<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Mark One
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED FEBRUARY 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-11288
APPLIED POWER INC.
--------------------
(Exact name of Registrant as specified in its charter)
WISCONSIN 39-0168610
--------- ----------
(State of incorporation) (I.R.S. Employer Id. No.)
13000 WEST SILVER SPRING DRIVE
BUTLER, WISCONSIN 53007
MAILING ADDRESS: P. O. BOX 325, MILWAUKEE, WISCONSIN 53201
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(414) 781-6600
--------------------
(Registrant's telephone number)
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 12 months (or 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
----- -----
Number of outstanding shares of Class A Common Stock: 13,436,303 as of March
31, 1996.
The Index to Exhibits appears on Page 13.
1
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APPLIED POWER INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I - FINANCIAL INFORMATION
- - ------------------------------
Item 1 - Unaudited Condensed Consolidated Financial Statements
<S> <C>
Condensed Consolidated Statement of Earnings -
Three and Six Months Ended
February 29, 1996 and February 28, 1995 ................... 3
Condensed Consolidated Balance Sheet -
February 29, 1996 and August 31, 1995 ..................... 4
Condensed Consolidated Statement of Cash Flows -
Six Months Ended February 29, 1996 and February 28, 1995 .. 5
Notes to Condensed Consolidated Financial Statements ....... 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................. 8
PART II - OTHER INFORMATION
---------------------------
Item 4 - Submission of Matters to a Vote of Security Holders ......... 11
Item 6 - Exhibits and Reports on Form 8-K ............................ 11
SIGNATURE ............................................................ 12
---------
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
APPLIED POWER INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------ --------------------------
FEBRUARY 29, February 28, FEBRUARY 29, February 28,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $137,080 $124,501 $276,350 $250,300
Cost of Products Sold 85,414 77,209 170,604 154,836
-------- -------- -------- --------
Gross Profit 51,666 47,292 105,746 95,464
Engineering, Selling and Administrative Expenses 37,802 35,128 77,658 70,821
-------- -------- -------- --------
Operating Earnings 13,864 12,164 28,088 24,643
Other Expense(Income):
Net interest expense 2,047 2,916 4,114 5,654
Amortization of intangible assets 988 884 1,707 2,045
Other - net (421) 1,213 (321) 1,414
-------- -------- -------- --------
Earnings Before Income Tax Expense 11,250 7,151 22,588 15,530
Income Tax Expense 3,600 2,513 7,228 5,451
-------- -------- -------- --------
Earnings Before Extraordinary Item 7,650 4,638 15,360 10,079
Extraordinary Loss from Early Extinguishment
of Debt, net of income taxes of $2,423 - (4,920) - (4,920)
-------- -------- -------- --------
Net Earnings(Loss) $ 7,650 $ (282) $ 15,360 $ 5,159
======== ======== ======== ========
Primary Earnings(Loss) Per Share:
Earnings Before Extraordinary Item $ 0.55 $ 0.34 $ 1.10 $ 0.74
Extraordinary Loss - (0.36) - (0.36)
-------- -------- -------- --------
Earnings(Loss) Per Share $ 0.55 $ (0.02) $ 1.10 $ 0.38
======== ======== ======== ========
Weighted Average Common and Equivalent Shares 13,922 13,662 13,959 13,642
======== ======== ======== ========
Fully Diluted Earnings(Loss) Per Share:
Earnings Before Extraordinary Item $ 0.55 $ 0.34 $ 1.10 $ 0.74
Extraordinary Loss - (0.36) - (0.36)
-------- -------- -------- --------
Earnings(Loss) Per Share $ 0.55 $ (0.02) $ 1.10 $ 0.38
======== ======== ======== ========
Weighted Average Common and Equivalent Shares 13,947 13,662 13,959 13,643
======== ======== ======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
3
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APPLIED POWER INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FEBRUARY 29, August 31,
1996 1995
-------------- ---------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 3,371 $ 911
Net accounts receivable 60,877 71,000
