SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: March 31, 2000
Commission file number: 1-448
MESTEK, INC.
Pennsylvania Corporation
I.R.S. Employer Identification No.
25-0661650
260 North Elm Street
Westfield, Massachusetts 01085
Telephone: (413) 568-9571
The Registrant 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 and has
been subject to such filing requirements for the past 90 days.
The number of shares of Common Stock outstanding as of April 30, 2000, was
8,743,103.
<PAGE>
MESTEK, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2000
INDEX
PART I - FINANCIAL INFORMATION Page No.
--------
Condensed consolidated balance sheets at March 31, 2000
and December 31, 1999 3 - 4
Condensed consolidated statements of income for the three
months ended March 31, 2000 and 1999 5
Condensed consolidated statements of cash flows for the three
months ended March 31, 2000 and 1999 6
Condensed consolidated statement of changes in shareholders' equity
for the period from January 1, 1999 through March 31, 2000 7
Notes to the condensed consolidated financial statements 8-14
Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
PART II - OTHER INFORMATION
Statement of Computation of Per share Earnings 16
SIGNATURE 16
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MESTEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, Dec. 31,
2000 1999
--------- ---------
(Dollars in thousands)
ASSETS
Current Assets
Cash $778 $4,468
Accounts Receivable - less allowances of,
$3,782 and $3,627 respectively 59,280 66,605
Unbilled Accounts Receivable 285 447
Inventories 58,805 54,688
Other Current Assets 6,036 5,815
-------- --------
Total Current Assets 125,184 132,023
Property and Equipment - net 69,837 69,067
Notes Receivable --- 3,850
Investment in Simione 6,850 ---
Other Assets and Deferred Charges - net 6,033 7,146
Excess of Cost over Net Assets of Acquired Companies 34,740 30,167
--------- ---------
Total Assets $242,644 $242,253
========= =========
See the Notes to Condensed Consolidated Financial Statements.
Continued on next page
<PAGE>
MESTEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Unaudited)
March 31, Dec. 31,
2000 1999
--------- ----------
(Dollars in thousands)
LIABILITIES, AND SHAREHOLDERS' EQUITY
Current Liabilities
Current Portion of Long-Term Debt $18,130 $14,467
Accounts Payable 19,037 18,335
Accrued Compensation 3,085 6,778
Accrued Commissions 2,403 3,314
Progress Billings in Excess of Cost and Estimated Earnings 301 3,257
Customer Deposits 4,574 5,409
Other Accrued Liabilities 19,662 16,731
-------- ---------
Total Current Liabilities 67,192 68,291
Long-Term Debt 20,311 20,324
Other Liabilities 1,978 2,104
-------- ---------
Total Liabilities 89,481 90,719
-------- ---------
Minority Interests 2,983 2,917
-------- ---------
Shareholders' Equity
Common Stock - no par, stated value $0.05 per share,
9,610,135 shares issued 479 479
Paid in Capital 15,434 15,434
Retained Earnings 145,168 143,180
Treasury Shares, at cost, (867,032 and 846,132
common shares, respectively) (9,809) (9,393)
Cumulative Translation Adjustment (1,092) (1,083)
-------- ---------
Total Shareholders' Equity 150,180 148,617
-------- ---------
Total Liabilities, and Shareholders' Equity $242,644 $242,253
========= =========
See the Notes to Condensed Consolidated Financial Statements.
<PAGE>
MESTEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
2000 1999
-------- ------
(In thousands, except for share amounts)
Net Sales $89,476 $77,562
Net Service Revenues 291 423
-------- --------
Total Revenues 89,767 77,985
Cost of Goods Sold 64,209 55,969
Cost of Service Revenues 142 236
-------- --------
Gross Profit 25,416 21,780
Selling Expense 11,528 9,970
General and Administrative Expense 4,495 3,724
Engineering Expense 2,791 2,153
-------- -------
Operating Profit 6,602 5,933
Interest Expense (247) (259)
Other Income (Expense) - net (37) (183)
-------- -------
Income from Continuing
Operations Before Income Taxes 6,318 5,491
Income Taxes 2,468 2,145
-------- -------
Income from Continuing Operations 3,850 3,346
-------- -------
Discontinued Operations:
(Loss) Income from operations of
Discontinued Segment before taxes (478) 199
Applicable Income Tax Benefit (Expense 167 (26)
-------- -------
(Loss) Income from Operations of Discontinued Segment (311) 173
Net Income $3,539 $3,519
======== =======
Basic Earnings (Loss) Per Common Share
Continuing Operations $ .44 $ .38
Discontinued Operations ($ .04) $ .02
-------- -------
Net Income $ .40 $ .40
======== =======
Basic Weighted Average Shares Outstanding 8,745 8,881
======== =======
Diluted Earnings (Loss) Per Common Share
Continuing Operations $ .44 $ .38
Discontinued Operations ($ .04) $ .02
-------- -------
Net Income $ .40 $ .40
======== =======
Diluted Weighted Average Shares Outstanding 8,762 8,908
======== =======
See the Notes to Condensed Consolidated Financial Statements.
