UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
__________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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 June 30, 1995 was 5,169,128
shares.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
(In thousands)
JUNE 30 DECEMBER 31
1995 1994
Assets
<S> <C> <C>
Current assets
Cash and equivalents $ 2,448 $ 3,173
Trade accounts receivable 36,854 42,363
Inventories 22,864 11,244
Refundable income taxes 622 607
Other current assets 7,071 3,304
Total current assets 69,859 60,691
Property, plant and equipment, at cost 147,916 145,722
Less accumulated depreciation 96,617 92,118
51,299 53,604
Other assets 7,018 6,191
Net assets of discontinued operations 1,455 1,530
Total assets $ 129,631 $ 122,016
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<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities
Short-term borrowings $ 2,375 $ 613
Current portion of long-term debt 40 70
Trade accounts payable 10,793 10,335
Income taxes 1,230 3,324
Other current liabilities 17,831 17,753
Total current liabilities 32,269 32,095
Long-term debt 4,137 2,600
Pension plans and other retiree benefits 42,493 42,543
Other liabilities 3,284 2,579
Total liabilities 82,183 79,817
Stockholders' equity
Common stock 5,796 5,796
Additional paid-in capital 11,869 11,909
Retained earnings 46,134 40,870
Cumulative foreign currency translation adjustment (1,008) (917)
Minimum pension liability adjustment (5,009) (5,009)
57,782 52,649
Less treasury stock, at cost 10,334 10,450
Total stockholders' equity 47,448 42,199
Total liabilities and stockholders' equity $ 129,631 $ 122,016
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands,except
per share amounts)
THREE MONTHS ENDED
JUNE 30
1995 1994
<S> <C> <C>
Net sales $ 40,604 $ 27,608
Costs and expenses
Cost of products sold 28,429 20,222
Selling, general and
administrative expenses 6,935 5,571
Research and development expenses 1,279 1,217
Interest (income) --net (35) (35)
Other (income)--net (273) (225)
Income before income taxe 4,269 858
Provision for income taxes 626 255
Income from continuing operation 3,643 603
Gain on disposal of discontinued operations -- 1,440
Net income $ 3,643 $ 2,043
Weighted average number of common shares
outstanding 5,168,943 5,162,980
Income per common share:
Income from continuing operations $ .70 $ .12
Gain on disposal of discontinued operation -- .28
Net income $ .70 $ .40
Cash dividends declared per common share $ .125 $ .10
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except
per share amounts)
SIX MONTHS ENDED
JUNE 30
1995 1994
<S> <C> <C>
Net sales $ 72,505 $ 51,307
Costs and expenses
Cost of products sold 49,823 38,023
Selling, general and
administrative expenses 12,921 10,532
Research and development expenses 2,698 2,289
Interest (income) --net (88) (10)
Other (income)--net (439) (455)
Income before income taxes 7,590 928
Provision for income taxes 1,034 260
Income from continuing operations 6,556 668
Gain on disposal of discontinued operations -- 1,440
Net income $ 6,556 $ 2,108
Weighted average number of common shares
outstanding 5,166,958 5,162,991
Income per common share:
Income from continuing operations $ 1.27 $ .13
Gain on disposal of discontinued operations -- .28
Net income $ 1.27 $ .41
Cash dividends declared per common share $ .25 $ .20
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
(In thousands)
SIX MONTHS ENDED
JUNE 30
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,556 $ 2,108
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 4,716 4,719
(Gain) on disposals of property, plant
and equipment (24) (83)
(Benefit) for deferred income taxes (669) (264)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 5,591 (3,514)
(Increase) in inventories (11,167) (3,410)
(Increase) decrease in other current assets (3,829) 2,133
Increase in trade accounts payable 842 2,807
Increase (decrease) in all other current
operating liabilities (1,932) 830
Other, net 616 770
(Gain) on disposal of discontinued operations -- (1,840)
Discontinued operations (446) 1,123
Net cash provided by operating activities 254 5,379
Cash flows from investing activities:
Capital expenditures (2,904) (1,117)
Proceeds from asset disposals 34 670
Proceeds from collection of notes receivable 97 3,190
Net cash provided by (used in) investing
activities (2,773) 2,743
Cash flows from financing activities:
Proceeds from short-term borrowings 1,731 1,407
Net proceeds (repayments) under
revolving credit agreements 1,200 (6,500)
Proceeds from long-term debt 101 60
(Repayment) of long-term debt (33) (89)
Net stock issues 76 --
Dividends paid (1,292) (1,033)
Net cash provided by (used in)
financing activities 1,783 (6,155)
Effect of exchange rate changes on cash
and equivalents 11 154
Increase (decrease) in cash and equivalents (725) 2,121
Cash and equivalents, beginning 3,173 4,155
Cash and equivalents, ending $ 2,448 $ 6,276
<FN>
See notes to consolidated financial statements.