Net inventories 107,186 103,358
Prepaid taxes and expenses 14,487 15,195
----------- ------------
Total Current Assets 185,921 190,464
Other Assets 6,180 6,274
Goodwill 57,266 57,346
Other Intangibles 29,965 10,427
Net Property, Plant and Equipment 71,530 68,435
----------- ------------
Total Assets $ 350,862 $ 332,946
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 15,638 $ 12,620
Trade accounts payable 37,321 37,530
Accrued compensation and benefits 15,290 19,707
Income taxes payable 9,981 7,575
Current maturities of long-term debt - 187
Other current liabilities 19,875 19,828
----------- ------------
Total Current Liabilities 98,105 97,447
Long-Term Debt, less current maturities 79,280 74,156
Deferred Income Taxes 15,094 16,386
Other Deferred Liabilities 13,292 13,271
Shareholders' Equity
Common stock, $0.20 par value per share, authorized 40,000,000
shares, issued and outstanding 13,423,690 and 13,406,590 shares,
respectively 2,684 2,681
Additional paid-in capital 28,592 28,328
Retained earnings 108,841 94,285
Cumulative translation adjustments 4,974 6,392
----------- ------------
Total Shareholders' Equity 145,091 131,686
----------- ------------
Total Liabilities and Shareholders' Equity $ 350,862 $ 332,946
=========== ============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
4
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APPLIED POWER INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
FEBRUARY 29, February 28,
1996 1995
----------- ------------
<S> <C> <C>
Operating Activities
- - --------------------
Net Earnings $ 15,360 $ 5,159
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Non-cash charge - Extraordinary loss on debt extinguishment - 4,920
Depreciation and amortization 10,405 9,409
Provision for deferred taxes (1,285) (1,071)
Changes in operating assets and liabilities, excluding
the effects of business acquisitions and disposals:
Accounts receivable 2,912 (5,564)
Inventories (6,363) (3,554)
Prepaid expenses and other assets 693 119
Trade accounts payable 56 (1,946)
Other liabilities (6,298) (1,781)
Income taxes payable 2,418 (2,434)
-------- -------
Net Cash Provided By Operating Activities 17,898 3,257
Investing Activities
- - --------------------
Proceeds on the sale of property, plant and equipment 7 51
Additions to property, plant and equipment (11,457) (5,761)
Cash used for business acquisitions (23,481) (699)
Proceeds from sale of product lines 5,181 -
Other (21) 158
-------- -------
Net Cash Used In Investing Activities (29,771) (6,251)
Financing Activities
- - --------------------
Net borrowings(repayments) under credit agreements 7,619 (650)
Net borrowings on short-term credit facilities 3,151 3,738
Net commercial paper repayments (3,276) (7,038)
Additional receivables financed 7,500 5,000
Dividends paid on common stock (804) (796)
Stock options exercised 267 1,918
Other (47) -
-------- -------
Net Cash Provided By Financing Activities 14,410 2,172
Effect of Exchange Rate Changes on Cash (77) 74
-------- -------
Net Increase(Decrease) in Cash and Cash Equivalents 2,460 (748)
Cash and Cash Equivalents - Beginning of Period 911 1,907
-------- -------
Cash and Cash Equivalents - End of Period $ 3,371 $ 1,159
======== =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
5
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APPLIED POWER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Applied Power Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial reporting and
with the instructions of Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
For additional information, refer to the consolidated financial statements and
footnotes thereto in the Company's 1995 Annual Report on Form 10-K.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been made. Such adjustments consist of only those of a
recurring nature, other than the extraordinary charge discussed in Note D -
"Extraordinary Charge" and the foreign exchange loss discussed in Note E -
"Foreign Currency Exchange Loss." Operating results for the three and six
months ended February 29, 1996 are not necessarily indicative of the results
that may be expected for the fiscal year ending August 31, 1996.