<PAGE>
MESTEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
2000 1999
------ ------
(Dollars in thousands)
Cash Flows from Operating Activities:
Net Income $3,539 $3,519
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 2,867 2,221
Provision for Losses on Accounts Receivable 130 108
Change in Assets & Liabilities:
Cash Flows Provided by (Used in) Changes In:
Accounts Receivable 5,024 2,678
Unbilled Accounts Receivable 162 (12)
Inventory (3,255) 137
Other Assets (586) 256
Accounts Payable 592 (5,823)
Accrued Expenses (1,765) (819)
Progress Billings (116) (65)
Other Long Term Liabilities 255 (15)
-------- --------
Net Cash Provided by Operating Activities 6,847 2,185
-------- --------
Cash Flows from Investing Activities:
Capital Expenditures (2,810) (3,771)
Additional Investment in Simione (3,000) ---
Acquisition of Businesses (net of cash acquired) (8,018) (22,941)
-------- --------
Net Cash Used in Investing Activities (13,828) (26,712)
-------- --------
Cash Flows from Financing Activities:
Net Borrowings Under Line of Credit Agreements 3,673 23,690
Principal Payments Under Long Term Debt Obligations (23) (21)
Increase in Minority Interests 66 48
Repurchase of Common Stock (416) (339)
Cumulative Translation Adjustments (9) 5
-------- --------
Net Cash Provided by (Used in) Financing Activities 3,291 23,383
-------- --------
Net Decrease in Cash and Cash Equivalents (3,690) (1,144)
Cash and Cash Equivalents - Beginning of Period 4,468 3,777
-------- --------
Cash and Cash Equivalents - End of Period $778 $2,633
========= =========
See the Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
MESTEK, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
For the period January 1, 1999 through March 31, 2000
<CAPTION>
Cumulative
Common Paid In Retained Treasury Translation
Stock Capital Earnings Shares Adjustment Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1999 $479 $15,434 $125,263 ($6,790) ($1,088) $133,298
Net Income 17,917 17,917
Common Stock Repurchased (2,603) (2,603)
Cumulative Translation Adjustment 5 5
------ ------- -------- -------- --------- ---------
Balance - December 31, 1999 $479 $15,434 $143,180 ($9,393) ($1,083) $148,617
Net Income 3,539 3,539
Dividends Paid in MCS, Inc. common stock (1,551) (1,551)
Common Stock Repurchased (416) (416)
Cumulative Translation Adjustment (9) (9)
------ ------- -------- -------- --------- ---------
Balance - March 31, 2000 $479 $15,434 $145,168 ($9,809) ($1,092) $150,180
====== ======= ======== ========= ========= =========
See the Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
MESTEK, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements include the accounts of the
company and its wholly owned subsidiaries. In the opinion of management, the
financial statements include all material adjustments, consisting solely of
normal recurring adjustments, necessary for a fair presentation of the Company's
financial position, results of operations and cash flows. The results of this
interim period are not necessarily indicative of results for the entire year.
Inventories
Inventories are valued at the lower of cost or market. Cost of inventories is
determined principally by the last-in, first-out (LIFO) method.
Income Taxes
Provisions for income tax in the amounts of $2,301,000 and $2,171,000 were
recorded for the three-month periods ended March 31, 2000 and 1999,
respectively.
Excess of Cost Over net Assets of Acquired Companies (Goodwill)
- ---------------------------------------------------------------
The Company amortizes Goodwill on the straight-line basis over the estimated
period to be benefited. The acquisition of the assets of Anemostat on March 26,
1999 resulted in Goodwill of approximately $6,800,000, which will be amortized
over 25 years. The acquisition of the assets of Wolfram, Inc., as more fully
described in Note 2, resulted in Goodwill of approximately $2,700,000, which
will be amortized over 25 years. The acquisition of selected assets of B & K
Rotary Machinery International Corporation, as more fully described in Note 2,
resulted in Goodwill of approximately $2,200,000, which will be amortized over
25 years. The Company continually evaluates the carrying value of Goodwill. Any
impairments would be recognized when the expected future operating cash flows
derived from such Goodwill is less than their carrying value.
