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Previous: JAMES RIVER CORP OF VIRGINIA, 11-K, 1995-07-11 |
Next: MERRILL LYNCH & CO INC, 424B3, 1995-07-11 |
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 the quarter ended May 31, 1995
Commission file number 0-6953
LILLY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-0471010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
733 SOUTH WEST STREET
INDIANAPOLIS, INDIANA 46225
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(317) 687-6700
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
<PAGE>
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
registrant's classes of common stock, as of the latest
practicable date.
Number of shares outstanding at June 30, 1995:
Class A Common 22,305,000
Class B Common 350,000
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended
May 31 May 31
1995 1994
_______________________
<S> <C> <C>
Net sales $85,407 $84,520
Costs and expenses:
Cost of products sold 56,877 54,796
Selling, administrative and general 15,057 15,807
Research and development 3,330 3,282
------- -------
75,264 73,885
------- -------
OPERATING INCOME 10,143 10,635
Other income (expense):
Interest income and sundry 49 70
Interest expense (514) (730)
------- -------
(465) (660)
------- -------
INCOME BEFORE INCOME TAXES 9,678 9,975
Income Taxes 3,870 4,189
------- -------
NET INCOME $ 5,808 $ 5,786
======= =======
Cash dividends per share--Note B $ 0.080 $ 0.067
======= =======
Average number of shares and equivalent shares
of capital stock outstanding--Note B 23,300 23,300
======= =======
<PAGE>
Net income per share--Note B $ 0.25 $ 0.25
======= =======
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)
Six Months Ended
May 31 May 31
1995 1994
____________________
<S> <C> <C>
Net sales $165,854 $158,492
Costs and expenses:
Cost of products sold 110,444 104,527
Selling, administrative and general 30,366 30,706
Research and development 6,671 6,622
-------- --------
147,481 141,855
-------- --------
OPERATING INCOME 18,373 16,637
Other income (expense):
Interest income and sundry 182 88
Interest expense (1,130) (1,333)
-------- --------
(948) (1,245)
-------- --------
INCOME BEFORE INCOME TAXES 17,425 15,392
Income Taxes 6,970 6,465
-------- --------
NET INCOME $ 10,455 $ 8,927
======== ========
Cash dividends per share--Note B $ 0.150 $ 0.127
======== ========
<PAGE>
Average number of shares and equivalent shares
of capital stock outstanding--Note B 23,300 23,260
======== ========
Net income per share--Note B $ 0.45 $ 0.38
======== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
May 31 November 30
1995 1994
________________________
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 17,191 $ 26,581
Short-term investments 75 75
Accounts receivable, less allowances
for doubtful accounts (5/31/95, $1,894;
11/30/94, $1,759) 39,213 42,231
Inventories--Note C 24,204 23,885
Prepaid expenses 745 285
-------- --------
TOTAL CURRENT ASSETS 81,428 93,057
OTHER ASSETS 12,256 10,464
INTANGIBLE ASSETS 50,593 50,978
PROPERTY AND EQUIPMENT
Land 4,646 4,044
Buildings and equipment 74,238 71,721
Allowances for depreciation (deduction) (41,832) (40,012)
-------- --------
37,052 35,753
-------- --------
<PAGE>
$181,329 $190,252
======== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
May 31 November 30
1995 1994
________________________
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 24,889 $ 29,288
Salaries, wages, commissions and
related items 7,104 9,160
State and local taxes 819 1,520
Federal income taxes 2,248 4,401
Current portion of long-term debt 7,060 7,084
-------- --------
TOTAL CURRENT LIABILITIES 42,120 51,453
LONG-TERM DEBT 21,000 28,026
OTHER LIABILITIES 11,627 11,349
SHAREHOLDERS' EQUITY
Capital stock:
Class A (limited voting) 14,913 14,831
Class B (voting) 300 300
Additional capital 73,049 71,972
Retained earnings 45,264 38,223
Currency translation adjustments 594 185
Cost of capital stock in treasury
(deduction) (27,538) (26,087)
-------- --------
106,582 99,424
-------- --------
$181,329 $190,252
<PAGE>
======== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
Six Months Ended
May 31 May 31
1995 1994
________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net income $10,455 $ 8,927
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,293 2,370
Amortization of intangibles 1,944 2,183
Deferred income taxes (61) (98)
Changes in operating assets and liabilities:
Accounts receivable 3,018 (1,957)
Inventories (319) 248
Prepaid expenses (460) (645)
Accounts payable and accrued expenses (7,156) 1,974
Income taxes (2,153) 1,283
Sundry (244) 166
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,317 14,451
INVESTING ACTIVITIES
Purchases of property and equipment (3,893) (3,669)
Sundry (2,046) 675
------- -------
NET CASH USED BY INVESTING ACTIVITIES (5,939) (2,994)
FINANCING ACTIVITIES
Cash dividends paid (3,415) (2,863)
Principal payments on short-term and
long-term borrowings (7,060) (1,278)
Purchases of capital stock for treasury (1,150) 0
Sundry 857 0
------- -------
NET CASH USED BY FINANCING ACTIVITIES (10,768) (4,141)
<PAGE>
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (9,390) 7,316
Cash and cash equivalents at beginning of year 26,581 7,384
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $17,191 $14,700
======= =======
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
May 31, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended
November 30, 1994.
