<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
- --- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 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 0-13940
---------------
CENTRAL SPRINKLER CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2328106
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
451 North Cannon Avenue, Lansdale, PA 19446
-------------------------------------------
(Address of principal executive offices)
(Zip Code)
(215) 362-0700
--------------
(Registrant's telephone number, including area code)
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
---- ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at June 7, 1995
----- ---------------------------
Common Stock, $.01 Par Value 3,729,697
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTRAL SPRINKLER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
April 30, October 31,
1995 1994
---------- -----------
(Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 2,735 $ 2,188
Short-term investments 8,740 18,334
Accounts receivable, less allowance
for doubtful receivables of $4,028
in 1995 and $3,737 in 1994, respectively 27,548 24,907
Inventories 31,605 28,653
Deferred income taxes 5,141 4,686
Prepaid expenses and other assets 1,408 902
---------- ----------
Total current assets 77,177 79,670
---------- ----------
Property, Plant and Equipment 35,151 27,546
Less - Accumulated depreciation 13,801 12,298
---------- ----------
21,350 15,248
---------- ----------
Goodwill, less accumulated amortization of
$2,886 in 1995 and $2,761 in 1994, respectively 3,136 3,261
---------- ----------
Other Assets 1,069 882
---------- ----------
$ 102,732 $ 99,061
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings and current portion
of long-term debt $ 23,040 $ 11,564
Accounts payable 9,850 7,731
Accrued expenses 5,711 5,301
Accrued income taxes 1,337 1,906
---------- ----------
Total current liabilities 39,938 26,502
---------- ----------
Long-Term Debt 17,853 19,391
---------- ----------
Other Noncurrent Liabilities 639 699
---------- ----------
Deferred Income Taxes 1,365 1,368
---------- ----------
Shareholders' Equity:
Common stock, $.01 par value; shares
authorized - 15,000,000; issued -
5,397,695 in 1995 and 1994 54 54
Additional paid-in capital 27,722 27,674
Retained earnings 37,852 34,481
Cumulative translation adjustments (65) (76)
Deferred cost - Employee Stock Ownership
Plan ("ESOP") (6,522) (6,679)
Unrealized investment holding losses (1) --
---------- ----------
59,040 55,454
Less - Common stock in treasury, at
cost - 1,680,373 shares in 1995 and
443,540 in 1994 16,103 4,353
---------- ----------
42,937 51,101
---------- ----------
$ 102,732 $ 99,061
========== ==========
See accompanying notes to financial statements.
2
<PAGE> 3
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
1995 1994 1995 1994
-------- ------- -------- --------
(Dollars in thousands,
except per share amounts)
Net Sales $ 37,990 $ 25,766 $ 71,704 $ 50,229
Cost of Sales 25,732 17,427 48,834 34,452
-------- -------- -------- --------
Gross profit 12,258 8,339 22,870 15,777
-------- -------- -------- --------
Operating Expenses:
Selling, general
and administrative 7,519 5,908 14,164 11,731
Research and development 1,253 1,105 2,478 2,171
Other income, net (73) (43) (127) (111)
-------- -------- -------- --------
8,699 6,970 16,515 13,791
-------- -------- -------- --------
Operating income 3,559 1,369 6,355 1,986
Interest(Income)Expense, Net 485 194 912 176
-------- -------- -------- --------
Income before income taxes 3,074 1,175 5,443 1,810
Income Taxes 1,151 406 2,072 617
-------- -------- -------- --------
Income Before Cumulative
Effect of Accounting Change 1,923 769 3,371 1,193
Cumulative Effect of Accounting
Change to SFAS No. 109-
Income Taxes -- -- -- 238
-------- -------- -------- --------
Net Income $ 1,923 $ 769 $ 3,371 $ 1,431
======== ======== ======== ========
Earnings Per Common Share:
Before cumulative effect of
accounting change $ .60 $ .15 $ .97 $ .23
Cumulative effect of accounting
change to SFAS No. 109-
Income Taxes -- -- -- .05
-------- -------- -------- --------
After cumulative effect of
accounting change $ .60 $ .15 $ .97 $ .28
======== ======== ======== ========
See accompanying notes to financial statements.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
April 30,
1995 1994
-------- --------
(Dollars in thousands)
Cash flows from operating activities:
Net income $ 3,371 $ 1,431
Noncash items included in income:
Depreciation and amortization 1,636 1,536
Cumulative effect of accounting change -- (238)
Deferred income taxes (458) (333)
Deferred costs 145 87
Decrease (increase) in -
Accounts receivable, net (2,641) (472)
Inventories (2,952) (5,354)
Prepaid expenses and other assets (506) (157)
