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Previous: MEAD CORP, 10-K/A, 1997-05-13 |
Next: MERCK & CO INC, 10-Q, 1997-05-13 |
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
----------------------------------------------
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 0-3821
---------
GENCOR INDUSTRIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 59-0933147
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
5201 North Orange Blossom Trail, Orlando, Florida 32810
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(407) 290-6000
--------------
(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 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 number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.
Class Outstanding at April 28, 1997
----- -----------------------------
Common stock, $0.10 par value 1,635,415 shares
Class B stock, $0.10 par value 441,532 shares
1
<PAGE>
Gencor Industries, Inc.
Form 10-Q for the Quarter Ended March 31, 1997
<TABLE>
<CAPTION>
Index
- -----
Page
----
<S> <C>
Part I. Financial Information - Unaudited
Item 1. Financial Statements
a) Consolidated Balance Sheet -
March 31, 1997 and
September 30, 1996 3
b) Consolidated Income Statement -
Three and Six Months Ended
March 31, 1997 and 1996 4
c) Consolidated Statement of Cash Flows -
Six Months Ended
March 31, 1997 and 1996 5
d) Notes to Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Position and Results of Operations 7
Part II. Other Information 9
Exhibit 11 10
</TABLE>
2
<PAGE>
Gencor Industries, Inc.
Consolidated Balance Sheet
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
---- ----
(Unaudited) (Audited)
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 9,151 $ 1,502
Accounts and notes receivable, less allowance
for doubtful accounts of $3,727 and $2,859 35,084 24,646
Inventories:
Raw materials 15,012 14,390
Work-in-process 11,605 10,339
Finished goods 18,163 16,807
------------ ------------
44,780 41,536
Prepaid expenses, including deferred income
taxes of $612 1,568 2,129
------------ ------------
Total current assets 90,583 69,813
Property and equipment, net 31,455 36,796
Other assets 5,753 3,345
Goodwill, net 11,788 9,107
------------ ------------
$ 139,579 $ 119,061
============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Notes payable $ 497 $ 1,699
Current portion of long-term debt 2,839 2,528
Accounts payable 16,815 13,368
Customer deposits 7,210 3,242
Accrued expenses 12,589 8,830
Income taxes payable 343 285
------------ ------------
Total current liabilities 40,293 29,952
Post-retirement benefits 1,760 1,526
Long-term debt 79,853 73,746
Deferred income taxes 444 1,438
Other long-term liabilities 830 -
------------ ------------
Total liabilities 123,180 106,662
------------ ------------
Shareholders' equity:
Preferred stock, par value $0.10 per share; authorized
300,000 shares, none issued - -
Common stock, par value $0.10 per share; authorized
5,000,000 shares; 1,901,850 and 1,620,267 shares issued,
respectively 190 162
Class B stock, par value $0.10 per share; authorized
3,000,000 shares; 441,532 shares issued 44 44
Capital in excess of par value 10,808 7,836
Retained earnings 7,052 4,999
Cumulative translation adjustment (744) 309
------------ ------------
17,350 13,350
Subscription receivable from officer (95) (95)
Less common stock in treasury, at cost (266,435 shares) (856) (856)
------------ ------------
16,399 12,399
------------ ------------
$ 139,579 $ 119,061
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Gencor Industries, Inc.
Consolidated Income Statement
(Unaudited)
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------------------------------ ------------------------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---- ---- ---- ----
Net revenue $ 48,717 $ 17,433 $ 83,936 $ 25,694
Costs and expenses:
Production costs 37,556 12,165 62,413 18,654
Product engineering and development 568 626 1,167 1,166
Selling, general and administrative 6,063 2,274 14,188 4,356
------------ ------------ ------------ -------------
44,187 15,065 77,768 24,176
------------ ------------ ------------ -------------
Operating income 4,530 2,368 6,168 1,518
Other income (expense):
Interest income 5 - 5 -
Interest expense (1,662) (383) (3,177) (711)
Miscellaneous 34 3 345 58
------------ ------------ ------------ -------------
Income before income taxes 2,907 1,988 3,341 865
Provision for income taxes 1,046 738 1,198 288
------------ ------------ ------------ -------------
Net income $ 1,861 $ 1,250 $ 2,143 $ 577
============ ============ ============ =============
Income per share:
Primary $ 0.84 $ 0.70 $ 1.02 $ 0.32
============ ============ ============ =============
Fully diluted $ 0.84 $ 0.70 $ 1.02 $ 0.32
============ ============ ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
Gencor Industries, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
-----------------------------------
<S> <C> <C>
1997 1996
---- ----
Net income $ 2,143 $ 577
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization 2,659 344
Gain on equipment disposal (149) (53)
Loss (gain) on foreign exchange 199 (2)
Purchase price adjustments 669 -
Change in assets and liabilities:
Increase in income tax receivable - (541)
(Increase) decrease in receivables (10,663) 2,520
Increase in inventories (1,073) (7,467)
Decrease in prepaid expenses 1,117 219
Increase (decrease) in deferred income taxes (497) 68
Increase in accounts payable and customer deposits 6,684 4,098
Increase in accrued expenses 3,083 96
Increase (decrease) in income taxes payable 58 (309)
Decrease in other assets 797 -
---------------- ----------------
Total adjustments 2,884 (1,027)
---------------- ----------------
Cash provided by (used for) operations 5,027 (450)
Cash flows from investing activities:
Capital expenditures (1,259) (691)
Other, net - 444
---------------- ----------------
Cash used for investing activities (1,259) (247)
Cash flows from financing activities:
Net reduction under lines of credit and notes payable (12,256) (427)
Net borrowings of debt 79,672 1,032
Payments to Ingersoll Rand (61,012) -
Dividends paid (89) (87)
Payment of closing costs (3,959) 56
Issuance of common stock 1,611 -
---------------- ----------------
Cash provided by financing activities 3,967 574
Effect of exchange rate changes on cash (86) -
---------------- ----------------
Net increase (decrease) in cash 7,649 (123)
Cash and cash equivalents at:
beginning of period 1,502 416
---------------- ---------------
end of period $ 9,151 $ 293
================ ===============
Supplemental cash flow information:
- ----------------------------------
Cash paid during the period for:
Interest $ 2,100 $ 591
================ ===============
Income taxes $ 769 $ 989
================ ===============
</TABLE>
5
<PAGE>
Gencor Industries, Inc.
