<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
June 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 August 8, 1995 was 3,744,967.
There are a total of 10 pages filed in this document.
<PAGE> 2
<TABLE>
PART 1 - FINANCIAL INFORMATION
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1995 AND DECEMBER 31, 1994
(All money amounts stated in thousands of dollars)
<CAPTION>
ASSETS 6-30-95 12-31-94
------ ------- --------
Unaudited
<S> <C>
Cash $ 2,238 $ 30
Accounts receivable
Customers 24,047 21,484
Earned and unbilled on partially
completed contracts 7,009 4,946
Inventories 22,990 20,187
Other current assets 3,074 2,589
------- -------
Current assets 59,358 49,236
Property, plant & equipment - net 17,146 17,372
Prepaid pension costs 11,131 11,161
Other assets 2,114 573
------- -------
89,749 78,342
======= =======
LIABILITIES
-----------
Short term borrowings 2,231 7,000
Accounts payable 7,941 4,781
Accrued liabilities 5,754 3,519
Advance payments on contracts 9,927 4,599
Accrued taxes 356 1,454
------- -------
Current liabilities 26,209 21,353
Long-term borrowings 5,000 0
Deferred U.S. income taxes 3,209 1,430
Other accrued liabilities 2,883 2,883
------- -------
37,301 25,666
------- -------
SHAREHOLDERS' EQUITY
--------------------
Preferred stock 15 15
Common stock 5,617 5,617
Retained earnings 46,902 46,981
Translation adjustment (86) 63
------- -------
52,448 52,676
------- -------
$89,749 $78,342
======= =======
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<PAGE> 3
<TABLE>
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the six months ended June 30, 1995 and 1994
(In thousands of dollars, except per share amounts)
<CAPTION>
1995 1994
--------- ---------
Unaudited Unaudited
<S> <C> <C>
Net sales $50,704 $33,982
Operating costs and expenses:
Cost of sales 43,880 29,713
Selling and administrative 6,432 5,287
Interest expense 261 182
Other expense (income) (1) (153)
------- -------
50,572 35,029
Net income (loss) before income taxes 132 (1,047)
Provision (credit) for income taxes (3) (308)
------- -------
Net income (loss) $ 135 $ (739)
======= =======
Earnings per common share:
Net income (loss) $ .04 $ (.20)
======= =======
Dividends per share
Preferred $ .90 $ .90
Common $ .10 $ .10
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<PAGE> 4
<TABLE>
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the three months ended June 30, 1995 and 1994
(In thousands of dollars, except per share amounts)
<CAPTION>
1995 1994
--------- ---------
Unaudited Unaudited
<S> <C> <C>
Net sales $28,501 $15,575
Operating costs and expenses:
Cost of sales 24,028 13,551
Selling and administrative 3,308 2,715
Interest expense 130 99
Other expense (income) 34 (25)
------- -------
27,500 16,340
Income (loss) before income taxes 1,001 (765)
Provision (credit) for income taxes (361) (262)
------- -------
Net income (loss) $ 640 $ (503)
======= =======
Earnings per common share: $ .17 $ (.14)
======= =======
Dividends per share
Preferred $ .45 $ .45
Common $ .05 $ .05
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<PAGE> 5
<TABLE>
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended June 30, 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) $ 135 $ (739)
Adjustments to reconcile net income (loss) to
net cash provided by operations:
Depreciation 846 739
Pension Income 32 (178)
Gain on discontinuance of operation of foreign subsidiary --
Cash provided by (used for)
current assets and liabilities:
Accounts receivable (4,627) 4,938
Inventories (2,803) (2,126)
Other assets (1,964) (1,520)
Accounts payable 3,160 1,263
Accrued liabilities 3,190 (651)
Advance payments on contracts 5,328 1,242
Accrued income taxes (274) (549)
------- -------
Total adjustments 2,888 3,158
------- -------
Net cash provided by (used in)
operating activities 3,023 2,419
Cash flows from investing activities:
Capital expenditures (619) (1,157)
------- -------
Cash flows from financing activities:
Dividends paid (388) (388)
Proceeds from (repayments of) short-term borrowings 231 (1,000)
------- -------
(157) (1,388)
Effect of exchange rates on cash (39) 284
------- -------
Net increase in cash 2,208 158
Cash and cash equivalents at
beginning of period 30 1,556
------- -------
Cash and cash equivalents at
end of period $ 2,238 $ 1,714
======= =======
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
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<PAGE> 6
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended June 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.