</TABLE>
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GLEASON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(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 and six month periods ended June 30, 1995 and
1994, (b) the financial position at June 30, 1995 and
December 31, 1994, and (c) the cash flows for the six month
periods ended June 30, 1995 and 1994, of Gleason Corporation
and subsidiaries.
2. The results of operations for the three and six month
periods ended June 30, 1995 are not necessarily indicative
of the results to be expected for the full year.
3. All significant intercompany transactions are eliminated in
consolidation.
4. Effective July 1, 1995, the Company acquired certain assets
of Hurth Maschinen und Werkzeuge GmbH for approximately
$10.5 million in cash. The Company will account for the
acquisition under the purchase accounting method. The
impact of this transaction is not reflected in this report
on Form 10-Q.
5. The components of inventories were as follows:
(In thousands) 6/30/95 12/31/94
Raw materials and
purchased parts $ 2,734 $ 1,405
Work in process 13,583 6,955
Finished goods 6,547 2,884
$ 22,864 $ 11,244
6. The land and building of the Company's former Alliance Metal
Stamping and Fabricating division remains classified as net
assets of discontinued operations as the Company is
continuing to seek a buyer for this real estate.
7. Net cash payments (refunds) for income taxes were $3,113,000
and ($2,447,000) for the six months ended June 30, 1995 and
1994, respectively. Interest payments were $102,000 and
$269,000 for the six months ended June 30, 1995 and 1994,
respectively.
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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 and six month
periods ended June 30, 1995 and 1994 and in the Company's
financial condition during the six months ended June 30, 1995.
Results of Operations
The Company had income from continuing operations for the second
quarter ended June 30, 1995 of $3,643,000, or $.70 per share,
compared to $603,000, or $.12 per share, for the 1994 second
quarter. Net income for the second quarter of 1994 of $2,043,000,
or $.40 per share, included an after-tax gain of $1,440,000, or
$.28 per share from discontinued operations.
For the six months ended June 30, 1995, the Company had income
from continuing operations of $6,556,000, or $1.27 per share,
compared to $668,000, or $.13 per share, in the 1994 first half.
Orders levels during the first six months of 1995 were $101.2
million, a 51 percent increase compared to the 1994 period.
Orders for machine and tooling product lines increased 77 percent
and 28 percent, respectively over the prior year. The increase
in machine orders is attributable to the improved business
outlook for most vehicle producers worldwide and the favorable
acceptance of the Company's new machine products. Order activity
from overseas markets improved significantly during the second
quarter of 1995 with over 70 percent of the backlog for machine
products at June 30, 1995 consisting of orders from foreign
customers. Backlog as of June 30, 1995 increased to $83.4
million from $54.7 million at December 31, 1994. Backlog at June
30, 1994 was $42.0 million.
Net sales were $40,604,000 and $72,505,000 for the three and six
month periods ended June 30, 1995, increases of 47 percent and 41
percent over the comparable 1994 periods. Higher shipment levels
to customers in North/South America accounted for approximately
66 percent of the year over year increase for the six month
period, with sales into the Asia/Pacific and Europe/Africa
regions also showing improvement. Shipments of gear production
machines were 60 percent higher during the six month period with
increases in both bevel and parallel axis gear machine product
lines. Sales of parallel axis gear production machines accounted
for 41 percent of 1995 first half machine sales.
Tooling sales increased 32 percent in the first half of 1995
compared to the first half of 1994 primarily due to the higher
shipments of bevel gear cutting tools. Sales of other products,
including spare parts, service, customer training, software and
application support, increased 12 percent in the six months
ended June 30, 1995 compared to the 1994 period.
Cost of products sold as a percentage of sales were 70.0 percent
and 68.7 percent for the three and six month periods ended June
30, 1995 compared to 73.2 percent and 74.1 percent for the
comparable 1994 periods. The lower cost of sales percentage is
primarily due to improved gross margins on machine products
partially offset by a higher percentage of machines in the sales
mix. Machine margins benefited from higher production volumes
through the Company's new factory and improved production
efficiencies for many of the new machine models introduced in
1993 and 1994 which are now in full production and being
manufactured at much lower costs than in the prior year. Tooling
margins also improved due to the operating leverage created by
higher production volumes. Margins in the remaining two quarters
are expected to be somewhat lower than the first half of 1995 due
to a higher percentage of machines in the overall sales mix.
Margins on machines, in general, are lower than for tooling
products.
