UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended November 30, 1994
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 1-8862
____________________________________________________________________________
MARK IV INDUSTRIES, INC.
____________________________________________________________________________
(Exact name of Registrant as specified in its charter)
Delaware 23-1733979
____________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 John James Audubon Parkway, P.O. Box 810, Amherst, New York 14226-0810
____________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(716) 689-4972
____________________________________________________________________________
(Registrant's telephone number, including area code)
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 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
--- ---
Number of shares outstanding of each class of the Registrant's common stock,
as of the latest practicable date:
Class Outstanding at January 3, 1995
------- ------------------------------
Common stock $.01 par value 54,379,246
<PAGE>2
MARK IV INDUSTRIES, INC.
INDEX
Part I. Financial Information Page No.
- ------------------------------ --------
Consolidated Condensed Balance Sheets as of
November 30, 1994 and February 28, 1994 3
Consolidated Statements of Income and Retained Earnings
For the Three Month Periods Ended November 30, 1994
and 1993 4
Consolidated Statements of Income and Retained Earnings
For the Nine Month Periods Ended November 30, 1994 and 1993 5
Consolidated Statements of Cash Flows
For the Nine Month Periods Ended November 30, 1994 and 1993 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. Other Information 15
- ---------------------------
Signature Page 16
Exhibit Index 17
<PAGE>3
MARK IV INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
November 30, February 28,
1994 1994
------------ ------------
ASSETS (Unaudited)
Current Assets:
Cash $ 800 $ 500
Accounts receivable 356,900 275,100
Inventories 370,800 265,000
Other current assets 62,400 42,100
---------- ----------
Total current assets 790,900 582,700
Pension related and other
non-current assets 176,700 126,300
Property, plant and equipment, net 499,500 365,300
Cost in excess of net assets acquired and
deferred charges 336,500 208,000
---------- ----------
TOTAL ASSETS $1,803,600 $1,282,300
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
maturities of debt $ 46,600 $ 45,000
Accounts payable 162,700 99,700
Compensation related liabilities 61,800 43,100
Accrued interest 8,400 13,600
Accrued expenses and other liabilities 104,500 67,000
Income taxes payable 18,700 1,500
---------- ----------
Total current liabilities 402,700 269,900
---------- ----------
Long-Term Debt:
Senior debt 476,200 195,000
Subordinated debentures 295,500 372,200
---------- ----------
Total long-term debt 771,700 567,200
---------- ----------
Other non-current liabilities 157,300 99,800
---------- ----------
Stockholders' Equity:
Common stock 500 400
Additional paid-in capital 338,400 261,500
Retained earnings 134,100 88,600
Foreign currency translation adjustment (1,100) (5,100)
---------- ----------
Total stockholders' equity 471,900 345,400
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,803,600 $1,282,300
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>4
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
For the Three Month Periods Ended November 30, 1994 and 1993
(Amounts in thousands, except per share data)
1994 1993
Net sales $397,300 $320,000
-------- --------
Operating costs:
Cost of products sold 261,700 206,200
Selling and administration 71,700 60,700
Research and development 8,800 8,000
Depreciation and amortization 14,800 11,400
-------- --------
Total operating costs 357,000 286,300
-------- --------
Operating income 40,300 33,700
Interest expense 13,700 12,800
-------- --------
Income before provision for taxes 26,600 20,900
Provision for income taxes 10,100 8,100
-------- --------
Income before extraordinary items 16,500 12,800
Extraordinary items, net of tax (1,100) -
-------- --------
Net Income 15,400 12,800
Retained earnings - beginning of the period 120,000 105,300
Cash dividends of $.0275 and $.024 per share (1,300) (1,000)
-------- --------
Retained earnings - end of the period $134,100 $117,100
======== ========
Net income per share of common stock:
Primary:
Income before extraordinary items $ .36 $ .30
Extraordinary items (.02) -
-------- --------
Net Income (loss) $ .34 $ .30
======== ========
Fully Diluted:
Income before extraordinary items $ .34 $ .27
Extraordinary items (.02) -
-------- --------
Net Income (loss) $ .32 $ .27
======== ========
Weighted average number of shares outstanding:
Primary 45,961 42,684
======== ========
Fully-diluted 51,068 50,975
