<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(XX) Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period ended November 30, 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 1-8831
FEDDERS CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 22-2572390
(State of incorporation) (I.R.S. Employer Identification No.)
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<S> <C>
505 Martinsville Road, Liberty Corner, New Jersey 07938-0813
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: 908/604-8686
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 registrant has outstanding 19,048,282 shares of Common Stock
10,629,379 shares of Class A Stock (which is immediately
convertible into Common Stock on a share-for-share basis upon
conversion of all of the Class B Stock) and 2,267,906 shares of
Class B Stock (which is immediately convertible into Common Stock
on a share-for-share basis) as of December 31, 1994.
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FEDDERS CORPORATION
INDEX
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<CAPTION>
Page
Number
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4-5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
Part II OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE
11
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PART I FINANCIAL INFORMATION
FEDDERS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
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<CAPTION> Three months ended
November 30,
1994 1993
________________________
<S> <C> <C>
Net sales $20,125 $10,527
Cost and expenses:
Cost of sales 15,819 8,453
Selling, general and
administrative expense 5,603 5,198
________________________
21,422 13,651
________________________
Operating loss (1,297) (3,124)
Net interest expense (143) (887)
________________________
Loss before income taxes (1,440) (4,011)
Federal, state and foreign
income tax benefit (223) (120)
________________________
Loss before cumulative effect of
an accounting change $(1,217) $(3,891)
Cumulative effect of an
accounting change - 1,780
________________________
Net loss $(1,217) $(2,111)
========================
Earnings per share:
Loss before cumulative effect of
an accounting change $ (0.04) $ (0.13)
Cumulative effect of an
accounting change - 0.06
________________________
Net loss per share $ (0.04) $ (0.07)
========================
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See accompanying notes
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FEDDERS CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
(unaudited)
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<CAPTION>
November 30, August 31, November 30,
1994 1994 1993
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<S> <C> <C> <C>
ASSETS:
Current assets:
Cash $ 4,270 $ 34,869 -
Accounts receivable
(less allowance of
$779, $774 and $905
at November 30,1994,
August 31, 1994 and
November 30, 1993,
respectively 19,347 12,840 $ 5,646
Inventories:
Finished goods 35,308 9,596 26,787
Work in process 2,868 1,242 2,027
Raw materials and
supplies 16,600 7,210 7,805
________________________________________
54,776 18,048 36,619
Prepaid expenses 592 674 783
________________________________________
Total current assets 78,985 66,431 43,048
Property, plant and
equipment at cost:
Land and improvements 1,360 1,363 1,385
Buildings 12,323 12,005 11,857
Machinery and equipment 47,281 47,146 46,480
________________________________________
60,964 60,514 59,722
Less accumulated
depreciation 32,937 33,142 27,093
________________________________________
Net property, plant and
equipment 28,027 27,372 32,629
Other assets 6,764 6,850 7,942
________________________________________
$ 113,776 $ 100,653 $ 83,619
========================================
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See accompanying notes
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FEDDERS CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands, except share data)
(unaudited)
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<CAPTION> November 30, August 31, November 30,
1994 1994 1993
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<S> <C> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:
Short-term borrowing - - $ 10,544
Current portion of
long-term debt $ 623 $ 616 2,220
Accounts payable 21,583 5,315 8,147
Accrued expenses 20,123 22,127 12,517
____________________________________
Total current liabilities 42,329 28,058 33,428
Long-term debt 17,305 17,327 24,395
Deferred income taxes 1,175 1,175 -
Other long-term liabilities 4,858 4,776 3,058
Stockholders' equity:
Common Stock, $1 par value,
60,000,000 shares authorized,
19,642,409, 19,641,659 and
18,694,559 issued at November
30, 1994, August 31, 1994 and
November 30, 1993,
respectively 19,642 19,642 18,695
Class A Stock, $1 par value,
30,000,000 shares authorized,
10,626,079 shares issued and
outstanding at November 30,
1994 and 10,625,029 issued
on September 9, 1994 10,626 10,625 -
Class B Stock, $1 par value,
7,500,000 shares authorized,
2,267,906 issued at November
30, 1994, 2,268,206 issued at
August 31, 1994, and November
30, 1993, respectively 2,268 2,268 2,268
Additional paid-in capital 51,218 51,423 47,846
Retained earnings (deficit) (25,981) (24,764) (37,239)
Cumulative translation
adjustment (142) (169) 134
Notes due on Common Stock
purchases (556) (742) -
____________________________________
57,075 58,283 31,704
Less-treasury stock, at cost (8,966) (8,966) (8,966)
