<PAGE>
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 January 31, 1999 Commission file number 1-5838
---------------- ------
NCH CORPORATION
-------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-0457200
------------------------------- ------------------------
(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 (972) 438-0211
--------------
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
--- ---
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 March 3, 1999
-------------------------- ----------------------------
Common Stock, $1 par value 5,454,094
-------------------------- ----------------------------
<PAGE>
NCH CORPORATION
INDEX
Page No.
--------
Part I. Financial Information:
Consolidated Balance Sheets --
January 31, 1999 and April 30, 1998 3
Consolidated Statements of Income --
Three Months and Nine Months Ended
January 31, 1999 and 1998 4
Consolidated Statements of Cash Flows --
Nine Months Ended January 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 21
Part II. Other Information 22
<PAGE>
<TABLE>
NCH CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands Except Share and Per Share Data)
(Unaudited)
<CAPTION>
January 31, April 30,
1999 1998
-------- --------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 31,770 $ 17,139
Marketable securities 4,187 101,626
Accounts receivable, net 146,471 140,758
Inventories 109,079 108,478
Prepaid expenses 10,172 9,434
Deferred income taxes 20,499 19,099
-------- --------
Total Current Assets 322,178 396,534
-------- --------
Property, Plant and Equipment 197,659 191,514
Accumulated depreciation 118,332 112,353
-------- --------
79,327 79,161
-------- --------
Deferred Income Taxes 32,457 30,848
-------- --------
Other 14,992 13,161
-------- --------
Total $448,954 $519,704
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to banks $ 7,143 $ 7,178
Current maturities of long-term debt 248 292
Accounts payable 49,348 49,083
Accrued expenses 30,055 28,019
Income taxes payable 23,359 20,736
Dividends payable - 2,504
-------- --------
Total Current Liabilities 110,153 107,812
-------- --------
Long-term Debt, less current maturities 1,200 1,400
-------- --------
Retirement and Deferred Compensation Plans 117,187 111,088
-------- --------
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 12,929 12,289
Retained earnings 490,116 474,540
Accumulated other comprehensive loss (32,664) (33,675)
-------- --------
482,150 464,923
Less treasury stock
(6,184,685 and 4,615,605 shares) 261,736 165,519
-------- --------
220,414 299,404
-------- --------
Total $448,954 $519,704
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
NCH CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $199,101 $195,659 $589,109 $587,276
-------- -------- -------- --------
Operating Expenses
Cost of sales, including
warehousing and
commissions 109,457 105,778 326,309 317,545
Marketing and administrative
expenses 77,915 78,604 225,466 230,216
-------- -------- -------- --------
187,372 184,382 551,775 547,761
-------- -------- -------- --------
Operating Income 11,729 11,277 37,334 39,515
Other (Expenses) Income
Revaluation of foreign
currencies 249 (612) (1,178) (1,653)
Net interest (786) (126) (1,889) (405)
-------- -------- -------- --------
Income before Income Taxes 11,192 10,539 34,267 37,457
Provision for Income Taxes 5,035 4,276 15,313 15,401
-------- -------- -------- --------
Net Income $ 6,157 $ 6,263 $ 18,954 $ 22,056
======== ======== ======== ========
Weighted Average Number of
Shares Outstanding
Basic 5,595 7,167 5,784 7,165
======== ======== ======== ========
Diluted 5,616 7,196 5,813 7,194
======== ======== ======== ========
Earnings Per Share
Basic $ 1.10 $ .87 $ 3.28 $ 3.08
======== ======== ======== ========
Diluted $ 1.10 $ .87 $ 3.26 $ 3.07
======== ======== ======== ========
Cash Dividend Paid Per Share $ .35 $ .35 $ 1.05 $ .95
======== ======== ======== ========
Cash Dividend Declared Not Paid $ - $ .35 $ - $ .35
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
NCH CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
January 31,
---------------------
1999 1998
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 18,954 $ 22,056
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 10,122 10,911