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>5
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
For the Nine Month Periods Ended November 30, 1994 and 1993
(Amounts in thousands, except per share data)
1994 1993
---- ----
Net sales $1,118,300 $924,400
---------- --------
Operating costs:
Cost of products sold 730,200 597,700
Selling and administration 205,000 171,000
Research and development 24,500 23,300
Depreciation and amortization 38,000 31,200
---------- --------
Total operating costs 997,700 823,200
---------- --------
Operating income 120,600 101,200
Interest expense 39,000 37,700
---------- --------
Income before provision for income taxes 81,600 63,500
Provision for income taxes 31,300 24,000
Income before extraordinary items and
cumulative effect of accounting change 50,300 39,500
Extraordinary items, net of tax (1,100) (21,700)
Cumulative effect of accounting change - (26,000)
---------- --------
Net income (loss) 49,200 (8,200)
Retained earnings - beginning of the period 88,600 128,300
Cash dividends of $.0825 and $.072 per share (3,700) (3,000)
---------- --------
Retained earnings - end of the period $134,100 $117,100
========== ========
Net income per share of common stock:
Primary:
Income before extraordinary items and
accounting change $ 1.15 $ .93
Extraordinary items (.03) (.51)
Cumulative effect of accounting change - (.61)
-------- --------
Net income (loss) $ 1.12 $ (.19)
======== ========
Fully-diluted:
Income before extraordinary items and
accounting change $ 1.04 $ .85
Extraordinary items (.02) (.43)
Cumulative effect of accounting change - (.51)
-------- --------
Net income (loss) $ 1.02 $ (.09)
======== ========
Weighted average number of shares outstanding:
Primary 43,804 42,411
======== ========
Fully-diluted 51,030 50,684
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>6
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Month Periods Ended November 30, 1994 and 1993
(Dollars in thousands)
1994 1993
---- ----
Cash flows from operating activities:
Income before extraordinary items $ 50,300 $ 39,500
Items not affecting cash:
Depreciation and amortization 38,000 31,200
Pensions and other (5,700) (1,100)
-------- --------
Net cash provided by earnings 82,600 69,600
Other adjustments to reconcile income to
net cash provided by (used in) operating
activities:
Changes in assets and liabilities,
net of effects of businesses acquired:
Accounts receivable (300) 9,400
Inventories (13,800) (16,500)
Other assets (10,400) (12,200)
Accounts payable 11,200 (1,300)
Other liabilities 13,600 (18,700)
-------- --------
Net cash provided by operations 82,900 30,300
Extraordinary items, before deferred charges - (30,000)
-------- --------
Net cash provided by
operating activities 82,900 300
-------- --------
Cash flows from investing activities:
Acquisitions and divestitures, net (293,800) (31,500)
Purchase of plant and equipment (28,000) (28,100)
-------- --------
Net cash used in investing activities (321,800) (59,600)
-------- --------
Cash flows from financing activities:
Credit agreement borrowings, net 241,200 (30,000)
Purchases of subordinated debt - (190,200)
Issuance of senior subordinated notes - 258,000
Other changes in debt, net 1,300 23,400
Common stock transactions 300 700
Cash dividends paid (3,500) (3,000)
-------- --------
Net cash provided by
financing activities 239,300 58,900
-------- --------
Effect of exchange rate fluctuations (100) (300)
-------- --------
Net increase (decrease) in cash 300 (700)
Cash and cash equivalents:
Beginning of the period 500 2,700
-------- --------
End of the period $ 800 $ 2,000
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>7
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. In the opinion of the Company's management, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position
of the Company at November 30, 1994, and the results of its operations
and its cash flows for the three and nine month periods ended November
30, 1994 and 1993. Such results are not necessarily indicative of the
results to be expected for the full year.
2. On November 4, 1994, the Company acquired substantially all of the stock
of Purolator Products Company (Purolator) for a cash purchase price of
$25.00 per share, or a total cost, including expenses, of approximately
$286.3 million. Funding for the acquisition was provided by borrowings
under the Company's 1994 Credit Agreement as discussed in Note 6.
Purolator is a manufacturer of a broad range of filters and separation
systems used in automotive (principally aftermarket), marine, heating,
ventilating, air conditioning, and high-technology liquid-filtration
applications, and specialized industrial filters and separation systems.
Purolator is a significant addition to the Company's Power and Fluid
Transfer business segment.