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The accompanying unaudited interim consolidated financial statements and related
notes should be read in conjunction with the financial statements and related
notes included in the Company's 1996 Annual Report on Form 10-K. In the opinion
of management, all material adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation have been included in
the accompanying unaudited interim consolidated financial statements. Operating
results for the six months ended March 31, 1997, are not necessarily indicative
of the results that may be expected for the year ending September 30, 1997.
NOTE 2 - ACQUISITION
- --------------------
Effective September 30, 1996, the Company purchased the stock of Process
Equipment Division of Ingersoll-Rand Company ("CPM") for $60,868,697. CPM, a
multi-national entity, is also engaged in the design and manufacture of process
equipment. The acquisition was financed under a new $95 million credit
facility. Additionally, subsequent to September 30, 1996, an equity infusion of
approximately $3,000,000 was provided by certain key members of operating
management.
The results of operations of CPM have been included in the results of the
Company from October 1, 1996. Assuming the acquisition had occurred on October
1, 1995, the Company's (unaudited) net sales, net income, and earnings per share
would have been approximately $74,099,000, $1,440,000, and $0.65, respectively,
for the six months ended March 31, 1996 and approximately $39,696,000,
$1,208,000, and $0.55, respectively, for the three months ended March 31, 1996.
NOTE 3 - CASH DIVIDEND
- ----------------------
On November 21, 1996, the Company declared a cash dividend of $0.05 per share,
payable January 4, 1997, to shareholders of record as of December 18, 1996.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- OF OPERATIONS
A. Consolidated Results of Operations
----------------------------------
Results of operations for the quarter ended March 31, 1997, as compared to the
- ------------------------------------------------------------------------------
quarter ended March 31, 1996:
- ----------------------------
Total net revenue for the quarter ended March 31, 1997 was $48,717,000 versus
$17,433,000 for the same period of 1996, an increase of $31,284,000 or 179.45%.
The increase resulted primarily from the inclusion of sales from the newly
acquired subsidiary, CPM.
Production costs were $37,556,000 or 77.1% of net revenue in the second quarter
of fiscal 1997, versus $12,165,000 or 69.8% of net revenue in the same period in
fiscal 1996. The increase in production cost dollars is a direct result of the
CPM acquisition.
Product engineering and development costs decreased $58,000 or 9.3% primarily as
a result of lower personnel costs.
Selling, general and administrative expenses increased in the second quarter of
fiscal 1997 to $6,063,000 from $2,274,000 in the same period of fiscal 1996 due
primarily to the CPM acquisition. Additionally, the amortization of goodwill and
deferred costs emanating from the acquisition also contributed to the increase.
The change in interest expense reflects higher average borrowings, primarily as
a result of financing the CPM acquisition.
Net income in the second quarter of fiscal 1996 amounted to $1,861,000, a
$611,000 increase over the second quarter of fiscal 1996 net income of
$1,250,000 as a result of the above factors.
Results of operations for the six months ended March 31, 1997, as compared to
- -----------------------------------------------------------------------------
the six months ended March 31, 1996:
- -----------------------------------
Total net revenue for the six months ended March 31, 1997 was $83,936,000 versus
$25,694,000 for the same period of 1996, an increase of $58,242,000 or 226.7%.
The increase resulted primarily from the inclusion of sales from the newly
acquired subsidiary, CPM.
Production costs were $62,413,000 or 74.4% of net revenue in the first six
months of fiscal 1997 versus $18,654,000 or 72.6% of net revenue in the same
period in fiscal 1996. The increase in production cost dollars is a direct
result of the CPM acquisition.
