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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, 1999 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)
Delaware 22-2572390
(State of incorporation) (I.R.S. Employer Identification No.)
505 Martinsville Road, Liberty Corner, NJ 07938 - 0813
(Address of principal executive offices) (Zip Code)
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 16,135,359 shares of Common Stock, 17,559,369 shares of Class A Stock (which is immediately convertible into Common Stock on a share-for-share basis upon conversion of all of Class B Stock) and 2,266,606 shares of Class B Stock (which is immediately convertible into Common Stock on a share-for-share basis) as of December 31, 1999.
FEDDERS CORPORATION
INDEX
|
Page Number |
||
|
______________________________________________________________________________ |
||
|
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 |
7-15 |
|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
16-17 |
|
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
17 |
|
Item 6. |
Exhibits and Reports on Form 8-K |
17-18 |
|
SIGNATURE |
19 |
|
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
FEDDERS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(amounts in thousands, except per share data)
(unaudited)
|
Three months ended November 30, |
||
|
1999 |
1998 |
|
|
________________________________ |
||
|
Net sales and other income |
$44,683 |
$25,702 |
|
Cost of sales |
31,425 |
19,110 |
|
Selling, general and administrative expense |
13,269 |
8,970 |
|
________________________________ |
||
|
44,694 |
28,080 |
|
|
Operating loss |
(11) |
(2,378) |
|
Partner's net interest in joint venture results |
(114) |
(99) |
|
Net interest expense |
(2,991) |
(2,027) |
|
________________________________ |
||
|
Loss before income taxes |
(3,116) |
(4,504) |
|
Federal, state and foreign income tax benefit |
(983) |
(1,569) |
|
________________________________ |
||
|
Net loss |
$ (2,133) |
$ (2,935) |
|
________________________________ |
||
|
Other comprehensive income (loss): |
||
|
Foreign currency translation, net of tax |
31 |
(98) |
|
Comprehensive income |
$ (2,102) |
$ (3,033) |
|
________________________________ |
||
|
Net loss per share |
$ (0.06) |
$ (0.08) |
|
Dividends per share declared: |
||
|
Common and Class A |
$ 0.0300 |
$ 0.0250 |
|
Class B |
$ 0.0270 |
$ 0.0225 |
|
============================= |
||
See accompanying notes
FEDDERS CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
|
November 30, 1999 |
August 31, 1999 |
November 30, 1998 |
|
|
________________________________________ |
|||
|
ASSETS: Current assets: |
|||
|
Cash |
$ 50,163 |
$117,509 |
$ 39,985 |
|
Accounts receivable (less allowance of $1,990, $1,373, and $2,055 at November 30, 1999, August 31, 1999 and November 30, 1998, respectively) |
20,122 |
21,028 |
15,186 |
|
Inventories: Finished goods |
65,615 |
29,328 |
43,637 |
|
Work in process |
6,406 |
3,298 |
5,120 |
|
Raw materials and supplies |
25,190 |
28,988 |
35,339 |
|
________________________________________ |
|||
|
97,211 |
61,614 |
84,096 |
|
|
Deferred income taxes |
10,168 |
10,161 |
5,902 |
|
Other current assets |
645 |
1,496 |
3,601 |
|
________________________________________ |
|||
|
Total current assets |
178,309 |
211,808 |
148,770 |
|
Property, plant and equipment at cost: |
|||
|
Land and improvements |
3,573 |
4,042 |
2,994 |
|
Buildings |
26,226 |
31,257 |
22,387 |
|
Machinery and equipment |
109,713 |
102,380 |
81,018 |
|
Machinery and equipment under capital lease |
5,442 |
6,657 |
8,647 |
|
________________________________________ |
|||
|
144,954 |
144,336 |
115,046 |
|
|
Less accumulated depreciation |
75,219 |
73,565 |
58,119 |
|
________________________________________ |
|||
|
69,735 |
70,771 |
56,927 |
|
|
Deferred income taxes |
6,387 |
7,676 |
8,838 |
|
Goodwill |
75,213 |
73,999 |
54,733 |
|
Other assets |
20,358 |
18,088 |
15,749 |
|
________________________________________ |
|||
