<PAGE>
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, 1995
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, 1995
Common Stock, $2.50 par value 9,657,825 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, 1995 and 1994 (unaudited)
Consolidated Balance Sheets as of 4
March 31, 1995 (unaudited)
and December 31, 1994
Consolidated Statements of Cash Flows 5
for the Three Months Ended
March 31, 1995 and 1994 (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,
------------------
1995 1994
(unaudited) (unaudited)
-------- --------
<S> <C> <C>
Net sales $ 53,416 $ 44,159
Cost of sales 35,693 28,752
--------- ---------
Gross profit 17,723 15,407
--------- ---------
Selling and marketing expense 7,145 6,120
General and administrative expense 5,168 5,077
Research and development expense 3,164 2,421
--------- ---------
Income before interest and taxes 2,246 1,789
--------- ---------
Other (income) expense:
Interest expense, net 1,044 928
Other, net 30 11
--------- ---------
Income (loss) before income taxes 1,172 850
Provision for income taxes -0- -0-
--------- ---------
Net income (loss) $ 1,172 $ 850
========= =========
Earnings (loss) per common share $ .06 $ .03
====== ======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
ASSETS
March 31,
1995 December 31,
(unaudited) 1994
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,673 $ 7,165
Restricted cash 8,000 8,000
Accounts receivable 39,556 38,348
Recoverable amounts on long-term contracts 8,207 7,380
Inventories 26,300 23,231
Prepaid expenses 4,310 4,176
--------- ---------
Total current assets 94,046 88,300
--------- ---------
Property, plant and equipment, net 31,165 30,789
Net assets held for sale -- 3,000
Goodwill 6,159 6,180
Other assets 9,812 9,932
--------- ---------
$ 141,182 $ 138,201
========= =========
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 9,181 $ 10,104
Current portion of long-term debt 1,625 3,220
Accounts payable 22,295 18,722
Accrued liabilities 31,646 31,177
--------- ---------
Total current liabilities 64,747 63,223
--------- ---------
Long-term debt 40,659 40,667
Other liabilities 1,820 1,899
Redeemable preferred stock 22,563 22,532
Common shareholders' equity:
Common stock 26,895 26,891
Additional paid-in capital 19,590 20,353
Accumulated deficit (24,943) (26,115)
Cumulative translation adjustments (271) (1,371)
Less common stock in treasury, at cost (9,878) (9,878)
--------- ---------
Total common shareholders' equity 11,393 9,880
--------- ---------
$ 141,182 $ 138,201
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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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,
------------------
1995 1994
(unaudited) (unaudited)
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Income (loss) from operations $ 1,172 $ 850
Adjustments to reconcile income (loss) to
net cash provided by operating activities:
Depreciation and amortization 1,843 1,705
Changes in operating assets and liabilities:
Restricted cash -- (2,102)
Accounts and notes receivable 4,138 3,308
Recoverable amounts on long-term contracts (827) (612)
Inventories (2,367) (495)
Prepaid expenses (103) (36)
Accounts payable and accrued liabilities (1,071) (2,852)
Deferred income taxes and other expenses (60) 79
Other 52 (155)
--------- ---------
Net cash provided by (used in) operations 2,777 (310)
--------- ---------
Cash flows from investing activities:
Capital expenditures (1,406) (1,000)
Proceeds from sale of building 2,605 --
--------- ---------
Net cash provided by (used in) investing activities 1,199 (1,000)
--------- ---------
Cash flows from financing activities:
Net repayments under credit lines (1,622) (98)
Issuances of common stock 12 4
Retirement of long-term debt (1,103) --
Principal payments under capital lease obligations (12) --
Dividends (743)(743)
--------- ---------
Net cash used in financing activities (3,468) (837)
--------- ---------
Net increase (decrease) in cash and cash equivalents 508 (2,147)
Cash and cash equivalents at beginning of period 7,165 17,682
--------- ---------
Cash and cash equivalents at end of period $ 7,673 $ 15,535
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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KOLLMORGEN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1995
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,
1995, 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 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 increased by $0.5 million during
the first quarter of 1995. Net income from operations and depreciation and
amortization provided $3.0 million in cash. In addition, accounts receivable
collections provided $4.1 million cash which was partially offset by an
increase in inventory of $2.4 million, an increase in recoverable amounts on
long-term contracts of $0.8 million, and a decrease in accounts payable and
accrued liabilities of $1.1 million.
Investing activities provided $1.2 million of which $1.4 million was
used for the purchase of capital equipment. In addition, the Company sold a
vacant facility for $2.6 million in cash.