The acquisition has been accounted for under the purchase method, and
Purolator's results of operations have been consolidated with the
Company's results of operations effective as of the acquisition date.
The Company has made a preliminary determination and allocation of the
purchase price as of the acquisition date, consisting of the following
(dollars in thousands):
Accounts receivable $ 77,200
Inventories 88,200
Other current assets 24,000
Accounts payable and
other current liabilities (91,300)
--------
Net working capital acquired 98,100
Fixed assets 129,000
Cost in excess of net assets acquired 118,900
Long-term bank indebtedness (38,600)
Other non-current items, net (21,100)
--------
Total purchase price,
including expenses $286,300
========
The financial position of Purolator has been included in the
consolidated balance sheet of the Company as of November 30, 1994 based
upon the above preliminary determination and allocation. Such amounts
will be finalized upon additional analysis and asset valuation
determinations to be made by the Company and various outside appraisal
firms. The final changes are not expected to have a significant impact
on the Company's results of operations as reported herein.
<PAGE>8
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table presents the pro forma consolidated condensed
results of operations for the Company's nine month periods ended
November 30, 1994 and 1993 as if the following transactions had occurred
at the beginning of each of the periods: (i) the consummation of the
acquisition of Purolator in November 1994 and the borrowings under the
1994 Credit Agreement in connection therewith; (ii) the conversion in
October 1994 of approximately $76.7 million aggregate principal amount
of the Company's 6-1/4% Convertible Debentures into approximately
5,340,000 shares of common stock at a conversion price of $14.3685 per
share; and (iii) the consummation of the Offering in December 1994 (as
discussed in Note 7), and the application of the estimated net proceeds
therefrom. The pro forma amounts do not purport to be indicative of the
results that actually would have been obtained had the transactions
identified above actually taken place at the beginning of each of the
periods, nor are they intended to be a projection of future results
(dollars in thousands, except per share amounts):
Nine Months Ended
November 30,
-----------------
1994 1993
---- ----
Net sales $1,449,000 $1,258,100
========== ==========
Income before interest
and taxes $ 146,700 $ 124,300
========== ==========
Income before
extraordinary items and
accounting change $ 62,200 $ 50,400
========== ==========
Income per share,
before extraordinary items
and accounting changes:
Primary $ 1.15 $ .93
========== =========
Fully-diluted $ 1.11 $ .91
========== =========
3. Accounts receivable are presented net of allowances for doubtful
accounts of $26,800,000 and $17,600,000 at November 30, 1994 and
February 28, 1994, respectively.
<PAGE>9
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4. Inventories consist of the following components (dollars in thousands):
November 30, February 28,
1994 1994
---- ----
Raw materials, parts and sub-assemblies $104,900 $ 67,700
Work-in-process 58,600 43,500
Finished goods 207,300 153,800
-------- --------
Inventories $370,800 $265,000
======== ========
Since physical inventories taken during the year do not necessarily
coincide with the end of a quarter, management has estimated the
composition of inventories with respect to raw materials, work-in-
process and finished goods. It is management's opinion that this
estimate represents a reasonable approximation of the inventory
breakdown as of November 30, 1994. The amounts at February 28, 1994 are
based upon the audited balance sheet at that date.
5. Property, plant and equipment is stated at cost and consists of the
following components (dollars in thousands):
November 30, February 28,
1994 1994
---- ----
Land and land improvements $ 42,200 $ 35,700
Buildings 149,700 115,700
Machinery and equipment 450,600 324,700
-------- --------
Total property, plant and equipment 642,500 476,100
Less accumulated depreciation 143,000 110,800
-------- --------
Property, plant and equipment, net $499,500 $365,300
======== ========
6. Long-term debt consists of the following at November 30, 1994 and
February 28, 1994 (dollars in thousands):
November 30, February 28,
1994 1994
---- ----
Senior Debt:
1994 Credit Agreement $ 421,000 $ -
1993 Credit Facility - 140,000
Multi-Currency Agreement 48,700 48,400
Other items 32,700 40,500
--------- --------
Total 502,400 228,900
Less Current maturities (6,100) (5,800)
Less amounts allocated to
discontinued operations (20,100) (28,100)
--------- --------
Net senior debt 476,200 195,000
--------- --------
Subordinated debt:
8-3/4% Senior Notes 258,000 258,000
6-1/4% Convertible Debentures 37,500 114,200
--------- --------
Total subordinated debt 295,500 372,200
--------- --------
Total long-term debt $ 771,700 $567,200
========= ========
<PAGE>10
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
On November 2, 1994, the Company entered into a new $650 million credit
agreement (the "1994 Credit Agreement") with a group of financial
institutions which provides for (i) a five-year term loan in the
principal amount of approximately $300 million used to finance the
acquisition of Purolator (as discussed in Note 2) and to repay certain
existing Purolator debt, and (ii) a five-year revolving credit facility
in an amount of up to $350 million for refinancing the Company's
previously existing credit facility (the "1993 Credit Facility") and
certain existing Purolator debt, and for working capital and other
general corporate purposes.
