UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
__________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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, 1997 was 9,959,740
shares.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
(Dollars in thousands)
MARCH 31 DECEMBER 31
Assets 1997 1996
<S> <C> <C>
Current assets
Cash and equivalents $ 5,394 $ 7,199
Trade accounts receivable 67,802 65,583
Inventories 30,035 27,986
Deferred income taxes 6,894 6,894
Other current assets 3,869 4,038
Total current assets 113,994 111,700
Property, plant and equipment, at cost 167,568 170,084
Less accumulated depreciation 109,215 108,693
58,353 61,391
Deferred income taxes 10,013 10,013
Other assets 7,505 7,570
Total assets $ 189,865 $ 190,674
Liabilities and Stockholders' Equity
Current liabilities
Short-term borrowings $ 622 $ 329
Current portion of long-term debt 5 6
Trade accounts payable 16,942 16,972
Income taxes 10,991 10,224
Other current liabilities 26,461 30,335
Total current liabilities 55,021 57,866
Long-term debt 3,988 4,506
Pension plans and other retiree benefits 37,867 38,220
Other liabilities 5,519 5,218
Total liabilities 102,395 105,810
Stockholders' equity
Common stock 11,594 11,594
Additional paid-in capital 5,657 5,731
Retained earnings 90,759 86,187
Cumulative foreign currency
translation adjustment (3,532) (2,149)
Minimum pension liability adjustment (461) (461)
104,017 100,902
Less treasury stock, at cost 16,547 16,038
Total stockholders' equity 87,470 84,864
Total liabilities and stockholders' equity $ 189,865 $ 190,674
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(Dollars in thousands,except
per share amounts)
THREE MONTHS ENDED
MARCH 31
1997 1996
<S> <C> <C>
Net sales $ 60,335 $ 59,510
Costs and expenses
Cost of products sold 41,016 40,371
Selling, general and
administrative expenses 9,863 10,200
Research and development expenses 1,974 1,788
Interest (income) expense--net (1) 341
Other (income)--net (540) (328)
Income before income taxes 8,023 7,138
Provision for income taxes 2,829 2,538
Net income $ 5,194 $ 4,600
Primary earnings per common share $ 0.50 $ 0.43
Fully diluted earnings per common share $ 0.50 $ 0.43
Weighted average number of common shares outstanding:
Primary 10,305,852 10,710,940
Fully diluted 10,305,852 10,755,260
Cash dividends declared per common share $ .0625 $ .0625
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
(Dollars in thousands)
THREE MONTHS ENDED
MARCH 31
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,194 $ 4,600
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 2,901 2,831
(Gain) on disposals of property, plant
and equipment (428) (5)
Provision for deferred income taxes 29 605
Changes in operating assets and liabilities:
(Increase) in accounts receivable (3,352) (2,966)
(Increase) in inventories (2,858) (5,557)
(Increase) in other current assets (9) (356)
Increase (decrease) in trade accounts payable 208 (699)
(Decrease) in all other current operating
liabilities (1,463) (233)
Other, net 228 941
Net cash provided by (used in) operating activities 450 (839)
Cash flows from investing activities:
Capital expenditures (2,127) (1,518)
Proceeds from asset disposals 1,520 10
Proceeds from collection of notes receivable 18 54
Net cash (used in) investing activities (589) (1,454)
Cash flows from financing activities:
Proceeds from short-term borrowings 310 182
Net (repayments) under revolving
credit agreements (550) (5,381)
Proceeds from long-term debt 34 22
(Repayment) of long-term debt (3) (3)
Purchase of treasury stock (609) --
Net stock issues 26 23
Dividends paid (622) (648)
Net cash (used in) financing activities (1,414) (5,805)
Effect of exchange rate changes on cash
and equivalents (252) (87)
(Decrease) in cash and equivalents (1,805) (8,185)
Cash and equivalents, beginning 7,199 9,926
Cash and equivalents, ending $ 5,394 $ 1,741
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(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, 1997 and 1996
(b) the financial position at March 31, 1997 and December
31, 1996, and (c) the cash flows for the three-month periods
ended March 31, 1997 and 1996, of Gleason Corporation and
subsidiaries.
2. The results of operations for the three-month period ended
March 31, 1997 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) 3/31/97 12/31/96
Raw materials and
purchased parts $ 5,582 $ 5,269
Work in process 20,719 18,063
Finished goods 3,734 4,654
$ 30,035 $ 27,986
5. Net cash payments for income taxes were $788,000 and
$288,000 for the three months ended March 31, 1997 and 1996,
respectively. Interest payments were $24,000 and $154,000
for the three months ended March 31, 1997 and 1996,
respectively.