Financing activities used $3.5 million in cash of which $1.6 million was
used to pay off a note payable on the above-mentioned facility. The Company
also purchased, on the open market, approximately $1 million aggregate
principal amount of the Company's 8-3/4% Convertible Subordinated Debentures
at market prices less than par value. This purchase resulted in an
immaterial gain. Dividends paid on common and preferred stock accounted for
$0.7 million use of cash.
The Company believes that it can generate sufficient resources through
cash from operations and its current borrowing capacity to finance its 1995
capital expenditures, sinking fund payments, and working capital
requirements. There were no significant capital expenditure commitments at
the end of the quarter.
RESULTS OF OPERATIONS
Sales for the first quarter 1995 were $53.4 million resulting in net
income of $1.2 million or $0.06 per common share. This compares with 1994
first quarter sales of $44.2 million, net income of $0.9 million or $0.03 per
common share.
Backlog at the end of the first quarter of 1995 was $140 million, an
increase over the first quarter and year-end 1994 of $11 million and $21.5
million, respectively.
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Segments of Business Information
(dollars in thousands)
For the
Three Months Ended
March 31,
------------------
1995 1994
--------- ---------
Motion Technologies Group:
Net sales $ 29,989 $ 23,239
Operating profit 2,007 1,834
Electro-Optical Instruments:
Net sales 23,427 20,920
Operating profit 1,342 1,157
General Corporate:
Operating expenses (2,177) (2,141)
Consolidated:
Net sales $ 53,416 $ 44,159
Operating income (loss) 1,172 850
Effective January 1, 1995, the Company began reporting the operating
results of its French instruments business in the Electro-Optical Instruments
segment. Previously, this business had been part of the Motion Technologies
Group. Accordingly, 1994 results have been restated to reflect this change.
In the motion technologies group, first quarter 1995 sales were $30
million compared to $23.2 million, up 29% from the corresponding quarter of
1994. Operating income for this segment was $2 million compared to $1.8
million, up 9% from the same period a year ago. An unfavorable product mix
and increased new product development expenses impacted first quarter
performance. The increase in sales occurred in both the industrial and
defense products (ADP) group. Sales in the ICP group increased $3.5 million
over the first quarter of 1994 primarily associated with increased OEM
business. Sales in the ADP group increased by $3.3 million as a result of
the additional sales generated by the April 1994 acquisition of Hightech
Components, Ltd. In addition, sales at the Company's French subsidiary
increased by $2 million essentially associated with several prototype
development programs.
Backlog for this segment at the end of the first quarter 1995 was $62
million, an increase of 6% from year-end 1994.
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In the electro-optical instruments segment, sales were $23.4 million
compared to $20.9 million, up 12% from the corresponding quarter of 1994.
Operating income for this segment was $1.3 million for the first quarter 1995
compared to $1.2 million for the same quarter of 1994. Sales of new products
introduced during 1994 in the Company's color and instrumentation business
resulted in an increased sales volume of $1.6 million. Sales at the
Company's operations in California increased by $0.8 million over the 1994
first quarter primarily because of the shutdown of this facility during the
first quarter of 1994 as a result of the Northridge earthquake.
Backlog for this segment at the end of the 1995 first quarter was $78
million, a 30% increase over the year-end 1994.
General corporate expense includes interest expense, net of investment
income, and general corporate administrative 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 15, 1995
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<TABLE>
Exhibit 11
KOLLMORGEN CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(Dollars in thousands, except per share amounts)
<CAPTION>
For the
Three Months Ended
March 31,
------------------
1995 1994
---------- ----------
<S> <C> <C>
Net income (loss) $ 1,172 $ 850
Less preferred stock dividends and
accretion of discount (581) (581)
Earnings (loss) applicable to
primary common shares 591 269
Number of shares:
Weighted average number of common
shares outstanding 9,649,905 9,636,798
---------- ----------
Earnings (loss) per common share $ .06 $ .03
====== ======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE> <S> <C>
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<ARTICLE> 5
<LEGEND>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENTS OF OPERATIONS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 7,673
<SECURITIES> 0
<RECEIVABLES> 39,556
<ALLOWANCES> 1,000
<INVENTORY> 26,300
<CURRENT-ASSETS> 94,046
<PP&E> 114,708
<DEPRECIATION> 83,543
<TOTAL-ASSETS> 141,182
<CURRENT-LIABILITIES> 64,747
<BONDS> 40,659
<COMMON> 26,895
22,563
0
<OTHER-SE> (15,502)
<TOTAL-LIABILITY-AND-EQUITY> 141,182
<SALES> 51,528
<TOTAL-REVENUES> 53,416
<CGS> 34,458
<TOTAL-COSTS> 35,693
<OTHER-EXPENSES> 15,477
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,074
<INCOME-PRETAX> 1,172
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,172
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