Provision for losses on accounts receivable 4,415 5,089
Deferred income taxes (2,827) (5,123)
Retirement and deferred compensation plans 5,903 4,442
Other noncash items (317) 187
Changes in assets and liabilities,
excluding net assets acquired in the
purchase of businesses:
Accounts receivable (7,638) (6,753)
Inventories (189) (9,635)
Prepaid expenses (678) (289)
Accounts payable, accrued expenses and
income taxes payable 3,844 5,050
Other noncurrent assets (570) (527)
-------- --------
Net cash provided by operating activities 31,019 25,408
-------- --------
Cash Flows from Investing Activities
Sales of property, plant and equipment 660 1,063
Purchases of property, plant and equipment (10,499) (10,589)
Redemptions of marketable securities 103,224 29,081
Purchases of marketable securities (5,932) (36,573)
Acquisitions of businesses (1,843) (2,944)
Other (1,005) (886)
-------- --------
Net cash provided (used) in
investing activities 84,605 (20,848)
-------- --------
Cash Flows from Financing Activities
Proceeds from notes payable 3,754 5,519
Payments of notes payable (3,979) (2,173)
Additional long term debt - 51
Payments of long term debt (243) (64)
Borrowing of cash surrender values 2,023 1,930
Payments of dividends (5,882) (6,809)
Purchase of treasury stock (97,203) (7,439)
Proceeds from exercise of stock options 1,200 6,101
-------- --------
Net cash used in financing activities (100,330) (2,884)
-------- --------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (663) (2,490)
-------- --------
Net Increase (Decrease) in Cash and
Cash Equivalents 14,631 (814)
-------- --------
Cash and Cash Equivalents at Beginning
of Year 17,139 21,273
-------- --------
Cash and Cash Equivalents at End of Period $ 31,770 $ 20,459
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
NCH CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
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 January 31, 1999, the results of its operations
for the three and nine months ended January 31, 1999 and 1998, and cash
flows for the nine months then ended.
The accounting policies followed by NCH Corporation (the Company) are set
forth in Note 1 to the Company's consolidated financial statements in the
1998 NCH Corporation Report to the Shareholders, which is included in Part
II of Form 10-K.
The results of operations for the three and nine month periods ended
January 31, 1999, are not necessarily indicative of the results to be
expected for the full year.
2. Inventories
-----------
Inventories consisted of the following (in thousands of dollars):
January 31, April 30,
1999 1998
-------- --------
Raw Materials $ 14,391 $ 13,904
Finished Goods 92,908 92,795
Sales Supplies 1,780 1,779
-------- --------
$109,079 $108,478
======== ========
<PAGE>
3. Earnings Per Common Share
-------------------------
Basic earnings per share are computed by dividing net income for the
period by the weighted average number of shares of common stock
outstanding for the period. Diluted earnings per share are determined by
dividing net income by the weighted average number of shares of common
stock and common stock equivalents outstanding. Stock options are the
Company's only common stock equivalents and are considered in the diluted
earnings per share calculations if dilutive. For the three and nine month
periods ended January 31, 1999, options totaling 99,423 and 76,978 were
excluded as their effect would have been antidilutive. However, for the
three and nine month periods ended January 31, 1998, all options were
included as their effect was dilutive for those periods
4. Comprehensive Income
--------------------
Effective May 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
The adoption of this statement had no impact on the Company's net income
or stockholders' equity. SFAS No. 130 established new standards for the
reporting and display of comprehensive income and its components. SFAS
No. 130 requires foreign currency translation adjustments and unrealized
gains or losses on the Company's available-for-sale securities to be
included in the measure of comprehensive income and segregated in
stockholders' equity as accumulated other comprehensive income. Amounts
in prior year financial statements have been reclassified to conform to
SFAS No. 130.
