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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended July 31, 1995 Commission file number 1-5838
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NCH CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 75-0457200
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 152170
2727 Chemsearch Blvd.
Irving, TX 75015-2170
-------------------------------- --------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
include area code (214) 438-0211
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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 for 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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at September 1, 1995
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Common Stock, $1 par value 8,140,087
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NCH CORPORATION
INDEX
Page No.
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Part I. Financial Information:
Consolidated Balance Sheets --
July 31, 1995 and April 30, 1995 3
Consolidated Statements of Income --
Three Months Ended July 31, 1995 and 1994 4
Consolidated Statements of Cash Flows --
Three Months Ended July 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 12
Part II. Other Information 13
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<TABLE>
NCH CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands Except Share and Per Share Data)
(Unaudited)
<CAPTION>
July 31, April 30,
1995 1995
-------- --------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 21,753 $ 16,264
Marketable securities 97,800 112,074
Accounts receivable, net 149,507 147,333
Inventories 111,164 105,864
Prepaid expenses 11,020 6,669
Deferred income taxes 16,579 15,853
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Total Current Assets 407,823 404,057
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Property, Plant and Equipment 192,672 187,030
Accumulated depreciation 104,840 101,812
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87,832 85,218
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Deferred Income Taxes 24,028 23,940
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Other 15,380 15,922
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Total $535,063 $529,137
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to banks $ 4,626 $ 5,405
Current maturities of long-term debt 2,259 2,203
Accounts payable 58,896 54,330
Accrued expenses 29,543 27,464
Income taxes payable 21,253 24,148
Dividends payable 2,448 2,493
Total Current Liabilities 119,025 116,043
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Long-Term Debt, less current maturities 4,761 4,761
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Retirement and Deferred Compensation Plans 94,343 92,157
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Stockholders' Equity
Common stock, par value $1 per share, authorized
20,000,000 shares. Issued 11,769,304
shares 11,769 11,769
Additional paid-in capital 7,449 7,348
Retained earnings 416,687 410,932
Foreign currency translation adjustment (15,395) (18,412)
Unrealized (losses) gains on investments 435 (255)
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420,945 411,382
Less treasury stock
(3,610,589 and 3,458,202 shares) 104,011 95,206
-------- --------
316,934 316,176
-------- --------
Total $535,063 $529,137
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
NCH CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended July 31,
---------------------------
1995 1994
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<S> <C> <C>
Net Sales $192,153 $178,728
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Operating Expenses
Cost of sales, including
warehousing & commissions 101,743 94,512
Marketing & administrative expenses 76,860 71,156
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178,603 165,668
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Operating Income 13,550 13,060
Other (Expenses) Income
Revaluation of foreign currencies 116 (419)
Net interest 240 640
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Income before Income Taxes 13,906 13,281
Provision for Income Taxes 5,703 5,455
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Net Income $ 8,203 $ 7,826
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Average Number of
Shares Outstanding 8,239 8,279
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Earnings Per Share $1.00 $ .95
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Cash Dividend Paid Per Share $ .30 $ .25
===== =====
Cash Dividend Declared Not Paid $ .30 $ .25
===== =====
</TABLE>
The accompanying notes are an integral part of these financial
statements.
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<TABLE>
NCH CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
July 31,
-----------------------
1995 1994
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<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 8,203 $ 7,826
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,417 3,340
Provision for losses on accounts receivable 2,003 1,963
Deferred income taxes (1,001) (1,049)
Retirement and deferred compensation plans 2,027 669
Other noncash items (112) (113)
Change in assets and liabilities, excluding
net assets acquired in the purchase
of businesses:
Accounts receivable (1,630) (1,242
Inventories (4,527) (5,142)
Prepaid expenses (4,441) (2,831)
Accounts payable, accrued expenses and
income taxes payable 2,293 1,220
Other noncurrent assets (552) (308)
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Net cash provided by operating activities 5,680 4,333
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Cash Flows from Investing Activities
Sales of property, plant and equipment 221 505
Purchases of property, plant and equipment (5,303) (3,477)
Redemptions of marketable securities 17,468 9,376
Purchases of marketable securities (2,132) (4,728)
Other (1,012) (1,018)
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Net cash provided in investing activities 9,242 658
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Cash Flows from Financing Activities
Proceeds from notes payable 2,442 1,603
Payments of notes payable (3,443) (2,408)
Payments of long-term debt - (3)
Borrowing of cash surrender values 1,887 1,708
Payments of dividends (2,493) (2,069)
Purchases of treasury stock (8,881) -
Proceeds from exercise of stock options 37 34
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Net cash used in financing activities (10,451) (1,135)
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Effect of Exchange Rate Changes on Cash
and Cash Equivalents 1,018 405
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Net Increase in Cash and Cash Equivalents 5,489 4,261
Cash and Cash Equivalents at Beginning of Year 16,264 18,754
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Cash and Cash Equivalents at End of Period $ 21,753 $ 23,015
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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NCH CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Basis of Presentation
---------------------
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary (consisting of only normal re-occurring accruals) to
present fairly NCH Corporation's financial position as of July
31, 1995, and April 30, 1995, the results of its operations for
the three months ended July 31, 1995 and 1994, and cash flows for
the three months then ended.