The loans outstanding under the 1994 Credit Agreement bear interest, at
the Company's option, at (i) the reference rate of the agent acting on
behalf of the financial institutions, or (ii) under a LIBOR option, with
borrowing spreads of LIBOR plus 0.55% to LIBOR plus 1.00% depending on
the company's consolidated leverage ratio (as defined in the 1994 Credit
Agreement). The Company is currently paying interest on the loan at
LIBOR plus 0.75% per annum. The 1994 Credit Agreement contains certain
affirmative and negative covenants customary for this type of agreement
and is guaranteed by all of the Company's significant domestic
subsidiaries. All of such guarantees are collateralized by first
priority pledges of all outstanding capital stock of each guarantor
subsidiary.
In October 1994, the Company entered into agreements with certain
holders of its 6-1/4% Convertible Subordinated Debentures due February
15, 2011 to convert approximately $76,700,000 of the debentures into
approximately 5,340,000 shares of the Company's common stock at an
applicable conversion rate of $14.3685 per share. The principal amount
of converted debt, as well as related unamortized deferred charges have
been reclassified to common stock and additional paid in capital.
7. In December 1994, the Company completed an underwritten public offering
of 6,175,000 shares of its common stock, at a public offering price of
$19.00 per share (the Offering). The net proceeds from the Offering of
approximately $113,000,000 were used to repay a portion of the
indebtedness outstanding under the Company's 1994 Credit Agreement.
Under the terms of the 1994 Credit Agreement, the amount of net proceeds
of the Offering used to repay outstanding indebtedness under the
revolving credit facility may be reborrowed by the Company.
8. For purposes of cash flows, the Company considers overnight investments
as cash equivalents. The Company paid interest of approximately
$45,600,000 and $44,200,000 in the nine month periods ended November 30,
1994 and 1993, respectively. Such amounts include $1,100,000 and
$1,600,000 allocated to the costs of discontinued operations in the nine
month periods ended November 30, 1994 and 1993, respectively. The
Company also paid income taxes of approximately $15,100,000 and
$12,700,000 in the nine month periods ended November 30, 1994 and 1993,
respectively.
<PAGE>11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Net cash provided by earnings was approximately $82,600,000 for the nine month
period ended November 30, 1994, an increase of approximately $13,000,000 (19%)
over the nine month period ended November 30, 1993. As of November 30, 1994,
the Company had working capital of approximately $388,200,000, an increase of
approximately $75,400,000 (24%) from February 28, 1994. The increase in
working capital is substantially attributable to the acquisition of Purolator.
On November 4, 1994, the Company completed the purchase of the stock of
Purolator Products Company (Purolator) for a cash purchase price of $25.00 per
share, or a total cost, including expenses, of approximately $286.3 million.
Funding for the acquisition was provided by borrowings under the Company's
1994 Credit Agreement, as discussed in Note 6. Purolator is a manufacturer of
a broad range of filters and separation systems used in automotive
(principally aftermarket), marine, heating, ventilating, air conditioning, and
high-technology liquid-filtration applications, and specialized industrial
filters and separation systems. Purolator is a significant addition to the
Company's Power and Fluid Transfer business segment.