Comprehensive Income
For the period ended March 31, 2000 and March 31, 1999, respectively, the
components of other comprehensive income were immaterial and consisted solely of
foreign currency translation adjustments.
Reclassification
Reclassifications are made periodically to previously issued financial
statements to conform with the current year presentation.
Note 2 - Business Acquisitions
On January 28, 2000, the Company acquired substantially all of the
operating assets of Wolfram, Inc. d/b/a Cesco Products ("Cesco") located in
Minneapolis, Minnesota. Cesco manufactures vertical and horizontal louvers;
controls and fire/smoke dampers; gravity ventilators, louver penthouses and
walk-in access doors for the HVAC industry at its location in Minneapolis,
Minnesota. The Cesco products are complementary to the Company's existing louver
and damper businesses. The purchases price paid for the assets acquired was
approximately $5,991,000, including assumed liabilities of approximately
$991,000. The Company accounted for this acquisition under the purchase method
of accounting and accordingly recorded goodwill of approximately $2,700,000.
On February 10, 2000, the Company acquired the designs, intellectual
property and certain physical assets of B & K Rotary Machinery International
Corporation ("B & K") of Brampton, Ontario, Canada. B & K is a well-known and
experienced manufacturer of highly engineered metal processing line. B & K
equipment is found in steel processing centers, tube/pipe production plants and
roll-forming facilities around the world. The B & K Supermill(TM), Rotary
Shear(TM), and Rotary Pierce(TM) designs are the technology of choice among
leading producers of light gauge steel framing used in building construction.
The purchase price paid for the assets acquired was approximately $2,800,000.
The Company accounted for this acquisition under the purchase method of
accounting and accordingly, recorded goodwill of approximately $2,200,000.
On March 14, 2000, the Company and MetCoil Systems Corporation,
("MetCoil") announced that they have entered into a definitive merger agreement
under which MetCoil will be merged into a wholly owned subsidiary of the Company
for approximately $32 million. The Company hopes to complete this merger during
the second quarter of fiscal 2000.
The merger is subject to approval by MetCoil's stockholders at the
meeting scheduled for June 1, 2000. Review under the Hart-Scott-Rodino Act
resulted in early termination. All other conditions were further described in a
proxy statement mailed to MetCoil's stockholders in late April. The Board of
Directors of MetCoil has unanimously recommended that stockholders approve the
merger.
MetCoil manufactures advanced sheet-metal-forming equipment,
fabricating equipment and computer-controlled fabrication systems for the global
market. The Company employs approximately 270 people, principally in its Cedar
Rapids, Iowa and Lisle, Illinois manufacturing facilities, and had revenues for
the fiscal year ended May 31, 1999 of $45.8 million. MetCoil's products are
complementary with those of the Company's Metal Forming Segment.
<PAGE>
Note 3 - Discontinued Operation
On May 26, 1999 the Company entered into an agreement, (the Agreement),
to merge its wholly owned subsidiary, MCS, Inc. (MCS) into Simione Central
Holdings, Inc. (Simione). Simione is a provider of information systems and
services to the home health care industry supplying information systems,
consulting and agency support services to customers nationwide. Simione provides
freestanding, hospital based and multi-office Home Health Care Providers
(including certified, private duty, staffing, HME, IV therapy, and hospice) with
information solutions that address all aspects of home care operations. Simione
maintains offices nationwide and is headquartered in Atlanta, Georgia.
Under the terms of the Agreement, for every share of outstanding
Simione common stock, Simione would issue .85 shares of its common stock to the
Company. As a result, the Company would own, based on the number of Simione
common shares outstanding at the date of the Agreement, approximately 46% of
Simione after the merger is completed. On August 12, 1999, Simione, with the
Company's consent, acquired all of the outstanding common stock of CareCentric
Solutions, Inc. for $200,000 and acquired all of the Preferred Stock of
CareCentric Solutions, Inc. in return for 3.1 million newly issued shares of
Simione Series A Preferred Stock, which may be converted on a one for one basis
into Simione common shares upon consent of a majority of the Simione
shareholders. The Series A Preferred Stock was converted to common stock after
shareholder approval on March 7, 2000. As a result the Company would expect to
own, barring other changes in the capital structure of Simione, approximately
38% of Simione after the merger is completed. Under the terms of the Agreement,
MCS's ProfitWorks segment will remain with the Company.
