<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 June 30, 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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There were 6,780,975 shares of Common Stock, $1.00 par value per share
outstanding as of June 30, 1995, not including 11,406 shares classified as
Treasury Stock.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET--DECEMBER 31, 1994 AND JUNE 30, 1995
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(Thousands of dollars)
<TABLE>
<CAPTION>
12-31-94 6-30-95
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(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 207 $ 197
Temporary investments 36,716 36,418
Receivables, net 28,262 24,704
Inventories 21,919 25,615
Deferred income taxes 4,522 4,522
--------- ---------
Total current assets 91,626 91,456
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PROPERTY, PLANT AND EQUIPMENT, at cost 228,264 230,748
Less - Accumulated depreciation (167,558) (170,174)
--------- ---------
60,706 60,574
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PREPAID PENSION COSTS 17,784 19,310
OTHER ASSETS 6,658 6,529
--------- ---------
$ 176,774 $ 177,869
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 10,661 $ 10,935
Accrued payroll and benefits 4,574 4,801
Accrued warranty expenses 2,265 2,040
Accrued property and other taxes 2,158 1,058
Other accrued liabilities 1,137 1,169
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Total current liabilities 20,795 20,003
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DEFERRED INCOME TAXES 6,172 6,172
POST RETIREMENT BENEFITS 11,843 11,933
SHAREHOLDERS' EQUITY:
Common stock, $1 par value per share;
20,000,000 shares authorized;
6,792,381 shares issued 6,792 6,792
Capital in excess of par 15,372 15,372
Retained earnings 115,800 117,811
Treasury stock, 11,406 shares at cost - (214)
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Total shareholders' equity 137,964 139,761
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$ 176,774 $ 177,869
========= ==========
</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 For the Six Months
Ended June 30 Ended June 30
--------------------- --------------------
(Unaudited) (Unaudited)
1994 1995 1994 1995
------- ------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $53,900 $58,638 $103,044 $117,613
COSTS OF SALES 48,940 50,225 92,356 102,468
------- ------- -------- --------
Gross profit 4,960 8,413 10,688 15,145
SELLING, GENERAL AND ADMINISTRATION
EXPENSES 5,693 5,746 11,268 10,859
------- ------- -------- --------
Operating income (loss) (733) 2,667 (580) 4,286
OTHER INCOME, NET 1,458 1,030 1,973 1,839
------- ------- -------- --------
Earnings before income taxes 725 3,697 1,393 6,125
PROVISION FOR INCOME TAXES 247 1,263 474 2,072
------- ------- -------- --------
Net earnings $ 478 $ 2,434 $ 919 $ 4,053
======= ======= ======== ========
EARNINGS PER SHARE $.07 $ .36 $ .14 $ .60
======= ======= ======== ========
DIVIDENDS PER SHARE $.15 $ .15 $ .30 $ .30
======= ======= ======== =======
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,802,573 6,800,224 6,799,965 6,805,198
</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 SIX MONTHS ENDED JUNE 30, 1994 AND 1995
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(Thousands of dollars)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30
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(Unaudited)
1994 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 919 $ 4,053
Adjustments to reconcile earnings
to net cash provided by operating
activities:
Depreciation 3,961 3,508
Pension benefit (1,663) (1,526)
Net changes in operating
assets and liabilities 9,882 (839)
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Net cash provided by operating activities 13,099 5,196
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment (2,037) (3,785)
Sales of property, plant and
equipment 3,974 408
(Increase) decrease in other assets (110) 128
------- -------
Net cash provided by (used by) investing
activities 1,827 (3,249)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (2,038) (2,036)
Purchase of treasury stock - (214)
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Net cash used by financing activities (2,038) (2,250)
Effect of translation on cash and temporary
investments - (5)
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Net increase (decrease) in cash and temporary
investments 12,888 (308)
Cash and temporary investments, at
beginning of period 20,355 36,923
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Cash and temporary investments, at
end of period $33,243 $36,615
======= =======
</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 six months ended June 30, 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 6-30-95
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(Thousands of dollars)
<S> <C> <C>
Raw materials and purchased
parts $ 9,013 $ 10,533
Work in process 4,911 5,739
Finished goods 7,995 9,343
--------- --------
$ 21,919 $ 25,615
========= ========
</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 June 30, 1995, the Company had working capital of $71,453,000 as compared
to $70,831,000, at December 31, 1994, an increase of $622,000.