|
$350,003 |
$382,342 |
$285,017 |
|
|
==================================== |
|||
See accompanying notes
FEDDERS CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except par value)
(unaudited)
|
|
November 30, 1999 |
August 31, 1999 |
November 30, 1998 |
|
________________________________________ |
|||
|
LIABILITIES & STOCKHOLDERS' EQUITY: Current liabilities: |
|||
|
Short-term notes |
$ 4,012 |
- |
- |
|
Current portion of long-term debt |
1,946 |
$ 4,598 |
$ 1,941 |
|
Accounts payable |
12,840 |
35,432 |
24,424 |
|
Income taxes payable |
9,968 |
13,049 |
12,387 |
|
Accrued expenses |
45,623 |
46,463 |
26,506 |
|
________________________________________ |
|||
|
Total current liabilities |
74,389 |
99,542 |
65,258 |
|
Long-term debt |
158,747 |
156,765 |
108,109 |
|
Other long-term liabilities |
8,340 |
13,240 |
10,947 |
|
Partner's net interest in joint venture results |
4,228 |
3,862 |
4,415 |
|
Stockholders' equity (all classes $1 par value): |
|||
|
Common Stock: 80,000 shares authorized, 16,350, 16,135 and 16,766 issued at November 30 ,1999, August 31, 1999 and November 30, 1998, respectively |
16,350 |
16,135 |
16,766 |
|
Class A Stock: 60,000 shares authorized, 19,543, 19,400 and 19,385 issued at November 30, 1999, August 31, 1999 and November 30, 1998, respectively |
19,543 |
19,400 |
19,385 |
|
Class B Stock: 7,500 shares authorized, 2,267 issued at November 30, 1999, August 31, 1999 and November 30, 1998, respectively |
2,267 |
2,267 |
2,267 |
|
Additional paid-in capital |
28,258 |
28,069 |
30,808 |
|
Retained earnings |
50,257 |
53,379 |
32,625 |
|
Cumulative translation adjustment |
(243) |
(288) |
(580) |
|
________________________________________ |
|||
|
117,857 |
118,962 |
101,271 |
|
|
Less: treasury stock, at cost, 2,220, 1,764 and 728 shares at November 30, 1999, August 31, 1999 and November 30, 1998, respectively |
(10,979) |
(8,802) |
(3,542) |
|
Deferred compensation |
(1,154) |
(1,227) |
(1,441) |
|
________________________________________ |
|||
|
Total stockholders' equity |
104,299 |
108,933 |
96,288 |
|
________________________________________ |
|||
|
$350,003 |
$382,342 |
$285,017 |
|
|
==================================== |
|||
See accompanying notes
FEDDERS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited)
|
|
Three Months Ended November 30, |
|
|
____________________________ |
||
|
1999 |
1998 |
|
|
____________________________ |
||
|
Cash flows from operations: Net loss |
$ (2,133) |
$ (2,935) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||
|
Depreciation and amortization |
3,163 |
2,390 |
|
Deferred income taxes |
1,284 |
2 |
|
Changes in operating assets and liabilities: Accounts receivable |
289 |
(666) |
|
Income tax receivables |
617 |
- |
|
Inventories |
(35,597) |
(31,835) |
|
Other current assets |
844 |
707 |
|
Other assets |
(176) |
107 |
|
Accounts payable |
(25,231) |
(1,345) |
|
Accrued expenses |
(840) |
(5,845) |
|
Income tax payable |
(3,081) |
(2,019) |
|
Other long-term liabilities |
(4,894) |
(716) |
|
Other |
117 |
(78) |
|
____________________________ |
||
|
Net cash used in operations |
(65,638) |
(42,233) |
|
____________________________ |
||
|
Cash flows from investing activities: |
||
|
Additions to property, plant and equipment |
(619) |
(2,573) |
|
Partner's net interest in joint venture results |
366 |
(222) |
|
____________________________ |
||
|
Net cash used in investing activities |
(253) |
(2,795) |
|
____________________________ |
||
|
Cash flows from financing activities: Proceeds of short-term borrowings |
1,602 |
- |
|
Repayments of long-term debt |
(354) |
(482) |
|
Proceeds from stock options exercised |
547 |
17 |
|
Repurchase of capital stock (buy-back plan) |
(2,177) |
(4,572) |
|
Cash dividends |
(1,073) |
(936) |
|
____________________________ |
||
|
Net cash used in financing activities |
(1,455) |
(5,973) |
|
____________________________ |
||
|
Net decrease in cash and cash equivalents |
(67,346) |
(51,001) |
|
