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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994
Commission File No. 1-5562
KOLLMORGEN CORPORATION
(Exact name of registrant as specified in its charter)
New York 04-2151861
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160l Trapelo Road, Waltham, Massachusetts 02154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 890-5655
NONE
(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 issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 12, 1994
Common Stock, $2.50 par value 9,639,138 shares
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KOLLMORGEN CORPORATION
INDEX
Page No.
PART I - Financial Information
Consolidated Statements of Operations 3
for the Three Months Ended
March 31, 1994 and 1993 (unaudited)
Consolidated Balance Sheets as of 4
March 31, 1994 (unaudited)
and December 31, 1993
Consolidated Statements of Cash Flows 5
for the Three Months Ended
March 31, 1994 and 1993 (unaudited)
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis 7-9
of Financial Condition and
Results of Operations
PART II - Other Information 9
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<TABLE>
PART I - FINANCIAL INFORMATION
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
<CAPTION>
For the
Three Months Ended
March 31,
------------------
1994 1993
(unaudited) (unaudited)
-------- --------
<S> <C> <C>
Net sales 44,159 $ 45,568
Cost of sales 28,752 31,028
--------- ---------
Gross profit 15,407 14,540
--------- ---------
Selling and marketing expense 6,120 6,016
General and administrative expense 5,077 5,503
Research and development expense 2,421 2,343
--------- ---------
Income before interest and taxes 1,789 678
--------- ---------
Other income (expense):
Interest expense, net (928) (1,157)
Other, net (11) 38
--------- ---------
Income (loss) before income taxes 850 (441)
Provision for income taxes -0- -0-
--------- ---------
Net income (loss) $ 850 $ (441)
========= =========
Earnings (loss) per common share $ .03 $ (.10)
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<FN>
See accompanying notes to consolidated financial statements.
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<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
ASSETS
March 31,
1994 December 31,
(unaudited) 1993
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,535 $ 17,682
Restricted cash 8,822 6,720
Accounts receivable 30,804 33,744
Recoverable amounts on long-term contracts 6,446 5,834
Inventories 22,676 22,018
Prepaid expenses 3,618 3,564
--------- ---------
Total current assets 87,901 89,562
--------- ---------
Property, plant and equipment, net 29,869 30,461
Net assets held for sale 3,000 3,000
Other assets 11,081 10,985
--------- ---------
$ 131,851 $ 134,008
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LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 5,512 $ 5,532
Current portion of long-term debt 3,874 3,872
Accounts payable 15,570 16,341
Accrued liabilities 30,646 32,561
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Total current liabilities 55,602 58,306
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Long-term debt 44,120 44,120
Other liabilities 1,670 1,590
Redeemable preferred stock 22,438 22,407
Common shareholders' equity:
Common stock 26,875 26,875
Additional paid-in capital 22,666 23,447
Accumulated deficit (29,316) (30,166)
Cumulative translation adjustments (2,276) (2,624)
Less common stock in treasury, at cost (9,928) (9,947)
--------- ---------
Total common shareholders' equity 8,021 7,585
--------- ---------
$ 131,851 $ 134,008
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<FN>
See accompanying notes to consolidated financial statements.
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<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
<CAPTION>
For the
Three Months Ended
March 31,
------------------
1994 1993
(unaudited) (unaudited)
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Income (loss) from operations $ 850 $ (441)
Adjustments to reconcile income (loss) to
net cash provided by operating activities:
Depreciation and amortization 1,705 1,748
Changes in operating assets and liabilities:
Restricted cash (2,102) (1,712)
Accounts and notes receivable 3,308 1,954
Recoverable amounts on long-term contracts (612) 4,738
Inventories (495) 2,230
Prepaid expenses (36) 111
Accounts payable and accrued liabilities (2,852) (4,001)
Deferred income taxes and other expenses 79 (16)
Other (155) (372)
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Net cash provided by (used in) operations (310) 4,239
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Cash flows from investing activities:
Capital expenditures (1,000) (1,017)
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Net cash used in investing activities (1,000) (1,017)
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Cash flows from financing activities:
Net repayments under credit lines (98) (275)
Issuances of common stock 4 -
Retirement of long-term debt - (206)
Dividends (743)(741)
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Net cash used in financing activities (837) (1,222)
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Net increase (decrease) in cash and cash equivalents (2,147) 2,000
Cash and cash equivalents at beginning of period 17,682 23,463
--------- ---------
Cash and cash equivalents at end of period $ 15,535 $ 25,463
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<FN>
See accompanying notes to consolidated financial statements.
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KOLLMORGEN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1994
1. The accompanying unaudited consolidated financial statements include the
accounts of Kollmorgen Corporation and all of its majority owned
subsidiaries.
2. In the opinion of management, the unaudited consolidated financial
statements included herein contain all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the Company's
and its consolidated subsidiaries' financial condition at March 31,
1994, and the results of operations and cash flows for the three-month
period then ended. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the full
year. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for additional information.