NOTE B - ACQUISITIONS
On February 23, 1996, the Company's Wright Line division acquired the European
distribution rights for its products for cash of $1,250 plus forgiveness of
accounts receivable outstanding of $723 from its European distributor. Goodwill
of approximately $1,900 was generated in conjunction with the transaction.
On December 8, 1995, the Company acquired the remaining 10% minority interest
in Applied Power Korea. Cash of $388 was used in the acquisition, which
generated goodwill of approximately $340. The results of operations of this
subsidiary have historically been included in the Condensed Consolidated
Statement of Earnings.
On October 26, 1995, the Company's Enerpac division acquired the assets of
Designed Fluid-Air Systems, Inc. ("DFAS"). Consideration included $298 in cash
plus future royalties over the next five years not to exceed $500 in the
aggregate. Approximately $100 of the purchase price was assigned to Goodwill.
DFAS, located in Oswego, Illinois, designs, fabricates and assembles customized
quick die change systems utilizing hydraulic, pneumatic and electrical
components. The operating results of DFAS subsequent to the acquisition date
are included in the Condensed Consolidated Statement of Earnings.
On September 29, 1995, the Company completed the acquisition of substantially
all of the assets and certain liabilities of Vision Plastics Manufacturing
Company ("Vision") for $3,557 in cash. Included in the liabilities assumed was
$1,357 of outstanding mortgage debt, which was subsequently extinguished by the
Company during the first quarter. On January 10, 1996, in a separate
transaction, the Company acquired certain proprietary technology rights and
patents related to Vision. Total consideration for the two transactions of
approximately $21,500 was funded by proceeds from borrowings under existing
credit facilities. Intangible assets of $19,942 were recorded which included
approximately $950 of Goodwill. Vision, based in San Diego, California,
manufactures plastic cable ties which are sold through electrical wholesale,
retail and OEM channels. The operating results of Vision subsequent to
September 29, 1995 are included in the Condensed Consolidated Statement of
Earnings.
On June 28, 1995, the Company acquired all of the outstanding stock of New
England Controls, Inc. ("NECON") for approximately $2,059 in cash.
Approximately $1,536 of the purchase price was assigned to Goodwill. NECON,
based in Milford, Connecticut, manufactures electrical switches for the
electrical wholesale, retail and OEM markets. The operating results of NECON
subsequent to the acquisition date are included in the Condensed Consolidated
Statement of Earnings.
All acquisitions were accounted for using the purchase method.
6
<PAGE> 7
NOTE C - SALES OF PRODUCT LINES
On January 24, 1996, the Company sold substantially all of the assets and
liabilities of its APITECH mobile equipment product line. Total consideration
from the transaction, which included future collection of retained accounts
receivable, is approximately $5,200, which approximated the book value of the
product line.
On December 13, 1995, the Company's GB Electrical subsidiary sold its HIT
spring steel product line for approximately $2,400 in cash. Proceeds from the
sale approximated the book value of the product line.
NOTE D - EXTRAORDINARY CHARGE
During the quarter ended February 28, 1995, the Company recorded an
extraordinary loss of $4,920 ($0.36 per share) in anticipation of the March 30,
1995 extinguishment of $64,350 of 9.92% Senior Unsecured Notes. The pre-tax
extraordinary loss of $7,343 is comprised of a make whole provision of $4,050,
costs associated with the cancellation of underlying interest rate swap
agreements of $3,047 and the write-off of deferred finance costs of $246.
The funds used to retire the debt and pay the make whole obligation were
obtained from new borrowings under an existing $40,000 multi-currency revolving
credit agreement and a temporary $40,000 expansion to the existing
multi-currency revolving credit agreement. These borrowings were extinguished
on August 21, 1995, and all amounts outstanding were simultaneously reborrowed
under a new $120,000 multi-currency revolving credit agreement. In conjunction
with the refinancing, the Company entered into interest rate caps on a notional
$60,000 in borrowings that limit the maximum applicable base rate (three month
LIBOR) to 8.0%. Currently the Company incurs interest at .3% - .45% above three
month LIBOR. The interest rate caps expire in March, 1997.