Cash and cash equivalents at beginning of period |
117,509 |
90,986 |
|
____________________________ |
||
|
Cash and cash equivalents at end of period |
$50,163 |
$39,985 |
|
========================= |
||
|
Supplemental disclosure: |
||
|
Interest paid |
$325 |
$188 |
|
Net income taxes paid |
83 |
542 |
|
========================= |
||
See accompanying notes
FEDDERS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A. The financial information included herein is unaudited and prepared in accordance with the instructions for Form 10-Q; however, such information reflects all adjustments, which consist solely of normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of results for the interim periods. Reference should be made to the annual financial statements, including footnotes thereto, included in Fedders Corporation's (the "Company") Annual Report on Form 10-K for the fiscal year ended August 31, 1999. The Company's business is seasonal, and consequently, operating results for the three-month period ending November 30, 1999 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2000.
B. In August 1998, the Company announced that it had been authorized to repurchase up to $30 million of outstanding stock. Under this plan, in the first three months of fiscal 2000, the Company repurchased approximately 0.5 million shares of Class A Stock for $2.2 million or $4.77 per share. Total repurchases under this plan amounted to approximately 3.1 million shares of Common and Class A stock for $15.4 million or $5.04 per share.
C. In the first quarter of 2000 and 1999, net loss per share was computed using the weighted average number of shares of Common, Class A and Class B Stock outstanding, which amounted to approximately 36,029,000 and 37,689,000 shares, respectively. Stock options were not included in computing diluted earnings per share due to the net loss in both periods.
D. In January 1998, the Company announced a plan to restructure its operations, which resulted in the Company recording a one-time expense totaling $16.8 million in the second fiscal quarter of 1998. At November 30, 1999, the restructuring reserve balance was approximately $1.2 million and consisted principally of amounts for terminations of various equipment and facility leases.
In August 1999, the Company added to the 1998 restructuring of its operations to include a one-time net charge of $3.1 million. At November 30, 1999, the restructuring reserve balance was approximately $0.6 million and consisted principally of terminations of various equipment leases.
E. Supplemental Condensed Consolidating Financial Statements
Fedders North America, Inc. ("FNA") is a wholly-owned subsidiary of the Company. FNA and the Company are the Issuer and the Guarantor, respectively, of the Senior Subordinated Notes due 2007, of which $100 million were issued in August, 1997, and $50 million were issued in August, 1999. The Company's guarantee is full and unconditional. The following condensed consolidating financial statements present separate information for FNA and for the Company and its subsidiaries other than FNA, and should be read in connection with the consolidated financial statements of the Company.
Intercompany Transactions:
The historical condensed consolidating financial statements presented below include the following transactions between the Company and FNA:
to sales. Such charges to FNA amounted to approximately $3.6 million and $2.2 million for the three months ended November 30, 1999 and 1998, respectively.
2) FNA's interest expense reflects actual interest charges on the 9-3/8% Senior Subordinated Notes due 2007, a promissory note, an industrial revenue bond and capital lease obligations.
3) FNA's depreciation and amortization for the three months ended November 30, 1999 and 1998 amounted to approximately $1.2 million and $1.9 million, respectively. Capital expenditures of FNA amounted to $1.7 million and $2.3 million in each three-month period.
FEDDERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(amounts in thousands)
|
For the Three Months Ended November 30, 1999 |
|||
|
______________________________________ |
|||
|
Fedders North America |
Other Fedders |
Fedders Corporation |
|
|
______________________________________ |
|||
|
Net sales |
$36,624 |
$8,059 |
$44,683 |
|
Cost of sales |
24,188 |
7,237 |
31,425 |
|
Selling, general and administrative expense (1,3) |
9,951 |
3,319 |
13,269 |
|
______________________________________ |
|||
|
Operating income (loss) |
2,485 |
(2,497) |
(11) |
|
Partner's net interest in joint venture results |
- |
(114) |
(114) |
|
Net interest income (expense) (2) |
(3,795) |
805 |
(2,991) |
|
______________________________________ |
|||
|
Loss before income taxes |
(1,310) |
(1,806) |
(3,116) |
|
Income tax benefit |
(384) |
(599) |
(983) |
|
______________________________________ |
|||
|
Net loss |
$ (926) |
$(1,207) |
$(2,133) |
|
Other comprehensive income (loss): |
|||
|
Foreign currency translation, net of tax |
36 |
(5) |
31 |
|
______________________________________ |
|||
|
Comprehensive loss |
$ (890) |
$(1,212) |
$(2,102) |
|
================================== |
|||
See accompanying notes
FEDDERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(unaudited)
(amounts in thousands)
|
For the Three Months Ended November 30, 1998 |
|||
|
______________________________________ |
|||
|
Fedders North America |
Other Fedders |
Fedders Corporation |
|
|
______________________________________ |
|||
|
Net sales |
$18,178 |
$ 7,524 |
$25,702 |
|
Cost of sales |
13,039 |
6,071 |
19,110 |
|
Selling, general and administrative expense (1,3) |
3,500 |
5,470 |
8,970 |
|
______________________________________ |
|||
|
Operating income (loss) |
1,639 |
(4,017) |
(2,378) |
|
Partner's net interest in joint venture results |
- |
(99) |
(99) |
|
Net interest income (expense) (2) |
(2,590) |
563 |
(2,027) |
|
______________________________________ |
|||
|
Loss before income taxes |
(951) |
(3,553) |
(4,504) |
|
Income tax benefit |
(332) |
(1,237) |
(1,569) |
|
______________________________________ |
|||
|
Net loss |
$ (619) |
$(2,316) |
$(2,935) |
|
Other comprehensive income (loss): |
|||
|
Foreign currency translation, net of tax |
(114) |
13 |
(98) |
|
______________________________________ |
|||
|
Comprehensive loss |
$ (733) |
$(2,303) |
$(3,033) |
|
================================== |
|||
See accompanying notes
FEDDERS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEETS (unaudited) (amounts in thousands)
|
November 30, 1999 |
||||
|
________________________________________________ |
||||
|
Fedders North America |
Other Fedders |
Eliminating Entries |
Fedders Corporation |
|
|
________________________________________________ |
||||
|
Assets Current assets: |
||||
|
Cash |
$ 6,141 |
$44,022 |
- |
$ 50,163 |
|
Accounts receivable, net |
14,283 |
5,839 |
- |
20,122 |
|
Inventories |
82,768 |
14,443 |
- |
97,211 |
|
Other current assets |
8,196 |
2,617 |
- |
10,813 |
|
________________________________________________ |
||||
|
Total current assets |
$111,388 |
$66,921 |
- |
$178,309 |
|
Investment in subsidiaries |
- |
104,306 |
$(104,306) |
- |
|
Property, plant and equipment, net |
58,883 |
10,852 |
- |
69,735 |
|
Goodwill |
69,311 |
5,902 |
- |
75,213 |
|
Other long-term assets |
11,760 |
14,985 |
- |
26,745 |
|
________________________________________________ |
||||
|
$251,342 |
$202,966 |
$(104,306) |
$350,002 |
|
|
=========================================== |
||||
|
Liabilities and Stockholders' Equity Current liabilities: |
||||
|
Short-term notes |
- |
$ 4,012 |
- |
$ 4,012 |
|