The accounting policies followed by the Company are set forth in
Note 1 to the Company's financial statements in the 1995 NCH
Corporation Report to the Shareholders, which is included in Part
II of Form 10-K.
The results of operations for the three month period ended July
31, 1995, are not necessarily indicative of the results to be
expected for the full year.
2. Inventories
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Inventories consisted of the following (in thousands of dollars):
July 31, April 30,
1995 1995
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Raw Materials $ 14,877 $ 15,551
Finished Goods 94,065 88,089
Sales Supplies 2,222 2,224
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$111,164 $105,864
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3. Earnings Per Common Share
-------------------------
Earnings per common share are based upon the weighted average
number of common shares outstanding during the period.
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4. Supplemental Cash Flow Information
-----------------------------------
Cash payments for interest for the three months ended July 31,
1995 and 1994, were approximately $607,000 and $424,000,
respectively. Cash payments for income taxes were approximately
$8,771,000 and $6,543,000 for the same periods, respectively.
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NCH CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
-------------------------------
In the fiscal quarter ended July 31, 1995, working capital
increased to $288.8 million from $288.0 million at April 30,
1995, and the current ratio was 3.4 to 1 at July 31, 1995,
compared to 3.5 to 1 at April 30, 1995. The total of cash, cash
equivalents and marketable securities decreased by $8.7 million
in the fiscal quarter to $119.6 million at July 31, 1995, as
shown on the Consolidated Balance Sheets. Net cash flows from
operations totaled $5.7 million. Principal uses of cash
consisted of treasury stock purchases of $8.9 million, net
capital expenditures of $5.1 million and payment of dividends of
$2.5 million. Management expects that operating cash flows will
continue to generate sufficient funds to finance operating needs,
capital expenditures and the payment of dividends.
The Company's international subsidiaries operate on a fiscal
year ending on the last day of February. The reported values of
both assets and liabilities of the Company's international
subsidiaries increased as a result of the change in the Company's
composite spot rate at May 31, 1995, compared to February 28,
1995. This is reflected by the foreign currency translation
component of stockholders' equity, which changed from an $18.4
million reduction of equity at April 30, 1995, to a $15.4 million
reduction of equity at July 31, 1995.
Accounts receivable and inventories increased by $2.2 million
and $5.3 million, respectively, in the quarter ended July 31,
1995, as measured in U.S. dollars and reported on the
Consolidated Balance Sheets. As stated above, the result of
exchange rate deviations from the end of the previous year to the
end of the first fiscal quarter was to increase the reported U.S.
dollar values of both assets and liabilities. The change in
accounts receivable and inventories shown in the Consolidated
Statements of Cash Flows is exclusive of the effect of exchange
rates on the reported asset values, and shows accounts receivable
decreasing by $.4 million and inventories increasing by $4.5
million during the quarter. Inventory levels increased in the
Company's domestic operations, due to higher inventory
requirements as a result of a long-term trend of increasing sales
and expansion of the domestic product line.
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Accounts payable, accrued expenses and income taxes payable
were similarly affected by currency translation. These
liabilities increased by $2.3 million when measured exclusive of
the effect of exchange rate changes, but increased by $3.8
million as reported on the Consolidated Balance Sheets. Accounts
payable increased primarily in the Company s European operations
as a result of increased inventory levels in the current year as
compared to the prior year. This increase was partially offset by
a decrease in domestic income taxes payable, due to normal timing
differences in the amounts of tax payments in the current quarter
compared to the preceding quarter.
Net expenditures for property, plant and equipment amounted
to $5.1 million for the quarter ended July 31, 1995, and
consisted of the installation and update of worldwide computer
systems and other normal additions of data processing and
operating equipment. As with the other assets and liabilities,
the effect of currency translation on the reported U.S. dollar
values of property, plant and equipment was to increase those
reported values.
Total bank indebtedness, comprised of long-term debt, current
maturities of long-term debt and notes payable, decreased
exclusive of the effect of exchange rate changes by $1.0 million
during the three months ended July 31, 1995. The decrease was
due primarily to the maturation and repayment of a short-term
loan in one of the Company's European subsidiaries. The bank
indebtedness shown on the Consolidated Balance Sheets was also
affected by currency translation, showing a smaller decrease of
$.7 million.
