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, 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 March 31, 1995 was 5,168,833
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 1995 1994
<S> <C> <C>
Current assets
Cash and equivalents $ 7,293 $ 3,173
Trade accounts receivable 32,698 42,363
Inventories 21,009 11,244
Refundable income taxes 629 607
Other current assets 5,758 3,304
Total current assets 67,387 60,691
Property, plant and equipment, at cost 147,418 145,722
Less accumulated depreciation 94,737 92,118
52,681 53,604
Other assets 6,610 6,191
Net assets of discontinued operations 1,492 1,530
Total assets $128,170 $122,016
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities
Short-term borrowings $ 2,501 $ 613
Current portion of long-term debt 2,230 70
Trade accounts payable 12,232 10,335
Income taxes 1,326 3,324
Other current liabilities 19,446 17,753
Total current liabilities 37,735 32,095
Long-term debt 502 2,600
Pension plans and other retiree benefits 42,518 42,543
Other liabilities 2,872 2,579
Total liabilities 83,627 79,817
Stockholders' equity
Common stock 5,796 5,796
Additional paid-in capital 11,874 11,909
Retained earnings 43,137 40,870
Cumulative foreign currency translation adjustment (916) (917)
Minimum pension liability adjustment (5,009) (5,009)
54,882 52,649
Less treasury stock, at cost 10,339 10,450
Total stockholders' equity 44,543 42,199
Total liabilities and stockholders' equity $128,170 $122,016
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(In thousands, except
per share amounts)
THREE MONTHS ENDED
MARCH 31
1995 1994
<S> <C> <C>
Net sales $ 31,901 $ 23,699
Costs and expenses
Cost of products sold 21,394 17,801
Selling, general and
administrative expenses 5,986 4,961
Research and development expenses 1,419 1,072
Interest(income)expense--net (53) 25
Other(income)--net (166) (230)
Income before income taxes 3,321 70
Provision for income taxes 408 5
Net income $ 2,913 $ 65
Weighted average number of common shares
outstanding 5,164,951 5,163,002
Net income per share $ .56 $ .01
Cash dividends declared per common share $ .125 $ .10
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
(In thousands)
THREE MONTHS ENDED
MARCH 31
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,913 $ 65
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 2,364 2,344
(Gain) on disposals of property, plant
and equipment (16) (34)
(Benefit) for deferred income taxes (317) (327)
Changes in operating assets and liabilities:
Decrease in accounts receivable 9,779 3,289
(Increase) in inventories (9,701) (1,175)
(Increase) decrease in other current assets (2,451) 1,925
Increase in trade accounts payable 1,852 1,554
(Decrease) in all other current
operating liabilities (401) (77)
Other, net 238 323
Discontinued operations (287) 50
Net cash provided by
operating activities 3,973 7,937
Cash flows from investing activities:
Capital expenditures (1,090) (401)
Proceeds from asset disposals 16 69
Proceeds from collection of notes receivable 46 1,156
Net cash (used in) provided by investing
activities (1,028) 824
Cash flows from financing activities:
Proceeds from short-term borrowings 1,796 883
Net (repayments) under
revolving credit agreements (200) (7,800)
Proceeds from long-term debt 39 25
(Repayment) of long-term debt (17) (45)
Net stock issues 76 --
Dividends paid (646) (516)
Net cash provided by (used in)
financing activities 1,048 (7,453)
Effect of exchange rate changes on cash
and equivalents 127 45
Increase in cash and equivalents 4,120 1,353
Cash and equivalents, beginning 3,173 4,155
Cash and equivalents, ending $ 7,293 $ 5,508
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
GLEASON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 month periods ended March 31, 1995 and 1994, (b)
the financial position at March 31, 1995 and December 31,
1994, and (c) the cash flows for the three month periods
ended March 31, 1995 and 1994, of Gleason Corporation and
subsidiaries.
2. The results of operations for the three month period ended
March 31, 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. The components of inventories were as follows:
(In thousands) 3/31/95 12/31/94
Raw materials and
purchased parts $ 2,509 $ 1,405
Work in process 13,243 6,955
Finished goods 5,257 2,884
$21,009 $11,244
5. 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.
6. Net cash payments (refunds) for income taxes were $ 2,510,000
and ($2,169,000) for the three months ended March 31, 1995
and 1994, respectively. Interest payments were $28,000 and
$131,000 for the three months ended March 31, 1995 and 1994,
respectively.
<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, 1995 and 1994 and in the Company's financial
condition during the three months ended March 31, 1995.
Results of Operations
The Company had net income for the first quarter ended March 31,
1995 of $2,913,000, or $.56 per share, compared to $65,000, or
$.01 per share, for the 1994 first quarter. Higher sales and
improved margins were the primary reasons for the earnings
increase.
Orders received in the quarter totaled $47.8 million, a 75
percent increase over 1994 first quarter levels. Order levels
for all product lines showed improvement, with the largest
increase occurring in the Company's machine product lines. The
increase in machine orders is primarily due to the improved
business outlook for most vehicle producers worldwide and the
favorable acceptance of the Company's new machine products. The
U.S. market continued to be the Company's strongest geographic
sector, accounting for approximately 50 percent of the first
quarter orders for machines. Backlog as of March 31, 1995
increased to $70.6 million from $54.7 million at December 31,
1994. Backlog at March 31, 1994 was $29.8 million.
Net sales for the quarter were $31,901,000, or 35 percent higher
compared to the 1994 quarter. Total sales to each of the three
major geographic regions, the Americas, Europe/Africa, and
Asia/Pacific, increased compared to the 1994 first quarter.