____________________________________
Total stockholders' equity 48,109 49,317 22,738
____________________________________
$113,776 $100,653 $ 83,619
====================================
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See accompanying notes
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FEDDERS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
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<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30,
1994 1993
__________________
<S> <C> <C>
Cash flows from operations:
Net loss $ (1,217) $ (2,111)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Depreciation and amortization 1,059 1,150
Changes in operating assets and liabilities:
Accounts receivable (6,507) 3,255
Inventories (36,728) (17,349)
Other current assets 82 4,016
Other assets (49) (114)
Accounts payable 16,268 2,973
Accrued expenses (2,217) (4,667)
Other long-term liabilities 82 (6,050)
Other 27 264
_______________________
Net cash used in operations (29,200) (18,633)
_______________________
Cash flows from investing activities:
Additions to property, plant and equipment
(excluding $951 of equipment acquired
under capital lease in fiscal 1994) (1,636) (735)
Disposals of property, plant and equipment 200 -
_______________________
Net cash used in investing activities (1,436) (735)
Cash flows from financing activities:
Increase in short-term borrowings - 10,544
Repayments of long-term debt (158) (85)
Proceeds from stock options exercised 195 356
_______________________
Net cash provided by financing activities 37 10,815
Net decrease in cash and cash equivalents (30,599) (8,553)
Cash and cash equivalents at
beginning of period 34,869 8,553
_______________________
Cash and cash equivalents at end of period $ 4,270 $ 0
=======================
Supplemental disclosure:
Interest paid $ (269) $ (806)
Net income taxes paid (refunded) (412) -
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See accompanying notes
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FEDDERS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A. In December 1994, the Company's revolving credit facility was
increased from $30 million to $40 million.
B. Earnings per share are computed by dividing net income by the
weighted average number of shares of Common, Class A and Class B Stock
and other common stock equivalents outstanding: 32,146,000 and
30,564,000 in the first quarter of 1995 and 1994. Prior-period
earnings per share have been restated to reflect the Class A Stock
dividend distributed in September 1994.
C. Pursuant to the Company's stock option plans, options to purchase
1,800 shares of stock were exercised during the first three months of
fiscal 1995.
D. The financial information included herein is unaudited; however,
such information reflects all adjustments which, other than the
cumulative effect of an accounting change, consists solely of normal
recurring adjustments which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
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Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
The following is management's discussion and analysis of certain
significant factors which affected the Company's financial position
and operating results during the periods included in the accompanying
consolidated financial statements.
Results of Operations
Operating Results as Percent of Sales
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<CAPTION> First Fiscal Quarter
1995 1994
<S> <C> <C>
Gross Profit 21.4% 19.7%
Selling, General and Admin. Expense 27.8 49.4
Operating Loss (6.4) (29.7)
Interest Expense .7 8.4
Pre-tax Loss (7.2) (38.1)
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Net sales of room air conditioners in the first quarter of fiscal 1995
of $20.1 million increased 91.4% from sales of $10.5 million in the
first quarter of 1994. The increase in off-season sales is primarily
attributable to increased volume to distributors. On an annual basis,
however, most of the Company's business is direct sales to major
retailers, so the first quarter increase is not indicative of the full
year, even though orders for fiscal 1995 are strong.
Gross profit margin as a percentage of net sales increased due
primarily to greater fixed-cost absorption from added production to
meet the increased orders in fiscal 1995.
Selling, general and administrative expense decreased as a percentage
of net sales from the prior year as a result of increased sales.
Net interest expense decreased 84% from the prior year quarter as a
result of the absence of short-term borrowing during the quarter,
lower long-term debt and increased interest income on cash invested.
The normal off-season loss in the first quarter was reduced by 64%
before income taxes.
The loss before the cumulative effect of an accounting change
decreased by 69% in the fiscal 1995 quarter.
In the first quarter of fiscal 1994, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes," which resulted in a one-time cumulative effect of
accounting change amounting to $1.8 million. The Company had a 3% tax
rate during fiscal 1994 reflecting utilization of tax loss
carryforwards resulting in a net tax benefit of $120,000 in the first
quarter of fiscal 1994. The effective tax rate increased to 15%
during the first quarter of fiscal 1995 as the Company expects to
utilize its tax loss carryforwards during the fiscal year. This
resulted in a net tax benefit of $223,000 during the first quarter of
fiscal 1995.