A regular quarterly dividend of $.30 per share, declared by
the directors of the Company on April 12, 1995, was paid on June
15, 1995, amounting to $2.5 million. On July 27, 1995, the
directors of the Company declared a regular quarterly dividend of
$.30 per share, payable September 15, 1995, to shareholders of
record September 1, 1995.
Operating Results
-----------------
First Quarter Comparison - Prior Year
Net sales for the first quarter of fiscal 1995 increased 8%
to $192.2 million in the current year as compared with $178.7
million reported in the same quarter of the last fiscal year.
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Domestically, net sales in the first quarter of the current year
remained even with the first quarter of the prior year.
International net sales, when measured on a local country
currency basis, increased approximately 9%. When reported in
U.S. dollars, international net sales in the first quarter of the
current year increased 17% as compared to the first quarter of
the prior year.
Operating expenses as a percent of net sales increased
slightly in the current quarter to 92.9% of net sales compared to
92.7% in the first quarter last year. As a result, operating
income before other expenses and income taxes for the quarter
ended July 31, 1995, was 7.1% of net sales compared to 7.3% of
net sales for the quarter ended July 31, 1994.
In the three months ended July 31, 1995, net interest income
was $.2 million compared to $.6 million in the same quarter of
the prior year. Revaluation of foreign currencies was a gain of
$.1 million in the first quarter of the current year compared to
a loss of $.4 million in the same period of the prior year.
Provision for income taxes was 41.0% of pre-tax income in the
first quarter of the current year compared to 41.1% of pre-tax
income in the prior year. Net income for the quarter ended July
31, 1995, was 4.3% of net sales compared to 4.4% of net sales in
the quarter ended July 31, 1994.
First Quarter Comparison - Preceding Quarter
Net sales of $192.2 million for the first quarter of fiscal
1996 were 4% higher than the $185.2 million net sales reported in
the fourth quarter of fiscal 1995. International net sales were
11% higher when measured in U.S. dollars, as a result of normal
quarter-to-quarter sales fluctuations and the effect of exchange
rate changes, while domestic net sales were 2% lower than the
fourth quarter of the prior year.
Operating expenses as a percent of net sales were 92.9% in
the current quarter compared to 92.1% in the fourth quarter of
the last fiscal year. Operating expenses in the domestic
operations were higher as a percent of net sales due to normal
quarter-to-quarter sales and expense fluctuations. As a result,
operating income before other expenses and income taxes for the
quarter ended July 31, 1995, was 7.1% of net sales compared to
7.9% of net sales for the quarter ended April 30, 1995.
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Net interest income in the three months ended July 31, 1995,
amounted to $.2 million compared to $.3 million in the three
months ended April 30, 1995. Gain on revaluation of foreign
currencies was $.1 million in the first quarter of the current
year compared to $.5 million in the fourth quarter of the prior
year.
Provision for income taxes in the quarter ended July 31,
1995, amounted to 41.0% of pre-tax income compared to 35.1% of
pre-tax income in the quarter ended April 30, 1995. The lower
overall tax rate in the fourth quarter of the prior year was due
to the impact of variations in individual country income levels
and tax rates on combined international results. Net income for
the quarter ended July 31, 1995, was 4.3% of net sales compared
to 5.4% of net sales in the quarter ended April 30, 1995.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
(b) Reports on Form 8-K -- There were no reports on Form 8-K
filed for the three months ended July 31, 1995.
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.
NCH Corporation
---------------
(Registrant)
Date September 12, 1995 /s/ Tom Hetzer
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Tom Hetzer
Vice President - Finance
(Principal Accounting
Officer)
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JUL-31-1995
<EXCHANGE-RATE> 1.0
<CASH> 21,753
<SECURITIES> 97,800
<RECEIVABLES> 169,014
<ALLOWANCES> 19,507
<INVENTORY> 111,164
<CURRENT-ASSETS> 407,823
<PP&E> 192,672
<DEPRECIATION> 104,840
<TOTAL-ASSETS> 535,063
<CURRENT-LIABILITIES> 119,025
<BONDS> 0
<COMMON> 11,769
0
0
<OTHER-SE> 513,187
<TOTAL-LIABILITY-AND-EQUITY> 535,063
<SALES> 192,153
<TOTAL-REVENUES> 192,153
<CGS> 101,743
<TOTAL-COSTS> 178,603
<OTHER-EXPENSES> (116)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (240)
<INCOME-PRETAX> 13,906
<INCOME-TAX> 5,703
<INCOME-CONTINUING> 8,203
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,203
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
