<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
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 1-7608
LOCTITE CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 06-0701067
(State or other (I.R.S. Employer
jurisdiction
of incorporation or Identification No.)
organization)
</TABLE>
10 COLUMBUS BOULEVARD, HARTFORD, CONNECTICUT 06106
(Address of principal executive offices, including zip code)
(860) 520-5000
(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 [ ]
The number of shares of common stock outstanding as of June 30, 1996, was
32,020,388, $.01 par value.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[This page intentionally left blank.]
<PAGE> 3
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Earnings and Retained Earnings for
the three-month periods and the six-month periods ended June
30, 1996 and 1995............................................ 2
Consolidated Statement of Cash Flows for the six-month periods
ended June 30, 1996 and 1995................................. 3
Consolidated Balance Sheet at June 30, 1996 and December 31,
1995......................................................... 4
Notes to Consolidated Financial Statements..................... 6
Item 2. Management's Discussion and Analysis of Results of Operations
and Changes in Financial Condition........................... 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders............ 13
Item 6. Exhibits and Reports on Form 8-K............................... 13
Signatures................................................................. 14
</TABLE>
1
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LOCTITE CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
AND RETAINED EARNINGS
(Unaudited)
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
------------------- -------------------
Net sales......................................... $200,298 $201,161 $400,512 $397,958
Cost of sales..................................... 76,681 75,214 153,163 149,146
-------- -------- -------- --------
Gross margin...................................... 123,617 125,947 247,349 248,812
-------- -------- -------- --------
Research & development expense.................... 7,089 7,540 14,326 14,723
Selling, general and administrative expenses...... 85,212 86,321 169,068 167,795
-------- -------- -------- --------
92,301 93,861 183,394 182,518
-------- -------- -------- --------
Earnings from operations.......................... 31,316 32,086 63,955 66,294
Investment income................................. 777 1,581 2,417 2,852
Interest expense.................................. (3,409) (2,103) (5,994) (3,847)
Other income (expense)............................ (236) 171 (156) 345
Foreign exchange gain (loss)...................... 117 410 288 (202)
-------- -------- -------- --------
Earnings before income taxes...................... 28,565 32,145 60,510 65,442
Provisions for income taxes....................... 7,427 8,031 15,733 16,688
-------- -------- -------- --------
Net earnings...................................... $ 21,138 $ 24,114 44,777 48,754
======== ========
Retained earnings, beginning of period............ 351,487 389,514
Less:
Cash dividends declared (1996 -- $.55
and 1995 -- $.46)............................... 17,683 16,277
Stock repurchases................................. 85,226 4,164
-------- --------
Retained earnings, end of period.................. $293,355 $417,827
======== ========
Earnings per share................................ $ 0.66 $ 0.68 $ 1.38 $ 1.38
======== ======== ======== ========
Average number of shares outstanding.............. 32,111 35,370 32,508 35,370
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
LOCTITE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
-------------------
Cash flows from operating activities:
Net earnings........................................................... $44,777 $48,754
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization....................................... 16,374 16,062
Deferred income taxes............................................... (1,647) 245
Provision for losses -- accounts receivable......................... 1,599 1,379
Change in:
Trade and other receivables......................................... (21,174) (22,327)
Inventory........................................................... 271 (10,796)
Prepaid and other current assets.................................... (2,148) (5,188)
Accounts payable and accrued expenses............................... (91) (13,693)
Interest payable.................................................... 885 232
Taxes payable....................................................... 2,978 (358)
Other.................................................................. (65) (8)
------- -------
Cash provided by operating activities.................................... 41,759 14,302
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment............................. (12,395) (14,867)
Dispositions of property, plant and equipment.......................... 538 588
Goodwill & intangible portion of acquisitions.......................... (1,051) (5,823)
Change in short-term investments....................................... 16,858 (9,707)
Change in long-term investments........................................ (82) 537
------- -------
Cash provided by (used in) investing activities.......................... 3,868 (29,272)
------- -------
Cash flows from financing activities:
Stock repurchases...................................................... (87,877) (3,696)
Issuances of common stock.............................................. 3,914 2,281
Dividends paid......................................................... (16,559) (14,858)
Increase in short-term debt............................................ 47,442 19,278
Payments of long-term debt............................................. (198) (221)