Current portion of long-term debt |
$ 1,940 |
6 |
- |
1,946 |
|
Accounts and income tax payable |
22,590 |
218 |
- |
22,808 |
|
Accrued expenses |
45,163 |
460 |
- |
45,623 |
|
________________________________________________ |
||||
|
Total current liabilities |
$69,693 |
$ 4,696 |
- |
$74,389 |
|
Long-term debt |
156,096 |
2,651 |
- |
158,747 |
|
Other long-term liabilities |
2,069 |
10,500 |
- |
12,568 |
|
Stockholders' equity: Common, Class A and Class B Stock |
$ (4,528) |
$ 42,693 |
$ (5) |
$ 38,160 |
|
Paid-in capital |
21,320 |
181,581 |
(173,219) |
29,683 |
|
Retained earnings |
7,027 |
(25,688) |
68,918 |
50,257 |
|
Treasury stock |
- |
(12,404) |
- |
(12,404) |
|
Deferred compensation |
- |
(1,155) |
- |
(1,154) |
|
Cumulative translation adjustment |
(335) |
92 |
- |
(243) |
|
________________________________________________ |
||||
|
Total stockholders' equity |
23,484 |
185,119 |
(104,306) |
104,297 |
|
________________________________________________ |
||||
|
$251,342 |
$202,966 |
$(104,306) |
$350,002 |
|
|
=========================================== |
||||
See accompanying notes
FEDDERS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEETS (unaudited) (amounts in thousands)
|
August 31, 1999 |
||||
|
________________________________________________ |
||||
|
Fedders North America |
Other Fedders |
Eliminating Entries |
Fedders Corporation |
|
|
________________________________________________ |
||||
|
Assets Current assets: |
||||
|
Cash |
$ 76,092 |
$ 41,417 |
- |
$117,509 |
|
Accounts receivable, net |
13,655 |
7,373 |
- |
21,028 |
|
Inventories |
46,991 |
14,623 |
- |
61,614 |
|
Other current assets |
5,714 |
5,943 |
- |
11,657 |
|
________________________________________________ |
||||
|
Total current assets |
$142,452 |
$ 69,356 |
- |
$211,808 |
|
Investment in subsidiaries |
- |
104,306 |
$(104,306) |
- |
|
Property, plant and equipment, net |
60,226 |
10,545 |
- |
70,771 |
|
Goodwill |
67,228 |
6,771 |
- |
73,999 |
|
Other long-term assets |
9,835 |
15,929 |
- |
25,764 |
|
________________________________________________ |
||||
|
$279,741 |
$206,907 |
$(104,306) |
$382,342 |
|
|
=========================================== |
||||
|
Liabilities and Stockholders' Equity Current liabilities: |
||||
|
Current portion of long-term debt |
$ 2,188 |
$ 2,410 |
- |
$ 4,598 |
|
Accounts and income tax payable |
52,436 |
(3,995) |
- |
48,481 |
|
Accrued expenses |
40,960 |
5,503 |
- |
46,463 |
|
________________________________________________ |
||||
|
Total current liabilities |
$ 95,584 |
$ 3,958 |
- |
$ 99,542 |
|
Long-term debt |
154,114 |
2,651 |
- |
156,765 |
|
Other long-term liabilities |
2,301 |
14,801 |
- |
17,102 |
|
Stockholders' equity: Common, Class A and Class B Stock |
5 |
37,802 |
$ (5) |
37,802 |
|
Paid-in capital |
21,292 |
179,996 |
(173,219) |
28,069 |
|
Retained earnings (deficit) |
6,761 |
(22,300) |
68,918 |
53,379 |
|
Treasury stock |
- |
(8,802) |
- |
(8,802) |
|
Deferred compensation |
(1,227) |
(1,227) |
||
|
Cumulative translation adjustment |
(316) |
28 |
- |
(288) |
|
________________________________________________ |
||||
|
Total stockholders' equity |
27,742 |
185,497 |
(104,306) |
108,933 |
|
________________________________________________ |
||||
|
$279,741 |
$206,907 |
$(104,306) |
$382,342 |
|
|
=========================================== |
||||
See accompanying notes
FEDDERS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEETS (unaudited) (amounts in thousands)
|
November 30, 1998 |
||||
|
________________________________________________ |
||||
|
Fedders North America |
Other Fedders |
Eliminating Entries |
Fedders Corporation |
|
|
