Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8782
GLEASON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 16-1224655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 University Avenue, Rochester, New York 14692
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(716) 473-1000
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 ( ).
The number of shares outstanding of the registrant's Common
stock, par value $1 per share, at March 31, 1994 was 5,162,980
shares.
<PAGE>
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
(In thousands)
MARCH 31 DECEMBER 31
Assets 1994 1993
<S> <C> <C>
Current assets
Cash and equivalents $ 5,508 $ 4,155
Trade accounts receivable 25,054 28,543
Inventories 14,459 12,899
Refundable income taxes 109 2,292
Other current assets 4,854 4,744
Net current assets of discontinued operations 1,757 1,441
Total current assets 51,741 54,074
Property, plant and equipment, at cost 143,946 146,585
Less accumulated depreciation 85,874 86,299
58,072 60,286
Other assets 3,912 3,962
Net assets of discontinued operations 3,331 3,527
Total assets $117,056 $121,849
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities
Short-term borrowings $ 1,299 $ 408
Current portion of long-term debt 105 132
Trade accounts payable 8,470 6,100
Income taxes 1,125 1,103
Other current liabilities 17,319 17,552
Total current liabilities 28,318 25,295
Long-term debt 6,836 14,575
Pension plans and other retiree benefits 45,333 45,269
Other liabilities 2,026 1,701
Total liabilities 82,513 86,840
Stockholders' Equity
Common stock 5,796 5,796
Additional paid-in capital 11,909 11,909
Retained earnings 35,196 35,647
Cumulative foreign currency translation adjustment (1,330) (1,315)
Minimum pension liability adjustment (6,585) (6,585)
44,986 45,452
Less treasury stock, at cost 10,443 10,443
Total stockholders' equity 34,543 35,009
Total liabilities and stockholders' equity $117,056 $121,849
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 2
<PAGE>
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except
per share amounts)
THREE MONTHS ENDED
MARCH 31
1994 1993
<S> <C> <C>
Net sales $ 23,699 $ 24,784
Costs and expenses
Cost of products sold 17,801 17,790
Selling, general and
administrative expenses 4,961 6,044
Research and development expenses 1,072 1,635
Interest expense (income)--net 25 (58)
Other expense (income)--net (230) 27
Income (loss) before income taxes 70 (654)
Income tax provision (benefit) 5 (13)
Net income (loss) $ 65 $ (641)
Weighted average number of common shares
outstanding 5,163,002 5,153,603
Net income (loss) per common share $ .01 $ (.12)
Cash dividends declared per common share $ .10 $ .10
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 3
<PAGE>
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
(In thousands)
THREE MONTHS ENDED
MARCH 31
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 65 $ (641)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,344 2,345
(Gain) loss on disposals of property, plant
and equipment (34) 6
Provision (benefit) for deferred income taxes (327) 48
Changes in operating assets and liabilities:
Decrease in accounts receivable 3,289 4,170
(Increase) in inventories (1,175) (1,705)
(Increase) decrease in other current assets 1,925 (340)
Increase (decrease) in trade accounts payable 1,554 (695)
(Decrease) in all other current
operating liabilities (77) (3,825)
Other, net 323 375
Discontinued operations 50 (312)
Net cash provided by (used in) operating
activities 7,937 (574)
Cash flows from investing activities:
Capital expenditures (401) (3,345)
Proceeds from asset disposals 69 14
Proceeds from collection of notes receivable 1,156 154
Net cash provided by (used in) investing
activities 824 (3,177)
Cash flows from financing activities:
Proceeds from short-term borrowings 883 1,511
Net (repayments) borrowings under revolving
credit agreements (7,800) 4,700
Proceeds from long-term debt 25 9
(Repayment) of long-term debt (45) (818)
Dividends paid (516) (516)
Net cash provided by (used in)
financing activities (7,453) 4,886
Effect of exchange rate changes on cash
and equivalents 45 (21)
Increase in cash and equivalents 1,353 1,114
Cash and equivalents, beginning 4,155 7,105
Cash and equivalents, ending $ 5,508 $ 8,219
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 4
<PAGE>
<PAGE>
GLEASON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994
(Unaudited)
1. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present fairly (a) the results of operations for
the three month periods ended March 31, 1994 and 1993, (b)
the financial position at March 31, 1994 and December 31,
1993, and (c) the cash flows for the three month periods
ended March 31, 1994 and 1993, of Gleason Corporation and
subsidiaries.
2. The results of operations for the three month period ended
March 31, 1994 are not necessarily indicative of the results
to be expected for the full year.
3. All significant intercompany transactions are eliminated in
consolidation.
4. Certain reclassifications have been made to the prior year's
financial statements to conform to the 1994 presentation.
5. The components of inventories were as follows:
(In thousands) 3/31/94 12/31/93
Raw materials and
purchased parts $ 1,541 $ 1,519
Work in process 8,880 7,360
Finished products 4,038 4,020
$14,459 $12,899
6. The Company's Alliance Metal Stamping and Fabricating
division is classified as Discontinued Operations in the
accompanying financial statements. Estimated losses from its
operations and the expected loss on the sale of its assets
were provided for in 1991. The Company is continuing to seek
a buyer for this operation's assets. Management anticipates
this sale will occur during 1994.
(continued)
Page 5
<PAGE>
<PAGE>
6. (continued)
The net assets of discontinued operations have been
segregated in the March 31, 1994 and December 31, 1993
Consolidated Balance Sheets as follows:
(In thousands) 3/31/94 12/31/93
Net current assets:
Current assets $ 2,377 $ 1,957
Current liabilities (620) (516)
$ 1,757 $ 1,441
Net property, plant
and equipment $ 3,331 $ 3,527
7. Net cash payments (refunds) for income taxes were
($2,169,000) and $21,000 for the three months ended March 31,
1994 and 1993, respectively. Interest payments were $131,000
and $124,000 for the three months ended March 31, 1994 and
1993, respectively.
