<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission File No. 1-1997
March 31, 1995
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
An Ohio Corporation Employer Identification
No. 34-4307810
615 North Oak Street, Sidney, Ohio 45365
Telephone 513/492-4111
Securities registered pursuant to Section 12(b) of the act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
Common Shares, without New York Stock Exchange Inc.
par value
-------------------
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 twelve months, and (2) has been subject to such
filing requirements for the past 90 days. Yes x. No .
--- ---
The number of common shares outstanding as of May 2, 1995 was 3,744,967.
There are a total of 9 pages filed in this document.
<PAGE> 2
<TABLE>
PART 1 - FINANCIAL INFORMATION
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995 AND DECEMBER 31, 1994
(All money amounts stated in thousands of dollars)
<CAPTION>
ASSETS 3-31-95 12-31-94
- ------ ------- --------
Unaudited
<S> <C> <C>
Cash $ 2,550 $ 30
Accounts receivable
Customers 20,700 21,484
Earned and unbilled on partially
completed contracts 3,032 4,946
Inventories 22,351 20,187
Other current assets 3,085 2,589
------- -------
Current assets 51,718 49,236
Property, plant & equipment - net 17,034 17,372
Prepaid pension costs 11,129 11,161
Other assets 2,054 573
------- -------
81,935 78,342
======= =======
LIABILITIES
- -----------
Short term borrowings 7,000 7,000
Accounts payable 7,590 4,781
Accrued liabilities 3,455 3,519
Advance payments on contracts 5,221 4,599
Accrued taxes 1,126 1,454
------- -------
Current liabilities 24,392 21,353
Long-term borrowings 0 0
Deferred U.S. income taxes 2,619 1,430
Other accrued liabilities 2,883 2,883
------- -------
29,894 25,666
======= =======
SHAREHOLDERS' EQUITY
- --------------------
Preferred stock 15 15
Common stock 5,617 5,617
Retained earnings 46,283 46,981
Translation adjustment 126 63
------- -------
52,041 52,676
------- -------
$81,935 $78,342
======= =======
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
-2-
<PAGE> 3
<TABLE>
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the three months ended March 31, 1995 and 1994
(In thousands of dollars, except per share amounts)
<CAPTION>
1995 1994
--------- ---------
Unaudited Unaudited
<S> <C> <C>
Net sales $22,203 $18,406
Operating costs and expenses:
Cost of sales 19,853 16,163
Selling and administrative 3,124 2,572
Interest expense 132 83
Other expense (income) (37) (130)
------- -------
23,072 18,688
(869) (282)
Gain on discontinuance of operation of foreign subsidiary -- --
------- -------
Income (loss) before income taxes (869) (282)
------- -------
Income taxes (364) (46)
------- -------
Net income (loss) $ (505) $ (236)
======= =======
Earnings per common share: $ (.13) $ (.06)
======= =======
Dividends per share
Preferred $ .45 $ .45
Common $ .05 $ .05
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
-3-
<PAGE> 4
<TABLE>
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three months ended March 31, 1995 and 1994
(All money amounts stated in thousands of dollars)
<CAPTION>
1995 1994
--------- ---------
Unaudited Unaudited
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (505) $ (236)
Adjustments to reconcile net income (loss) to net
cash provided by operations:
Depreciation 416 370
Pension Income 32 (89)
Gain on discontinuance of operation of foreign subsidiary -- --
Cash provided by (used for)
current assets and liabilities:
Accounts receivable 2,698 (74)
Inventories (2,164) (2,253)
Other assets (1,913) (807)
Accounts payable 2,809 5,085
Accrued liabilities 1,072 189
Advance payments on contracts 621 (727)
Accrued income taxes (274) (286)
------- -------
Total adjustments 3,297 1,408
------- -------
Net cash provided by (used in)
operating activities 2,792 1,172
Cash flows from investing activities:
Capital expenditures (77) (227)
------- -------
Cash flows from financing activities:
Dividends paid (194) (194)
Proceeds from (repayments of) short-term borrowings 0 1,000
------- -------
Effect of exchange rates on cash (1) 30
------- -------
Net increase in cash 2,520 1,781
Cash and cash equivalents at
beginning of period 30 1,556
------- -------
Cash and cash equivalents at
end of period $ 2,550 $ 3,337
======= =======
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
-4-
<PAGE> 5
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 1995 and 1994
The foregoing consolidated results of operations are unaudited, but in the
opinion of the company all adjustments (consisting of normal recurring
accruals as well as the accounting changes) necessary to present fairly
the results for these periods have been included.
NET INCOME PER COMMON SHARE:
Net income per common share, is based upon the weighted average number of
common shares outstanding and common share equivalents, after giving effect to
the preferred share dividend requirement.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's latest annual report and
any current year's previously filed Forms 10-Q.