<PAGE>
The components of comprehensive income, net of related tax, for the three-
month and nine-month periods ended January 31, 1999 and 1998 are as follows
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 6,157 $ 6,263 $ 18,954 $ 22,056
Unrealized gain (loss)
on available-for-sale
securities:
Gain (loss) arising
during period 9 73 15 199
Reclassification
adjustment - - (111) -
Foreign currency translation
adjustment 2,971 (681) 1,107 (4,916)
-------- -------- -------- --------
Comprehensive income $ 9,137 $ 5,655 $ 19,965 $ 17,339
======== ======== ======== ========
</TABLE>
The components of accumulated other comprehensive loss, net of related tax,
at January 31, 1999 and April 30, 1998 are as follows (in thousands):
January 31, April 30,
1999 1998
-------- --------
Unrealized gain on available-
for-sale securities $ 15 $ 111
Foreign currency translation
adjustment (32,679) (33,786)
-------- --------
Accumulated other comprehensive
loss $(32,664) $(33,675)
======== ========
5. Supplemental Cash Flow Information
----------------------------------
Cash payments for interest for the nine months ended January 31, 1999 and
1998, were approximately $1,512,000 and $1,717,000, respectively. Cash
payments for income taxes were approximately $16,007,000 and $16,153,000
for the same periods, respectively.
<PAGE>
NCH CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
-------------------------------
In the nine months ended January 31, 1999, working capital decreased to
$212.0 million from $288.7 million at April 30, 1998. The current ratio
was 2.9 to 1 at January 31, 1999, compared to 3.7 to 1 at April 30, 1998.
The total of cash, cash equivalents and marketable securities decreased by
$82.8 million in the first nine months to $36.0 million at January 31,
1999, as shown on the Consolidated Balance Sheets. Net cash flows from
operations totaled $31.0 million. Additional cash was provided by net
redemptions of marketable securities of $97.3 million, and the borrowing
of cash surrender values of company-owned life insurance policies on key
employees of $2.0 million. Principal uses of cash consisted of treasury
stock purchases of $97.2 million, net capital expenditures of $9.8 million,
and payment of dividends of $5.9 million. During the year, the Company
purchased the assets of two small businesses for $1.8 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 November 30,
1998, compared to February 28, 1998. This is reflected by the foreign
currency translation component of accumulated other comprehensive loss,
which changed from a $33.8 million reduction of equity at April 30, 1998,
to a $32.7 million reduction of equity at January 31, 1999.
Accounts receivable increased by $5.7 million and inventories increased
by $.6 million in the nine months ended January 31, 1999, 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 nine months 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 increasing by $3.2 million for the
nine month period, net of the provision for losses on accounts receivable
of $4.4 million. The increase in accounts receivable was primarily in
the Company's international subsidiaries due to a 15% sales increase in
the current quarter compared to the fourth quarter of last year. The
Consolidated Statements of Cash Flows shows inventories increasing by $.2
million during the nine months ended January 31, 1999, exclusive of the
effect of exchange rates. The increase in inventory was primarily in the
Company's domestic operation, due to increased sales volume.
<PAGE>
Accounts payable, accrued expenses and income taxes payable were
similarly affected by currency translation. These liabilities increased
by $3.8 million when measured exclusive of the effect of exchange rate
changes, but increased by $4.9 million as reported on the Consolidated
Balance Sheets. This increase was primarily due to an increase in income
taxes payable in the Company's domestic operation, due to normal timing
differences in the amounts of tax payments in the current quarter compared
to the fourth quarter of the prior year.
Net expenditures for property, plant and equipment amounted to $9.8
million for the nine months ended January 31, 1999, and consisted of the
installation and update of worldwide computer systems and normal additions
of operating equipment.
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 $.5 million during the nine months ended January
31, 1999. The decrease was due primarily to payments on long-term debt
during the year. The bank indebtedness shown on the Consolidated Balance
Sheets was also affected by currency translation, and shows a decrease of
$.3 million.
The directors of the Company declared a regular quarterly dividend of
$.35 per share on February 10, 1999, payable March 15, 1999, to
shareholders of record March 1, 1999. No dividends were declared during
the current quarter, and it is expected that another dividend will be
declared in the fourth quarter of the current year. Cash dividends paid
during the first nine months of the fiscal year amounted to $5.9 million.