________________________________________________ |
||||
|
Assets Current assets: |
||||
|
Cash |
- |
$ 39,985 |
- |
$ 39,985 |
|
Accounts receivable, net |
$ 9,923 |
5,263 |
- |
15,186 |
|
Inventories |
70,137 |
13,959 |
- |
84,096 |
|
Other current assets |
6,481 |
3,022 |
- |
9,503 |
|
________________________________________________ |
||||
|
Total current assets |
$ 86,541 |
$ 62,229 |
- |
$148,770 |
|
Investment in subsidiaries |
- |
104,306 |
$(104,306) |
- |
|
Property, plant and equipment, net |
46,318 |
10,609 |
- |
56,927 |
|
Goodwill |
48,519 |
6,214 |
- |
54,733 |
|
Other long-term assets |
7,315 |
17,272 |
- |
24,587 |
|
________________________________________________ |
||||
|
$188,693 |
$200,630 |
$(104,306) |
$285,017 |
|
|
=========================================== |
||||
|
Liabilities and Stockholders' Equity Current liabilities: |
||||
|
Current portion of long-term debt |
$ 1,936 |
$ 5 |
- |
$ 1,941 |
|
Accounts and income tax payable |
37,482 |
(671) |
- |
36,811 |
|
Accrued expenses |
22,817 |
3,689 |
- |
26,506 |
|
________________________________________________ |
||||
|
Total current liabilities |
$62,235 |
$ 3,023 |
- |
$65,258 |
|
Net due to (from affiliate) |
(8,895) |
8,895 |
- |
- |
|
Long-term debt |
104,976 |
3,133 |
- |
108,109 |
|
Other long-term liabilities |
2,999 |
12,363 |
- |
15,362 |
|
Stockholders' equity: Common, Class A and Class B Stock |
5 |
38,418 |
(5) |
38,418 |
|
Paid-in capital |
21,292 |
182,735 |
$(173,219) |
30,808 |
|
Retained earnings (deficit) |
6,609 |
(42,902) |
68,918 |
32,625 |
|
Treasury stock |
- |
(3,542) |
- |
(3,542) |
|
Deferred compensation |
- |
(1,441) |
- |
(1,441) |
|
Cumulative translation adjustment |
(528) |
(52) |
- |
(580) |
|
________________________________________________ |
||||
|
Total stockholders' equity |
27,378 |
173,216 |
(104,306) |
96,288 |
|
________________________________________________ |
||||
|
$188,693 |
$200,630 |
$(104,306) |
$285,017 |
|
|
=========================================== |
||||
See accompanying notes
FEDDERS CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(unaudited)
(amounts in thousands)
|
For the Three Months Ended November 30, 1999 |
|||
|
______________________________________ |
|||
|
Fedders North America |
Other Fedders |
Fedders Corporation |
|
|
______________________________________ |
|||
|
Net cash used in operations |
$(66,561) |
$ 923 |
$(65,638) |
|
______________________________________ |
|||
|
Net additions to property, plant, and equipment |
(619) |
- |
(619) |
|
Partner's interest in joint venture |
- |
366 |
366 |
|
______________________________________ |
|||
|
Net cash used in investing activities |
(619) |
366 |
(253) |
|
______________________________________ |
|||
|
Net (repayments) proceeds of short and long-term borrowings |
(2,771) |
4,019 |
1,248 |
|
Cash dividends |
- |
(1,073) |
(1,073) |
|
Proceeds from stock options exercised |
- |
547 |
1,972 |
|
Repurchase of capital stock |
- |
(2,177) |
(3,602) |
|
______________________________________ |
|||
|
Net cash provided by (used in) financing activities |
(2,771) |
1,316 |
(1,455) |
|
______________________________________ |
|||
|
Net increase (decrease) in cash and cash equivalents |
(69,951) |
2,605 |
(67,346) |
|
Cash and cash equivalents at beginning of year |
76,092 |
41,417 |
117,509 |
|
______________________________________ |
|||
|
Cash and cash equivalents at end of period |
$ 6,141 |
$44,022 |
$ 50,163 |
|
================================== |
|||
See accompanying notes
FEDDERS CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(unaudited)
(amounts in thousands)
|
For the Three Months Ended November 30, 1998 |
|||
|