On September 9, 1999, Mestek, Inc. ("Mestek") announced that it had
entered into an amendment to the Plan and Agreement of Merger dated May 26, 1999
(the "Amendment") between Simione Central Holdings, Inc. ("SCHI"), Mestek, and
its wholly-owned subsidiary, MCS, Inc. ("MCS"), whereby the shares of common
stock of MCS will be distributed to the Mestek common shareholders in a spin-off
transaction (the Spin-off), and MCS will then be merged with and into SCHI, (the
Merger). The Spin-off and the Merger were completed on March 7, 2000, after
shareholder approval.
In connection with the Amendment, Mestek loaned to SCHI a total of
$4,000,000 on a short-term basis. Upon the closing of the above-mentioned
merger, the $4,000,000 loan was canceled, and Mestek contributed an additional
$2,000,000 to the capital of SCHI in return for newly issued Series B Preferred
Stock of SCHI. The Series B Preferred Stock issued to Mestek super has voting
rights equivalent to 2.2 million shares of SCHI common stock. Recently Mestek
has agreed to reduce such voting rights by half to comply with NASDAQ's voting
rights policy, in exchange for a three-year warrant. Mestek also received as
part of it capital contribution to SCHI a warrant for the subsequent purchase of
400,000 shares of SCHI common stock. The Amendment also provided, upon
consummation of the merger, for the appointment to the SCHI Board of Directors
of six individuals designated by Mestek, and the obligation of the Mestek Major
Shareholders (as defined in the Amendment) to vote for the nominees to the SCHI
Board of Directors for eighteen months after the effective date of the merger.
Mestek also loaned Simione $850,000 on November 11, 1999 on a
short-term basis. Upon consummation of the merger, the loan was converted to
$850,000 of newly issued Series C Preferred Stock. The Series C Preferred stock
has voting rights equal to 170,000 shares of SCHI common stock.
On March 6, 2000, the Company completed the Spin-off and on March 7,
2000, the subsequent merger of its wholly owned subsidiary, MCS, Inc., into
Simione Central Holdings, Inc. The net Book Value of the assets of MCS, Inc. of
approximately $1,551,000 has been treated as a dividend to the shareholders of
the Company. The Company has accounted for the operations of MCS prior to that
date as a discontinued operation in accordance with APB30.
Summarized financial information for the discontinued operations, were
as follows:
Quarter ended Years ended
March 31, 2000 1999 1998
-------------- ---- ----
Operating Revenues $1,701 $16,648 $14,901
(Loss) Income before Provision
for Income Taxes ($478) $772 $1,712
(Loss) Income from
Discontinued Operations.
Net of Income Tax ($311) $466 $1,026
At December 31, 1999
Current Assets $4,648
Total Assets $6,696
Current Liabilities $6,191
Total Liabilities $6,191
Net Assets of Discontinued Operations $505
Note 4 - Inventories
Inventories consisted of the following at:
March 31, December 31,
2000 1999
---- ----
Finished Goods $21,268 $18,692
Work-in-progress 15,789 14,865
Raw materials 28,952 28,335
------ ------
66,009 61,892
Less provision for LIFO
Method of valuation (7,204) (7,204)
------- -------
$58,805 $54,688
======= =======
Note 5 - Property and Equipment
March 31, Dec. 31,
2000 1999
---------- ------
Land $ 2,853 $ 2,853
Building 26,917 26,792
Leasehold Improvements 4,640 4,415
Equipment 97,843 96,028
------ ---------
132,253 130,088
Accumulated Depreciation (62,416) (61,021)
-------- -------
$ 69,837 $ 69,067
========= =========
Note 6 - Long-Term Debt
March 31, Dec. 31,
2000 1999
------------- --------
Revolving Loan Agreement $ 38,031 $ 34,358
Other Bonds and Notes Payable 410 433
----------- -----------
38,441 34,791
Less Current Maturities (18,130) (14,467)
-------- --------
$ 20,311 $ 20,324
======== ========
Revolving Loan Agreement - The Company has a Revolving Loan Agreement
and Letter of Credit Facility (the Agreement) with a commercial bank. The
Agreement provides $55 million of unsecured revolving credit and $10 million of
standby letter of credit capacity. Borrowings under the Agreement bear interest
at a floating rate based on the bank's prime rate less one percent (1.00%) or,
at the discretion of the borrower, LIBOR plus a quoted market factor or,
alternatively, in lieu of the prime based rate, a rate based on the overnight
Federal Funds Rate. The Agreement has been extended on a one-year basis through
April 30, 2001. The Revolving Loan Agreement contains financial covenants, which
require that the Company maintain certain current ratios, working capital
amounts, capital bases and leverage ratios. This Agreement also contains
restrictions regarding the creation of indebtedness, the occurrence of mergers
or consolidations, the sale of subsidiary stock and the payment of dividends in
excess of 50 percent (50%) of net income.