On November 2, 1994, the Company entered into the new $650 million Credit
Agreement with a group of financial institutions which provides for (i) a
five-year term loan in the principal amount of approximately $300 million used
to finance the acquisition of Purolator and to repay certain existing
Purolator debt, and (ii) a five-year revolving credit facility in an amount of
up to $350 million for refinancing the Company's 1993 Credit Facility and
certain existing Purolator debt and for working capital and other general
corporate purposes. The loans outstanding under the 1994 Credit Agreement
bear interest, at the Company's option, at (i) the reference rate of the agent
acting on behalf of the financial institutions, or (ii) under a LIBOR option,
with borrowing spreads of LIBOR plus 0.55% to LIBOR plus 1.00% depending on
the Company's consolidated leverage ratio (as defined in the 1994 Credit
Agreement). The Company is currently paying interest on the loan at LIBOR
plus 0.75% per annum. The 1994 Credit Agreement contains certain affirmative
and negative covenants customary for this type of agreement and is guaranteed
by all of the Company's significant domestic subsidiaries. All of such
guarantees are collateralized by first priority pledges of all outstanding
capital stock of each guarantor subsidiary.
In October 1994, the Company entered into agreements with certain holders of
its 6-1/4% Convertible Subordinated Debentures due February 15, 2011 to
convert approximately $76,700,000 of the debentures into approximately
5,340,000 shares of the Company's common stock at an applicable conversion
rate of $14.3685 per share. The principal amount of converted debt, as well
as related unamortized deferred charges have been reclassified to common stock
and additional paid in capital. The remaining $37,500,000 of these debentures
have a first call date of February 16, 1995, and it is the Company's intention
to call them on that date.
<PAGE>12
In December 1994, the Company completed an underwritten public offering of
6,175,000 shares of its common stock, at a public offering price of $19.00 per
share. The net proceeds of the offering of approximately $113,000,000 were
used to repay a portion of the Company's outstanding indebtedness under the
Company's 1994 Credit Agreement. Under the terms of the 1994 Credit
Agreement, the amount of net proceeds of the Offering used to repay
outstanding indebtedness under the revolving credit facility may be reborrowed
by the Company.
The Company has borrowing availability under its primary credit agreements of
$280,300,000 and additional availability under its various domestic and
foreign demand lines of credit of approximately $86,700,000 as of November 30,
1994. Long-term debt at November 30, 1994 increased approximately
$204,500,000 from the total amount as of February 28, 1994, primarily as a
result of the Purolator acquisition, less the effects of the debt conversion.
As a result, the Company's long-term debt as a percentage of total
capitalization increased to 62.1% at November 30, 1994, or approximately 50.0%
after giving effect to the Offering and the anticipated conversion of the
remaining Convertible Debentures referred to above. Excluding the acquisition
of Purolator, and the debt conversion, the Company has reduced long-term debt
by approximately $53,800,000 from February 28, 1994. Further debt reduction
will be pursued through the use of cash generated from operations and reduced
working capital requirements. Management believes that cash generated from
operations should be sufficient to support the Company's working capital
requirements and anticipated capital expenditures for the foreseeable future.
Results of Operations
- ---------------------
Prior to the acquisition of Purolator in November 1994, the Company classified
its operations into three business segments: Power and Fluid Transfer;
Transportation; and Professional Audio. Following the acquisition of
Purolator, management reviewed its existing businesses and determined that its
Transportation business segment should be combined with the Power and Fluid
Transfer business segment in view of the similarity in markets and customers
served. Management also believes that the revised classification will enable
the company to benefit from a global organizational structure and the
coordination of distribution activities. As a result, the Company now
classifies its operations into two business segments: Power and Fluid
Transfer; and Professional Audio.
The results of operations for the three and nine month periods ended November
30, 1994 include the results of operations of Purolator from its November 4,
1994 acquisition date. The results of operations for the nine month period
ended November 30, 1993 includes the results of operations of PTI from its
June 2, 1993 acquisition date.
Net sales for the three month period ended November 30, 1994 increased
approximately $77,300,000 (24%) over the comparable period last year. The
increase was primarily due to the internal sales growth of the Company's Power
and Fluid Transfer Segment, and also due to the inclusion of the results of
operations of Purolator from its acquisition date. Sales in the Company's
Professional Audio Segment in the current quarter were comparable to sales
levels in that segment in the three month period ended November 30, 1993.