NOTE B--SHARE AND PER SHARE AMOUNTS
Share and per share amounts have been adjusted to reflect the
three-for-two stock split distributed June 1, 1994. Equivalent
shares of capital stock represent additional shares assumed
issued upon exercise of stock options.
NOTE C--INVENTORIES
The principal inventory classifications are summarized as follows
(in thousands):
May 31 November 30
1995 1994
Finished products $ 17,283 $ 16,831
Raw materials 15,534 15,127
-------- --------
32,817 31,958
Less adjustment of certain
inventories to last in,
first out (LIFO) basis 8,613 8,073
-------- --------
$ 24,204 $ 23,885
======== ========
The Company uses the LIFO method in inventory valuation for
approximately 82% of inventories where an actual valuation can be
made only at the end of each year based on the inventory levels
and costs at that time. Accordingly, interim LIFO calculations
must necessarily be based on management's estimates of expected
<PAGE>
year-end inventory levels and costs. Since these are subject to
many forces beyond management's control, interim results are
subject to the final year-end LIFO inventory valuation. The
Company estimates the annual adjustment for LIFO and allocates it
to quarters based on actual inflation experienced in a quarter as
it relates to anticipated inflation for the year.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
Sales and net income for the second quarter ended May 31, 1995
were slightly higher than last year's record second quarter
results. Sales increased to $85.4 million for the 1995 second
quarter compared to $84.5 million for last year's quarter. Net
income was $5.8 million or 25 cents per share.
Sales for the first six months of fiscal 1995 were $165.9 million
compared to $158.5 million for the same period in 1994. Net
income for the first half of 1995 improved to $10.5 million or 45
cents per share compared to last year's $8.9 million or 38 cents
per share.
As announced earlier, second quarter 1995 results were weaker
than originally forecasted. Sales volume slowed during the
second quarter in response to reduced domestic industrial output.
Gross profit margins declined mainly due to rising raw material
costs. We have initiated price increases and other cost control
measures to improve profit margins.
On June 23, 1995 the Board of Directors approved a quarterly cash
dividend of 8 cents per share. The dividend will be paid October
2, 1995 to shareholders of record on September 11, 1995. Lilly
has invested over $2 million in recent weeks to repurchase shares
of its outstanding stock. We consider the repurchase of stock to
be an appropriate investment at this time.
During the second quarter of 1995 we commenced construction of a
new manufacturing plant in Bowling Green, Kentucky. Construction
activities are on schedule and we expect the facility to be
operational by early 1996.
The second half of fiscal 1995 will be challenging due to
economic uncertainties and rising raw material costs. We remain
optimistic and expect our financial performance to compare
favorably with 1994.