(2) Changes in Results of Operations
Net sales for the three months and the six months ended June 30, 1995
increased 9% and 14% respectively over the same periods ended June 30, 1994.
Sales by product group for the three months and six months ended June 30, 1994
and 1995 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30 % June 30 %
------------------ Increase ------------------ Increase
1994 1995 (Decrease) 1994 1995 (Decrease)
-------- -------- ---------- -------- -------- ----------
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Oil field pumping
units $ 9,510 $ 9,948 5 $ 19,628 $ 21,315 9
Power transmission
products 14,441 13,741 (5) 28,154 25,413 (10)
Foundry castings 7,250 8,045 11 13,844 16,310 18
Industrial supplies 1,343 - * 3,052 - *
Trailers 21,356 26,904 26 38,366 54,575 42
------- ------- -------- --------
$53,900 $58,638 9 $103,044 $117,613 14
======= ======= ======== ========
</TABLE>
*Business sold during 2nd Quarter, 1994.
The increase in the Company's sales was primarily due to increased
trailer volumes associated with stronger trailer market demands. Demand for
foundry castings also increased resulting in significantly higher sales volumes.
The gross profit for the first six months of 1995 was 13% up from 10% for
the same period of 1994. The improvement is related to the higher volume of
trailer sales as well as favorable changes in the product mix within the three
remaining product groups.
Selling, General and Administrative Expenses (S. G. & A.) decreased
$409,000 or 4% for the six months ended June 30, 1995, from $11,268,000 for the
same period in 1994. This reduction reflects the Company's continued emphasis
on cost containment.
Other income for the first six months of 1995 was $1,839,000. This
represents a decrease of $134,000 or 7% in other income from the same period in
1994.
The provision for income taxes increased $1,016,000 and $1,598,000
respectively for the three months and six months ended June 30, 1995 as compared
to the same periods in 1994. The increases in the provision resulted from the
increases in pretax income.
The Company reported net earnings in the first six months of 1995 of
$4,053,000 compared to $919,000 in the first six months of 1994. The increase
in net earnings resulted primarily from the increased volume of trailer sales
and the Company's continued effort to reduce expenses.
Backlog at June 30, 1995, increased by approximately $17,606,000 or 16%
above the prior year end backlog. Backlogs increased in three of the product
groups while trailer backlogs declined.
<PAGE>
Backlog by product group at December 31, 1994 and June 30, 1995 is as
follows:
<TABLE>
<CAPTION>
December 31 June 30 %
1994 1995 Change
----------- -------- ------
(In thousands)
<S> <C> <C> <C>
Oilfield pumping units $ 8,527 $14,128 66
Power transmission products 21,061 38,059 81
Foundry castings 4,162 12,771 207
Trailers 75,611 62,009 (18)
-------- --------
$109,361 $126,967 16
======== ========
</TABLE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit 27--Financial Data Schedule
(B) Reports on Form 8-K
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 8/11/95 /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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 197
<SECURITIES> 36,418
<RECEIVABLES> 25,304
<ALLOWANCES> 600
<INVENTORY> 25,615
<CURRENT-ASSETS> 91,456
<PP&E> 230,748
<DEPRECIATION> 170,174
<TOTAL-ASSETS> 177,869
<CURRENT-LIABILITIES> 20,003
<BONDS> 0
<COMMON> 6,792
0
0
<OTHER-SE> 132,969
<TOTAL-LIABILITY-AND-EQUITY> 177,869
<SALES> 117,613
<TOTAL-REVENUES> 117,613
<CGS> 102,468
<TOTAL-COSTS> 113,327
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,125
<INCOME-TAX> 2,072
<INCOME-CONTINUING> 4,053
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,053
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
</TABLE>