<PAGE>13
Net sales for the nine month period ended November 30, 1994 increased
approximately $193,900,000 (21%) over the nine month period ended November 30,
1993. If the sales of PTI in the three month period ended May 31, 1993 had
been included in the results for the nine month period ended November 30,
1993, sales in the current nine month period would have increased by
approximately $151,400,000 (11%). Excluding the sales of the Purolator and
PTI businesses in both periods, the internal sales growth of the Company's
Power and Fluid Transfer segment was primarily responsible for the Company's
increased sales in the current period. Sales in the Company's Professional
Audio segment in the current nine month period were comparable to sales levels
in that segment in the prior year's nine month period.
The cost of products sold as a percentage of consolidated net sales remained
consistent at approximately 65% for the three and nine month periods ended
November 30, 1994, as compared to the three and nine month periods ended
November 30, 1993. Selling and administration costs as a percentage of
consolidated net sales were approximately 18% for each of the three and nine
month periods ended November 30, 1994 and 1993.
Research and development costs for the three and nine month periods ended
November 30, 1994 were substantially the same as for the three and nine month
periods ended November 30, 1993. As a percentage of consolidated net sales,
these expenses remained consistent at approximately 2% in each period. This
consistent level of investment reflects the Company's continuing emphasis on
new product development.
Depreciation and amortization expense increased by $3,400,000 (30%) for the
three month period ended November 30, 1994 as compared to the three month
period ended November 30, 1993. The increase is attributed to depreciation
resulting from fixed asset additions made in the second half of fiscal 1994,
as well as the inclusion of the results of operations of Purolator from its
acquisition date.
For the nine month period ended November 30, 1994, depreciation and
amortization expense increased by $6,800,000 (22%) as compared to the nine
month period ended November 30, 1993. This increase is primarily due to the
PTI acquisition which occurred in the second quarter of fiscal 1994, as well
as the inclusion of the results of operations of Purolator from its
acquisition date. The increase is also due to the amortization of the
restricted stock grants made in the second half of fiscal 1994, and the
increase in depreciation resulting from fixed asset additions made in the
second half of fiscal 1994.
Interest expense for the three month period ended November 30, 1994 increased
by approximately $900,000 (7%) as compared to the three month period ended
November 30, 1993. The increase is primarily due to an increase in the
weighted average debt outstanding resulting from borrowings incurred to
finance the acquisition of Purolator, net of the effects of the debt
conversion in October 1994. Increases in economic rates on the Company's
domestic debt were significantly offset by lower weighted average interest
rates on its foreign debt.
<PAGE>14
Interest expense for the nine month period ended November 30, 1994 increased
by approximately $1,300,000 (3%) as compared to the nine month period ended
November 30, 1993. The increase is primarily due to an increase in the
weighted average debt outstanding resulting from borrowing incurred to finance
the acquisition of Purolator, net of the effects of the debt conversion in
October 1994. Increases in economic rates on the Company's domestic debt were
significantly offset by lower weighted average interest rates on its foreign
debt.
The Company's provision for income taxes as a percentage of pre-tax accounting
income for the three and nine month periods ended November 30, 1994 increased
as compared to the comparable periods last year, primarily as a result of
increased income in foreign locations with higher statutory tax rates than in
the U.S.
As a result of all of the above, the Company's income before special items for
the three and nine month periods ended November 30, 1994 increased $3,700,000
(29%) and $10,800,000 (27%), respectively, over the comparable periods last
year.
As a result of the replacement of the Company's 1993 Credit Facility with the
1994 Credit Agreement, the Company recognized a $1,100,000 extraordinary loss,
net of related tax benefits, for the three and nine month periods ended
November 30, 1994, related to the write-off of the unamortized balance of
deferred charges associated with the 1993 Credit Facility.
As a result of the debt extinguishment in the first quarter of fiscal 1994,
the Company incurred an extraordinary loss, net of related tax benefits, of
$21,700,000. Additionally, the Company's adoption of SFAS No. 106 in the
first quarter of fiscal 1994 resulted in the recognition of a net of tax
charge of $26,000,000 which was recorded as a cumulative effect of an
accounting change. These special charges resulted in a net loss of $8,200,000
in the nine month period ended November 30, 1993 in comparison to the net
income of $49,200,000 earned in the nine month period ended November 30, 1994.
Impact of Inflation
- -------------------
Generally, the Company has been able to pass on inflation-related cost
increases; consequently, inflation has had no material impact on income from
operations.
<PAGE>15
Part II. OTHER INFORMATION
- ---------------------------
Items 1, 3, 4 and 5 are inapplicable and have been omitted.