NOTE E - FOREIGN CURRENCY EXCHANGE LOSS
Earnings from continuing operations for the three and six months ended February
28, 1995 include a $1,331 foreign currency exchange loss ($0.06 per share,
after tax) for the devaluation of the Mexican peso. Applied Power S.A. de C.V.,
the Company's Mexican subsidiary, had certain U.S. Dollar denominated
liabilities which were impacted by the devaluation. During the second quarter
of fiscal 1995, the Company restructured various financial obligations of its
Mexican subsidiary to reduce the earnings impact of any potential further
devaluation of the peso.
7
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
RESULTS OF OPERATIONS
The Company reported record second quarter sales and earnings for the quarter
ended February 29, 1996. Net earnings before extraordinary charges for the
quarter were $7,650, or $0.55 per share, compared to $4,638, or $0.34 per
share, for the second quarter of the prior year. For the first six months of
fiscal 1996, earnings before extraordinary charges were $15,360, or $1.10 per
share, a 52% improvement over comparable prior year earnings of $10,079, or
$0.74 per share. Increased sales, greater leverage on fixed costs and lower
financing costs yielded the improved results. Foreign currency translation had
a negligible impact on results for both the quarter and six months ended
February 29, 1996. Operating results for the three and six month periods ended
February 28, 1995 included a $1,331, or $0.06 per share, foreign exchange loss
related to the devaluation of the Mexican peso (discussed below).
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------
SALES BY SEGMENT
- - ----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
- - ----------------------------------------------------------------------------------------------------------
FEBRUARY 29, February 28, FEBRUARY 29, February 28,
1996 1995 Change 1996 1995 Change
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributed Products $ 69,644 $ 62,112 12 % $136,670 $124,852 9 %
Engineered Solutions 46,364 46,570 0 % 94,288 92,277 2 %
Wright Line 21,072 15,819 33 % 45,392 33,171 37 %
- - ----------------------------------------------------------------------------------------------------------
Total $137,080 $124,501 10 % $276,350 $250,300 10 %
==========================================================================================================
</TABLE>
Two of the Company's three business segments showed strong sales growth over
the prior year for the second quarter of fiscal 1996, while the third segment's
sales remained stable over the same period. All three business segments have
reported sales increases over the prior year for the six months ended February
29, 1996.
Sales from Distributed Products, which consists of Enerpac and GB Electrical,
grew by 12% and 9% for the three and six month periods ended February 29, 1996,
respectively. Of the $11,818 year-to-date increase in sales, approximately
$2,880 was the net result of acquisitions and dispositions subsequent to the
second quarter of fiscal 1995. The remaining incremental sales dollars were
primarily brought about by the strengthening of several European economies and
continued geographic expansion into developing markets.
Engineered Solutions, consisting of Barry Controls, Power-Packer and APITECH
generated a 2% sales increase for the six months ended February 29, 1996 over
the prior year comparable period. The Company estimates that the effect of the
sale of its APITECH mobile equipment product line was $1,000 in reduced sales
in the quarter and year-to-date totals compared to the corresponding prior year
periods. Continued growth in Power-Packer's cab-tilt product line, as well as
increased sales in commercial aerospace components by Barry Controls,
contributed to the sales increase.
The year-to-year sales growth of 37% experienced by Wright Line is attributable
to the continued strong demand for its existing and new technical furniture
product lines, its expanded direct sales force throughout 1996 and geographic
expansion.
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------
GROSS PROFIT BY SEGMENT
- - ---------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
- - ---------------------------------------------------------------------------------------------------------------
FEBRUARY 29, February 28, FEBRUARY 29, February 28,
1996 1995 Change 1996 1995 Change
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributed Products $28,141 $26,287 7 % $ 56,704 $52,726 8 %
Engineered Solutions 13,873 13,084 6 % 27,698 26,284 5 %
Wright Line 9,652 7,921 22 % 21,344 16,454 30 %
- - ---------------------------------------------------------------------------------------------------------------
Total $51,666 $47,292 9 % $105,746 $95,464 11 %
===============================================================================================================
</TABLE>
8
<PAGE> 9
The Company's second quarter and year-to-date gross profit increased 9% and
11%, respectively, over the comparable prior year periods, which was primarily
attributable to the increased sales volume. The higher production levels had a
favorable impact on fixed manufacturing costs, improving the Company's overall
six month gross profit percentage from 38.1% to 38.3%.
