<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM IO-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended
September 30, 1995 Commission File No. 1-1997
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 November 10, 1995 was 3,744,967.
There are a total of 10 pages filed in this document.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(All money amounts stated in thousands of dollars)
<TABLE>
<CAPTION>
ASSETS 9-30-95 12-31-94
- ------ --------- ----------
Unaudited
<S> <C> <C>
Cash $ 1,706 $ 30
Accounts receivable
Customers 23,890 21,484
Earned and unbilled on partially
completed contracts 13,569 4,946
Inventories 26,492 20,187
Other current assets 3,291 2,589
------- -------
Current assets 68,948 49,236
Property, plant & equipment - net 16,852 17,372
Prepaid Pension costs 11,131 11,161
Other assets 2,156 573
------- -------
99,087 78,342
======= =======
LIABILITIES
-----------
Short term borrowings 3,661 7,000
Accounts payable 9,786 4,781
Accrued liabilities 11,214 3,519
Advance payments on contracts 7,617 4,599
Accrued taxes 356 1,454
------- -------
Current liabilities 32,634 21,353
Long-term borrowings 8,000 0
Deferred U.S. income taxes 2,967 1,430
Other accrued liabilities 2,883 2,883
------- -------
46,484 25,666
------- -------
SHAREHOLDERS' EQUITY
--------------------
Preferred stock 15 15
Common stock 5,617 5,617
Retained earnings 46,880 46,981
Translation adjustment 91 63
------- -------
52,603 52,676
------- -------
$99,087 $78,342
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-2-
<PAGE> 3
THE MONARCH MACHINE T00L COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the nine months ended Sepmember 30, 1995 and 1994
(In thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
1995 1994
--------- ---------
Unaudited Unaudited
<S> <C> <C>
Net sales $82,145 $54,373
Operating costs and expenses:
Cost of sales 71,497 48,290
Selling and administrative 9,750 8,007
Interest expense 453 285
Other expense (income) (70) (175)
-------- -------
81,630 56,407
515 (2,034)
Gain on discontinuance of operation of foreign subsidiary 230 300
Net income (loss) before income taxes 745 (1,734)
Provision (credit) for income taxes 265 (436)
-------- -------
Net income (loss) $ 480 $(1,298)
======= =======
Earnings per common share:
Net income (loss) $ .13 $ (.35)
======= =======
Dividends per share
Preferred $ 1.35 $ 1.35
Common $ .15 $ .15
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
- 3 -
<PAGE> 4
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the three months ended September 30, 1995 and 1994
(In thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
1995 1994
--------- ---------
Unaudited Unaudited
<S> <C> <C>
Net sales $31,441 $20,392
Operating costs and expenses:
Cost of sales 27,617 18,576
Selling and administrative 3,317 2,720
Interest expense 192 103
Other expense (income) (68) (20)
--------- -------
31,058 21,379
383 (987)
Gain on discontinuance of operation of foreign subsidiary 230 300
Income (loss) before income taxes 613 (687)
Provision (credit) for income taxes 268 (128)
--------- --------
Net income (loss) $ 345 $ (559)
========= ========
Earnings per common share: $ .09 $ (.15)
========= ========
Dividends per share:
Preferred $ .45 $ .45
Common $ .05 $ .05
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE> 5
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(All money amounts stated in thousands of dollars)
<TABLE>
<CAPTION>
1995 1994
--------- ---------
Unaudited Unaudited
<S> <C> <C>
Cash flows from Operating activities:
Net income (loss) $ 480 $ (1,298)
Adjustments to reconcile net income (loss) to net
cash provided by operations:
Depreciation 1,270 1,110
Pension Income 32 (267)
Gain on discontinuance of operation of foreign subsidiary (230) (300)
Cash provided by (used for)
current assets and liabilities:
Accounts receivable (11,029) 1,351
Inventories (6,304) (781)
Other assets (1,992) (727)
Accounts payable 5,004 1,353
Accrued liabilities 8,409 49
Advance payments on contracts 3,019 718
Accrued income taxes (276) (676)
-------- ------
Total adjustments (2,097) 1,830
-------- ------
Net cash provided by (used in)
operating activities (1,617) 532
Cash flows from investing activities:
Capital expenditures (750) (1,396)
-------- ------
Cash flows from financing activities:
Dividends paid (582) (582)
Proceeds from (repayments of) short-term borrowings 4,661 1,000
-------- ------
4,079 418
Effect of exchange rates on cash (36) 432
-------- ------
Net increase in cash 1,676 (14)
Cash and cash equivalents at
beginning of period 30 1,556
-------- ------
Cash and cash equivalents at
end of period $ 1,706 $ 1,542
======== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
-5-
<PAGE> 6
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 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.