Item 2 - Changes in Securities
- ------------------------------
On November 17, 1994, the Company filed a Registration Statement on Form
S-8, which registered 700,000 shares of the Company's common stock, par value
$0.01 per share, reserved for issuance under the following employee benefit
plans of Purolator Products Company, as such plans have been assumed and/or
amended by the Company:
(i) 1992 Stock Option Plan of Purolator Products Company
(ii) 1994 Long-Term Incentive Plan of Purolator Products Company
(iii) Purolator Products Company Employees Retirement Savings Plan
On December 9, 1994, the company completed an underwritten public
offering of 6,175,000 shares of its common stock at a public offering price of
$19.00 per share.
Item 6(a) - Exhibits
- --------------------
Exhibit No.
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
Item 6(b) Reports on Form 8-K
- -----------------------------
The following report on Form 8-K was filed pertaining to events
occurring during the quarter ended November 30, 1994.
1. A current report on Form 8-K, dated November 2, 1994, was filed to
report under Items 2,5, 7a, 7b, and 7c that (i) the Company and
its wholly-owned subsidiary, Mark IV Acquisition Corp., completed
the purchase of the stock of Purolator Products Company, a
manufacturer and marketer of a broad range of filters and
separation systems for approximately $286,300,000 and, (ii) the
Company and a group of financial institutions entered into a
credit agreement providing for a five-year term loan and a five-
year revolving credit facility.
<PAGE>16
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.
MARK IV INDUSTRIES, INC.
Registrant
DATE: January 6, 1995 /s/ Sal H. Alfiero
--------------- -----------------------------
Sal H. Alfiero
Chairman of the Board
DATE: January 6, 1995 /s/ Clement R. Arrison
--------------- ----------------------------
Clement R. Arrison
President
DATE: January 6, 1995 /s/ William P. Montague
--------------- ----------------------------
William P. Montague
Executive Vice President
and Chief Financial Officer
DATE: January 6, 1995 /s/ John J. Byrne
--------------- ----------------------------
John J. Byrne
Vice President-Finance
DATE: January 6, 1995 /s/ Richard L. Grenolds
--------------- ----------------------------
Richard L. Grenolds
Vice President and
Chief Accounting Officer
<PAGE>17
EXHIBIT INDEX
Description
- -----------
Page No.
-------
2.1 Agreement and Plan of Merger dated as of October 3, 1994 N/A
by and among Mark IV Industries, Inc., Mark IV Acquisition
Corp., and Purolator Products Company, incorporated by
reference to exhibit (c)(1) to Schedule 14D-1 (Tender
Offer) dated October 7, 1994, as filed with the SEC
on such date.
2.2 Offer to Purchase, as revised, incorporated by reference N/A
to exhibit (a)(1) to Amendment No. 1 to Schedule 14D-1
Tender Offer) dated October 11, 1994, as filed with the
SEC on such date.
10.1 Credit and Guarantee Agreement dated as of November 2, 1994, N/A
among Mark IV Industries, Inc., as Borrower, Mark IV
Transportation Products Corp., Gulton Industries, Inc.,
Dayco Products, Inc., Electro-Voice Incorporated, Anchor
Swan, Inc. and Mark IV Acquisition Corp., as Guarantors, the
banks and other financial institutions which are parties
thereto, Bank of America National Trust and Savings
Association, as Administrative Agent and Bid Agent, and
BA Securities, Inc., as Arranger, incorporated by
reference to exhibit (b)(2) to Amendment No. 3 to
Schedule 14D-1 (Tender Offer) dated November 2, 1994, as
filed with the SEC on such date.