Payments under capital lease obligations............................... (548) (924)
------- -------
Cash (used in) provided by financing activities.......................... (53,826) 1,860
------- -------
Effect of exchange rate changes on cash.................................. (336) 661
------- -------
Decrease in cash and cash equivalents.................................... (8,535) (12,449)
Cash and cash equivalents:
Beginning of period.................................................... 60,333 33,264
------- -------
End of period.......................................................... $51,798 $20,815
======= =======
Interest paid............................................................ $ 5,130 $ 3,488
Taxes paid (net of refunds).............................................. $12,562 $18,855
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
LOCTITE CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
(UNAUDITED)
<S> <C> <C>
A S S E T S
Current assets:
Cash and cash equivalents......................................... $ 51,798 $ 60,333
Time and certificates of deposit.................................. 3,191 20,344
Marketable securities............................................. 118 126
Accounts and notes receivable (less allowances of $7,229 and
$6,651)........................................................ 162,158 147,743
Other receivables................................................. 19,060 17,068
Inventories:
Finished goods................................................. 56,125 54,686
Work in process................................................ 18,738 20,063
Raw materials.................................................. 21,717 23,028
-------- --------
96,580 97,777
Deferred income tax benefit....................................... 16,772 15,149
Prepaid expenses and other current assets......................... 21,306 19,395
-------- --------
Total current assets................................................ 370,983 377,935
-------- --------
Venture capital and other long-term investments..................... 4,230 4,149
Property, plant and equipment:
Land and land improvements........................................ 22,296 22,359
Buildings......................................................... 123,009 124,443
Machinery and equipment........................................... 217,604 210,538
Construction in progress.......................................... 5,890 5,357
-------- --------
368,799 362,697
Less -- accumulated depreciation.................................. 163,558 153,613
-------- --------
205,241 209,084
Deferred income tax benefit......................................... 9,186 8,863
Goodwill (net of amortization of $22,881 and $21,190)............... 96,232 97,840
Other intangibles (net of amortization of $10,739 and $10,128)...... 11,664 12,256
Other assets........................................................ 6,014 5,501
-------- --------
Total assets........................................................ $703,550 $715,628
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt................................................... $132,556 $ 85,356
Long-term debt -- current maturities.............................. 391 406
Accounts payable.................................................. 37,129 36,003
Accrued salaries, wages and other compensation.................... 17,204 22,164
Accrued taxes, other than income taxes............................ 5,637 7,059
Accrued income taxes.............................................. 25,666 21,242
Dividends payable................................................. 9,634 8,510
Accrued pension and retirement benefits........................... 2,234 1,819
Accrued insurance................................................. 6,766 7,457
Accrued liabilities -- other...................................... 22,573 21,670
---------- ------------
Total current liabilities........................................... 259,790 211,686
---------- ------------
Long-term liabilities:
Long-term debt.................................................... 76,972 77,238
Capital lease obligations......................................... 1,637 2,161
Retirement and postretirement obligations......................... 18,845 17,262
Other............................................................. 10,206 10,483
---------- ------------
107,660 107,144
---------- ------------
Stockholders' equity:
Common stock, $.01 par value:..................................... 48,752 47,489
Authorized 300,000,000 shares; issued 32,020,388 shares at
June 30, 1996 and 33,603,019 shares at December 31, 1995
Retained earnings................................................. 293,355 351,487
Foreign currency translation adjustment........................... (5,581) (1,752)
Adjustment for minimum pension liability.......................... (426) (426)
---------- ------------
Total stockholders' equity.......................................... 336,100 396,798
---------- ------------
Total liabilities and stockholders' equity.......................... $703,550 $715,628
======== ==========
</TABLE>
5
<PAGE> 8
LOCTITE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated 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 Article
10 of Regulation S-X. Accordingly, certain information and footnotes required by
generally accepted accounting principles for complete financial statements are
not included herein. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included in the accompanying
unaudited financial statements and are of a normal recurring nature.
The notes to the consolidated financial statements contained in Loctite
Corporation's December 31, 1995 Annual Report on Form 10-K should be read in
conjunction with the consolidated financial statements and notes to consolidated
financial statements contained herein.
Certain reclassifications have been made to the 1995 amounts to conform to
the 1996 presentation.