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Liquidity and Capital Resources
Working capital requirements of the Company are seasonal with cash
balances peaking in the fourth quarter and the greatest utilization of
its lines of credit occurring early in the calendar year. During the
first fiscal quarter, with sales seasonally low, the Company utilized
cash to produce finished goods at a higher rate than in the prior year
to meet increased orders in fiscal 1995.
Accounts receivable increased as a result of higher sales.
Inventories and accounts payable increased as a result of higher
production levels.
In December 1994, the Company increased its revolving credit facility
from $30 million to $40 million to provide additional seasonal working
capital, reduced the rate of interest on the facility to the prime
rate plus 2% and extended the facility through December 1997.
Management believes that the Company's earnings and borrowing capacity
are adequate to meet the needs of its operation and long-term credit
requirements, including capital expenditures and debt maturities.
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PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on December 20,
1994 to elect three (3) directors to serve for a term of three (3)
years and until their successors shall be elected and shall be
qualified, and ratify the appointment of Ernst & Young as the
Company's independent auditors for the ensuing fiscal year. Messrs.
Joseph Giordano and Clarence Russel Moll were elected directors at the
Annual Meeting. Mr. Anthony E. Puleo was also elected to the board,
bringing the number of board members to eight. At the Annual Meeting,
Messrs. William J. Brennan, Salvatore Giordano, Sal Giordano, Jr.,
Howard S. Modlin, S. A. Muscarnera continued to serve as directors of
the Company. On all matters considered at the Annual Meeting, the
vote required was a majority of the shares of Common Stock and Class B
Stock, voting in person or by proxy together as a single class. The
final results of the voting are as follows:
1. Joseph Giordano nominee for Director was elected by a vote of
15,222,980.
2. Clarence Russel Moll nominee for Director was elected by a vote of
15,199,395.
3. Anthony E. Puleo nominee for Director was elected by a vote of
15,223,983.
4. Ratification of Ernst & Young as independent auditors was by a
vote of 15,522,792.
The proxies tabulated represented 18,044,931 shares of Common and
Class B Stock or 85% of the total outstanding Common and Class B
shares. Class A shares are not eligible to vote.
Item 6. Exhibits and Reports on Form 8-K
(b)Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
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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.
FEDDERS CORPORATION
By /s/Robert L. Laurent, Jr.
Robert L. Laurent, Jr.
Executive Vice President,
Finance & Administration
Date: January 12, 1995 Signing both in his capacity as
Executive Vice President on
behalf of the Registrant and as
Chief Financial Officer of the
Registrant
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<ARTICLE> 5
<CIK> 0000744106
<NAME> FEDDERS CORP.
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> QTR-1 12-MOS QTR-1
<FISCAL-YEAR-END> AUG-31-1995 AUG-31-1994 AUG-31-1994
<PERIOD-END> NOV-30-1994 AUG-31-1994 NOV-30-1993
<CASH> 4,270 34,869 0
<SECURITIES> 0 0 0
<RECEIVABLES> 20,126 13,164 6,551
<ALLOWANCES> (779) (774) (905)
<INVENTORY> 54,776 18,048 36,619
<CURRENT-ASSETS> 78,985 66,431 43,048
<PP&E> 60,964 60,514 59,722
<DEPRECIATION> (32,937) (33,142) (27,093)
<TOTAL-ASSETS> 113,776 100,653 83,619
<CURRENT-LIABILITIES> 42,329 28,058 33,428
<BONDS> 17,305 17,327 20,963
<COMMON> 32,536 32,535 20,963
0 0 0
0 0 0
<OTHER-SE> 15,573 16,782 1,775
<TOTAL-LIABILITY-AND-EQUITY> 113,776 100,653 83,619
<SALES> 20,125 0 10,527
<TOTAL-REVENUES> 20,125 0 10,527
<CGS> 15,189 0 8,453
<TOTAL-COSTS> 15,189 0 8,453
<OTHER-EXPENSES> 5,603 0 5,198
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 143 0 887
<INCOME-PRETAX> (1,440) 0 (4,011)
<INCOME-TAX> (223) 0 (120)
<INCOME-CONTINUING> (1,217) 0 (3,891)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 1,780
<NET-INCOME> (1,217) 0 (2,111)
<EPS-PRIMARY> (.04) 0 (.07)
<EPS-DILUTED> 0 0 0
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