<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 September 30,1995.
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 0-2612
LUFKIN INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-040-4410
-------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 South Raguet, Lufkin, Texas 75901
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 409-634-2211
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 _____
There were 6,783,575 shares of Common Stock, $1.00 par value per share
outstanding as of September 30, 1995, not including 8,806 shares classified as
Treasury Stock.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET--DECEMBER 31, 1994 AND SEPTEMBER 30, 1995
(Thousands of dollars)
<TABLE>
<CAPTION>
ASSETS 12-31-94 9-30-95
--------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 207 $ 92
Temporary investments 36,716 35,292
Receivables, net 28,262 29,945
Inventories 21,919 27,121
Deferred income taxes 4,522 4,848
--------- ---------
Total current assets 91,626 97,298
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, at cost 228,264 232,121
Less - Accumulated depreciation (167,558) (171,664)
--------- ---------
60,706 60,457
--------- ---------
PREPAID PENSION COSTS 17,784 20,174
OTHER ASSETS 6,658 6,113
--------- ---------
$ 176,774 $ 184,042
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,661 $ 11,397
Accrued payroll and benefits 4,574 5,482
Accrued warranty expenses 2,265 2,042
Accrued property and other taxes 2,158 1,819
Other accrued liabilities 1,137 1,361
-------- --------
Total current liabilities 20,795 22,101
-------- --------
DEFERRED INCOME TAXES 6,172 9,062
POST RETIREMENT BENEFITS 11,843 11,982
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 15,367
Retained earnings 115,800 118,906
Treasury stock, 8,806 shares at cost - (168)
-------- --------
Total shareholders' equity 137,964 140,897
-------- --------
$176,774 $184,042
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Thousands of dollars, except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30
---------------------- ----------------------
(Unaudited) (Unaudited)
1994 1995 1994 1995
--------- ----------- --------- ----------
<S> <C> <C> <C> <C>
NET SALES $55,913 $62,936 $158,957 $180,549
COSTS AND PROVISION
Cost of sales 49,344 54,656 140,200 157,124
Special inventory provision 10,224 - 11,724 -
------- ------- -------- --------
Total cost of sales 59,568 54,656 151,924 157,124
------- ------- -------- --------
Gross profit (loss) (3,655) 8,280 7,033 23,425
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 4,600 5,591 15,868 16,450
------- ------- -------- --------
Operating income (loss) (8,255) 2,689 (8,835) 6,975
OTHER INCOME, NET 515 623 2,488 2,462
------- ------- -------- --------
Earnings (loss) before income taxes (7,740) 3,312 (6,347) 9,437
PROVISION (BENEFIT) FOR INCOME TAXES (2,632) 1,201 (2,158) 3,273
------- ------- -------- --------
Net earnings (loss) $(5,108) $ 2,111 $ (4,189) $ 6,164
======= ======= ======== ========
EARNINGS (LOSS)PER COMMON AND COMMON
EQUIVALENT SHARE $(.75) $ .31 $(.62) $ .90
======= ======= ======= ========
DIVIDENDS PER SHARE $ .15 $ .15 $ .45 $ .45
======= ======= ======= ========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 6,792,381 6,829,821 6,792,381 6,817,476
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1995
(Thousands of dollars)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
--------------------
(Unaudited)
1994 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $(4,189) $ 6,164
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Depreciation 5,865 5,220
Pension benefit (2,623) (2,390)
Deferred income tax provision (benefit) (1,622) 2,564
Net changes in operating
assets and liabilities 21,518 (5,439)
------- -------
Net cash provided by operating activities 18,949 6,119
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment (3,096) (5,404)
Sales of property, plant and
equipment 4,110 433
Decrease in other assets 639 545
------- -------
Net cash provided by (used by) investing
activities 1,653 (4,426)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (3,056) (3,054)
Proceeds from exercise of stock options - 68
Purchase of treasury stock - (241)
------- -------
Net cash used by financing activities (3,056) (3,227)
Effect of translation on cash and temporary
investments 103 (5)
------- -------
Net increase (decrease) in cash and temporary
investments 17,649 (1,539)