6. In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share, which is
effective for both interim and annual financial statements
for periods ending after December 15, 1997. At that time,
the Company will be required to change the method currently
being used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating
primary earnings per share, the dilutive effect of stock
options will be excluded. The impact of this accounting
pronouncement would have resulted in an increase in primary
earnings per share of $.02 and $.01 for the three-month periods
ended March 31, 1997 and March 31, 1996 respectively. There
would have been no impact on fully diluted earnings per share
for these periods under Statement 128.
7. Subsequent Event: On August 28, 1997, the Board of Directors
declared a two-for-one (2-for-1) stock split on the Company's
common stock, including shares held in its treasury, effected
in the form of a 100% common stock distribution payable on
September 26, 1997 to holders of record on September 12, 1997.
The distribution on September 26, 1997 increased the number of
shares issued from 5,797,070 to 11,594,140, which includes an
increase in treasury stock from 820,614 to 1,641,228. Common
stock and additional paid-in capital as of March 31, 1997 and
December 31, 1996 have been restated to reflect this split.
In addition, all share and per share data have been restated
to reflect the split.
<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, 1997 and 1996 and in the Company's financial
condition during the three months ended March 31, 1997.
Results of Operations
The Company had net income for the first quarter ended March 31,
1997 of $5.2 million, or $.50 per share, compared to $4.6
million, or $.43 per share, for the 1996 first quarter.
Operating earnings before interest and taxes for the first
quarter were $8.0 million, or $.78 per share, compared to $7.5
million, or $.70 per share, in the 1996 first quarter.
New orders totaled $55.4 million for the first quarter compared
to $55.1 million in the 1996 first quarter. Order levels for
both bevel and cylindrical gear equipment products were
relatively flat compared to the prior year. Order volumes for
cylindrical gear products, other than those produced by the
Company's Gleason-Hurth subsidiary ("Hurth"), were about $5
million higher than in the 1996 first quarter; however this was
offset by lower incoming orders for cylindrical gear products
produced by Hurth. Order levels at Hurth stated in U.S. dollars
compared to the 1996 first quarter were negatively impacted by a
foreign exchange translation effect of approximately $3.9 million
due to the stronger dollar versus the German mark. In April of
the current year, Hurth received a large order totaling
approximately $14.2 million from a European customer. This
order, which was not included in the first quarter order totals,
has deliveries scheduled for late 1997, 1998 and early 1999.
With this large order, the incoming order rate for cylindrical
gear products is well ahead of last year, and the Company expects
orders for these products to be higher in 1997 than in 1996.
Consolidated backlog was $117.9 million at March 31,1997 compared
to $122.8 million at December 31,1996 and $120.1 million at March
31,1996. Forward looking statements related to the level and
timing of incoming orders is subject to a number of risk factors
which could cause actual results to differ materially from those
expected. These risk factors include, but are not limited to,
actions taken by competitors, the stability of customers' capital
spending plans and changes in general economic conditions in the
world markets the Company serves.
Net sales were $60.3 million for the first quarter, compared to
$59.5 million in the 1996 first quarter. Machine product sales
approximately equaled the 1996 first quarter levels with higher
shipments of new bevel gear production machines offset by lower
sales of remanufactured machine products and cylindrical gear
production machines, primarily at Hurth. First quarter shipments
were approximately $1.9 million lower due to the weaker German
mark to U.S. dollar translation rates for the 1997 first quarter
compared to the first quarter of 1996.
<PAGE>
Sales of tooling products were down approximately 4 percent
compared to the first quarter of 1996 due to lower shipments of
workholding equipment. Bevel cutting tool sales were flat year
over year. Other products sales, including spare parts, service
and software, were higher than in the 1996 first quarter.
Cost of products sold as a percentage of sales was 68.0 percent
for the three-month period ended March 31, 1997 compared to 67.8
percent for the comparable 1996 period. Margins are heavily
impacted by the mix of products sold. For example, machines, in
general, tend to carry higher cost of sales percentages than
tooling or other products. Margins for all major product
categories were approximately the same as last year. There were
no major shifts in product mix which materially affected margins.
Selling, general and administrative expenses were $9.9 million,
or 16.3 percent of sales, for the first quarter of 1997 compared
to $10.2 million, or 17.1 percent of sales, in the 1996 first
quarter. This decrease was attributable to lower commissions
paid to outside dealers. Commissions were higher in the 1996
first quarter with higher shipments to Brazil, where the Company
is represented by an independent machine dealer.
Research and development expenses were $2.0 million in the first
quarter of 1997, an increase of 10 percent compared to the 1996
period. Development spending in 1997 exceeded 1996 levels
because of increased spending for new product development
programs for both bevel and cylindrical gear products and
manufacturing technology initiatives for the Company's tooling
operations.