During April 1998, the Company sold two subsidiaries, resulting in a
gain of $11.0 million before taxes ($7.1 million after taxes). Sales for
these two subsidiaries were less than 5% of the Company's consolidated
annual sales, and therefore this transaction has not had a material
impact on the Company's operations.
On May 26, 1998, the Board of Directors authorized the repurchase of an
aggregate of 1,266,176 shares of NCH Corporation Common Stock from the
Milton P. Levy, Jr. family. These shares were acquired on May 26, 1998 at
$60.89 per share. The closing trading price of NCH Common Stock on that
date was $65.44 per share. In addition, the Company purchased an
additional 284,839 shares on the open market. In these two transactions,
the Company repurchased 1,551,015 shares of NCH Common Stock for an
aggregate price of $93.8 million. Other additional repurchases of NCH
Common Stock by the Company totaled $3.4 million during the current year.
In August 1998, the Company obtained a $50 million unsecured credit
facility from a group of banks which expires in August 2001, and is
available for acquisitions and general corporate purposes. Interest on
the credit facility is generally payable quarterly, at the Company's
option of the Eurodollar rate plus 0.6%, or the federal funds rate plus
0.5% (which will not exceed the bank's prime rate). The credit facility
is governed by certain financial covenants, including minimum tangible
net worth and a maximum leverage ratio. At January 31, 1999, the Company
had not borrowed any amount under this credit facility.
<PAGE>
Year 2000 Compliance
--------------------
The Company uses and relies on a wide variety of information
technologies, computer systems and scientific equipment containing
computer-related components. Some of the Company's older computer
software programs and equipment use two digit fields rather than four
digit fields to define the applicable year (i.e., "98" in the computer
code refers to the year "1998"). As a result, time-sensitive functions
of those software programs and equipment may misinterpret dates after
January 1, 2000 to refer to the twentieth century rather than to the
twenty-first century (i.e., "02" could be interpreted as "1902" rather
than "2002"). This condition is commonly referred to as the Year 2000
Issue. If the Year 2000 Issue is not resolved, it could have a material
adverse effect on the Company's business, financial condition or results
of operations.
The Company has developed a strategy to address the potential exposures
related to the Year 2000 Issue on its operations for the fiscal year 2000
and beyond. A review of key financial, informational and operational
systems has been completed. Plans for implementation and testing of
necessary modifications to these key computer systems and equipment to
ensure that they are Year 2000 compliant are expected to be completed by
July 1999. The Company believes that with these plans and completed
modifications, the Year 2000 Issue will not have a material adverse
effect on its business, financial condition or results of operations.
However, there can be no assurance that if these modifications are made
in a timely fashion that they will prevent a material adverse effect on
the Company's business, financial condition or results of operations.
The financial impact of any such material adverse effect cannot be
estimated at this time. The Company has contingency plans to deal with
major Year 2000 failures, and such plans are constantly being monitored
and will be revised as necessary.
In addition to risks associated with the Company's own computer systems
and equipment, the Company has relationships with, and is to varying
degrees dependent upon, a large number of third parties that provide
information, goods and services to the Company. These include corporate
partners, suppliers, vendors, financial institutions and governmental
entities. There can be no assurance that the systems of other
organizations on which the Company may rely will adequately address the
Year 2000 Issue, or that the failure of other organizations to address
the Year 2000 Issue will not have a material adverse effect on the
Company's business, financial condition or results of operations. The
Company has contacted key third parties to assess their readiness to
address the Year 2000 Issue.
The total cost of systems assessments and modifications related to the
Year 2000 Issue is funded through operating cash flows and has not been
material to date. The Company is expensing these costs as incurred. The
Company has identified resources to address the Year 2000 Issue. The
financial impact of making the required systems changes cannot be known
precisely at this time, but it is currently expected to be less than $2.0
million. The actual financial impact could, however, exceed this
estimate.
