FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(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 0-5610
Paxar Corporation
(Exact name of registrant as specified in its charter)
New York 13-5670050
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
275 North Middletown Road, Pearl River, N.Y. 10965
(Address of principal executive offices)
(914) 735-9200
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
(March 31, 1995)
Common Stock, $0.10 par value: 17,635,967 shares<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 2.
PART 1. FINANCIAL INFORMATION
_____________________________
The financial statements included herein have been prepared by
Paxar Corporation (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
While certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, the Company
believes that the disclosures made herein are adequate to make
the information presented not misleading. It is recommended that
these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.
In the opinion of the Company, all adjustments, consisting only
of normal recurring accruals and adjustments, necessary to
present fairly the financial information contained herein, have
been included.<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 3.
Item 1. Financial Statements
<TABLE>
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended March 31
___________________________
1995 1994
____________ ____________
(in thousands, except per
share amounts)
<S> <C> <C>
Sales $50,524 $35,982
Cost of sales 32,032 23,398
_______ _______
Gross profit 18,492 12,584
Selling, general and
administrative expenses 12,378 9,186
_______ _______
Operating income 6,114 3,398
Interest expense, net 402 48
_______ _______
Income before taxes 5,712 3,350
Taxes on income 1,771 1,172
_______ _______
Net income $ 3,941 $ 2,178
_______ _______
Weighted average shares
outstanding 17,752 17,429
_______ _______
Earnings per share $0.22 $0.12
_______ _______
<FN>
See Notes to Consolidated Financial Statements<PAGE>
</FN>
</TABLE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 4.
<TABLE>
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Mar. 31, 1995 Dec. 31, 1994
_____________ _____________
(unaudited)
(in thousands, except
share amounts)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 4,460 $ 3,136
Short-term investments 1,182 1,365
Receivables, less allowance for doubtful
accounts of $668 in 1995 and $506 in 1994 31,879 28,880
Inventories (Note 3) 28,085 27,045
Other current assets 3,978 2,780
Deferred income taxes 803 803
_________ _________
Total current assets 70,387 64,009
_________ _________
Property, plant and equipment, at cost 74,653 73,580
Less: Accumulated depreciation 24,942 23,533
_________ _________
Net property, plant and equipment 49,711 50,047
_________ _________
Goodwill, net 13,797 14,010
Other assets 741 637
_________ _________
$134,636 $128,703
_________ _________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to banks $ 4,994 $ 5,344
Current maturities of long-term debt (Note
4) 620 641
Accounts payable and accrued liabilities
(Note 5) 20,317 18,253
Accrued taxes on income 2,153 799
_________ _________
Total current liabilities 28,084 25,037
_________ _________
Long-term debt (Note 4) 12,296 13,796
Deferred income taxes 10,637 10,391
Other, net 1,655 1,626
Shareholders' equity:
Preferred Stock, $0.01 par value,
5,000,000 shares authorized, none issued
and outstanding - -
Common Stock, $0.10 par value,
30,000,000 shares authorized, 17,635,967
and 17,556,061 shares issued and
outstanding, in 1995 and 1994,
respectively 1,763 1,756
Paid-in capital 35,691 35,432
Retained earnings 45,683 41,742 <PAGE>
Foreign currency translation adjustments (1,173) (1,077)
_________ _________
Total shareholders' equity 81,964 77,853
_________ _________
$134,636 $128,703
_________ _________
<FN>
See Notes to Consolidated Financial Statements<PAGE>
</FN>
</TABLE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 5.
<TABLE>
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Three Months Ended March 31, 1995 and 1994
(in thousands, except share amounts)
(Unaudited)
<CAPTION>
Foreign
Currency
Common Stock Paid-in Retained Translation
Shares Amount Capital Earnings Adjustments
______ ______ _______ ________ ___________
<S> <C> <C> <C> <C> <C>
Balance, December
31, 1993 13,754,323 $1,375 $31,945 $30,493 $(1,356)
Net income - - - 2,178 -
Exercise of
stock options 32,397 4 115 - -
Translation
adjustments - - - - 127
__________ ______ _______ _______ ________
Balance, March 31,
1994 13,786,720 $1,379 $32,060 $32,671 $(1,229)
__________ ______ _______ _______ ________
Balance December
31, 1994 17,556,061 $1,756 $35,432 $41,742 $(1,077)
Net income - - - 3,941 -
Exercise of
stock options 65,844 6 107 - -
Employee stock
purchase plan 14,062 1 152 - -
Translation
adjustments - - - - (96)
__________ ______ _______ _______ ________
Balance, March 31,
1995 17,635,967 $1,763 $35,691 $45,683 $(1,173)
__________ ______ _______ _______ ________
<FN>
See Notes to Consolidated Financial Statements<PAGE>
</FN>
</TABLE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 6.