-6-
<PAGE> 7
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the nine months ended September 30, 1995 and 1994
RESULTS OF OPERATIONS
New order bookings for the entire corporation throughout the first nine
months of 1995 were up approximately 65% relative to the level experienced
during the same period last year. During the third quarter of this year new
order bookings were down 24% in relation to the same period last year. The
large improvement in the new order rate, year-to-date, has been experienced at
most of our operations, but have been greatest at our strip processing
operations. The order rate was also affected by the purchase of Busch GmbH
in May which involved the acquisition of approximately $8.0 million in new
orders. The order rate drop in the third quarter was due to the lack of coil
processing line orders. This widely fluctuating order pattern,
quarter-to-quarter is normal to the coil processing business. The resulting
level of backlogs at the end of the third quarter of 1995 was $69.9 million
as compared to $49.6 million at 12/31/94 and $33.6 million at 9/30/94.
Net sales for the first nine months of 1995 were $82.1 million as compared
to $54.4 million for the same period in 1994, and for the third quarter of
1995 were $31.4 million in contrast to the $ 20.4 million experienced during
the same period last year. The increases in net sales in the first nine
months and the third quarter of this year were principally due to higher
backlogs at the beginning of these periods relative to the beginning backlogs
in the equivalent periods in 1994. 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 nine months of 1995 produced a net profit of
$.13 per share as compared to a net loss of $.35 per share during the same
period in 1994. The net gain of $.09 per share posted in the third quarter of
1995 compares favorably to the net loss of $.15 incurred during the same
period one year earlier. Rising new order and backlog levels have begun to
increase net shipments, which allow the Company's operations to operate
nearer capacity, thereby covering fixed costs to a much greater degree than
was possible during the same periods in 1994. Earnings were hindered in the
third quarter of this year, however, by the closure of several projects
closing at substandard margin levels at our domestic coil processing
division. Earnings will return to their normal level at this division in the
fourth quarter of this year.
This year's earnings have improved relative to the first nine months of last
year primarily due to the increased shipments made possible by a much better
new order rate. However, earnings were not as strong as we would have liked
due to the generally increasing cost of purchased items that we have only had
limited success in passing along to the customer due to 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.
-7-
<PAGE> 8
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the nine months ended September 30, 1995 and 1994
RESULTS OF OPERATIONS (continued)
Our efforts at cost containment are evidenced by the fact that selling and
general and administrative expenses expressed as a percentage of sales were
11.9% during the first nine months of this year as compared to 14.7% during
the same period last year. Although this ratio is highly dependent upon sales
volume because of the fixed nature of many of these costs, the Company will
continue to focus on controlling these costs where possible as we have in the
past. Cost of sales expressed as a percentage of sales went down to
approximately 87% during the nine months of 1995 as compared to 89% during the
same period last year. Cost of sales expressed as a percentage of sales
decreased to approximately 88% during the third quarter of 1995 as compared
to 91% during the same period last year. Most of the improvement in this
ratio was due to increased shipment volume. The lower margins incurred in
past 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
operation because of considerable excess capacity.
During the past several years the Company has been divesting of and
reorganizing under-performing 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. In May of this year
the Company acquired the Busch GmbH company located in Dueren Germany, which
manufactures machinery for the processing of papers, plastics, films, and
foils.
LIQUIDTY AND CAPITAL RESOURCES
The Company maintained a strong financial position throughout the past year
and has current assets of $2.11 for each dollar of current liabilities at
9/30/95 as compared to $2.31 at 12/31/94.
The Company presently has long-term debt of $8 million. The Company has
unsecured lines of credit aggregating $30 million, including a $20 million
committed three year revolving loan with a three year term-out option.
Short-term borrowings against these facilities at 9/30/95 were $3.7 million
compared to $4.0 million at the end of last year. Management completed the
renewal of these agreements, during the second quarter of this year,
including the expansion of the existing unsecured $13 million committed line
to $ 20 million under essentially the same terms as were present in the
existing facility.
-8-
<PAGE> 9
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the three month period ending
September 30, 1995.
-9-
<PAGE> 10
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 11/13/95 By /s/ Robert Riethman
--------------------- ----------------------------
Robert Riethman, Treasurer
Date 11/13/95 By /s/ Earl Hull
--------------------- ----------------------------
Earl Hull, Corporate Secretary
-10-
<PAGE> 11
EXHIBIT INDEX
Exhibit No. Description
EX-27 Financial Data Schedule
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000000000
<NAME> 0
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 0
<CASH> 1,706
<SECURITIES> 0
<RECEIVABLES> 23,890
<ALLOWANCES> 0
<INVENTORY> 26,492
<CURRENT-ASSETS> 68,948
<PP&E> 16,852
<DEPRECIATION> 1,270
<TOTAL-ASSETS> 99,087
<CURRENT-LIABILITIES> 32,634
<BONDS> 0
<COMMON> 5,617
0
15
<OTHER-SE> 46,880
<TOTAL-LIABILITY-AND-EQUITY> 99,087
<SALES> 82,145
<TOTAL-REVENUES> 82,145
<CGS> 71,497
<TOTAL-COSTS> 81,630
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 107
<INTEREST-EXPENSE> 453
<INCOME-PRETAX> 745
<INCOME-TAX> 265
<INCOME-CONTINUING> 515
<DISCONTINUED> 230
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 480
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