<PAGE>
Euro Conversion
---------------
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between their existing currencies
("legacy currencies") and one common currency - the euro. The euro is now
trading on currency exchanges and can be used in business transactions.
Beginning in January 2002, new euro-denominated bills and coins will be
issued, and legacy currencies will be withdrawn from circulation. The
Corporation's operating subsidiaries affected by the euro conversion are
developing plans to address the systems and business issues affected by
the euro currency conversion. These issues include, among others, the need
to adapt computer and other business systems and equipment to accommodate
euro-denominated transactions. The Corporation does not expect this
conversion to have a material impact on its financial condition or results
of operations.
Forward-Looking Information
---------------------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations and other sections of this Quarterly Report contain forward-
looking statements that are based on current expectations, estimates
and assumptions regarding the worldwide economy, technological
innovation, competitive activity, interest rates, pricing, and currency
movements. These statements are not guarantees of future results or
events, and involve certain risk and uncertainties which are difficult to
predict and many of which are beyond the control of the Company. Actual
results and events could differ materially from those anticipated by the
forward-looking statements.
Operating Results
-----------------
Third Quarter Comparison - Prior Year
-------------------------------------
Net sales for the third quarter increased 2% to $199.1 million in the
current year as compared with $195.7 million reported in the same quarter
of the last fiscal year. Domestically, net sales in the third quarter of
the current year increased 2% over the third quarter of the prior year.
International net sales, measured on a local currency basis and in U.S.
dollars, increased 2% compared to the third quarter of the prior year.
Net sales for the third quarter would have increased 6% over sales
reported in the same quarter of last fiscal year, excluding the results
of the two subsidiaries sold in the prior fiscal year.
<PAGE>
Operating expenses as a percent of net sales decreased slightly in the
current quarter to 94.1% of net sales compared to 94.2% in the third
quarter of the prior year. The decrease is primarily due to decreased
domestic marketing and administrative costs, partially offset by higher
international product costs. As a result, operating income before other
expenses and income taxes was 5.9% of net sales for the quarter ended
January 31, 1999, compared to 5.8% of net sales for the quarter ended
January 31, 1998. Operating income before other expenses and income
taxes would have been 5.9% in the prior year, excluding the results of
two subsidiaries sold in the prior fiscal year.
In the quarter ended January 31, 1999, net interest expense was $.8
million compared to $.1 million in the same quarter of the prior year.
Revaluation of foreign currencies was a gain of $.2 million in the third
quarter of the current year compared to a loss of $.6 million in the same
period of the prior year.
Provision for income taxes was 45.0% of pre-tax income in the third
quarter of the current year compared to 40.6% of pre-tax income in the
prior year. This increase is due to the reduction of marketable securities
during the current quarter, which reduced the amount of tax-exempt interest
income, and is also due to a higher proportional share of domestic income
in the quarter, which is subject to higher effective tax rates than
international income. Net income for the quarter ended January 31,
1999, was 3.1% of net sales compared to 3.2% of net sales in the quarter
ended January 31, 1998.
Third Quarter Comparison - Preceding Quarter
--------------------------------------------
Net sales of $199.1 million for the third quarter of fiscal 1999 were 4%
higher than the $191.2 million net sales reported in the second quarter.
International net sales were 27% higher when measured in U.S. dollars, as
a result of normal quarter-to-quarter sales fluctuations and the effect of
exchange rate changes. Domestic net sales were 10% lower than the
previous quarter due to normal quarter-to-quarter sales fluctuations.
Operating expenses were 94.1% of net sales in the current quarter
compared to 92.9% in the second quarter. Operating expenses in the
domestic operations were higher as a percent of net sales due to
increased cost of sales and increased marketing expenses. As a result,
operating income before other expenses and income taxes was 5.9% of net
sales for the quarter ended January 31, 1999, compared to 7.1% of net
sales for the quarter ended October 31, 1998.