NOTE 2 -- ACQUISITIONS
During the first quarter of 1996, the Company acquired the remaining
forty-nine percent interest in its Loctite Taiwan Co., Ltd. subsidiary, which
brought the Company's percent of voting stock owned to 100%. The cost of this
acquisition is not material to the Company.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND CHANGES IN FINANCIAL CONDITION
OPERATIONS
QUARTER ENDED JUNE 30, 1996 VERSUS QUARTER ENDED JUNE 30, 1995
For the quarters ended June 30, 1996 and June 30, 1995, net sales were
$200.3 million and $201.2 million, respectively. Management measures the results
of the Company based on businesses and regions. Trade sales between regions are
reflected as sales of the region servicing the customer. A summary (in millions)
is as follows:
<TABLE>
<CAPTION>
QUARTER QUARTER LOCAL
ENDED ENDED DOLLAR CURRENCY
6/30/96 6/30/95 % GROWTH % GROWTH
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
SALES:
European Region............................... $ 80.4 $ 81.5 (1)% 1%
North American Region......................... 74.8 74.6 -- 1
Latin American Region......................... 22.2 18.8 18 22
Asian/Pacific Region.......................... 22.9 23.5 (2) 7
------ ------ --- ---
Total Sales from Ongoing Operations........ 200.3 198.4 1 4
Luminescent Systems........................... -- 2.8 n/m n/m
------ ------ --- ---
TOTAL SALES................................ $200.3 $201.2 --% 2%
====== ====== === ===
Industrial Business:
European Region............................... $ 44.6 $ 44.4 --% 4%
North American Region......................... 42.4 42.2 1 1
Latin American Region......................... 6.8 6.5 3 7
Asian/Pacific Region.......................... 19.6 21.3 (8) 2
------ ------ --- ---
Total Sales from Ongoing Operations........ 113.4 114.4 (1) 3
Luminescent Systems........................... -- 2.8 n/m n/m
------ ------ --- ---
Total Industrial Business Sales............ $113.4 $117.2 (3)% --%
====== ====== === ===
Automotive Aftermarket Business:
European Region............................... $ 12.4 $ 12.3 1% 3%
North American Region......................... 20.5 20.9 (2) (2)
Latin American Region......................... 2.9 2.5 14 21
Asian/Pacific Region.......................... 2.5 1.8 38 37
------ ------ --- ---
Total Automotive Aftermarket Business
Sales.................................... $ 38.3 $ 37.5 2% 3%
====== ====== === ===
Retail Business:
European Region............................... $ 23.4 $ 24.8 (6)% (5)%
North American Region......................... 11.9 11.5 4 4
Latin American Region......................... 12.5 9.8 30 32
Asian/Pacific Region.......................... 0.8 0.4 n/m n/m
------ ------ --- ---
Total Retail Business Sales................ $ 48.6 $ 46.5 5% 6%
====== ====== === ===
</TABLE>
n/m = not meaningful
Certain prior period amounts were reclassified between businesses to conform to
the 1996 presentation.
- ---------------
Average net prices changed as a result of changes in list price, changes in
product mix, changes in customers, and changes in foreign exchange rates. Such
factors are not readily quantifiable individually due to the diversity of
markets, product formulations, and product packages.
7
<PAGE> 10
In the European region, sales for the quarter ended June 30, 1996 decreased
1% in U.S. dollars and grew 1% in local currency compared to the second quarter
of 1995. The limited local currency growth in the region was a result of a
continued sluggish European economy. Sales in the region's industrial business
were flat in U.S. dollars and improved by 4% in local currency. Automotive
aftermarket business sales increased 1% in U.S. dollars and 3% in local
currency. Poor economic conditions in France, the Company's largest European
market, had its most significant impact on the retail business which reported a
sales decrease of 6% in U.S. dollars and 5% in local currency. Sales of the five
major countries in the region (France, Italy, U.K., Germany, and Spain) declined
2% in U.S. dollars and increased 1% in local currency. The average sales growth
in the major European countries, excluding France, was 3% in U.S. dollars and 4%
in local currency.
Sales in the North American region were flat in U.S. dollars and increased
1% in local currency when compared to the corresponding period of 1995. Sales in
each line of business showed little change compared to the prior year with the
4% increase in retail sales being the most significant. Substantial sales growth
after the North American realignment undertaken during 1995 is taking longer
than expected to achieve. However, the Company's current organizational
structure is designed to ensure that the goal of long-term growth, both
internally and through strategic acquisitions, is achieved.
Latin American sales grew 18% in U.S. dollars compared to the second
quarter of 1995. Average U.S. dollar sales growth in the five major countries
(Brazil, Colombia, Venezuela, Costa Rica, and Chile) was 17%. The sales increase
in the region's industrial business was limited to 3% in U.S. dollars due
primarily to a sluggish industrial climate in Brazil. The retail business
continued its strong growth with a sales increase of 30% in U.S. dollars.