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<PAGE> 7
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the six months ended June 30, 1995 and 1994
RESULTS OF OPERATIONS
New order bookings for the entire corporation throughout the first six
months of 1995 were up approximately 212% relative to the level experienced
during the same period last year. During the second quarter of this year new
order bookings were 311% greater than during the same period last year. The
large improvement in the 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 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 resulting level of backlogs at the end of the second quarter
of 1995 was $85.2 million as compared to $49.6 million at 12/31/94 and $32.7
million at 6/30/94.
Net sales for the first half of 1995 were $50.7 million as compared to
$34.0 million for the same period in 1994, and for the second quarter of 1995
were $28.5 million in contrast to the $ 15.6 million experienced during the
same period last year. The increases in net sales in the first six months and
the second quarter of this year were principally due to higher backlogs at the
beginning of these periods relative to the beginning backlogs in he 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 half of 1995 produced a net profit of $.04
per share as compared to a net loss of $.20 per share during the same period in
1994. The net gain of $.17 per share posted in the second quarter of 1995
compares favorably to the net loss of $.14 incurred during the same period one
year earlier. Rising new orders 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 quarter in 1994. Earnings were hampered this quarter, however, by the
costs of developing our Stamco-Depiereux operation which was established in
June of last year.
This year's earnings are beginning to improve relative to the first six 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.
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<PAGE> 8
THE MONARCH MACHINE TOOL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the six months ended June 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
12.7% during the first half of this year as compared to 15.6% 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 86%
during the six months of 1995 as compared to 87% during the same period last
year. Cost of sales expressed as a percentage of sales decreased to
approximately 84% during the second quarter of 1995 as compared to 87% during
the same period last year. Most of the improvement in the second quarter 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
operations 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintained a strong financial position throughout the past year and
has current assets of $2.26 for each dollar of current liabilities at 6/30/95
as compared to $2.31 at 12/31/94.
The Company presently has long-term debt of $5 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 6/30/95 were $7.0 million
compared to the same amount of $7.0 million at the end of last year and at
6/30/94. Management has recently completed the renewal of these agreements,
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.
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<PAGE> 9
PART II - OTHER INFORMATION
Item 4 - Submission of matters to a vote of security holders.
During the annual meeting of shareholders held on May 2,
1995 the following matters were voted upon by the Company's
security holders.
The following is a tabulation of the voting results:
1) Election of directors to the class whose term expires
in 1998.
Votes Votes
"For" "For"
--------- ----------
William A. Enouen 2,650,577 269,837
Joseph M. Rigot 2,634,188 286,226
Robert J. Siewert 2,653,146 267,268
Directors not voted upon whose term of office continued
after the meeting:
John A. Bertrand
Waldemar M. Goulet
Kenneth H. Hopkins
David E. Lundeen
Robert B. Meeker
John M. Richardson
John F. Torley
2) Shareholder proposal to recommend to the Board of
Directors that they engage an investment banker:
Votes Votes
"For" "Against" "Abstain"
-------- ----------- ----------
1,010,133 1,447,171 30,162
Item 6 - Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the three month
period ending June 30, 1995.
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<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 8/9/95 By /s/ Robert Riethman
--------------------------- --------------------------
Robert Riethman, Treasurer
Date 8/9/95 By /s/ Earl Hull
--------------------------- --------------------------
Earl Hull, Corporate Secretary
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,238
<SECURITIES> 0
<RECEIVABLES> 24,047
<ALLOWANCES> 0
<INVENTORY> 22,990
<CURRENT-ASSETS> 59,358
<PP&E> 17,146
<DEPRECIATION> 846
<TOTAL-ASSETS> 89,749
<CURRENT-LIABILITIES> 26,209
<BONDS> 0
<COMMON> 5,617
0
15
<OTHER-SE> 46,816
<TOTAL-LIABILITY-AND-EQUITY> 89,749
<SALES> 50,704
<TOTAL-REVENUES> 50,704
<CGS> 43,880
<TOTAL-COSTS> 50,572
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 313
<INTEREST-EXPENSE> 261
<INCOME-PRETAX> 132
<INCOME-TAX> (3)
<INCOME-CONTINUING> 135
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 135
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