Shipments of gear production machines were 38 percent higher,
with increases in both the bevel and parallel axis gear machine
product lines. Bevel gear machines accounted for approximately
70 percent of total machine sales for the quarter, versus 75 percent
in the 1994 quarter. Tooling sales increased 34 percent compared
to the 1994 first quarter primarily due to higher shipments of bevel
gear cutting tools. The Company expects that total sales in each of
the three remaining 1995 quarters should be higher than those of the
first quarter.
Cost of products sold as a percentage of sales were 67.1 percent
compared to 75.1 percent for the three months ended March 31,
1995 and 1994, respectively. The lower cost of sales percentage
is primarily due to improved gross margins on machine products.
Machine margins benefited from higher production volumes through
the Company's new factory and improved production efficiencies
for many of the Company's newer machine models. Tooling margins
also improved due to the operating leverage created by higher
production volumes. Margins in the remaining three quarters are
expected to be somewhat lower than the first quarter due to a
higher percentage of machines in the overall sales mix. Margins
on machines, in general, are lower than for tooling products.
(continued)
<PAGE>
<PAGE>
Selling, general and administrative (S,G&A) expenses were
$5,986,000, or 18.8 percent of sales, and $4,961,000, or 20.9
percent of sales, for the quarters ended March 31, 1995 and 1994,
respectively. Spending within the Company's worldwide sales and
service offices increased compared to the 1994 period due to the
establishment of direct sales representation in Europe and higher
business activity levels. The decrease as a percentage of sales
is attributable to the higher sales volumes. Commissions paid to
outside dealers, as a percentage of sales, were relatively
constant year over year.
Research and development expenses were $1,419,000, or 4.4 percent
of sales, for the quarter ended March 31, 1995 compared to
$1,072,000, or 4.5 percent of sales, for the 1994 quarter.
Development spending is planned to increase by over 10 percent in
1995 compared to 1994 levels with major projects including a
modernization program for the Company's tooling products and
operations and a new CNC gear testing machine.
In the 1995 first quarter, the Company recorded a tax provision
of $408,000 on pre-tax income of $3,321,000, or an effective tax
rate of 12.3 percent, compared to an effective rate of 7.1
percent in the 1994 comparable period. 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 $4.1 million at March 31,
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 March 31, 1995. As
future domestic income is generated, additional deferred tax
benefits can be recognized.
Liquidity and Capital Resources
Cash and cash equivalents increased $4,120,000 in the first three
months of 1995 to $7,293,000 at March 31, 1995. Unused credit
lines with banks, including revolving credit facilities, totaled
$27.7 million at March 31, 1995. Dividend payments to
stockholders totaled $646,000 in the three months ended March 31,
1995.
Net cash provided by operating activities was $3,973,000 in the
1995 first quarter compared to $7,937,000 in the comparable 1994
period. Operating cash flows were lower in 1995 due to higher
working capital requirements and income tax payments. The higher
working capital was attributable to higher inventory levels due to
significantly increased business volumes. Payments for income
taxes totaled $2,510,000 in the 1995 first quarter, versus net
income tax refunds of $2,169,000 in the 1994 period. Higher
operating earnings and reductions in trade accounts receivable
contributed favorably to the first quarter operating cash flows.
Cash collections on accounts receivable were higher in the first
quarter of 1995 compared to the 1994 period due to much higher
shipments in the 1994 fourth quarter compared to the prior year
fourth quarter.
(continued)
<PAGE>
<PAGE>
Investing activities used $1,028,000 of cash in the 1995 three
month period compared to cash provided by investing activities of
$824,000 in the comparable prior year period. Proceeds from
collections of notes receivable associated with the sales of
former businesses totaled $46,000 ($1,156,000 in 1994.) Capital
expenditures totaled $1,090,000 in the three months of 1995
compared to $401,000 in the first quarter 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.
Phoenix is a registered trademark of The Gleason Works.
<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 2, 1995. Matters voted at the meeting
were as follows:
For Withheld
(1) Election of directors for
three year terms:
Martin L. Anderson 4,391,018 8,297
John W. Guffy, Jr. 4,391,523 7,792
Robert A. Sherman 4,389,574 9,741
For Against Abstain
(2) Appointment of Ernst & Young 4,391,678 3,388 4,249
LLP as Independent Auditors
for 1995.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
None.
<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 3, 1995
John J. Perrotti
John J. Perrotti
Vice President - Controller
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000743239
<NAME> GLEASON CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 7293
<SECURITIES> 0
<RECEIVABLES> 32698
<ALLOWANCES> 0
<INVENTORY> 21009
<CURRENT-ASSETS> 67387
<PP&E> 147418
<DEPRECIATION> 94737
<TOTAL-ASSETS> 128170
<CURRENT-LIABILITIES> 37735
<BONDS> 0
<COMMON> 5796
0
0
<OTHER-SE> 38747
<TOTAL-LIABILITY-AND-EQUITY> 128170
<SALES> 31901
<TOTAL-REVENUES> 31901
<CGS> 21394
<TOTAL-COSTS> 21394
<OTHER-EXPENSES> 7239
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (53)
<INCOME-PRETAX> 3321
<INCOME-TAX> 408
<INCOME-CONTINUING> 2913
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2913
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