Brazil, which has the most significant retail business in the Latin American
region, reported retail sales growth of 47% in U.S. dollars attributable to
substantial advertising and marketing campaigns implemented to take advantage of
specific growth opportunities in the retail market.
The Asian/Pacific region achieved local currency sales growth of 7% despite
a 4% decline in Japan's local currency sales. This local currency gain
translated to a 2% decline in U.S. dollars due primarily to the weakness of the
Japanese yen in relation to the U.S. dollar. Significant growth in countries
other than Japan has created greater diversity in the region. Japan now accounts
for less than one-third of the region's total U.S. dollar sales. Further
penetration was realized in the automotive aftermarket and retail businesses
throughout the region, although the industrial business still accounts for over
85% of the region's total sales. Major countries, excluding Japan (Australia,
Korea, China, and Malaysia), reported average local currency sales growth of
16%.
Interest expense for the quarter ended June 30, 1996 was $1.3 million
higher than the respective prior year quarter due in large part to higher
average debt levels in the U.S. See "Financial Condition" discussion and
analysis for further information.
Income taxes, as a percentage of earnings before taxes, were 26% for the
three month period ended June 30, 1996 and 25% for the three month period ended
June 30, 1995.
8
<PAGE> 11
SIX MONTHS ENDED JUNE 30, 1996 VERSUS SIX MONTHS ENDED JUNE 30, 1995
Net sales for the six months ended June 30, 1996 and June 30, 1995 were
$400.5 million and $398.0 million, respectively. A summary (in millions) is as
follows:
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS LOCAL
ENDED ENDED DOLLAR CURRENCY
6/30/96 6/30/95 % GROWTH % GROWTH
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
SALES:
European Region............................... $167.0 $164.9 1% 2%
North American Region......................... 143.1 142.4 1 1
Latin American Region......................... 46.8 41.7 12 15
Asian/Pacific Region.......................... 43.6 43.1 1 9
------ ------ ---- ----
Total Sales from Ongoing Operations........ 400.5 392.1 2 3
Luminescent Systems........................... -- 5.9 n/m n/m
------ ------ ---- ----
TOTAL SALES................................ $400.5 $398.0 1% 2%
====== ====== ==== ====
Industrial Business:
European Region............................... $ 93.9 $ 90.8 3% 5%
North American Region......................... 83.4 83.9 (1) --
Latin American Region......................... 12.4 13.0 (5) (2)
Asian/Pacific Region.......................... 37.2 38.7 (4) 4
------ ------ ---- ----
Total Sales from Ongoing Operations........ 226.9 226.4 -- 2
Luminescent Systems........................... -- 5.9 n/m n/m
------ ------ ---- ----
Total Industrial Business Sales............ $226.9 $232.3 (2)% --%
====== ====== ==== ====
Automotive Aftermarket Business:
European Region............................... $ 24.8 $ 24.0 3% 3%
North American Region......................... 38.3 36.4 5 6
Latin American Region......................... 6.1 5.5 11 17
Asian/Pacific Region.......................... 4.8 3.6 33 31
------ ------ ---- ----
Total Automotive Aftermarket Business
Sales.................................... $ 74.0 $ 69.5 6% 7%
====== ====== ==== ====
Retail Business:
European Region............................... $ 48.3 $ 50.1 (4)% (5)%
North American Region......................... 21.4 22.1 (3) (3)
Latin American Region......................... 28.3 23.2 22 25
Asian/Pacific Region.......................... 1.6 0.8 n/m n/m
------ ------ ---- ----
Total Retail Business Sales................ $ 99.6 $ 96.2 4% 4%
====== ====== ==== ====
</TABLE>
- ---------------
n/m = not meaningful
Certain prior period amounts were reclassified between businesses to conform
with the 1996 presentation.
9
<PAGE> 12
In the European region, local currency sales growth of 2% was reduced to 1%
in U.S. dollars. The five major countries (France, Italy, U.K., Germany, and
Spain) reported an average local currency sales growth of 1%. Excluding France,
the local currency sales growth of the major countries was 5%. Poor performance
in France, the largest European business, is a result of the sluggish local
economy and the lingering impact of the general strike during the fourth quarter
of 1995. Sales in the industrial business in the European region improved by 5%
in local currencies and 3% in U.S. dollars. Automotive aftermarket business
sales increased 3% in both local currency and U.S. dollars. The performance in
France significantly impacted sales in the retail business, which declined 5% in
local currencies and 4% in U.S. dollars.
