UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549-1004
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 1995
COMMISSION FILE NUMBER 0-2413
MACDERMID, INCORPORATED
(Exact name of registrant as specified in its charter)
Connecticut 06-0435750
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
245 Freight Street, Waterbury, Connecticut 06702
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 575-5700
NONE
Former name, former address and former fiscal year, if changed since
last report.
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 and 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 []
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, no par value - 2,778,533 shares as of August 1, 1995.
<PAGE>
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INDEX
PART I Financial Information
Item 1. Financial Statements
Page No.
Consolidated Condensed Balance Sheets
June 30, 1995 and March 31, 1995 3-4
Consolidated Condensed Statements of Earnings
and Retained Earnings - Three Months Ended
June 30, 1995 and 1995 5-6
Consolidated Condensed Statements of Cash Flows -
Three Months Ended June 30, 1995 and 1994 7
Notes to Consolidated Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
PART II OTHER INFORMATION
Item 5. Other Information 11
Signatures 12
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<TABLE>
PART I. - FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollar amounts in thousands of dollars)
<CAPTION>
June 30, March 31,
1995 1995
----------- ---------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 3,869 $ 7,630
Accounts and Notes Receivable
(Net of Allowance for Doubtful
Accounts of $3,327 and $2,859) 51,166 45,559
Inventories
Finished Goods 16,571 16,074
Raw Materials 8,962 6,727
-------- --------
25,533 22,801
Prepaid Expenses 3,159 2,052
Deferred Income Tax Asset 3,155 3,155
-------- --------
Total Current Assets 86,882 81,197
Property, Plant and Equipment (Net of Accumulated
Depreciation of $36,954 and $35,721) 27,324 27,035
Other Assets 14,151 15,073
-------- --------
Total Assets $128,357 $123,305
======== ========
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
<CAPTION>
June 30, March 31,
1995 1995
----------- ---------
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 6,734 $ 4,720
Current Installments of Long-term Obligations 4,389 4,413
Accounts and Dividends Payable 19,526 18,475
Accrued Expenses 11,877 13,347
Income Taxes 6,321 5,531
-------- --------
Total Current Liabilities 48,847 46,486
Long-term Debt and Capital Lease
Obligations (note 5) 17,146 18,229
Accrued Postretirement Benefits 3,884 3,899
Deferred Income Taxes 962 960
Minority Interest in Subsidiaries 78 77
Shareholders' Equity
Common Stock Without Par Value 4,177 4,136
Additional Paid-In Capital 2,373 1,676
Retained Earnings 86,537 84,043
Equity Adjustment From Foreign Currency
Translation 2,316 1,551
Less Cost of 1,398,547 and 1,393,547 Common
Shares in Treasury (37,963) (37,752)
-------- --------
Total Shareholders' Equity 57,440 53,654
-------- --------
$128,357 $123,305
======== ========
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(Unaudited)
(Amounts in Thousands Except Per Share Amounts)
<CAPTION>
Three Months Ended
June 30,
------------------
1995 1994
---- ----
<S> <C> <C>
Net Sales $48,966 $42,587
Costs and expenses
Cost of Sales 23,762 21,325
Selling, technical and
administrative expenses 18,961 16,587
Interest income (55) (39)
Interest expense 510 250
Foreign exchange (4) (26)
Other (income) expense - net 941 (351)
------- -------
44,115 37,746
------- -------
Earnings before income taxes
and cumulative effect of
accounting change 4,851 4,841
Income taxes 1,941 1,670
------- -------
Earnings before cumulative
effect of accounting changes 2,910 3,171
Cumulative effect of accounting
changes - (372)
------- -------
Net earnings $ 2,910 $ 2,799
Retained earnings, beginning of
period 84,043 75,039
Cash dividends declared (416) (536)
------- -------
Retained earnings, end of period $86,537 $77,302
======= =======
Weighted average shares
Outstanding (note 3):
Primary 2,900,395 3,572,041
========= =========
Fully Diluted 2,904,914 3,572,041
========= =========
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
EARNINGS AND CASH DIVIDENDS PER SHARE
<CAPTION>
Three Months Ended
June 30
------------------
1995 1994
---- ----
<S> <C> <C>
Net earnings per share - Primary
and Fully Diluted
Before cumulative effect of
accounting changes $1.00 $0.89
Cumulative effect of accounting
changes - (0.11)
----- -----
$1.00 $0.78
===== =====
Cash dividends per share $ .15 $ .15
===== =====
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
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<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands of Dollars)
<CAPTION>
Three Months Ended
June 30,
--------------------
1995 1994
---- ----
<S> <C> <C>
Net cash flows from operating activities $ 1,012 $ 1,983
Cash flows from investing activities:
Capital expenditures (727) (1,178)
Proceeds from disposition of fixed assets 104 2,541
Acquisition of business (1,600) 9,092
Other investments - 23
------- -------
Net cash flows used in investing activities (2,223) (7,706)
------- -------
Cash flows from financing activities:
Long-term and short-term borrowings 936 8,161
Long-term and short-term repayments (2,965) (1,562)
Acquisition of treasury stock (211) -
Dividends paid (416) (536)
------- -------
Net cash flows used in financing activities (2,656) 6,063
Effect of exchange rate changes on cash 106 79
------- -------
Net increase (decrease) in cash and
cash equivalents (3,761) 419
Cash and cash equivalents at beginning of year 7,630 6,484
------- -------
Cash and cash equivalents at end of period $ 3,869 $ 6,903
======= =======
Cash paid for interest $ 844 $ 270
======= =======
Cash paid for income taxes $ 1,523 $ 776
======= =======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
The March 31, 1995 condensed consolidated balance sheet amounts
have been derived from the previously audited consolidated balance sheet
of MacDermid, Incorporated. The balance of the condensed financial
information reflects all adjustments which are, in the opinion of
management, necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods presented
and are of a normal recurring nature unless otherwise disclosed in this
report. The statements should be read in conjunction with the notes to
the consolidated financial statements included in MacDermid's 1995
Annual Report.
