<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995.
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-2612
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LUFKIN INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Texas 75- 040-4410
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 South Raguet, Lufkin, Texas 75901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 409-634-2211
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Indicate by check mark whether the registrant (1) has filed all reports re-
quired 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 re-
gistrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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As of March 31, 1995, there were 6,792,381 shares of Common Stock, $1.00 par
value per share, issued.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET--DECEMBER 31, 1994 AND MARCH 31, 1995
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(Thousands of dollars)
<TABLE>
<CAPTION>
ASSETS 12-31-94 3-31-95
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(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 207 $ 23
Temporary investments 36,716 39,729
Receivables, net 28,262 25,512
Inventories 21,919 22,936
Deferred income taxes 4,522 4,522
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Total current assets 91,626 92,722
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PROPERTY, PLANT AND EQUIPMENT, at cost 228,264 229,339
Less - Accumulated depreciation (167,558) (169,005)
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60,706 60,334
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PREPAID PENSION COSTS 17,784 18,560
OTHER ASSETS 6,658 6,818
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$ 176,774 $ 178,434
========= =========
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 10,661 $ 12,368
Accrued payroll and benefits 4,574 4,825
Accrued warranty expenses 2,265 2,210
Accrued property and other taxes 2,158 1,352
Other accrued liabilities 1,137 1,114
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Total current liabilities 20,795 21,869
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DEFERRED INCOME TAXES 6,172 6,172
POST RETIREMENT BENEFITS LIABILITY 11,843 11,888
SHAREHOLDERS' EQUITY:
Common stock, $1 par value per share;
20,000,000 shares authorized;
6,792,381 shares issued 6,792 6,792
Capital in excess of par 15,372 15,372
Retained earnings 115,800 116,365
Treasury stock, 1,306 shares at cost - (24)
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Total shareholders' equity 137,964 138,505
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$176,774 $178,434
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF EARNINGS
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(Thousands of dollars, except per share data)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31
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(Unaudited)
1994 1995
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<S> <C> <C>
NET SALES $ 49,144 $ 58,975
COST OF SALES 43,416 52,243
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Gross profit 5,728 6,732
SELLING, GENERAL AND ADMINISTRATION
EXPENSES 5,575 5,113
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Operating income 153 1,619
OTHER INCOME, NET 515 809
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Earnings before income taxes 668 2,428
PROVISION FOR INCOME TAXES 227 809
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Net earnings $ 441 $ 1,619
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EARNINGS PER SHARE $ .06 $ .24
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DIVIDENDS PER SHARE $ .15 $ .15
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WEIGHTED AVERAGE NUMBER OF SHARES 6,794,978 6,806,114
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF CASH FLOWS
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FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
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(Thousands of dollars)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31
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(Unaudited)
1994 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 441 $ 1,619
Adjustments to reconcile earnings
to net cash provided by operating
activities:
Depreciation 2,004 1,767
Pension benefit (844) (776)
Changes in assets and liabilities 6,589 2,853
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Net cash provided by operating activities 8,190 5,463
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to property, plant and
equipment (1,026) (1,536)
Sales of property, plant and
equipment 1,872 140
Increase in other assets (680) (160)
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Net cash provided by (used by) investing
activities 166 (1,556)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (1,019) (1,019)
Purchase of treasury stock - (24)
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Net cash used by financing activities (1,019) (1,043)
Effect of translation on cash and temporary
investments - (35)
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Net increase in cash and temporary
investments 7,337 2,829
Cash and temporary investments, at
beginning of period 20,355 36,923
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Cash and temporary investments, at
end of period $27,692 $39,752
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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(1) In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the financial position,
results of operations and cash flows of Lufkin Industries, Inc. and Subsidiaries
(the "Company") for all periods presented. The consolidated balance sheet as of
December 31, 1994, was derived from the audited consolidated balance sheet
included in the Company's 1994 annual report on Form 10-K. The results of
operations for the three months ended March 31, 1995, are not necessarily
indicative of the results that may be expected for the full fiscal year.
These statements have been prepared in accordance with the requirements
for interim financial statements contained in Regulation S-X, which do not
require all the information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Therefore, these statements should be
read in conjunction with the consolidated financial statements and related
footnotes included in the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1994.