Sales in the North American region were relatively flat for the first six
months of 1996 compared to the first six months of 1995. Overall, sales
increased by 1% in local currencies and in U.S. dollars. In the industrial
business, sales were down 1% in U.S. dollars. Automotive aftermarket business
sales grew by 5% in U.S. dollars and 6% in local currency. This growth is
attributable in part to the introduction of a new heavy-duty gasketing product.
Retail business sales decreased 3% in both U.S. dollars and local currency as
the Company was impacted by a highly competitive domestic market and temporarily
reduced purchasing activity of some major customers in an effort to lower their
inventory levels.
Latin American sales increased 12% in U.S. dollars compared to the first
six months of 1995. The region's major countries (Brazil, Venezuela, Colombia,
Costa Rica, and Chile) reported average growth of 11% in U.S. dollars. Sales in
the industrial business decreased 5% in U.S. dollars. This decline is the result
of the sluggish industrial climate in Brazil during the first six months of
1996. Retail business sales, which grew by 22% in U.S. dollars, benefited from
substantial advertising and marketing campaigns in Brazil.
The Asian/Pacific region's local currency sales gains of 9% declined to 1%
in U.S. dollars due primarily to a weaker Japanese yen in relation to the U.S.
dollar. Local currency sales in Japan are down 2% from the prior year due to the
struggling economic climate prevalent during the first six months of 1996 and
the movement of some customers' production facilities to other countries. The
other major countries (Australia, Korea, China, and Malaysia) reported an
average local currency sales growth of 16%. Efforts to increase penetration into
the automotive aftermarket and the retail businesses in the region led to a
large percentage growth in these markets, although industrial sales still
account for the majority of the region's sales for the six months ended June 30,
1996.
Interest expense increased by $2.1 million during the six month period
ended June 30, 1996 compared to the corresponding prior year period due
primarily to higher average debt levels in the U.S. See "Financial Condition"
discussion and analysis for further information.
Income taxes, as a percentage of earnings before taxes, were 26.0% for the
six month period ended June 30, 1996 and 25.5% for the comparable period ended
June 30, 1995.
FINANCIAL CONDITION
Management relies on cash provided from operations and the strength of the
Company's balance sheet, within prudent limits, to fund growth in operations and
provide an appropriate return to stockholders. The Company's liquidity is
assessed in terms of its overall ability to generate cash and to access the
credit markets on terms favorable to the Company. Of particular importance in
the management of liquidity are cash flows generated from operating activities,
capital expenditure levels, dividends paid, stock repurchases, acquisitions, and
adequate bank lines of credit.
10
<PAGE> 13
As more fully discussed below, the following table highlights some of the
significant factors which affect consolidated cash flow along with their
correlated effect on the net debt position of the Company.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1996 1995
-------- ------------
<S> <C> <C>
(Dollars in thousands)
Net cash flows from operating activities..................... $ 41,759 $ 14,302
Capital expenditures......................................... $ 12,395 $ 14,867
Common stock repurchases..................................... $ 87,877 $ 3,696
Dividends paid............................................... $ 16,559 $ 14,858
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
(Dollars in thousands)
Cash and short-term investments*............................. $ 55,107 $ 80,803
Total debt................................................... 212,771 166,338
-------- --------
Net debt..................................................... $157,664 $ 85,535
======== ========
</TABLE>
* Includes cash and cash equivalents, time and certificates of deposit, and
short-term marketable securities.
The Company completed a 3.35 million share stock repurchase program by
repurchasing 1.58 million shares of Company stock for $82.1 million during the
first six months of 1996. The total cost of the 3.35 million share repurchase
program was $166.5 million. Additional expenditures were made in connection with
the systematic repurchase of Company stock for certain of the Company's employee
benefit plans.
Dividends paid to stockholders were $16.6 million for the first six months
of 1996 compared to $14.9 million for the 1995 period. This increase reflects
the net impact of a 20% increase in dividends per share from $0.46 in the 1995
period to $0.55 in the 1996 period and the reduction in outstanding shares of
Company stock resulting from the above mentioned stock repurchase program.
Accounts and notes receivable increased by $14.4 million from December 31,
1995 to June 30, 1996. The largest increases were reported in Western Europe
(France, Italy, Germany, and the U.K.) and the U.S. and were a result of higher
sales during the second quarter of 1996 compared to the fourth quarter of 1995.
ACQUISITIONS
During the first quarter of 1996, the Company acquired the remaining
forty-nine percent interest in its Loctite Taiwan Co., Ltd. subsidiary, which
brought the Company's percent of voting stock owned to 100%. The cost of this
acquisition is not material to the Company.