Other income totaled $0.5 million in the first quarter compared to
$0.3 million in the prior year's first quarter. Other income
in the current quarter included a $0.4 million gain on the sale
of property associated with one of the Company's former Components
Group businesses. The property had been leased to the purchaser
of that operation since its sale in 1992.
The Company recorded a tax provision of $2.8 million, or an
effective tax rate of 35.3 percent, in the first quarter of 1997,
compared to $2.5 million, or an effective tax rate of 35.6
percent, for the prior year quarter. The effective tax rates for
both the 1997 and 1996 periods approximated the U.S. statutory
rate. The impact of the higher statutory rates on foreign
earnings (primarily in Germany) was offset by the utilization of
certain foreign tax credits and foreign operating loss
carryforwards in 1997 and 1996.
<PAGE>
Liquidity and Capital Resources
Borrowings under the Company's revolving credit facilities
decreased to $3.4 million at March 31, 1997 from $3.9 million at
December 31, 1996. Cash and cash equivalents decreased $1.8
million in the first three months of 1997 to $5.4 million.
Available unused short and long-term credit lines with banks,
including revolving credit facilities, totaled $36.9 million at
March 31, 1997. Dividend payments to stockholders totaled $0.6
million in the first quarter.
Operating activities in the first quarter provided cash of $0.5
million compared to net cash used in operating activities of $0.8
million in the comparable 1996 period. Cash provided by
operations was higher in the 1997 first quarter due to smaller
increases in working capital, primarily inventories.
Investing activities used $0.6 million of cash in the 1997 first
quarter versus $1.5 million in the comparable prior year period.
Capital expenditures totaled $2.1 million compared to $1.5
million in the 1996 first quarter. Capital expenditures for the
1997 full year are planned to increase from last year's level of
$10.3 million, with the majority of the spending planned for
further investments to upgrade existing production capabilities.
Cash flows from investing activities in the 1997 first quarter
also included $1.5 million in cash from the sale of the property
of one of the former Components Group businesses.
During the first quarter of 1997, the Company used $0.6 million in
cash to repurchase shares of its common stock under a program
authorized by its Board of Directors in July of 1996. As of
March 31, 1997, the Company had used approximately $6.8 million
in cash to repurchase 444,600 shares under this program.
In the third quarter of 1996, the Company announced its
intention to acquire the operations of the Hermann Pfauter
Group ("Pfauter"). Pfauter is a leading manufacturer of cylindrical
gear production equipment headquartered in Ludwigsburg, Germany with
major operating locations in Germany, the United States and Italy.
While some points between the parties still have not been resolved and
regulatory approval for the acquisition has not yet been received
in Germany, the Company expects that they will be resolved and a
favorable decision rendered, and that the acquisition will be
consummated by the end of the second quarter.
The Company is in the process of restructuring its credit
facilities to finance the acquisition of Pfauter and its other
investment and working capital requirements. Management expects
these credit facilities to be in place at the time of closing of
the acquisition.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults 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 6, 1997. Matters voted at the meeting
were as follows:
For Withheld
(1) Election of directors for
three year terms:
David J. Burns 4,571,100 16,891
J. David Cartwright 4,571,816 16,175
James S. Gleason 4,571,647 16,344
For Against Abstain
(2) Approval of an amendment to the
Company's 1992 Stock Plan to 4,396,075 149,870 42,046
increase the automatic annual
grant of options to each director,
who is not an employee of the
Company or any subsidiary, from
1,000 to 3,000 shares.
For Against Abstain
(3) Appointment of Ernst & Young LLP
as Independent Auditors for 1997. 4,562,056 10,815 15,120
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3: No change
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
None
<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: October 1, 1997 By: John J. Perrotti
John J. Perrotti
Vice President - Finance
(Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FORM 10-Q FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CAPTION>
<CIK> 0000743239
<NAME> GLEASON CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 5394
<SECURITIES> 0
<RECEIVABLES> 67802
<ALLOWANCES> 0
<INVENTORY> 30035
<CURRENT-ASSETS> 113994
<PP&E> 167568
<DEPRECIATION> 109215
<TOTAL-ASSETS> 189865
<CURRENT-LIABILITIES> 55021
<BONDS> 0
0
0
<COMMON> 11594
<OTHER-SE> 75876
<TOTAL-LIABILITY-AND-EQUITY> 189865
<SALES> 60335
<TOTAL-REVENUES> 60335
<CGS> 41016
<TOTAL-COSTS> 41016
<OTHER-EXPENSES> 11297
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1)
<INCOME-PRETAX> 8023
<INCOME-TAX> 2829
<INCOME-CONTINUING> 5194
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5194
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