______________________________________ |
|||
|
Fedders North America |
Other Fedders |
Fedders Corporation |
|
|
______________________________________ |
|||
|
Net cash used in operations |
$ (35,246) |
$ (6,988) |
$(42,233) |
|
______________________________________ |
|||
|
Net additions to property, plant, and equipment |
(2,283) |
(512) |
(2,795) |
|
______________________________________ |
|||
|
Net (repayments) of short and long-term borrowings |
(482) |
- |
(482) |
|
Cash dividends |
- |
(936) |
(936) |
|
Proceeds from stock options exercised |
- |
17 |
17 |
|
Repurchase of capital stock |
- |
(4,572) |
(4,572) |
|
Change in net due to (from) affiliate |
38,010 |
(38,010) |
- |
|
______________________________________ |
|||
|
Net cash provided by (used in) financing activities |
$ 37,528 |
$(43,501) |
$ (5,973) |
|
______________________________________ |
|||
|
Decrease in cash and cash equivalents |
- |
(51,001) |
(51,001) |
|
Cash and cash equivalents at beginning of year |
- |
90,986 |
90,986 |
|
______________________________________ |
|||
|
Cash and cash equivalents at end of period |
- |
$ 39,985 |
$ 39,985 |
|
================================== |
|||
See accompanying notes
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 Net Sales |
|||
|
__________________________________________ |
|||
|
2000 |
1999 |
||
|
__________________________________________ |
|||
|
Gross profit |
29.7% |
25.6% |
|
|
Selling, general and administrative expense |
29.7% |
34.9% |
|
|
Operating loss |
- |
9.3% |
|
|
Net interest expense |
6.7% |
7.9% |
|
|
Pre-tax loss |
6.7% |
17.5% |
|
|
====================================== |
|||
Net sales in the traditionally low-volume first quarter of fiscal 2000 of $44.7 million increased approximately 74% from sales of $25.7 million in the first quarter of 1999. The substantial increase was due to added sales of counter-seasonal and non-seasonal indoor air quality products by Trion, Inc. acquired by the Company in August, 1999.
The gross profit margin increased in the first quarter of 2000 due primarily to changes in customer and product mix as well as the Trion, Inc. and Envirco sales.
Selling, general and administrative expenses were $13.3 million versus $9.0 million in the prior year.
These expenses decreased as a percentage of net sales from the prior year as a result of the sales increase.
Net interest expense increased in the first fiscal quarter due to the issuance of $50 million of 9 3/8% Senior Subordinated Notes due 2007 in August, 1999.
The net loss for the normally unprofitable off-season first quarter of fiscal 2000 was $2.1 million, or 6 cents per share, compared to a net loss in fiscal 1999 of $2.9 million, or 8 cents per share.
Liquidity and Capital Resources
Working capital requirements of the Company are seasonal, with cash balances peaking in the fourth fiscal quarter and the greatest utilization of its lines of credit occurring early in the calendar year. Cash on hand amounted to $50.2 million at November 30, 1999, compared to $40.0 million a year earlier.
Net cash used in operations for the three-months ended November 30, 1999 amounted to $65.6 million. During the first fiscal quarter, the Company utilized cash to produce compressors and finished goods. Inventories increased to $97.2 million at November 30, 1999 from $61.6 million at year-end, while increasing from $84.1 million a year earlier. Finished goods increased to $68.4 million from $29.3 million at year-end and $45.3 million in the prior year. Accounts receivable of $20.1 million decreased slightly from year-end of $21.0 million and increased versus the prior year amount of $15.2 million.