11
<PAGE> 14
ENVIRONMENTAL MATTERS
Continuing compliance with existing federal, state, and local provisions
dealing with protection of the environment is not expected to have a material
effect upon the Company's capital expenditures, earnings, competitive position,
or liquidity. As previously reported in its 1995 Annual Report on Form 10-K, the
Company has been investigating a soil and groundwater contamination problem at
its Newington, Connecticut facility. The Company spent approximately $200,000 in
1993 and approximately $500,000 in 1994 in continuing subsurface investigation.
The Company spent approximately $900,000 in 1995 to complete the investigative
phase of the work, to implement a site remediation plan, and for additional
professional consulting services related thereto, including on-going operation
and maintenance of equipment and initial monitoring costs. The Connecticut
Department of Environmental Protection (DEP) approved the final site remediation
plan during the second quarter of 1996.
The DEP, in consultation with the U.S. Environmental Protection Agency, has
determined that the Newington facility is not subject to federal jurisdiction as
a hazardous waste storage facility under the Resource Conservation and Recovery
Act. Therefore, the site remediation plan will be implemented with the oversight
of the DEP. The Company estimates that it will spend $400,000 in 1996 for
engineering fees and construction costs necessary to implement the site
remediation plan. Thereafter, the Company expects to spend approximately $60,000
to $80,000 annually to operate, maintain and monitor the remediation equipment.
The Company does not anticipate any further significant expenditures in
connection with site remediation.
12
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On April 24, 1996, the Company held an Annual Meeting of Shareholders
(the "Annual Meeting") to elect twelve directors to hold office until the next
Annual Meeting and until their successors are elected and qualified and to
confirm the appointment of the Company's independent accountants for the current
fiscal year.
(b) Set forth below is a description of each matter voted upon at the
Annual Meeting and the number of votes cast for, against or withheld, as well as
the number of abstentions and broker non-votes as to each such matter.
1. Twelve directors were elected to hold office until the next Annual
Meeting and until their successors are elected and qualified. A list of
such directors, including the votes for, withheld, abstentions, and broker
non-votes, is set forth below:
<TABLE>
<CAPTION>
VOTES BROKER
FOR WITHHELD ABSTENTIONS NON-VOTES
----------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Robert E. Ix.......................... 29,593,430 126,734 none none
Frederick B. Krieble.................. 29,595,200 124,964
Dr. Roman Dohr........................ 29,626,031 94,133
Stephen J. Trachtenberg............... 29,636,311 83,853
David Freeman......................... 29,623,797 96,367
Peter C. Browning..................... 29,631,350 88,814
Stephen F. Page....................... 29,637,781 82,383
Christoph Henkel...................... 29,628,179 91,985
Robert W. Fiondella................... 29,625,049 95,115
Dr. Jochen Krautter................... 29,397,935 322,229
Indra K. Nooyi........................ 29,613,815 106,349
Arthur P. Byrne....................... 29,619,199 100,965
</TABLE>
2. The appointment of Price Waterhouse LLP as the Company's
independent accountants for the current fiscal year was confirmed. There
were 29,660,563 votes cast for the proposal; 40,475 votes against the
proposal; 19,126 abstentions; and no broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter -- None
13
<PAGE> 16
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.
LOCTITE CORPORATION
(Registrant)
Date: August 12, 1996 By: /s/ DAVID FREEMAN
--------------------------------------
David Freeman
Chairman, President and Chief
Executive Officer
Date: August 12, 1996 By: /s/ KEITH B. HALL
--------------------------------------
Keith B. Hall
Vice President and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 51,798
<SECURITIES> 118
<RECEIVABLES> 169,387
<ALLOWANCES> 7,229
<INVENTORY> 96,580
<CURRENT-ASSETS> 370,983
<PP&E> 368,799
<DEPRECIATION> 163,558
<TOTAL-ASSETS> 703,550
<CURRENT-LIABILITIES> 259,790
<BONDS> 78,609
0
0
<COMMON> 48,752
<OTHER-SE> 287,348
<TOTAL-LIABILITY-AND-EQUITY> 703,550
<SALES> 200,298
<TOTAL-REVENUES> 200,298
<CGS> 76,681
<TOTAL-COSTS> 76,681
<OTHER-EXPENSES> 91,423
<LOSS-PROVISION> 878
<INTEREST-EXPENSE> 3,409
<INCOME-PRETAX> 28,565
<INCOME-TAX> 7,427
<INCOME-CONTINUING> 21,138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,138
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
