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, 1996
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 - 2,767,193 shares as of August 1, 1996.
<PAGE>
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INDEX
PART I. Financial Information
Item 1. Financial Statements
Page No.
Consolidated Condensed Balance Sheets
June 30 and March 31, 1996 3-4
Consolidated Condensed Statements of Earnings
and Retained Earnings - Three Months Ended
June 30, 1996 and 1995 5
Consolidated Condensed Statements of Cash Flows -
Three Months Ended June 30, 1996 and 1995 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. Other Information 9
Signatures 10
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<TABLE>
PART I. - FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands of dollars except share amounts)
<CAPTION>
June 30, March 31,
1996 1996
----------- ---------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 5,167 $ 8,833
Accounts and Notes Receivable
(Net of Allowance for Doubtful
Receivables of $4,244 and $4,829) 63,357 64,410
Inventories
Finished Goods 21,791 21,271
Raw Materials 18,476 17,267
-------- --------
40,267 38,538
Prepaid Expenses 4,614 2,911
Deferred Income Tax Asset 4,200 4,045
-------- --------
Total Current Assets 117,605 118,737
Property, Plant and Equipment (Net of Accumulated
Depreciation of $39,119 and $37,916) 41,040 41,316
Goodwill, net 79,358 80,398
Other Assets 23,782 24,305
-------- --------
Total Assets $261,785 $264,756
======== ========
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
----------- ---------
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable $ 9,032 $ 5,219
Current Installments of Long-term Obligations 6,626 7,065
Accounts and Dividends Payable 23,878 21,296
Accrued Expenses 18,339 19,265
Income Taxes 6,504 6,178
-------- --------
Total Current Liabilities 64,379 59,023
Long-term Obligations 96,509 105,189
Accrued Postretirement and Postemployment Benefits 4,037 3,997
Deferred Income Taxes 89 45
Minority Interest in Subsidiaries 84 85
Preferred Stock--6% Redeemable Series A (no par) 31,059 30,600
Shareholders' Equity
Common Stock Stated Value $1 per Share 4,242 4,200
Additional Paid-In Capital 4,735 3,456
Retained Earnings 99,620 95,564
Equity Adjustment From Foreign Currency
Translation 658 1,034
Less Cost of 1,483,504 and 1,405,947 Common
Shares in Treasury (43,627) (38,437)
-------- --------
Total Shareholders' Equity 65,628 65,817
-------- --------
$261,785 $264,756
======== ========
<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 Share and Per Share Amounts)
<CAPTION>
Three Months Ended
June 30,
------------------
1996 1995
---- ----
<S> <C> <C>
Net Sales $72,655 $48,966
Costs and expenses
Cost of Sales 36,315 23,529
Selling, technical and
administrative expenses 25,817 19,690
Interest income (183) (55)
Interest expense 2,086 510
Other expense - net 404 441
------- -------
64,439 44,115
------- -------
Earnings before income taxes 8,216 4,851
Income taxes 3,287 1,941
------- -------
Net earnings 4,929 2,910
Preferred dividends (459) -
------- -------
Net earnings available for
common shareholders 4,470 2,910
Retained earnings, beginning of
period 95,564 84,043
Cash dividends declared (414) (416)
------- -------
Retained earnings, end of period $99,620 $86,537
======= =======
Weighted average common shares
Outstanding (note 3):
Primary 2,929,378 2,900,395
========= =========
Fully diluted 2,930,335 2,904,914
========= =========
Net earnings per common share -
primary and fully diluted $1.53 $1.00
===== =====
Cash dividends per common share $0.15 $0.15
===== =====
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands of Dollars)
<CAPTION>
Three Months Ended
June 30,
--------------------
1996 1995
---- ----
<S> <C> <C>
Net cash flows from operating activities $ 8,195 $ 372
Cash flows from investing activities:
Capital expenditures (1,592) (727)
Proceeds from disposition of fixed assets 37 104
Acquisition of business - (1,600)
------- -------
Net cash flows used in investing activities (1,555) (2,223)
------- -------
Cash flows from financing activities:
Long-term and short-term borrowings 9,833 936
Long-term and short-term repayments (14,967) (2,965)
Exercise of stock options 543 640
Purchase of treasury shares (5,190) (211)
Dividends paid (414) (416)
------- -------
Net cash flows used in financing activities (10,195) (2,016)
Effect of exchange rate changes on cash (111) 106
------- -------
Net decrease in cash and cash equivalents (3,666) (3,761)
Cash and cash equivalents at beginning of year 8,833 7,630
------- -------
Cash and cash equivalents at end of period $ 5,167 $ 3,869
======= =======
Cash paid for interest $ 1,968 $ 844
======= =======
Cash paid for income taxes $2,611 $ 1,523
======= =======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
The March 31, 1996 condensed consolidated balance sheet amounts
have been derived from the previously audited consolidated balance sheets
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 1996
Annual Report.