Cash and temporary investments, at
beginning of period 20,355 36,923
------- -------
Cash and temporary investments, at
end of period $38,004 $35,384
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(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 and nine months ended
September 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 9-30-95
--------- --------
(Thousands of dollars)
<S> <C> <C>
Raw materials and purchased
parts $ 9,013 $ 11,153
Work in process 4,911 6,076
Finished goods 7,995 9,892
--------- --------
$ 21,919 $ 27,121
========= ========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis
(1) Changes in Financial Condition
At September 30, 1995, the Company had working capital of $75,197,000 as
compared to $70,831,000, at December 31, 1994, an increase of $4,366,000
(2) Changes in Results of Operations
Net sales for the three months and the nine months ended September 30, 1995
increased 13% and 14%, respectively, over the same periods ended September 30,
1994. Sales by product group for the three months and nine months ended
September 30, 1994 and 1995 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
September 30 % September 30 %
------------------ Increase ------------------ Increase
1994 1995 (Decrease) 1994 1995 (Decrease)
-------- -------- ---------- -------- -------- ----------
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Oil field pumping
units $ 9,346 $12,189 30 $ 28,974 $ 33,504 16
Power transmission
products 13,477 15,702 17 41,631 41,115 (1)
Foundry castings 8,182 7,652 (7) 22,026 23,962 9
Industrial supplies - - * 3,052 - *
Trailers 24,908 27,393 10 63,274 81,968 30
------- ------- -------- --------
$55,913 $62,936 13 $158,957 $180,549 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 oil
field pumping units also increased resulting in significantly higher sales
volumes.
The gross profit for the first nine months of 1995 was 13% up from 4% for
the same period of 1994. The increase was primarily due to the Company recording
inventory loss provisions totaling $11,724,000 during the first nine months of
1994.
Selling, General and Administrative Expenses (S. G. & A.) increased
$582,000 or 4% for the nine months ended September 30, 1995, from $15,868,000
for the same period in 1994, primarily in support of higher net sales.
Other income for the first nine months of 1995 was $2,462,000. This
represents a decrease of $26,000 or 1% in other income over the same period in
1994.
The provision for income taxes increased to $1,201,000 and $3,273,000,
respectively, for the three months and nine months ended September 30, 1995,
compared to income tax benefits of $2,632,000 and $2,158,000, respectively, for
the same periods in 1994.
The Company reported net earnings in the first nine months of 1995 of
$6,164,000 compared to a loss of $4,189,000 for the first nine months of 1994.
The increase in net earnings resulted primarily from the increased volume of
trailer sales and the absence of any special inventory provisions during 1995.
Backlog at September 30, 1995, increased by approximately $994,000 or 1%
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 September 30, 1995, is
as follows:
<TABLE>
<CAPTION>
December 31 September 30 %
1994 1995 Change
----------- ------------ -------
(In thousands)
<S> <C> <C> <C>
Oilfield pumping units $ 8,527 $ 11,402 34
Power transmission products 21,061 38,858 85
Foundry castings 4,162 16,304 292
Trailers 75,611 43,791 (42)
-------- -------
$109,361 $110,355 1
======== ========
</TABLE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
27-Financial Data Schedule
(B) Reports on Form 8-K
None
<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.
LUFKIN INDUSTRIES, INC.
-------------------------------------
Date 11/13/95 /s/ C. James Haley, Jr.
---------------------- -------------------------------------
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 92
<SECURITIES> 35,292
<RECEIVABLES> 30,537
<ALLOWANCES> 592
<INVENTORY> 27,121
<CURRENT-ASSETS> 97,298
<PP&E> 232,121
<DEPRECIATION> 171,664
<TOTAL-ASSETS> 184,042
<CURRENT-LIABILITIES> 22,101
<BONDS> 0
<COMMON> 6,792
0
0
<OTHER-SE> 134,105
<TOTAL-LIABILITY-AND-EQUITY> 184,042
<SALES> 180,549
<TOTAL-REVENUES> 180,549
<CGS> 157,124
<TOTAL-COSTS> 173,574
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,437
<INCOME-TAX> 3,273
<INCOME-CONTINUING> 6,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,164
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