11 Statement Regarding Computation of Per Share Earnings 18
27 Financial Data Schedule 20
EXHIBIT 11
MARK IV INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (UNAUDITED)
For the Three and Nine Month Periods Ended November 30, 1994 and 1993
(Amounts in thousands, except per share data)
Three Months Nine Months
Ended November 30, Ended November 30,
------------------ -----------------
1994 1993 1994 1993
PRIMARY ---- ---- ---- ----
Shares outstanding:
Weighted average number of
shares outstanding 45,961 42,684 43,804 42,411
Net effect of dilutive stock
options (1) 365 343 314 322
------- ------- ------- -------
Total 46,326 43,027 44,118 42,733
======= ======= ======= =======
Income before extraordinary items
and cumulative effect of a change
in accounting principle $16,500 $12,800 $ 50,300 $39,500
======= ======= ======== =======
Income per share before extraordinary
items and cumulative effect of a
change in accounting principle (2) $ .35 $ .30 $ 1.14 $ .93
======= ======= ======== =======
Extraordinary items $(1,100) $ - $(1,100) $(21,700)
======= ======= ======= ========
Loss per share from extraordinary
items (2) $ (.02) $ - $ (.02) $ (.51)
======= ======= ======= ========
Cumulative effect of a change in
accounting principle $ - $ - $ - $(26,000)
======= ======= ======= ========
Loss per share from cumulative
effect of a change in accounting
principle (2) $ - $ - $ - $ (.61)
======= ======= ======= ========
Net income (loss) $15,400 $12,800 $49,200 $ (8,200)
======= ======= ======= ========
Net income (loss) per share (2) $ .33 $ .30 $ 1.12 $ (.19)
======= ======= ======= ========
Three Months Nine Months
Ended November 30, Ended November 30,
------------------ -----------------
1994 1993 1994 1993
FULLY-DILUTED ---- ---- ---- ----
Shares outstanding:
Weighted average number of
shares outstanding 45,961 42,684 43,804 42,411
Shares issuable upon conversion of
the Company's 6-1/4% Convertible
Subordinated Debentures 4,742 7,948 6,885 7,951
Net effect of dilutive stock
options (1) 365 343 341 322
------- ------- ------- -------
Total 51,068 50,975 51,030 50,684
======= ======= ======= =======
Income before extraordinary items and
cumulative effect of a change in
accounting principle $16,500 $12,800 $ 50,300 $39,500
Interest on Convertible Subordinated
Debentures, less tax effect $ 700 $ 1,200 $ 2,900 $ 3,500
------- ------- -------- -------
Income applicable to fully-diluted
shares, before extraordinary items
and cumulative effect of a change
in accounting principle $17,200 $14,000 $ 53,200 $43,000
======= ======= ======== =======
Income per share before extraordinary
items and cumulative effect of a
change in accounting principle $ .34 $ .27 $ 1.04 $ .85
======= ======= ======== =======
Extraordinary items $(1,100) $ - $(1,100) $(21,700)
======= ======= ======= ========
Loss per share from
extraordinary items $ (.02) $ - $ .02 $ (.43)
======= ======= ======== =======
Cumulative effect of a change in
accounting principle $ - $ - $ - $(26,000)
======= ======= ======= ========
Loss per share from cumulative
effect of a change in accounting
principle $ - $ - $ - $ (.51)
======= ======= ======= =======
Net income (loss) $16,100 $14,000 $52,100 $ (4,700)
======= ======= ======= ========
Net income (loss) per share $ .32 $ .27 $ 1.02 $ (.09)
======= ======= ======== =======
- ------------------------------------
(1) The net effects for the three and nine month periods ended November 30,
1994 and 1993 are based upon the treasury stock method using the average
market price during the periods for the primary amounts, and the higher
of the average market price or the market price at the end of the period
for the fully-diluted amounts.
(2) Primary earnings per share have been reported in the Company's
financial statements based only upon the shares of common stock
outstanding, since the dilutive effect of the stock options
is not considered to be material.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1994
<PERIOD-END> NOV-30-1994
<CASH> 800
<SECURITIES> 0
<RECEIVABLES> 383,700
<ALLOWANCES> 26,800
<INVENTORY> 370,800
<CURRENT-ASSETS> 790,900
<PP&E> 642,500
<DEPRECIATION> 143,000
<TOTAL-ASSETS> 1,803,600
<CURRENT-LIABILITIES> 402,700
<BONDS> 771,700
<COMMON> 500
0
0
<OTHER-SE> 471,400
<TOTAL-LIABILITY-AND-EQUITY> 1,803,600
<SALES> 1,118,300
<TOTAL-REVENUES> 1,118,300
<CGS> 730,200
<TOTAL-COSTS> 997,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,000
<INCOME-PRETAX> 81,600
<INCOME-TAX> 31,300
<INCOME-CONTINUING> 50,300
<DISCONTINUED> 0
<EXTRAORDINARY> 1,100
<CHANGES> 0
<NET-INCOME> 49,200
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.02
</TABLE>