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
- - ---------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
- - ---------------------------------------------------------------------------------------------------------
FEBRUARY 29, February 28, FEBRUARY 29, February 28,
1996 1995 Change 1996 1995 Change
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Engineering $ 4,529 $ 3,883 17 % $ 8,990 $ 7,605 18 %
Selling 24,303 20,677 18 % 50,013 41,996 19 %
Administration 8,970 10,568 (15)% 18,655 21,220 (12)%
- - ---------------------------------------------------------------------------------------------------------
Total $37,802 $35,128 8 % $77,658 $70,821 10 %
=========================================================================================================
</TABLE>
Second quarter and year-to-date operating expenses were 8% and 10% higher than
that reported in the comparable prior year periods, respectively, reflecting
the impact of higher sales levels, acquisitions and continued emphasis on
development of new product technology.
Engineering expenses have increased 18% for the six months ended February 29,
1996 over the comparable prior year period primarily due to new product
development expenditures, mostly within Engineered Solutions. The Company
believes that its investment in technology in all businesses will continue to
provide it with growth opportunities and continue to enhance its competitive
advantage.
The increase in selling expense of 19% for year-to-date fiscal 1996 over the
comparable prior year period was primarily sales volume driven, consisting of
incremental commissions, advertising and general selling costs. Wright Line has
a direct sales force whose compensation is substantially commission-based. As a
result of its 37% sales growth over the comparable prior year six month period,
its selling expenses increased at a similar rate, from $10,099 to $14,263.
Businesses acquired have added approximately $170 in selling expenses for the
six month period ended February 29, 1996.
The Company's administrative expenses for the second quarter decreased 15% from
the prior year. The second quarter and year-to-date fiscal 1996 results include
approximately $194 and $315, respectively, of additional administrative
expenses resulting from acquisitions, which were partially offset by decreases
due to the product line dispositions. Overall, administrative expenses for the
six month period ended February 29, 1996 decreased $2,565, or 12%, over the
comparable prior year period. The reduction was distributed throughout all
business segments of the Company. In total, operating expenses have remained at
approximately 28% of sales during the periods presented.
Interest expense for the three and six months ended February 29, 1996 decreased
significantly from comparable prior year periods due to the combination of
lower borrowing rates and lower debt outstanding for a substantial portion of
the period. After consistently declining each of the last few quarters, debt
increased in the most recent quarter as a result of the completion of the
Vision acquisition in January, 1996. For further information, refer to
Liquidity and Capital Resources below.
Amortization expense for the quarter ended February 29, 1996 increased slightly
from the comparable prior year period due to the patents and trademarks
purchased from Vision in January, 1996. Year-to-date amortization is still
below the prior year due to the GB Electrical intangible assets which became
fully amortized during the second quarter of fiscal 1995.
Included under other expense, net of tax, for both the three and six months
ended February 28, 1995 is a $1,331 loss attributable to the Mexico peso
devaluation which occurred during that period. The Company's Mexican subsidiary
had certain U.S. Dollar denominated liabilities which were impacted by the
devaluation. During the second quarter of fiscal 1995, the Company restructured
various financial obligations of its Mexican subsidiary to reduce the earnings
impact of any potential further devaluation of the peso, which has subsequently
been insignificant.