Note 2. Trends of Results of Operations
The results of operations for the three month periods ended
June 30, 1995 and 1994 are not necessarily indicative of trends or of
the results to be expected for the full year.
Note 3. Earnings Per Common Share
The computation of primary earnings per share is based upon the
weighted average number of outstanding shares plus (in periods in which
they have a dilutive effect) the effect of common shares contingently
issuable from stock options. The fully diluted per share computations
may also reflect additional dilution related to stock options due to
the use of the market price at the end of the period, when higher than
the average price for the period.
<PAGE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Following is a discussion of the results of operations for the three
months ended June 30, 1995 as compared to the same period in 1994 and
the changes in financial condition during the three months then ended.
CONSOLIDATED OVERVIEW:
SALES
Net proprietary sales reported for the current quarter increased more
than 18% from the same period last year reflecting continued
strengthening of business conditions in European and the Asia/Pacific
markets.
COSTS AND EXPENSES
Gross profits were up 19% because of the increased proprietary
chemical sales and overhead efficiencies realized through integration
of the business acquired from Allied-Kelite in May 1994. Selling,
technical and administrative expenses increased by 14%, principally
overseas to support sales growth and, in the United States, as a result
of the integration of the Allied-Kelite business.
PROVISION FOR INCOME TAXES
The effective income tax rate was approximately 40% for the quarter
ended June 30, 1995, up from about 35% for the same period in 1994,
reflecting the effects of changes in taxable earnings among operating
units which are taxable at differing rates. Additionally, a non
taxable gain on sale of property in Hong Kong in last year's first
quarter contributed to that period's lower rate.
GEOGRAPHIC SEGMENT RESULTS
NORTH AMERICA
Proprietary chemical product sales in the North America were up 5% in
the June 1995 quarter over the same period in 1994. U.S. net earnings
for the June 1995 quarter were improved from the same period in 1994
principally from the absence of acquisition expenses recognized in 1994.
<PAGE>
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EUROPE
In Europe, proprietary sales, as recorded in local currencies, increased
in most countries as the European economy has continued to recover from
the recent severe recession. In addition, successful market penetration
with a newer product line for printed circuit board manufacture has
pushed sales ahead. Total sales increased 30%. Improved margins
were realized in this segment, helping to offset a 25% rise in direct
expenses to support sales growth throughout the region. As a result,
first quarter net earnings showed substantial improvement for the second
consecutive year.
ASIA/PACIFIC
Proprietary chemical sales for the Far East group, overall, showed
growth of 42% over the first quarter last year. Direct expenses were
22% higher in the June quarter this year, principallydue to increased
selling costs. Reported net earnings are lower this year than the
same period last due to the one-time non taxable benefit of profits
realized on a property sale in fiscal year 1995.
FINANCIAL CONDITION
Operating activities during the June quarter 1995 resulted in a net
inflow of cash amounting to $1 million. This, together with cash
resources already on hand, was used to pay for capital improvements,
dividends to sharelholders, a business asset acquisition and a net
reduction in borrowings. Working capital at June 30, 1995 was $38
million as compared to $35 million at March 31, 1995.
Capital expenditures, $0.7 million dduring the June quarter, are likely
to increase as the year progresses - in line with total planned
expenditures of about $5 million for the fiscal year.
MacDermid has a long-term credit arrangement under which there is
a remaining term loan balance of $17.8 million and which permits
borrowings of up to $10 million under a three-year revolving credit
facility. In addition, MacDermid has credit lines available which
total approximately $38 million. Management believes these credit
facilities are adequate to fund current operating needs and expected
capital expenditures.
<PAGE>
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PART II.
OTHER INFORMATION
Item 5 - Other Information
On June 29, 1995, MacDermid completed the purchase of the remaining 50%
share of Hollmuller America, Inc., formerly a joint venture for equipment
manufacture with Hans Hollmuller Maschinenbau GmbH & Co. The former
joint venture company, which was renamed, MacDermid Equipment, Inc.
("MEI"), is now a wholly-owned subsidiary of MacDermid. The accounts of
MEI are included in the consolidated balance sheets as of June 30, 1995
and full results of operations will be included in consolidated results
beginning July 1, 1995.
Item 6 - Exhibits and Reports on Form 8-K
None
<PAGE>
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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.
MacDermid, Incorporated
(Registrant)
Date: August 14, 1995 Daniel H. Leever
Daniel H. Leever
President and Chief
Executive Officer
Date: August 14, 1995 Gregory M. Bolingbroke
Gregory M. Bolingbroke
Corporate Controller
<TABLE> <S> <C>
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<S> <C>
<FISCAL-YEAR-END> Mar-31-1996
<PERIOD-START> Apr-01-1995
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> 3-MOS
<CASH> 3869
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<RECEIVABLES> 51166
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<BONDS> 17146
0
0
<COMMON> 4177
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</TABLE>