Net cash used in investing activities of $0.3 million consisted of capital expenditures of $0.6 million in the first three months of fiscal 2000 offset by minority interest.
Net cash used in financing activities amounted to $1.5 million, primarily due to $3.6 million of stock repurchases under a previously announced stock repurchase plan of up to $30 million, cash dividends of $1.1 million offset by proceeds from short-term borrowing and stock options exercised of $3.6 million. At November 30, 1999 the Company had $4.0 million of short-term borrowings, related to its Chinese joint venture, versus no short-term borrowings a year earlier.
The Company declared quarterly dividends of 3.0 cents and 2.5 cents on each share of outstanding Class A and Common Stock and 2.7 cents and 2.25 cents on each share of outstanding Class B Stock in the first quarter of fiscal 2000 and 1999, respectively.
At December 31, 1999 the Company had approximately 36 million shares of Common, Class A and Class B Stock outstanding at a weighted average closing price of $5.41.
Management believes that the Company's cash, earnings and borrowing capacity are adequate to meet the demands of its operations and its long-term credit requirements.
Year 2000:
The Company incurred $84 thousand in Year 2000 compliance costs in the fiscal quarter ended November 30, 1999. Fiscal year 1999 Year 2000 compliance costs were approximately $500 thousand. No additional Year 2000 compliance costs are anticipated. The Company did not experience any Year 2000 compliance problems and does not anticipate that Year 2000 information technology problems will have any impact on its future earnings or cash flow.
Forward-looking statements are covered under the "Safe-Harbor" clause of the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations and assumptions. Actual results could differ materially from those currently anticipated as a result of known and unknown risks and uncertainties including, but not limited to, weather and economic, political, market and industry conditions. Such factors are described in Fedders' SEC filings, including its most recently filed annual report on Form 10-K. The Company disclaims any obligation to update any forward-looking statements to incorporate subsequent events.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - 27 Financial Data Schedule (EDGAR filing only)
EX-27 - EXHIBIT 27 FINANCIAL DATA SCHEDULE
FEDDERS CORPORATION
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF
NOVEMBER 30, 1999 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE FISCAL PERIOD ENDED NOVEMBER 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
|
PERIOD-TYPE |
3-MOS |
|
FISCAL-YEAR-END |
AUG-31-2000 |
|
PERIOD START |
SEP-1-1999 |
|
PERIOD-END |
NOV-30-1999 |
|
CASH |
50,163 |
|
SECURITIES |
0 |
|
RECEIVABLES |
22,112 |
|
ALLOWANCES |
1,990 |
|
INVENTORY |
97,211 |
|
CURRENT-ASSETS |
178,309 |
|
PP&E |
144,954 |
|
DEPRECIATION |
75,219 |
|
TOTAL-ASSETS |
350,003 |
|
CURRENT-LIABILITIES |
74,389 |
|
BONDS |
158,747 |
|
PREFERRED-MANDATORY |
0 |
|
PREFERRED |
0 |
|
COMMON |
38,160 |
|
OTHER-SE |
66,139 |
|
TOTAL-LIABILITY-AND-EQUITY |
350,003 |
|
SALES |
44,683 |
|
TOTAL-REVENUES |
0 |
|
CGS |
31,425 |
|
TOTAL-COSTS |
13,269 |
|
OTHER-EXPENSES |
114 |
|
LOSS-PROVISION |
0 |
|
INTEREST-EXPENSE |
2,991 |
|
INCOME-PRETAX |
(3,116) |
|
INCOME-TAX |
(983) |
|
INCOME-CONTINUING |
(2,133) |
|
DISCONTINUED |
0 |
|
EXTRAORDINARY |
0 |
|
CHANGES |
0 |
|
NET-INCOME |
(2,133) |
|
EPS-PRIMARY |
(0.06) |
|
EPS-DILUTED |
(0.06) |
(b) Reports on Form 8-K
None
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/ Michael Giordano
Vice President, Finance
Chief Financial Officer
January 14, 2000
Signing both in his capacity as
Vice President, Finance /
Chief Financial Officer and on
behalf of the registrant.
|
|