Page 6
<PAGE>
<PAGE>
GLEASON CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition
The following are management's comments relating to significant
changes in the results of operations for the three month periods
ended March 31, 1994 and 1993 and in the Company's financial
condition during the three months ended March 31, 1994.
Results of Operations
The Company had net income for the first quarter ended March 31,
1994 of $65,000, or $.01 per share, compared to a net loss of
$641,000, or $.12 per share, for the 1993 first quarter.
Net sales were $23,699,000 for the quarter compared to
$24,784,000 in the 1993 first quarter. Machine sales decreased
slightly primarily due to lower shipments of remanufactured
equipment. Sales of remanufactured machines are expected to be
lower for the year due to the success of new machine products
recently introduced. The new machines are part of the Company's
Phoenix (Registered Trademark) line of equipment. The Phoenix
line, which includes bevel and parallel axis gear production
machines, accounted for approximately 80 percent of total 1994
first quarter machine sales. This compares to approximately
49 percent of machine sales in the first quarter of 1993.
The Company expects total machine sales in 1994 will exceed
those in the prior year based upon the success of its
new products and current growth in the U.S. automotive
market. The growth in machine sales is expected to occur
in the second half of the year based upon customers'
current capital spending plans.
Tooling sales for the quarter were also lower than in the 1993
first quarter due to decreased shipments of bevel cutting tools.
Sales of bevel cutting tools, while below 1993 first quarter
levels, exceeded quarterly shipment levels during the second half
of 1993.
Backlog at March 31, 1994 increased to $29.8 million from $26.2
million at December 31, 1993. Backlog at March 31, 1993 was
$39.6 million. Order levels continued to be affected by slow
economic growth in key overseas markets, primarily Japan and
Western Europe.
Cost of products sold as a percentage of sales were 75.1 percent
and 71.8 percent for the three months ended March 31, 1994 and
1993, respectively. The cost of sales percentage for the quarter
was higher than the 1993 first quarter, but was lower than the
76.7 percent of sales for the 1993 full year. The higher cost of
sales percentage compared to the 1993 first quarter was primarily
(continued)
Page 7
<PAGE>
<PAGE>
due to lower average selling prices for certain machine products
due to increased pricing pressure from foreign competitors.
Selling, general and administrative expenses were $4,961,000, or
20.9 percent of sales, and $6,044,000, or 24.4 percent of sales,
for the quarters ended March 31, 1994 and 1993, respectively.
These expenses decreased compared to 1993 primarily due to lower
overhead spending as a result of cost reduction initiatives,
including staff reductions which occurred in 1993.
Research and development expenses were $1,072,000 for the quarter
compared to $1,635,000 for the 1993 quarter. Spending was higher
in the prior year due to prototype development costs on several
new products introduced last year.
Other income was higher for the quarter due to lower foreign
exchange losses and higher commission income.
The Company recognized deferred tax benefits on its first quarter
domestic operating losses. Management believes that it is more
likely than not that future income will be sufficient to fully
realize these benefits. The Company had a net domestic deferred
tax asset of approximately $2.7 million at March 31, 1994.
Liquidity and Capital Resources
Cash and equivalents increased $1,353,000 in the first quarter to
$5,508,000 at March 31, 1994. Borrowings under the Company's
revolving credit agreements decreased to $6,377,000 at March 31,
1994 from $14,122,000 at December 31, 1993. Unused short and
long-term credit lines with banks, including revolving credit
facilities, totaled $23.7 million at March 31, 1994. Dividend
payments to stockholders were $516,000 in the first quarter of
1994.
Net cash provided by operating activities was $7,937,000 compared
to net cash used in operating activities of $574,000 in the 1993
first quarter. The improvement was primarily attributable to
higher operating income, higher income tax refunds, larger net
reductions in working capital and lower payments for severance
programs. Payments associated with severance programs totaled
$.5 million in the first quarter of 1994 compared to $3.3 million
in the 1993 period.
Investing activities provided net cash of $824,000 in the 1994
first quarter compared to $3,177,000 of net cash used in the
comparable prior year period. Proceeds from collections of notes
(continued)
Page 8
<PAGE>
<PAGE>
receivable associated with the sale of discontinued operations
totaled $1,156,000 ($154,000 in 1993). Capital expenditures
totaled $401,000 in first quarter of 1994 compared to $3,345,000
in 1993. The Company expects full year capital spending levels
will be similar to those in 1993.
The Company's cash balances, presently available lines of credit
and anticipated funds from operations should be sufficient to
meet its near-term operating and investing activities.
Management believes it will be able to obtain additional long-
term financing if such financing is required.
Phoenix is a registered trademark of The Gleason Works.
Page 9
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Corporation's Annual Meeting of Stockholders was
held on May 3, 1994. Matters voted on at the meeting
were as follows:
For Withheld
(1) Election of directors
for three year terms:
J. David Cartwright 4,605,469 21,591
James S. Gleason 4,604,986 22,074
For Against Abstain
(2) Appointment of
Ernst & Young as
Independent auditors
for 1994. 4,612,964 7,922 6,174
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
None.
Page 10
<PAGE>
<PAGE>
SIGNATURES
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.
GLEASON CORPORATION
Registrant
DATE: May 6, 1994 John J. Perrotti
John J. Perrotti
Vice President - Controller
(Principal Financial Officer)
Page 11
<PAGE>
