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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 the quarter ended August 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
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
<PAGE>
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 September 30, 1995:
Class A Common 22,300,000
Class B Common 350,000
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
August 31 August 31
1995 1994
_______________________
<S> <C> <C>
Net sales $79,705 $86,639
Costs and expenses:
Cost of products sold 54,586 55,691
Selling, administrative and general 14,179 15,247
Research and development 3,027 3,199
------- -------
71,792 74,137
------- -------
OPERATING INCOME 7,913 12,502
Other income (expense):
Interest income and sundry 167 117
Interest expense (451) (769)
------- -------
(284) (652)
------- -------
INCOME BEFORE INCOME TAXES 7,629 11,850
Income Taxes 3,052 4,877
------- -------
NET INCOME $ 4,577 $ 6,973
======= =======
Cash dividends per share--Note B $ 0.080 $ 0.070
======= =======
Average number of shares and equivalent shares
of capital stock outstanding--Note B 23,100 23,250
======= =======
Net income per share--Note B $ 0.20 $ 0.30
<PAGE>
======= =======
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)
Nine Months Ended
August 31 August 31
1995 1994
____________________
<S> <C> <C>
Net sales $245,559 $245,131
Costs and expenses:
Cost of products sold 165,030 160,218
Selling, administrative and general 44,545 45,953
Research and development 9,698 9,821
-------- --------
219,273 215,992
-------- --------
OPERATING INCOME 26,286 29,139
Other income (expense):
Interest income and sundry 349 205
Interest expense (1,581) (2,105)
-------- --------
(1,232) (1,897)
-------- --------
INCOME BEFORE INCOME TAXES 25,054 27,242
Income Taxes 10,022 11,342
-------- --------
NET INCOME $ 15,032 $ 15,900
======== ========
Cash dividends per share--Note B $ 0.230 $ 0.197
======== ========
Average number of shares and equivalent shares
of capital stock outstanding--Note B 23,200 23,250
======== ========
Net income per share--Note B $ 0.65 $ 0.68
======== ========
<FN>
See notes to consolidated condensed financial statements.
<PAGE>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
August 31 November 30
1995 1994
________________________
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16,660 $ 26,581
Short-term investments 75 75
Accounts receivable, less allowances
for doubtful accounts (8/31/95, $2,060;
11/30/94, $1,759) 39,179 42,231
Inventories--Note C 20,264 23,885
Prepaid expenses 337 285
-------- --------
TOTAL CURRENT ASSETS 76,515 93,057
OTHER ASSETS 12,956 10,464
INTANGIBLE ASSETS 49,680 50,978
PROPERTY AND EQUIPMENT
Land 4,605 4,044
Buildings and equipment 78,319 71,721
Allowances for depreciation (deduction) (42,698) (40,012)
-------- --------
40,226 35,753
-------- --------
$179,377 $190,252
======== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
August 31 November 30
1995 1994
________________________
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 23,436 $ 29,288
Salaries, wages, commissions and
related items 6,004 9,160
State and local taxes 704 1,520
Federal income taxes 2,159 4,401
Current portion of long-term debt 7,056 7,084
-------- --------
TOTAL CURRENT LIABILITIES 39,359 51,453
LONG-TERM DEBT 21,000 28,026
OTHER LIABILITIES 11,355 11,349
SHAREHOLDERS' EQUITY
Capital stock:
Class A (limited voting) 14,937 14,831
Class B (voting) 300 300
Additional capital 73,336 71,972
Retained earnings 48,026 38,223
Currency translation adjustments 222 185
Cost of capital stock in treasury
(deduction) (29,158) (26,087)
-------- --------
107,663 99,424
-------- --------
$179,377 $190,252
======== ========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
Nine Months Ended
August 31 August 31
1995 1994
________________________
<S> <C> <C>
OPERATING ACTIVITIES
Net income $15,032 $15,900
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,406 3,627
Amortization of intangibles 2,931 3,254
Deferred income taxes (100) (139)
Changes in operating assets and liabilities:
Accounts receivable 3,052 (2,965)
Inventories 3,621 149
Prepaid expenses (52) (220)
Accounts payable and accrued expenses (9,824) 3,940
Income taxes (2,242) 2,361
Sundry (1,226) 624
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 14,598 26,531
INVESTING ACTIVITIES
Purchases of property and equipment (8,106) (5,367)
Sundry (2,597) 2,033
------- -------
NET CASH USED BY INVESTING ACTIVITIES (10,703) (3,334)
FINANCING ACTIVITIES
Cash dividends paid (5,230) (4,459)
Principal payments on short-term and
long-term borrowings (7,060) (1,867)
Purchases of capital stock for treasury (2,543) 0
Sundry 1,017 0
------- -------
NET CASH USED BY FINANCING ACTIVITIES (13,816) (6,326)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (9,921) 16,871
Cash and cash equivalents at beginning of year 26,581 7,384
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $16,660 $24,255
======= =======
<FN>
<PAGE>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
August 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):
August 31 November 30
1995 1994
Finished products $ 15,366 $ 16,831
Raw materials 13,811 15,127
-------- --------
29,177 31,958
Less adjustment of certain
inventories to last in,
first out (LIFO) basis 8,913 8,073
-------- --------
$ 20,264 $ 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
<PAGE>
and costs at that time. Accordingly, interim LIFO calculations
must necessarily be based on management's estimates of expected
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.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
Sales and earnings for the third quarter ended August 31, 1995
declined from the record results of last year's third quarter.