<TABLE>
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months
Ended March 31
1995 1994
________ ________
(in thousands)
<S> <C> <C>
Operating activities:
Net income $ 3,941 $ 2,178
________ ________
Depreciation and amortization 2,141 1,344
Deferred Income Taxes 246 200
Changes in assets and liabilities:
Receivables (2,999) (1,984)
Inventories (1,040) (269)
Other current assets (1,015) (1,192)
Accounts payable and accrued liabilities 1,961 (4,218)
Taxes on income 1,354 910
Other, net 29 -
________ ________
677 (5,209)
________ ________
Net cash provided by (used in) operating
activities 4,618 (3,031)
________ ________
Investing activities:
Purchase of property, plant and equipment (1,633) (2,391)
Other (63) (123)
________ ________
Net cash used in investing activities (1,696) (2,514)
________ ________
Financing activities:
Increase (decrease) of short-term debt (371) 243
Additions of long-term debt 1,200 6,700
Reductions of long-term debt (2,700) (906)
Exercise of stock options/stock purchase
plan 266 119
________ ________
Net cash provided by (used in) financing
activities (1,605) 6,156
________ ________
Other activities:
Effect of exchange rate on cash 7 (15)
________ ________
Increase in cash 1,324 596
Cash, at beginning of year 3,136 737
________ ________
Cash at end of period $ 4,460 $ 1,333
________ ________
<FN>
See Notes to Consolidated Financial Statements<PAGE>
</FN>
</TABLE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 7.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 1: GENERAL:
The accounting policies followed during the interim periods
reported on are in conformity with generally accepted accounting
principles, and are consistent with those applied for annual
periods as described in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994. Other than Balance Sheet
amounts as of December 31, 1994, all amounts contained herein are
unaudited.
RECLASSIFICATIONS:
Certain reclassifications have been made to prior year amounts to
conform to the current year presentation.
NOTE 2: BUSINESS ACQUISITION:
On May 2, 1994, the Company acquired, through its wholly owned
subsidiaries, ownership of the corporate capital of the Italian
companies Collitex, S.r.l., Astria, S.r.l. and T.I.E., S.r.l.
(the Collitex Group). The total purchase price, net of cash
acquired, was approximately $12.6 million, which includes the
issuance of 125,000 shares of the Company's common stock valued
at $11.20 per share (share amounts adjusted for subsequent stock
split) and $619 due in April 1997. In addition, up to $1.5
million of additional consideration may be paid in April 1997, if
the average earnings of the Collitex Group in the 1994-96 period
exceeds a stipulated base level. Such payments by the Company,
if any, would represent additional purchase price and,
accordingly, would increase goodwill.
On October 10, 1994, the Company acquired, through its wholly
owned subsidiaries, Orvafin S.r.l. and its affiliates (Orvac), an
Italian company. The total purchase price, net of cash acquired,
was $6.1 million, which includes the issuance of 125,000 shares
of the Company's common stock, valued at $10.875 per share, and
$606 due in October 1995.
The acquisitions of the Collitex Group and Orvac are being
accounted for as purchases with assets acquired and liabilities
assumed recorded at their estimated fair values at the date of
acquisition. The excess of the purchase price and transaction
costs over the fair value of net assets acquired is recorded as
goodwill. Liabilities assumed include deferred income taxes
related to differences between the basis of assets and
liabilities (principally property, plant and equipment) for tax
and financial reporting purposes and to certain government grants
previously received by the Collitex Group and Orvac which would
be subject to Italian tax if distributed. The purchase price
allocation related to certain accruals and reserves is not
complete and immaterial adjustments to goodwill may be necessary.<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 8.
The following unaudited proforma results of operations assumes
the acquisitions occurred at the beginning of 1994. These
proforma results have been prepared for comparative purposes only
and do not purport to be indicative of the results of operations
which may result in the future.
<TABLE>
<CAPTION>
(unaudited)
Three Months
Ended March 31
1994
______________
<S> <C>
Sales $40,418
_______
Net income $ 2,686
_______
Earnings per share $0.15
_______
</TABLE>
NOTE 3: INVENTORIES:
The components of inventories are set forth below:
<TABLE>
<CAPTION>
March 31, 1995 Dec. 31, 1994
______________ _____________
<S> <C> <C>
Raw materials $14,163 $13,484
Work-in-Process 3,582 3,267
Finished goods 10,340 10,294
_______ _______
$28,085 $27,045
_______ _______
</TABLE>
<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 9.