<PAGE>
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of shareholders of Lilly Industries, Inc.
on April 20, 1995, the following directors were elected by the
votes indicated:
<TABLE>
<CAPTION>
Abstentions
Stock Votes and Broker
Director Name Class Votes For Withheld Nonvotes
<S> <C> <C> <C> <C>
H. J. (Jack) Baker A 19,299,826 138,294 0
Robert H. McKinney A 19,300,129 137,991 0
John D. Peterson A 19,304,821 133,299 0
Van P. Smith A 19,301,129 136,991 0
William C. Dorris B 362,794 0 0
Douglas W. Huemme B 362,794 0 0
Roman J. Klusas B 362,794 0 0
Harry Morrison, Ph.D. B 362,794 0 0
Thomas E. Reilly, Jr. B 362,794 0 0
Richard A. Steele B 362,794 0 0
</TABLE>
Shareholders also approved adoption of the Supplemental Employee
Stock Purchase Plan which makes additional matching contributions
available to certain eligible employees who participate in the
Company's Employee Stock Purchase Plan. This proposal required
the separate affirmative votes, by class, of the holders of a
majority of the Company's Class A Common Stock and Class B Common
Stock present, or represented. The proposal was adopted with
16,565,463 shares, or 74%, of Class A Common Stock and 362,794
shares, or 99%, of Class B Common Stock voting for the proposal.
Shares of Class A Common Stock voted against was 1,019,091 and
abstentions and broker nonvotes were 1,853,566.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are included herein:
EXHIBIT 11 Computation of Earnings Per Share
EXHIBIT 27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the
three months ended May 31, 1995.
Note: All other item numbers under this section are not
applicable.
<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.
LILLY INDUSTRIES, INC. (Registrant)
July 11, 1995
/s/ Douglas W. Huemme
-----------------------------------
Douglas W. Huemme
Chairman, President and
Chief Executive Officer
PRINCIPAL FINANCIAL OFFICER
July 11, 1995
/s/ Roman J. Klusas
Roman J. Klusas
Vice President and
Chief Financial Officer
<TABLE>
<CAPTION>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
LILLY INDUSTRIES, INC.
(In thousands, except per share data)
Three Months Ended Six Months Ended
May 31 May 31 May 31 May 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding--
Note A 22,800 22,670 22,800 22,623
Net income $ 5,808 $ 5,786 $10,455 $ 8,927
Net income per common share--
Note A $ 0.25 $ 0.26 $ 0.46 $ 0.39
======= ======= ======== =======
Average shares outstanding--
Note A 22,800 22,670 22,800 22,623
Dilutive stock options based
on treasury stock method
using average market
price--Note A 500 603 500 615
------- ------- -------- -------
23,300 23,273 23,300 23,238
Net income $ 5,808 $ 5,786 $10,455 $ 8,927
Net income per common
and common equivalent
share--Note A $ 0.25 $ 0.25 $ 0.45 $ 0.38
======= ======= ======== =======
Fully diluted:
Average shares outstanding--
Note A 22,800 22,670 22,800 22,623
Dilutive stock options based
on the treasury stock
method using the higher
of quarter end or average
<PAGE>
market price--Note A 500 630 500 637
------- ------- -------- -------
23,300 23,300 23,300 23,260
Net income $ 5,808 $ 5,786 $10,455 $ 8,927
Net income per common
and common equivalent
share--Note A $ 0.25 $ 0.25 $ 0.45 $ 0.38
======= ======= ======== =======
<FN>
Note A--Share and per share amounts have been adjusted to reflect the
three-for-two stock split distributed June 1, 1994.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CAPTION>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED
CONDENSED BALANCE SHEET OF LILLY INDUSTRIES, INC. AS AT May 31, 1995 AND THE
CONSOLIDATED CONDENSED STATEMENT OF INCOME OF LILLY INDUSTRIES, INC. FOR THE THREE
MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<S> <C>
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> MAY-31-1995
<PERIOD-TYPE> 3-MOS
<CASH> 17,191
<SECURITIES> 75
<RECEIVABLES> 41,064
<ALLOWANCES> (1,894)
<INVENTORY> 24,204
<CURRENT-ASSETS> 81,428
<PP&E> 78,884
<DEPRECIATION> (41,832)
<TOTAL-ASSETS> 181,329
<CURRENT-LIABILITIES> 42,120
<BONDS> 0
0
0
<COMMON> 88,262
<OTHER-SE> 18,320
<TOTAL-LIABILITY-AND-EQUITY> 181,329
<SALES> 85,407
<TOTAL-REVENUES> 85,407
<CGS> 56,877
<TOTAL-COSTS> 75,264
<OTHER-EXPENSES> 49
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 514
<INCOME-PRETAX> 9,678
<INCOME-TAX> 3,870
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,808
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
<PAGE>
</TABLE>
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