Sales for the 1995 third quarter of $79.7 million were down from
$86.6 million. Quarterly net income was $4.6 million or 20 cents
per share compared to $7.0 million or 30 cents per share for the
same quarter a year ago.
Sales for the first nine months of 1995 were $245.6 million,
about even with $245.1 million for the same period last year.
Net income for the nine-month period was $15.0 million or 65
cents per share compared to $15.9 million or 68 cents per share
last year.
Financial results for the third quarter 1995 were lower as
previously announced. Sales for 1995's third quarter were down
8% due to reduced sales volume associated with a slowing economy
and reduced U.S. factory output of durable goods. Profit margins
declined as a result of lower business volume and increasing raw
material costs. We continue our efforts to improve profit
margins by increasing selling prices and reducing costs.
We are pleased to announce our filing of an application to list
Lilly common stock on the New York Stock Exchange. We expect
trading on the NYSE to commence within the next thirty days under
the symbol "LI". We look forward to improved marketability of
Lilly's stock for the benefit of all shareholders. Lilly has
continued to repurchase shares of its outstanding stock as it
believes this to be an excellent investment.
The Board of Directors declared a cash dividend of 8 cents per
share at its September 29, 1995 meeting. This 227th consecutive
quarterly dividend will be paid January 2, 1996 to shareholders
of record on December 12, 1995.
We expect improved results in the future as the economy
strengthens and we realize the benefits of cost reduction
measures.
<PAGE>
PART II: OTHER INFORMATION
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 August 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)
October 10, 1995
/s/ Douglas W. Huemme
------------------------------
Douglas W. Huemme
Chairman, President and
Chief Executive Officer
PRINCIPAL FINANCIAL OFFICER
October 10, 1995
/s/ Roman J. Klusas
-------------------------------
Roman J. Klusas
Vice President and
Chief Financial Officer
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
LILLY INDUSTRIES, INC.
(In thousands, except per share data)
Three Months Ended Nine Months Ended
August 31 August 31 August 31 August 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding--
Note A 22,600 22,690 22,700 22,650
Net income $ 4,577 $ 6,973 $15,032 $15,900
Net income per common share--
Note A $ 0.20 $ 0.31 $ 0.66 $ 0.70
======= ======= ======== =======
Average shares outstanding--
Note A 22,600 22,690 22,700 22,650
Dilutive stock options based
on treasury stock method
using average market
price--Note A 500 560 500 600
------- ------- -------- -------
23,100 23,250 23,200 23,250
Net income $ 4,577 $ 6,973 $15,032 $15,900
Net income per common
and common equivalent
share--Note A $ 0.20 $ 0.30 $ 0.65 $ 0.68
======= ======= ======== =======
Fully diluted:
Average shares outstanding--
Note A 22,600 22,690 22,700 22,650
Dilutive stock options based
on the treasury stock
method using the higher
of quarter end or average
market price--Note A 500 560 500 600
------- ------- -------- -------
23,100 23,250 23,200 23,250
<PAGE>
Net income $ 4,577 $ 6,973 $15,032 $15,900
Net income per common
and common equivalent
share--Note A $ 0.20 $ 0.30 $ 0.65 $ 0.68
======= ======= ======== =======
<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
<S> <C>
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> AUG-31-1995
<PERIOD-TYPE> 3-MOS
<CASH> 16,660
<SECURITIES> 75
<RECEIVABLES> 41,239
<ALLOWANCES> (2,060)
<INVENTORY> 20,264
<CURRENT-ASSETS> 76,515
<PP&E> 82,924
<DEPRECIATION> (42,698)
<TOTAL-ASSETS> 179,377
<CURRENT-LIABILITIES> 39,359
<BONDS> 0
0
0
<COMMON> 88,573
<OTHER-SE> 19,090
<TOTAL-LIABILITY-AND-EQUITY> 179,377
<SALES> 79,705
<TOTAL-REVENUES> 79,705
<CGS> 54,586
<TOTAL-COSTS> 71,792
<OTHER-EXPENSES> (167)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 451
<INCOME-PRETAX> 7,629
<INCOME-TAX> 3,052
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,577
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
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