NOTE 4: LONG-TERM DEBT:
An analysis of long-term debt is set forth below:
<TABLE>
<CAPTION>
March 31, 1995 Dec. 31, 1994
______________ _____________
<S> <C> <C>
Unsecured revolving bank
facility $ 9,800 $11,100
Secured and unsecured loans on
foreign property, plant and
machinery 2,599 2,795
Secured loans on foreign real
estate, plant and machinery 305 320
Mortgage loans on land and
buildings 212 222
_______ _______
12,916 14,437
Less current maturities 620 641
_______ _______
$12,296 $13,796
_______ _______
</TABLE>
NOTE 5: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
A summary of accounts payable and accrued liabilities is set
forth below:
<TABLE>
<CAPTION>
March 31, 1995 Dec. 31, 1994
______________ _____________
<S> <C> <C>
Accounts payable $11,690 $ 9,551
Accrued payroll costs 3,359 3,838
Other accrued liabilities 5,268 4,864
_______ _______
$20,317 $18,253
_______ _______
</TABLE>
NOTE 6: SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest and income taxes is set forth below:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1995 March 31, 1994
______________ ______________
<S> <C> <C>
Interest $363 $53
Income Taxes $111 $51
</TABLE>
<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 10.
PAXAR CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Operating Results:
The following table shows each element of the income statement as
a percent of sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months
Ended March 31
______________
1995 1994
____ ____
<S> <C> <C>
Sales 100.0% 100.0%
Cost of Sales 63.4 65.0
_____ _____
Gross Profit 36.6 35.0
Selling, general and administrative
expenses 24.5 25.5
_____ _____
Operating income 12.1 9.5
Interest expense, net 0.8 0.2
_____ _____
Income before taxes 11.3 9.3
Taxes on income 3.5 3.3
_____ _____
Net income 7.8% 6.0%
_____ _____
</TABLE>
Sales were $50.5 million for the three months ended March 31,
1995 compared to $36.0 million for the three months ended March
31, 1994, an increase of 40%. Domestic sales increased from
$26.8 million for the three months ended March 31, 1994 to $33.4
million for the comparable period in 1995. Foreign-based and
export sales increased from $9.1 million for the three months
ended March 31, 1994 to $17.2 million for the comparable period
in 1995. Acquisitions made in 1994 subsequent to March 31, 1994
contributed $5.3 million or 15% to the increase in sales.
Exclusive of the acquisitions the Company's apparel
identification business grew 37%, its labeling systems business
grew 9% and its electronic systems and bar code products business
grew 28% in the three months ended March 31, 1995 as compared
with the three months ended March 31, 1994.
The gross profit was $18.5 million in the three months ended
March 31, 1995 compared to $12.6 million in the comparable period
of 1994, an increase of 47%. The gross profit margin was 36.6%
for the current period compared to 35.0% for the three months
ended March 31, 1994. The improvement is primarily due to higher
utilization rates at the Company's manufacturing facilities.<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 11.
Selling, general and administrative expenses were $12.4 million
for the three months ended March 31, 1995 compared to $9.2
million for the comparable period of 1994, an increase of 35%.
As a percentage of sales, selling, general and administrative
expenses were 24.5 for the three months ended March 31, 1995
compared to 25.5% for the comparable period in 1994.
Operating income was $6.1 million or 12.1% of sales for the three
months ended March 31, 1995 compared to $3.4 million or 9.5% of
sales for the three months ended March 31, 1994.
Interest expense, net was $402,000 for the three months ended
March 31, 1995 compared to $48,000 for March 31, 1994. The
increase is attributable to higher levels of bank borrowings
arising from the acquisitions in May and October, 1994.
Income before taxes was $5.7 million (11.3% of sales) for the
three months ended March 31, 1995 as compared with $3.4 million
(9.3% of sales) for the three months ended March 31, 1994. The
increase in pretax profit for the three months ended March 31,
1995 compared to March 31, 1994 is summarized as follows:
<TABLE>
<CAPTION>
(in millions)
<S> <C>
Amount due to sales increase and
increased selling, general and
administrative expenses $2.1
Amount due to increase in gross margin 0.6
Amount due to increased interest costs (0.3)
_____
Total $2.4
_____
</TABLE>
The effective income tax rate was 31% for the three months ended
March 31, 1995 compared to 35% for the three months ended March
31, 1994. The overall effective tax rate is impacted by many
factors including different statutory rates on taxable income
generated on a global basis within different taxing
jurisdictions. The lower rate is mainly attributable to lower
rates on income derived from foreign sources, particularly from
Hong Kong and in Italy where the companies acquired in 1994
receive special tax abatement incentives.
