Agreement between the
Company and Gettys Corporation dated December 29, 1994,
municipal bonds in the amounts of $973,000 reflected as
marketable securities and $1,056,000 reflected as investments
are held in an escrow account to be applied to the purchase
price of the net assets of Gettys Corporation at the time the
Company acquires those net assets pursuant to the exercise of
the put or call option provisions of the Management Agreement.
Note C Inventories
- ------ -----------
It is not practical to determine raw material, work in
process, and finished goods inventories during interim
periods.
6
<PAGE> 7
Note D Long-Term Obligations
- ------ ---------------------
<TABLE>
<CAPTION>
September 29, 1995
-----------------------------------------------------
Outstanding Current Long-Term
----------- ------- ---------
<S> <C> <C> <C>
Industrial Revenue
Bonds $1,502,000 $ 139,000 $1,363,000
Supplemental Benefit
Program 1,162,000 175,000 987,000
---------- ---------- ----------
$2,664,000 $ 314,000 $2,350,000
========== ========== ==========
</TABLE>
Note E Earnings Per Share
- ------ ------------------
Earnings per share are based on the weighted average number of
shares outstanding.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
REVENUES
Consolidated revenues for the third quarter and nine months of 1995 increased
14.9% and 26.4%, respectively, as compared to the same periods in 1994. Sales
for the Heat Transfer Group increased 23.2% and 15.8% in the third quarter and
nine months of 1995 and 7.9% and 10.3% for the Electronic Components Group.
Sales of the Motion Technologies Group, which includes Harowe Servo Controls
Inc. ("HSC") in 1995 and for three months in 1994, increased 16.2% and 45.1%,
respectively, as compared to the third quarter and nine months of the prior
year.
Bookings of customer orders in the third quarter and nine months of 1995 were
$24.6 million and $71.0 million, respectively, up 44.9% and 43.5% over bookings
in the same periods last year. The Company's consolidated backlog of firm
orders at September 29, 1995 was $32.2 million, up 42.2% from $22.6 million on
September 30, 1994.
Investment income declined 27.5% and 33.9% in the third quarter and nine months
of 1995, respectively, reflecting the decline in average investment assets
primarily as a result of the sale of various bonds to fund both the purchase of
HSC and current operations.
COST OF PRODUCTS SOLD
The gross profit percentage increased in the third quarter of 1995 by 1.5%,
while the nine months remained relatively constant. The increase in the third
quarter reflects lower manufacturing costs within the Electronic Components and
Motion Technologies Groups, offset by slightly higher costs within the Heat
Transfer Group.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses, expressed as a percentage of net sales,
remained relatively consistent for the third quarter as compared to the same
period in 1994, while the nine months declined 1.3% reflecting management's
efforts to hold the growth of overhead costs below the growth in sales.
RESEARCH AND PRODUCT DEVELOPMENT
Research and product development increased in the third quarter and nine months
of 1995 by 4.3% and 30.7%, respectively, reflecting management's continued
commitment to the design of new products and improvement of existing products.
NET EARNINGS
Net earnings increased 28.5% in the third quarter of 1995 and 37.0% for the
nine months as compared to similar periods in 1994 and reflects the increased
level of net sales combined with lower operating costs, when expressed as a
percentage of revenues.
8
<PAGE> 9
FINANCIAL POSITION
The Company's liquidity is primarily generated from operations. In addition,
the Company has utilized its $10 million short-term line of credit from time to
time in amounts not exceeding $2,000,000 at any time during the nine months
ended September 29, 1995. Comparative information on the Company's liquidity
position follows ($000 omitted):
<TABLE>
<CAPTION>
1995 1994
September December
--------- --------
<S> <C> <C>
Net working capital $15,688 $13,322
Current ratio 2.5 2.2
Cash, cash equivalents
and marketable securities $ 2,779 $ 3,841
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended
-------------------------------
1995 1994
September September
--------- ----------
<S> <C> <C>
Cash flow from operations $ 1,782 $ 2,309
Capital expenditures $ 3,098 $ 1,398
</TABLE>
Over the past twelve months, the Company's portfolio of investments in
municipal bonds has declined as the proceeds realized from payment at maturity
or from sales of such investments have been applied to the final payment for
the acquisition of HSC and to the financing of the Company's receivables,
inventory, property, plant, and equipment, and research and product
development. The use of these funds has been consistent with the Company's
announced growth strategy. Continued success of that strategy will further
reduce the Company's investment portfolio and, in time, may require the Company
to seek long-term debt financing from banks or other lenders and/or additional
equity financing. As the Company's financing requirements become more clearly
defined, the Company will begin evaluating financing alternatives and will
re-assess its present dividend policy in order to determine whether either some
or all of the Company's cash currently used to pay dividends could be better
utilized towards the improvement of shareholder value when applied to fund the
Company's growth strategy.
9
<PAGE> 10
AMERICAN PRECISION INDUSTRIES
AND SUBSIDIARIES
Components of Consolidated Statement of Earnings
Expressed as a Percentage of Revenues
-------------------------------------
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
----------------------- -----------------------
1995 1994 1995 1994
September September September September
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues 100.0 100.0 100.0 100.0
-------- -------- -------- --------
Costs and Expenses
Cost of products sold 64.9 66.4 66.8 66.1
Selling and administrative 24.3 23.7 22.9 24.1
Research and product development 1.3 1.4 1.4 1.3
Interest and debt expense 0.3 0.3 0.3 0.3
-------- -------- -------- --------
90.8 91.8 91.4 91.8
-------- -------- -------- --------
Earnings before Income Taxes 9.2 8.2 8.6 8.2
Federal and State Income Taxes 3.4 3.1 3.1 2.9
-------- -------- -------- --------
Net Earnings 5.8 5.1 5.5 5.3
======== ======== ======== ========
Federal and State Income Taxes
as a percentage of earnings
before income taxes 37.5 37.3 36.1 36.4
======== ======== ======== ========
</TABLE>
10
<PAGE> 11
PART II
-------
OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K for the nine months ended
September 29, 1995. However, a Form 8-K reporting the
acquisition of Harowe Servo Controls, Inc. by the Company was
filed on July 14, 1994.
11
<PAGE> 12
AMERICAN PRECISION INDUSTRIES
AND SUBSIDIARIES
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.
AMERICAN PRECISION INDUSTRIES INC.
/s/ John M. Murray
-------------------------------------
John M. Murray
Vice President Finance and Treasurer
/s/ Thomas M. Huebsch
-------------------------------------
Thomas M. Huebsch
Chief Accounting Officer
November 10, 1995
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-29-1995
<CASH> 250,000
<SECURITIES> 2,529,000
<RECEIVABLES> 12,065,000
<ALLOWANCES> 288,000
<INVENTORY> 10,658,000
<CURRENT-ASSETS> 26,330,000
<PP&E> 29,010,000
<DEPRECIATION> 17,676,000
<TOTAL-ASSETS> 46,440,000
<CURRENT-LIABILITIES> 10,642,000
<BONDS> 0
<COMMON> 5,000,000
0
0
<OTHER-SE> 28,353,000
<TOTAL-LIABILITY-AND-EQUITY> 46,440,000
<SALES> 20,800,000
<TOTAL-REVENUES> 20,850,000
<CGS> 13,536,000
<TOTAL-COSTS> 18,931,000
<OTHER-EXPENSES> 5,341,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,000
<INCOME-PRETAX> 1,919,000
<INCOME-TAX> 719,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,200,000
<EPS-PRIMARY> $0.17
<EPS-DILUTED> 0
</TABLE>
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