Note 2. Trends of Results of Operations
The results of operations for the three month periods ended
June 30, 1996 and 1995 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 common share is based upon
the weighted average number of outstanding common 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 common
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. Earnings per common share
are calculated based upon net earnings available for common shareholders
after deduction for preferred dividends.
Note 4. Reclassification
Certain amounts in the 1995 Consolidated Condensed Balance Sheets,
Statements of Earnings and Retained Earnings and Statements of Cash Flows
have been reclassified to conform with 1996 presentation.
<PAGE>
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ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion compares the results of operations for the
three months ended June 30, 1996 to the same period in 1995 and
provides information with respect to changes in financial condition
during the three months then ended.
SALES
Total sales for the current quarter increased 48% from the same period
last year, principally resulting from inclusion of imaging business
which was acquired during the third quarter of fiscal year 1996. Also
contributing to the increase were equipment sales and certain overseas
markets.
COSTS AND EXPENSES
Gross profits were up 43%, substantially from additional business from
new subsidiaries as well as sales growth overseas. Gross profit, as a
percentage of sales, declined because the mix of products sold includes
a higher proportion of lower margin equipment sales.
PROVISION FOR INCOME TAXES
The effective income tax rate was approximately 40% for both the quarter
ended June 30, 1996 and the same period last year.
NET EARNINGS
Net earnings available to common shareholders for the three month
period ending June 30, 1996 increased 54% over the same period last
year despite increased interest expense and preferred dividends
relating to the Imaging business recently acquired.
FINANCIAL CONDITION
Operating activities during the three months ending June 30, 1996
produced an inflow of cash amounting to $8.6 million. From this cash
generated, $5.2 million was used for purchase of 77,557 of the
Corporation's outstanding shares. Capital improvements were made,
dividends to shareholders were paid, while debt was reduced $5.1
million using the balance of cash generated from operations together
with a portion of cash already on hand. Working capital at June 30,
1996 was $53.2 million as compared to $59.7 million at March 31, 1996.
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Capital expenditures, $1.6 million during the June quarter, are in
line with total planned expenditures of about $7.5 million for the
fiscal year.
MacDermid has a long-term credit arrangement under a seven-year term
loan for which a long-term balance of $80.3 million remains outstanding
at June 30, 1996 and which permits borrowings of up to $65 million
under a five-year revolving credit facility. MacDermid's other credit
facilities, which presently total approximately $40 million, together
with the revolving credit facility and the Corporation's cash flows
from operations, are adequate to fund working capital requirements and
expected capital expenditures.
OUTLOOK: ISSUES AND RISKS
This report and other Corporation reports and statements describe
many of the positive factors affecting the Corporation's future
business prospects. Investors should also be aware of factors which
could have a negative impact on those prospects. These include
political, economic or other conditions such as currency exchange
rates, inflation rates, recessionary or expansive trends, taxes and
regulations and laws affecting the business; competitive products,
advertising, promotional and pricing activity; the degree of acceptance
of new product introductions in the marketplace; and the difficulty
of forecasting sales at certain times in certain markets.
PART II. OTHER INFORMATION
ITEM 2: Changes in the Rights of Security Holders
None.
ITEM 5: Other Information
None.
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 12, 1996 Daniel H. Leever
Daniel H. Leever
President and Chief
Executive Officer
Date: August 12, 1996 Arthur J. LoVetere, Jr.
Arthur J. LoVetere, Jr.
Vice President and
Chief Financial Officer
Date: August 12, 1996 Gregory M. Bolingbroke
Gregory M. Bolingbroke
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> 3-MOS
<CASH> 5167
<SECURITIES> 0
<RECEIVABLES> 67601
<ALLOWANCES> 4244
<INVENTORY> 40267
<CURRENT-ASSETS> 117605
<PP&E> 80159
<DEPRECIATION> 39119
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<CURRENT-LIABILITIES> 64379
<BONDS> 96509
31059
0
<COMMON> 4242
<OTHER-SE> 61386
<TOTAL-LIABILITY-AND-EQUITY> 261785
<SALES> 72655
<TOTAL-REVENUES> 72655
<CGS> 36315
<TOTAL-COSTS> 64439
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<LOSS-PROVISION> 323
<INTEREST-EXPENSE> 2086
<INCOME-PRETAX> 8216
<INCOME-TAX> 3287
<INCOME-CONTINUING> 4470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4470
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.53
</TABLE>