Net interest expense amounted to $.8 million in the three months ended
January 31, 1999, compared to $1.0 in the three months ended October 31,
1998. The revaluation of foreign currencies resulted in a gain of $.2
million in the third quarter of the current year compared to a loss of $1.0
million in the second quarter of the current year.
Provision for income taxes amounted to 45.0% of pre-tax income in the
quarter ended January 31, 1999, compared to 45.4% of pre-tax income in the
quarter ended October 31, 1998. Net income was 3.1% of net sales for the
quarter ended January 31, 1999, compared to 3.3% of net sales in the
quarter ended October 31, 1998.
<PAGE>
Nine Months Comparison - Prior Year
-----------------------------------
Net sales for the nine months ended January 31, 1999, increased to
$589.1 million as compared with $587.3 million reported in the first nine
months of the last fiscal year. Domestically, net sales increased 1% in
the nine months compared to a year ago. International net sales were
affected by changes in currency translation rates and were relatively
constant as reported in U.S. dollars. When measured on a local country
currency basis, international net sales increased approximately 3%. Net
sales for the nine months ended January 31, 1999 would have increased
4.8% over sales reported in the first nine months of the last fiscal
year, excluding the results of two subsidiaries sold in the prior fiscal
year.
Operating expenses as a percent of net sales increased in the nine
months this year to 93.7% of net sales compared to 93.3% for the nine month
period ended January 31, 1998. The increase is due to higher overall
product costs, partially offset by decreased domestic marketing costs and
decreased international administrative costs. As a result, operating income
in the nine months this year decreased to 6.3% of net sales from 6.7% of
net sales in the nine months ended January 31, 1998. Operating income
before other expenses and income taxes would have been 6.7% in the prior
year, excluding the results of the two subsidiaries sold in the prior year.
Net interest expense was $1.9 million in the nine months ended January
31, 1999, compared to $.4 million in the first nine months of the prior
year. Revaluation of foreign currencies resulted in a loss of $1.2 million
in the first nine months of the current year compared to a loss of $1.7
million in the same period of the prior year.
Provision for income taxes was 44.7% of pre-tax income in the first
nine months of the current year compared to 41.1% of pre-tax income in the
prior year. This increase is due to the reduction of marketable securities
during the first nine months of the current year, which reduced the amount
of tax-exempt interest income, and is also due to a higher proportional
share of domestic income in the period, which is subject to higher
effective tax rates than international income. Net income was 3.2% of net
sales for the nine months ended January 31, 1999 compared to 3.8% of net
sales for the nine months ended January 31, 1998.
<PAGE>
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 January 31, 1999. The Company filed Form 8-K
on June 3, 1998 announcing that its board of directors authorized the
repurchase of an aggregate of 1,266,176 shares of NCH Common Stock from
Milton P. Levy, Jr., certain members of his family, including his
children, their spouses and his grandchildren, and trusts for the benefit
of his family members.
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 March 12, 1999 /s/ Tom Hetzer
-------------- --------------
Tom Hetzer
Vice President - Finance
(Principal Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JAN-31-1999
<EXCHANGE-RATE> 1.0
<CASH> 31,770
<SECURITIES> 4,187
<RECEIVABLES> 166,502
<ALLOWANCES> 20,031
<INVENTORY> 109,079
<CURRENT-ASSETS> 322,178
<PP&E> 197,659
<DEPRECIATION> 118,332
<TOTAL-ASSETS> 448,954
<CURRENT-LIABILITIES> 110,153
<BONDS> 0
0
0
<COMMON> 11,769
<OTHER-SE> 208,645
<TOTAL-LIABILITY-AND-EQUITY> 448,954
<SALES> 589,109
<TOTAL-REVENUES> 589,109
<CGS> 326,309
<TOTAL-COSTS> 551,775
<OTHER-EXPENSES> 1,178
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,889
<INCOME-PRETAX> 34,267
<INCOME-TAX> 15,313
<INCOME-CONTINUING> 18,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,954
<EPS-PRIMARY> 3.28
<EPS-DILUTED> 3.26
</TABLE>