Note Payable - The Company has a Demand Loan Facility with a second
commercial bank under which the Company can borrow up to $10,000,000 on a LIBOR
basis. The facility expires on April 1, 2000, with no balance outstanding as of
March 31, 2000.
<PAGE>
Note 7 - Interim Segment Information
Description of the types of products and services from which each reportable
segment derives its revenues:
The Company has three reportable segments: the manufacture of heating,
ventilating and air-conditioning equipment (HVAC), the manufacture of metal
handling and metal forming machinery (Metal Forming), and the production of
metal products (Metal Products). As further described in Note 3, the Company
discontinued its Computer Software segment during fiscal 2000.
The Company's HVAC segment manufactures and sells a wide variety of residential,
commercial and industrial heating, cooling, and air distribution products to
independent wholesales supply warehouses, to mechanical, sheet metal and other
contractors, and in some cases to other HVAC manufacturers under original
equipment manufacture (OEM) contracts. The products include finned tube and
baseboard radiation equipment gas fired heating and ventilating equipment, air
damper equipment and related air distribution products and commercial and
residential boilers. The products are marketed under a number of franchise names
including Sterling, Beacon Morris, Smith, Hydrotherm, RBI, Vulcan, Applied Air,
Wing, AWV, ABI, Arrow, Koldwave, Anemostat and Spacepak. Assets totaling
approximately $5,991,000 acquired in the CESCO acquisition on January 28, 2000,
as more fully described in Note 2, have been added to the Company's HVAC
segment.
The Company's Metal Products segment manufactures a variety of metal products
including aluminum extrusions, flexible metal hose and gray iron castings. This
segment sells its products mostly as components to manufacturers who incorporate
them into their own products. In some cases flexible metal hose is sold to
distributors.
The Company's Metal Forming Segment designs, manufactures and sells a variety of
metal Forming equipment and related machinery under names such as
Cooper-Weymouth, Peterson, Dahlstrom, Hill Engineering, Coilmate-Dickerman, and
Rowe. The products are sold through independent dealers in most cases to
end-users and in some cases to other original equipment manufacturers. The
products include roll formers, wing benders, coil feeds, straighteners, cradles,
cut-to-length lines, specialty dies, rotary punch, tube feed and cut-off and
flying cut-off saws. Assets totaling approximately $2,800,000 acquired in the B
& K acquisition on February 10, 2000 as more fully described in Note 2, have
been added to the Company's Metal Forming segment
Measurement of segment profit or loss and segment assets:
The Company evaluates performance and allocates resources based on profit or
loss from operations before interest expense and income taxes, (EBIT) not
including non-operating gains and losses. The accounting policies of the
reportable segments are the same as those described in the summary of
significant accounting policies. Inter-segment sales and transfers are recorded
at prices substantially equivalent to the Company's cost; inter-company profits
on such inter-segment sales or transfers are not material.
<PAGE>
Factors management used to identify the enterprise's reportable segments:
The Company's reportable segments are business units that offer different
products. The reportable segments are each managed separately because they
manufacture and distribute distinct products using distinct production processes
intended for distinct marketplaces.
Three Months ended
March 31, 2000:
Metal Metal All
HVAC Products Forming Others Totals
---- -------- ------- ------ ------
Revenues from External Customers $62,432 $18,479 $8,565 $291 $89,767
Segment Operating Profit $3,757 $2,658 $192 ($5) $6,602
Three Months ended
March 31, 1999:
Metal Metal All
HVAC Products Forming Others Totals
---- -------- ------- ------ ------
Revenues from External Customers $54,132 $15,543 $7,887 $423 $77,985
Segment Operating Profit $3,694 $1,919 $292 $28 $5,933
Note 8 - Earnings Per Common Share
Basic earnings per share were computed using the weighted average number of
common shares outstanding. Common stock options were considered in the
computation of diluted earnings.