3. Earnings (loss) per common share is based on net income less the
dividends and interest accretion on redeemable preferred stock divided
by the average number of common shares outstanding. Fully diluted net
income assumes full conversion of all convertible securities into common
stock which include the convertible subordinated debentures and
redeemable preferred stock. The fully diluted calculation does not
result in dilution of net income per common share and, accordingly, is
not presented (see Exhibit 11).
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Management's Discussion and Analysis of Financial Condition
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Kollmorgen's cash and cash equivalents decreased by $2.1 million during
the first quarter of 1994. Net income from operations and depreciation and
amortization provided $2.6 million in cash. The Company's restricted cash
balance increased $2.1 million during the quarter as its outstanding standby
letters of credit increased to $13.6 million from $9.4 million at year-end
1993. In addition, accounts receivable collections provided $3.3 million in
cash which was partially offset by decreases in payables and other
liabilities of $2.9 million. Inventories and recoverable amounts on long-
term contracts increased slightly from year-end 1993.
Investing activities used $1 million in cash for purchases of capital
equipment while financing activities used $.8 million in cash, of which $.7
million was used for payment of dividends to both common and preferred
shareholders. The Company is required in accordance with the terms of its
8-3/4% convertible subordinated debt agreement to make a minimum of $1.8
million sinking fund payment on May 1 of each year commencing on May 1, 1994,
and continuing until 2008. The Company feels it can generate sufficient
resources through cash from operations to meet its financial obligations.
There were no significant capital expenditure commitments at the end of
the quarter.
RESULTS OF OPERATIONS
Sales for the first quarter 1994 were $44.2 million resulting in a net
profit of $.9 million or $.03 per common share. This compares with 1993
first quarter sales of $45.6 million and a net loss of $.4 million or a loss
of $.10 per common share. Selling, general and administrative expenses were
reduced by $.5 million over the corresponding period a year ago, primarily
due to decreased expenses in the motion technologies group as a result of
personnel reductions in that segment.
Backlog at the end of the first quarter in 1994 was $129 million, an
increase over the first quarter and year-end 1993 of $20 million and $19
million, respectively.
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Segments of Business Information
(dollars in thousands)
For the
Three Months Ended
March 31,
------------------
1994 1993
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Motion Technologies Group:
Net sales $ 26,052 $ 27,622
Operating profit 1,553 1,233
Electro-Optical Instruments:
Net sales 18,107 17,946
Operating profit 1,318 505
General Corporate:
Operating expenses (2,021) (2,179)
Consolidated:
Net sales $ 44,159 $ 45,568
Operating income (loss) 850 (441)
In the motion technologies group, first quarter 1994 sales were $26.1
million compared to $27.6 million, down 6% from the corresponding quarter of
1993. Operating profit for this segment was $1.6 million compared to $1.2
million, up 26% from the same period a year ago. The decrease in sales is
primarily due to a lower sales volume in the domestic military/aerospace
portion of the business. The increase in operating income, despite the sales
decline, is a result of cost reductions and improved operating performance in
the Company's domestic motor businesses.
Backlog for this segment at the end of the first quarter 1994 was $54.2
million, an increase of 4% from year-end 1993.
In the electro-optical instruments segment, sales were $18.1 million for
the 1994 first quarter compared to $17.9 million for the corresponding period
a year ago. The relatively flat sales is a result of an increase in revenues
on long-term military contracts at the Company's Electro-Optical Division
offset by decreased revenues in the commercial color and light measurement
products. This decrease in the commercial portion of the business can be
primarily attributed to delays in repairing the Photo Research facility as a
result of the California earthquake in Northridge. This leased facility was
not able to be occupied for most of the quarter while repair crews cleaned up
the damage. Operating profit for the segment was $1.3 million for the 1994
first quarter as compared to $.5 million for the corresponding period a year
ago due to improved operating performance and higher revenues at the
Company's Electro-Optical Division. During this quarter that Division was
awarded three major contracts from the U.S. Navy for optronic sights and
periscopes and a foreign order totalling approximately $7 million.
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Backlog for this segment at the end of the 1994 first quarter was $75.3
million, a 30% increase over the year-end 1993.
General corporate expense includes net interest income and expense and
general corporate administrative expenses. These expenses were down $.2
million as a result of lower interest expense.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -- Listed below are the exhibits filed with this report.
11. Statement re computation of per share earnings.
(b) Reports on Form 8-K -- None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
KOLLMORGEN CORPORATION
By: /s/ Robert J. Cobuzzi
Robert J. Cobuzzi, Senior Vice President
Treasurer and Chief Financial Officer
Date: May 12, 1994
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Exhibit 11
KOLLMORGEN CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(Dollars in thousands, except per share amounts)
<CAPTION>
For the
Three Months Ended
March 31,
------------------
1994 1993
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<S> <C> <C>
Net income (loss) $ 850 $ (441)
Less preferred stock dividends and
accretion of discount (581) (581)
Earnings (loss) applicable to
primary common shares 269 (1,022)
Number of shares:
Weighted average number of common
shares outstanding 9,636,798 9,630,134
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Earnings (loss) per common share $ .03 $ (.10)
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<FN>
See accompanying notes to consolidated financial statements.
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