9
<PAGE> 10
The Company recorded an extraordinary loss, net of tax, of $4,920 ($0.36 per
share) in February, 1995 in anticipation of the March 30, 1995 extinguishment
of $64,350 of 9.92% Senior Unsecured Notes. The pre-tax extraordinary loss of
$7,343 was comprised of a make whole provision of $4,050, costs associated with
the cancellation of underlying interest rate swap agreements of $3,047, and the
write-off of deferred financing costs of $246. The refinancing provided the
Company more flexibility as to prepayment and geographic placement of debt, as
well as lower interest rate costs. For further information, refer to Liquidity
and Capital Resources below.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $3,371 and $911 at February 29, 1996 and
August 31, 1995, respectively. In order to minimize interest expense, the
Company maintains low cash balances by using available cash to reduce
short-term debt. The higher cash balance on hand at the end of the second
quarter of fiscal 1996 represented the timing of cash received during the last
few days of the quarter which was subsequently applied to the debt balance in
early March, 1996.
Cash generated from operations, after considering non-cash items and changes in
operating assets and liabilities, totaled $17,898 for the six months ended
February 29, 1996, compared to $3,257 for the comparable prior year period.
Stronger earnings from continuing operations coupled with improved management
of accounts receivable and the collection of receivables retained from
completed dispositions accounted for the majority of the year-over-year
operating cash flow increase.
Cash used in investing activities totaled $29,771 for the first six months of
fiscal 1996, of which $23,481 was used for the acquisitions of Vision, the
remaining interest in the Company's Korean subsidiary, DFAS and the European
distribution rights for Wright Line. Acquisition costs were partially offset by
the proceeds received on the sale of the HIT and APITECH mobile equipment
product lines totaling $5,181. In addition, $11,457 was used for capital
expenditures. Higher capital expenditures relative to the prior year reflect
the paint line and building additions at Wright Line and warehouse improvements
at GB Electrical. Both of these projects were substantially completed during
the second quarter of fiscal 1996.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
TOTAL CAPITALIZATION FEBRUARY 29, 1996 August 31, 1995
- - ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholders' Equity $145,091 57 % $131,686 56 %
Total Debt 94,918 37 % 86,963 37 %
Deferred Taxes 15,094 6 % 16,386 7 %
- - ------------------------------------------------------------------------------
Total $255,103 100 % $235,035 100 %
==============================================================================
</TABLE>
During the six months ended February 28, 1996, outstanding debt increased
$7,955, due primarily to cash outflow for business acquisitions completed
during the period. The short-term portion of total debt outstanding was $15,638
and $12,807 at February 29, 1996 and August 31, 1995, respectively. Incremental
debt requirements were kept minimal by virtue of strong operating cash inflows,
proceeds from sales of product lines and an increase in accounts receivable
financed. As a result, debt as a percentage of total capitalization at February
29, 1996, at 37%, increased one percentage point since the end of the first
quarter of fiscal 1996, and remained constant when compared to August 31, 1995.
Dividends of $804 were paid, while the exercise of stock options generated an
additional $267 of cash in the six month period ended February 29, 1996.
The Company entered into an interest rate swap agreement on a notional $15,000
in debt in December, 1995. The swap converts the interest rate for a term of
seven years from a floating rate to a fixed rate of approximately 6.18%.
The Company anticipates that the funds generated from operations and available
under credit facilities will be adequate to meet operating, debt service and
capital expenditure requirements for the foreseeable future.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on January 11, 1996. The only
matter voted on by shareholders at the meeting was the election of directors.
Each director nominee was elected. The number of votes for each nominee is set
forth below:
<TABLE>
<CAPTION>
Votes For Votes Withheld
----------------------- ----------------------
<S> <C> <C>
H. Richard Crowther 10,611,697 shares 47,958 shares
Jack L. Heckel 10,611,597 shares 48,058 shares
Richard M. Jones 10,611,759 shares 47,896 shares
Richard A. Kashnow 10,611,597 shares 48,058 shares
L. Dennis Kozlowski 10,611,597 shares 48,058 shares
Richard G. Sim 10,578,760 shares 80,895 shares
Raymond S. Troubh 10,631,917 shares 27,738 shares
</TABLE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) See Index to Exhibits on page 13, which is incorporated herein by
reference.