Selling, general, and administrative expenses increased in the first six months
of fiscal 1997 to $14,188,000 from $4,356,000 in the same period of fiscal 1996,
due primarily to the CPM acquisition. Additionally, the amortization expense of
goodwill and deferred costs emanating from the acquisition also contributed to
the increase in costs.
The change in interest expense reflects higher average borrowings, primarily as
a result of financing the CPM acquisition.
Net income increased in the first six months of fiscal 1997 to $2,143,000 from
$577,000 in the first six months of fiscal 1996 as a result of the above
factors.
7
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company had working capital at March 31, 1997 of $50,290,000 as compared
with working capital of $39,861,000 as of September 30, 1996. The increase in
working capital resulted from an increase in cash, accounts receivable, and
inventory and a reduction in notes payable, partially offset by increases in
accounts payable and customer deposits.
The Company's asphalt production equipment operations are subject to seasonal
fluctuations, often resulting in lower sales in the first and fourth fiscal
quarters of each year and much lower earnings or losses during such quarters.
CPM's operations are subject to less seasonality, and the seasonality which does
occur is opposite that of the construction equipment operations.
During the six months ended March 31, 1997, the Company's total debt increased
$5,216,000 as a result of increased borrowings, partially offset by scheduled
principal repayments.
The Company believes that, based on the present conditions and banking
arrangements, it will be able to meet its working capital needs during fiscal
1997 through operations.
B. Financial Condition as of March 31, 1997
----------------------------------------
There are no material changes in the Company's financial condition from that
reported as of September 30, 1996.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
A. Exhibits:
(11) Statement regarding computation of earnings per share.
B. Reports on Form 8-K:
Form 8-K filed on December 26, 1996
8
<PAGE>
EXHIBIT 11
GENCOR INDUSTRIES, INC.
COMPUTATIONS OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
-------------------------------------- --------------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings per share
- ------------------
Net income $1,861,000 $1,250,000 $2,143,000 $ 577,000
========== ========== ========== ==========
Average number of shares outstanding 2,063,923 1,780,364 1,960,060 1,778,520
========== ========== ========== ==========
Net income per share $ 0.90 $ 0.70 $ 1.09 $ 0.32
========== ========== ========== ==========
Additional primary computation
- ------------------------------
Average number of shares outstanding 2,063,923 1,780,364 1,960,060 1,778,520
Add dilutive effect of outstanding options
(as determined by the application of the
treasury stock method) 158,861 10,093 143,322 10,615
---------- ---------- ---------- ----------
Average number of shares outstanding,
as adjusted 2,222,784 1,790,457 2,103,382 1,789,135
========== ========== ========== ==========
Net income per share $ 0.84 $ 0.70 (A) $ 1.02 $ 0.32 (A)
========== ========== ========== ==========
Additional fully diluted computation
- ------------------------------------
Average number of shares outstanding 2,063,923 1,780,364 1,960,060 1,778,520
Add dilutive effect of outstanding option
(as determined by application of the
treasury stock method) 158,861 10,147 143,322 10,615
---------- ---------- ---------- ----------
Average number of shares outstanding,
as adjusted 2,222,784 1,790,511 2,103,382 1,789,135
========== ========== ========== ==========
Net income per share $ 0.84 $ 0.70 (A) $ 1.02 $ 0.32 (A)
========== ========== ========== ==========
</TABLE>
(A) This calculation is submitted in accordance with Regulations S-K Item 601
(b)(11), although it is not required by footnote to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
Note: On May 7, 1997, the Company announced a 2 for 1 stock split effective
May 30, 1997. Per share calculations above do not reflect the effect of
the stock split.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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.
GENCOR INDUSTRIES, INC.
Date: May 12, 1996 /s/ Russell R. Lee III
------------------------------
Russell R. Lee III
Treasurer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997
<PERIOD-START> OCT-01-1996 OCT-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1997
<CASH> 9,151 0
<SECURITIES> 0 0
<RECEIVABLES> 38,811 0
<ALLOWANCES> (3,727) 0
<INVENTORY> 44,780 0
<CURRENT-ASSETS> 90,583 0
<PP&E> 31,455 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 139,579 0
<CURRENT-LIABILITIES> 40,293 0
<BONDS> 0 0
0 0
0 0
<COMMON> 190 0
<OTHER-SE> 16,399 0
<TOTAL-LIABILITY-AND-EQUITY> 139,579 0
<SALES> 48,717 83,936
<TOTAL-REVENUES> 48,717 83,936
<CGS> 37,556 62,413
<TOTAL-COSTS> 44,187 77,768
<OTHER-EXPENSES> (34) (345)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,662 3,177
<INCOME-PRETAX> 2,907 3,341
<INCOME-TAX> 1,046 1,198
<INCOME-CONTINUING> 1,861 2,143
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,861 2,143
<EPS-PRIMARY> .84 1.02
<EPS-DILUTED> .84 1.02
</TABLE>
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