(continued)
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Selling, general and administrative expenses were
$6,935,000, or 17.1 percent of sales, and $12,921,000, or 17.8
percent of sales, for the three and six month periods ended June
30, 1995. The comparable 1994 periods were $5,571,000, or 20.2
percent of sales, and $10,532,000, or 20.5 percent of sales. The
decrease as a percentage of sales is attributable to the higher
sales volumes. Spending within the Company's worldwide sales and
service offices increased compared to the 1994 period due to the
establishment of greater direct sales representation in Europe and higher
business activity levels. Commissions paid to outside dealers, as
a percentage of sales, were relatively constant year over year.
Research and development expenses were $1,279,000 and $2,698,000
for the three and six month periods ended June 30, 1995, compared
to $1,217,000 and $2,289,000 in the three and six month periods
ending June 30, 1994. 1995 full year development spending is
planned to increase compared to 1994 levels with major projects
including a modernization program for the Company's tooling
products and a new CNC gear testing machine.
In the first half of 1995 the Company recorded a tax provision
for continuing operations of $1,034,000, or an effective tax
rate of 13.6 percent. The comparable 1994 period had an
effective tax rate of 28.0 percent. The 1995 tax provision
consisted primarily of foreign and domestic state taxes. The
U.S. federal current income tax provision was offset by a
deferred tax benefit resulting in an increase to the domestic
deferred tax asset to approximately $4.5 million at June 30,
1995. Under the provisions of FAS No. 109, the Company has been
limited in the amount of the deferred tax asset it has been able
to record based on future income. Management has determined that
it is more likely than not future income will be sufficient to
fully realize the deferred asset recorded at June 30, 1995. As
future domestic income is generated, additional deferred tax
benefits can be recognized.
Liquidity and Capital Resources
Cash and cash equivalents decreased $725,000 in the first six
months of 1995 to $2,448,000 at June 30, 1995. Borrowings under
the Company's revolving credit agreements increased to $3,574,000
at June 30, 1995 from $2,135,000 at December 31, 1994. Unused
credit lines with banks, including revolving credit facilities,
totaled $25.9 million at June 30, 1995. The Company anticipates
borrowings under its available credit facilities to increase in
the second half of 1995 due to the purchase and working capital
requirements of Hurth Maschinen und Werkzeuge GmbH and planned
capital spending programs. Dividend payments to stockholders
totaled $1,292,000 in the six months ended June 30, 1995.
Net cash provided by operating activities was $254,000 in the
1995 first half compared to $5,379,000 in the comparable 1994
period. Operating cash flows were lower in 1995 due to higher
working capital requirements and net income tax payments. The
higher working capital was attributable to higher inventory
levels and deposits with vendors due to the increased business
volumes. Payments for income taxes totaled $3,113,000 in the 1995
first half versus net income tax refunds of $2,447,000 in the
1994 period. Higher earnings and reductions in trade accounts
receivable contributed favorably to operating cash flows.
Investing activities used $2,773,000 of cash in the 1995 six
month period versus cash provided by investing activities of
$2,743,000 in the comparable prior year period. Proceeds from
collections of notes receivable associated with the sales of
former businesses totaled $97,000 ($3,190,000 in 1994). Capital
expenditures totaled $2,904,000 in the six months of 1995
compared to $1,117,000 in the first half of 1994. The Company
expects full year capital spending levels in 1995 to
approximately equal its depreciation expense.
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.
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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
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed on June
30, 1995 for Item 2 related to the Company's
acquisition of certain assets of Hurth Maschinen und
Werkzeuge GmbH effective July 1, 1995.
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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: July 27, 1995
John J. Perrotti
John J. Perrotti
Vice President - Controller
(Principal Financial Officer)
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<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FORM 10-Q FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000743239
<NAME> GLEASON CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2448
<SECURITIES> 0
<RECEIVABLES> 36854
<ALLOWANCES> 0
<INVENTORY> 22864
<CURRENT-ASSETS> 69859
<PP&E> 147916
<DEPRECIATION> 96617
<TOTAL-ASSETS> 129631
<CURRENT-LIABILITIES> 32269
<BONDS> 0
<COMMON> 5796
0
0
<OTHER-SE> 41652
<TOTAL-LIABILITY-AND-EQUITY> 129631
<SALES> 72505
<TOTAL-REVENUES> 72505
<CGS> 49823
<TOTAL-COSTS> 49823
<OTHER-EXPENSES> 15180
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (88)
<INCOME-PRETAX> 7590
<INCOME-TAX> 1034
<INCOME-CONTINUING> 6556
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6556
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
</TABLE>