(b) The Company filed a Current Report on Form 8-K under Item 5 dated
January 15, 1996 announcing that its GB Electrical unit had completed the
acquisition of certain U.S. and foreign patents relating to the products
of Vision Plastics Manufacturing Company.
11
<PAGE> 12
SIGNATURE
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.
APPLIED POWER INC.
------------------
(Registrant)
Date: April 12, 1996 By: /s/Robert C. Arzbaecher
------------------------
Robert C. Arzbaecher
Vice President and
Chief Financial Officer
(Principal Financial Officer
and duly authorized to sign
on behalf of the registrant)
12
<PAGE> 13
APPLIED POWER INC.
INDEX TO EXHIBITS
FISCAL 1996 SECOND QUARTER 10-Q
Exhibit
Number Description Page No.
- - ------- --------------------------------- --------
11 Computation of Earnings Per Share 14
27 Financial Data Schedule 15
13
<PAGE> 1
EXHIBIT 11
APPLIED POWER INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
FEBRUARY 29, February 28, FEBRUARY 29, February 28,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PRIMARY:
- - --------
Average shares outstanding 13,420 13,255 13,415 13,223
Net effect of dilutive options based on the treasury
stock method using average market price 502 407 544 419
------ --------- -------- -------
Total 13,922 13,662 13,959 13,642
====== ========= ======== =======
Net earnings(loss):
Earnings before extraordinary item $7,650 $ 4,638 $15,360 $10,079
Extraordinary loss on debt extinguishment - (4,920) - (4,920)
------ --------- -------- -------
Net Earnings(Loss) $7,650 $ (282) $15,360 $ 5,159
Primary earnings(loss) per share:
Earnings before extraordinary item $ 0.55 $ 0.34 $ 1.10 $ 0.74
Extraordinary loss on debt extinguishment - (0.36) - (0.36)
------ --------- -------- -------
Net Earnings(Loss) $ 0.55 $ (0.02) $ 1.10 $ 0.38
====== ========= ======== =======
FULLY DILUTED:
- - --------------
Average shares outstanding 13,420 13,255 13,415 13,223
Net effect of dilutive options based on the treasury
stock method using the greater of average
or period-end market price 527 407 544 420
------ --------- -------- -------
Total 13,947 13,662 13,959 13,643
====== ========= ======== =======
Net earnings(loss):
Earnings before extraordinary item $7,650 $ 4,638 $15,360 $10,079
Extraordinary loss on debt extinguishment - (4,920) - (4,920)
------ --------- -------- -------
Net Earnings(Loss) $7,650 $ (282) $15,360 $ 5,159
====== ========= ======== =======
Fully diluted earnings(loss) per share:
Earnings before extraordinary item $ 0.55 $ 0.34 $ 1.10 $ 0.74
Extraordinary loss on debt extinguishment - (0.36) - (0.36)
------ --------- -------- -------
Net Earnings(Loss) $ 0.55 $ (0.02) $ 1.10 $ 0.38
====== ========= ======== =======
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted form the unaudited
financial statements of Applied Power Inc. for the six month period ended
February 29, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 3,371
<SECURITIES> 0
<RECEIVABLES> 64,924
<ALLOWANCES> 4,047
<INVENTORY> 107,186
<CURRENT-ASSETS> 185,921
<PP&E> 158,887
<DEPRECIATION> 87,357
<TOTAL-ASSETS> 350,862
<CURRENT-LIABILITIES> 98,105
<BONDS> 79,280
0
0
<COMMON> 2,684
<OTHER-SE> 142,407
<TOTAL-LIABILITY-AND-EQUITY> 350,862
<SALES> 276,350
<TOTAL-REVENUES> 276,350
<CGS> 170,604
<TOTAL-COSTS> 170,604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,114
<INCOME-PRETAX> 22,588
<INCOME-TAX> 7,228
<INCOME-CONTINUING> 15,360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,360
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.10
</TABLE>