For the reasons discussed above, net income increased in the 1995
period to $3.9 million, or $0.22 per share from $2.2 million or
$0.12 per share in the 1994 period.<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 12.
Liquidity and Capital Resources:
The table below presents the summary of cash flow for the periods
indicated:
<TABLE>
<CAPTION>
(in millions)
Three Months
Ended March 31
______________
1995 1994
____ ____
<S> <C> <C>
Net cash provided by (used in)
operating activities $ 4.6 $(3.0)
Net cash used in investing activities (1.7) (2.5)
Net cash provided by (used in)
financing activities (1.6) 6.1
______ ______
Total change in cash $ 1.3 $ 0.6
______ ______
</TABLE>
Operating activities:
Cash provided by operating activities continues to be the
Company's primary source of funds to finance operating needs and
capital expenditures. During the first quarter of 1995, cash
provided by operating activities was $4.6 million. Cash used in
operating activities in the first quarter of 1994 was $3.0
million. Depreciation and amortization was $2.1 million during
the first quarter of 1995 compared to $1.3 million in the first
quarter of 1994.
Investing activities:
During the first quarter of 1995 capital expenditures were $1.6
million compared to $2.4 million during the first quarter of
1994. Other than projects for employee safety and environmental
improvement, all new capital projects are carefully analyzed and
are required to make a positive contribution on a net present
value basis, generating an attractive internal rate of return on
invested capital. The Company currently anticipates that capital
expenditures for the year ended December 31, 1995 will
approximate $10 million. In addition, the Company intends to
continue its growth, in part by acquisitions of other
complementary or related businesses and believes that further
acquisitions outside the United States would be of important
strategic value.<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 13.
Financing activities:
The table below shows the components of total capital at:
<TABLE>
<CAPTION>
(in millions)
March 31, Dec. 31,
1995 1994
________ _______
<S> <C> <C>
Long-term debt $ 12.3 $ 13.8
Shareholder's equity 82.0 77.9
______ ______
Total capital $ 94.3 $ 91.7
______ ______
Long-term debt as a percent of total
capital 13.0% 15.0%
______ ______
</TABLE>
Long-term debt decreased to $12.3 million at March 31, 1995 from
$13.8 million at December 31, 1994. At December 31, 1995, long-
term debt as a percent of total capital was 13.0% compared to
15.0% at December 31, 1994.
The Company has a revolving credit agreement allowing it to
borrow up to $43 million, and it has an uncommitted line of
credit in the amount of $5 million. At March 31, 1995, there was
$33.2 million available under the revolving credit agreement and
$3.5 million available from the line of credit. The revolving
credit agreement provides for the reduction of the commitment at
the rate of $1.25 million per quarter commencing on March 30,
1996. Any remaining balance outstanding will be due March 30,
1999. At March 31, 1995, the Company was in compliance with all
provisions of the loan agreement.<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 14.
PART II. OTHER INFORMATION
___________________________
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit Index. None.
b) Reports on Form 8-K. No reports were filed on Form 8-K
during the first quarter of 1995.<PAGE>
<PAGE>
FORM 10-Q
MARCH 31, 1995
PAGE 15.
PAXAR CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
PAXAR CORPORATION
______________________________
Registrant
/s/ Jack R. Plaxe
______________________________
Signature
Jack R. Plaxe
______________________________
Full Name of Signing Officer
Vice President and
Chief Financial Officer *
______________________________
Title of Signing Officer
May 11, 1995
______________________________
Date
*Mr. Plaxe has signed this Report in the dual capacity of duly
authorized officer and Chief Financial Officer.<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000075681
<NAME> PAXAR CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,460
<SECURITIES> 0
<RECEIVABLES> 31,879
<ALLOWANCES> 0
<INVENTORY> 28,085
<CURRENT-ASSETS> 70,387
<PP&E> 74,653
<DEPRECIATION> 24,942
<TOTAL-ASSETS> 134,636
<CURRENT-LIABILITIES> 28,084
<BONDS> 0
<COMMON> 1,763
0
0
<OTHER-SE> 80,201
<TOTAL-LIABILITY-AND-EQUITY> 134,636
<SALES> 50,524
<TOTAL-REVENUES> 50,524
<CGS> 32,032
<TOTAL-COSTS> 32,032
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 402
<INCOME-PRETAX> 5,712
<INCOME-TAX> 1,771
<INCOME-CONTINUING> 3,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,941
<EPS-PRIMARY> .22
<EPS-DILUTED> 0
</TABLE>