(2) Consolidated inventories consist of the following:
<TABLE>
<CAPTION>
12-31-94 3-31-95
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(Thousands of dollars)
<S> <C> <C>
Raw materials and purchased
parts $ 9,013 $ 9,432
Work in process 4,911 5,138
Finished goods 7,995 8,366
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$ 21,919 $ 22,936
========= ========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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(1) Changes in Financial Condition
At March 31, 1995, the Company had working capital of $70,853,000 as
compared to $70,831,000, at December 31, 1994, an increase of $22,000.
(2) Changes in Results of Operations
Net sales for the first quarter of 1995 increased 20% from the first
quarter of 1994. Sales by product group for the first quarter of 1994 and 1995
are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31 %
------------------ Increase
1994 1995 (Decrease)
-------- -------- ----------
(In thousands)
<S> <C> <C> <C>
Oilfield pumping units $10,118 $11,367 12
Power transmission products 13,713 11,672 (15)
Foundry castings 6,594 8,265 25
Industrial supplies 1,709 -- *
Trailers 17,010 27,671 63
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$49,144 $58,975 20
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</TABLE>
*Business sold during 2nd Quarter, 1994.
Sales volumes increased in three of the product groups, oilfield pumping
units, foundry castings and trailers, while sales of power transmission products
declined.
The gross profit for the first quarter of 1995 was 11% compared to 12% for
the first quarter of 1994, reflecting a change in the product mix.
Depreciation expense decreased $237,000 for the first quarter of 1995
compared to the first quarter of 1994. This decrease was due primarily to the
sales of the Company's Chanute, Kansas manufacturing facility and the Industrial
Supply business during 1994.
Selling, general and administrative expenses decreased $462,000 from
$5,575,000 for the first three months of 1994. The reduction in these expenses
reflects the Company's continuing cost reduction programs and the closure of the
Company's manufacturing facility in Chanute, Kansas during 1994.
Other income was $809,000 compared to $515,000 for the same period in
1994. The increase of $294,000 resulted primarily from increased interest
earned on temporary investments.
Income tax expense increased $582,000 for the first quarter of 1995
compared to the first quarter of 1994 due to the increase in pretax earnings.
The Company reported net earnings in the first quarter 1995 of $1,619,000
compared to $441,000 in the first quarter 1994. The increase in net earnings
resulted primarily from the increased volume of trailer sales and the Company's
cost-cutting measures.
Backlog at March 31, 1995, increased by approximately $21,671,000 over the
backlog at December 31, 1994. New orders for power transmission products and
foundry castings were the primary reasons for this increase.
<PAGE>
Backlog by product group at December 31, 1994 and March 31, 1995 is as
follows:
<TABLE>
<CAPTION>
December 31 March 31 %
1994 1995 Change
----------- --------------- -------
(In thousands)
<S> <C> <C> <C>
Oilfield pumping units $ 8,527 $ 8,330 (2)
Power transmission products 21,061 30,579 45
Foundry castings 4,162 13,752 230
Trailers 75,611 78,371 4
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$109,361 $131,032 20
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</TABLE>
PART II - OTHER INFORMATION
None.
<PAGE>
SIGNATURES
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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.
LUFKIN INDUSTRIES, INC.
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Date May 11, 1995 /s/ C. James Haley, Jr.
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C. James Haley, Jr.
Secretary-Treasurer
(Principal financial officer
and officer authorized to
sign on behalf of the
registrant)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 23
<SECURITIES> 39,729
<RECEIVABLES> 26,112
<ALLOWANCES> 600
<INVENTORY> 22,936
<CURRENT-ASSETS> 92,722
<PP&E> 229,339
<DEPRECIATION> 169,005
<TOTAL-ASSETS> 178,434
<CURRENT-LIABILITIES> 21,869
<BONDS> 0
<COMMON> 6,792
0
0
<OTHER-SE> 131,713
<TOTAL-LIABILITY-AND-EQUITY> 178,434
<SALES> 58,975
<TOTAL-REVENUES> 58,975
<CGS> 52,243
<TOTAL-COSTS> 57,356
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,428
<INCOME-TAX> 809
<INCOME-CONTINUING> 1,619
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,619
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