-5-
<PAGE> 6
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the three months ended March 31, 1995 and 1994
RESULTS OF OPERATIONS
New order bookings for the entire corporation throughout the first three
months of 1995 were up approximately 3% relative to the level experienced
during the same period last year. The improving new order rate of the past
several quarters has been experienced at most of our operations, but have been
greatest at our strip processing operations. The resulting level of backlogs at
the end of the first quarter of 1995 was $53.7 million as compared to $49.6
million at 12/31/94 and $28.9 million at 3/31/94.
Net sales for the first quarter of 1995 were $22.2 million as compared to
$18.4 million for the same period in 1994. The increase in net sales in the
first three months of this year was principally due to higher backlogs at the
beginning of the period. The beginning backlogs were higher at most of our
operations, but were up the most, relative to last year, at our strip
processing operations.
Operations during the first quarter of 1995 produced a net loss of $.13 per
share as compared to a net loss of $.06 per share during the same period in
1994. Although rising backlog levels have begun to increase net sales, earnings
have not kept pace with the increase in net sales. The principal reasons for
the larger loss this quarter relative to the same period last year were much
lower backlogs at our lathe manufacturing facility which resulted in greater
over-capacity inefficiencies at this operation, as well as the costs of
developing our Stamco-Depiereux operation which was established in June of
last year.
The increased operating loss this year, relative to last year, also reflects
generally increasing costs that we have not been able to pass off to the
customer due to unrelenting severe price competition from both domestic and
foreign builders of similar products. The Company, however, continues to
implement a company-wide effort to control costs particularly with respect to
the largest and fastest growing areas of costs such as health care, travel and
product liability insurance. Our efforts at cost containment are evidenced by
the fact that selling and general and administrative expenses expressed as a
percentage of sales have averaged around 14%, during the past two years,
despite the fact that net sales have been depressed during these periods. Cost
of sales as a percentage of sales went up to approximately 89% during the three
months of 1995 as compared to 88% during the same period last year.
-6-
<PAGE> 7
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the three months ended March 31, 1995 and 1994
RESULTS OF OPERATIONS (continued)
The lower margins incurred in recent quarters were due to the factors noted
above particularly the excess-capacity situation at some of our operations. Due
to the high engineering content of our products it is not practical or
desirable to radically adjust these costs to cyclical changes in the
marketplace for our equipment.
Earnings continue to be strongest at our strip processing operations due to
reasonable plant capacity utilization, and remain poorest at our turning
operations because of considerable excess capacity.
During the past several years the Company has been divesting of and
reorganizing underperforming operations and will continue to pursue this course
of action. The Company is also continually evaluating new opportunities
worldwide, with the intent of diversifying into related businesses to reduce
our reliance on any one market. The company is currently pursuing just such an
opportunity in Germany.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintained a strong financial position throughout the past year and
has current assets of $2.12 for each dollar of current liabilities at 3/31/95
as compared to the same amount of $2.12 at 3/31/94.
The Company presently has no long-term debt. The Company has unsecured lines of
credit aggregating $25,500,000, including a $13,000,000 committed three year
revolving loan with a three year term-out option. Short-term borrowings against
these facilities at 3/31/95 were $7 million compared to $9 million at the end
of the first three months last year. Management is currently negotiating the
renewal of these agreements.
-7-
<PAGE> 8
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
No reports on Form 8-K were filed during the three month
period ending March 31, 1995.
-8-
<PAGE> 9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE MONARCH MACHINE TOOL COMPANY
Date 5/8/95 By /s/ Robert Reithman
------------------------------ -----------------------------
Robert Riethman, Treasurer
Date 5/8/95 By /s/ Earl Hull
------------------------------ -----------------------------
Earl Hull, Corporate Secretary
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,550
<SECURITIES> 0
<RECEIVABLES> 20,700
<ALLOWANCES> 0
<INVENTORY> 22,351
<CURRENT-ASSETS> 51,718
<PP&E> 17,034
<DEPRECIATION> 416
<TOTAL-ASSETS> 81,935
<CURRENT-LIABILITIES> 24,392
<BONDS> 0
<COMMON> 5,617
0
15
<OTHER-SE> 46,409
<TOTAL-LIABILITY-AND-EQUITY> 81,935
<SALES> 22,203
<TOTAL-REVENUES> 22,203
<CGS> 19,853
<TOTAL-COSTS> 22,977
<OTHER-EXPENSES> 37
<LOSS-PROVISION> 313
<INTEREST-EXPENSE> 132
<INCOME-PRETAX> (869)
<INCOME-TAX> (364)
<INCOME-CONTINUING> (505)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (505)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