Note 9 - Common Stock Buyback Program
During the first quarter of 2000 the Company continued its program of selective
"open market" purchases of its common stock acquiring 20,900 shares. All such
shares are accounted for as treasury shares. No purchases have been made since
January 13, 2000
Note 10 - Stock Option Plans
On March 20, 1996 the Company adopted a stock option plan, the Mestek, Inc. 1996
Stock Option Plan, (the Plan), which provides for the granting of incentive and
non-qualified stock options of up to 500,000 shares of stock to certain
employees of the Company and other persons, including directors, for the
purchase of the Company's common stock at fair market value at the date of
grant. The Plan was approved by the Company's shareholders on May 22, 1996.
Options granted under the plan vest over a five-year period and expire at the
end of ten years. All options granted under the Plan total 175,000 shares, none
of which have been exercised at March 31, 2000. No options were granted in the
first quarter of 2000.
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation
Total Revenues in the Company's HVAC segment, as illustrated in Note 8 to the
Condensed Consolidated Financial Statements, during the first quarter of 2000
were increased relative to the first quarter of 1999, by 15%. Primarily this
increase is due to sales from the Company's Anemostat division which was
acquired on March 26, 1999 and sales from the Company's CESCO division which was
acquired on January 28, 2000. Gross profit margins for the HVAC segment were
relatively unchanged at 28%. Operating income for this segment was accordingly
increased from $3,694,000 in the first quarter of 1999 to $3,757,000 in the
first quarter of 2000.
Total Revenues in the Company's Metal Products segment, as illustrated in Note 8
to the Condensed Consolidated Financial Statements, were up 19% during the first
quarter of 2000, principally as a result improved performance at National
Northeast Corporation which had experienced sub-par 1999 performance due to
relocation and installation of a new press. In addition, this segment's Omega
Flex division continued to expand sales of it TracPipe(R) flexible gas piping
product. As a result of these factors, gross profit margins and operating income
increased significantly during the first quarter of 2000.
Total Revenues in the Company's Metal Forming segment, as illustrated in Note 8
to the Condensed Consolidated Financial Statement were up 9% reflecting an
improvement in the Company's ability to meet its delivery schedules for Metal
Forming Equipment, especially standard coil handling equipment and tooling.
Gross Profit Margins for the Metal Forming segment were reduced approximately 3%
primarily due to the effect of certain low-margin jobs completed during this
quarter. Operating income was accordingly reduced from $292,000 in the first
quarter of 1999 to $192,000 in the first quarter of 2000.
For the Company as a whole, Sales, General and Administrative, and Engineering
costs, taken together as a percentage of Total Revenues, were slightly increased
from 20.32% to 20.95%.
Operating income for the first quarter of 2000 for the Company as a whole
increased by $669,000 or 11% reflecting the net effect of the factors mentioned
above.
The Company's total debt (long-term debt plus current portion of long-term debt)
reflecting the acquisitions made in the first quarter of 2000 increased by $3.6
million during the quarter ended March 31, 2000. Management regards the
Company's current capital structure and banking relationships as fully adequate
to meet foreseeable future needs. Except for the non-cash distribution of the
stock of MCS during first quarter 2000 as further described in Note 3, the
Company has not paid dividends on its common stock since 1979.
The Company's Annual Meeting of Shareholder was held 11 a. m., May 12, 2000 at
the Reed Institute adjacent to the Company's headquarters in
Westfield, Massachusetts.
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Statement of Computation of Per Share Earnings ... Page 14
(b) Registrant filed three reports on Form 8-K during the quarter for which this
report is filed.
(c) Mr. William S. Rafferty, Senior Vice President-Marketing returned from a
medical leave of absence on May 11, 2000.
MESTEK, INC.
SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months Ended March 31,
2000 1999
-------- ------
(Amounts in thousands, except earnings per common share)
Net Income $ 3,539 $ 3,519
========= =========
Basic Earnings (Loss) Per Common Share
Continuing Operations $ .44 $ .38
Discontinued Operations ($ .04) $ .02
---------- --------
Net Income $ .40 $ .40
======== ========
Basic Weighted Average Shares Outstanding 8,745 8,881
========= =========
Diluted Earnings (Loss) Per Common Share
Continuing Operations $ .44 $ .38
Discontinued Operations ($ .04) $ .02
---------- ---------
Net Income $ .40 $ .40
======== =========
Diluted Weighted Average Shares Outstanding 8,762 8,908
========= =========
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.
MESTEK, INC.
------------
(Registrant)
Date: May 10, 2000 By: /S/ Stephen M. Shea
--------------------
Stephen M. Shea, Senior Vice President - Finance
and CFO (Chief Financial Officer)
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