Increase (decrease) in -
Accounts payable 2,119 (1,447)
Accrued expenses 410 (148)
Accrued income taxes (569) 269
-------- --------
Net cash provided by (used for)
operating activities 555 (4,826)
-------- --------
Cash flows from investing activities:
Cash used for acquisition of property, plant
and equipment (7,624) (2,362)
Cash from (used for) short-term investments 9,594 (854)
Other - net (176) (103)
-------- --------
Net cash provided by (used for) investing
activities 1,794 (3,319)
-------- --------
Cash flows from financing activities:
Cash used for treasury stock (11,750) --
Short-term borrowings, net 11,476 10,099
Cash repayments of long-term debt (1,538) (1,751)
Other - net 10 88
-------- --------
Net cash (used for) provided by financing
activities (1,802) 8,436
-------- --------
Net increase in cash and cash equivalents 547 291
Cash and cash equivalents at beginning of period 2,188 900
-------- --------
Cash and cash equivalents at end of period $ 2,735 $ 1,191
======== ========
See accompanying notes to financial statements.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
Six Months Ended
April 30,
1995 1994
-------- -------
(Dollars in thousands)
Supplemental disclosures of cash flow
information:-
Cash paid (received) during the period for:
Interest expense $ 1,181 $ 486
======= =======
Income taxes $ 3,099 $ 681
======= =======
Interest income $ (527) $ (414)
======= =======
See accompanying notes to financial statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation:
---------------------
The condensed financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. 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. These statements include
all adjustments that, in the opinion of management, are necessary
to provide a fair statement of the results for the periods
covered. These financial statements should be read in
conjunction with the audited financial statements and the notes
thereto included in the Company's Form 10-K for the year ended
October 31, 1994. The results of operations for the interim
periods presented are not necessarily indicative of the results
for the full year.
(2) Inventories:
-----------
Inventories are stated at the lower of cost (first-in,
first-out) or market, and consist of the following:
April 30, October 31,
1995 1994
-------- ----------
(Dollars in thousands)
Raw Materials and Work in Process $10,467 $ 9,179
Finished Goods 21,138 19,474
------- -------
$31,605 $28,653
======= =======
(3) Effect of Accounting Change to AICPA Statement of Position
No. 93-6, Employers' Accounting for Employee Stock Ownership
Plans:
------------------------------------------------------------
The Company has an Employee Stock Ownership Plan ("ESOP")
which covers certain employees not covered by collective
bargaining agreements. The ESOP owns 780,000 common shares of
the Company, 750,000 of which were acquired in a leveraged
transaction at $9.70 per share in April 1993. The 750,000 common
shares are being allocated to the employees and the related cost
is being amortized over a 15 year period that started in fiscal
1993, in accordance with the ESOP plan provisions.
In the first quarter of 1995, the Company adopted AICPA
Statement of Position No. 93-6, "Employers' Accounting for
Employee Stock Ownership Plans" ("SOP"). The SOP requires
recognition of compensation expense for shares allocated to
employees based on the fair market value of those shares in the
period in which they are allocated. The difference between cost
and fair market value of such allocated common shares
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
is recorded in additional paid-in capital. In addition,
unallocated ESOP shares are excluded from outstanding shares for
earnings per share ("EPS") calculations.
The ESOP shares as of April 30, 1995 are summarized as follows:
Allocated shares 91,000
Committed to be released shares 16,000
Unreleased shares 673,000
-----------
Total ESOP shares 780,000
===========
Fair value of unallocated
shares at April 30, 1995 $12,619,000
===========
The ESOP plan expense for the six-month periods ended April
30, 1995 and 1994 was $213,000 and $150,000, respectively. Such
expense for the three-month periods ended April 30, 1995 and 1994
was $123,000 and $75,000, respectively.
(4) Earnings Per Common Share:
-------------------------
Earnings per common share are computed using the weighted
average number of shares of common stock and common stock
equivalents outstanding (dilutive stock options) during the
periods (3,194,000 and 5,012,000 for the three-month periods
ended April 30, 1995 and 1994, respectively); (3,480,000 and
5,024,000 for the six-month periods ended April 30, 1995 and
1994, respectively).
In the first quarter of 1995, the Company adopted SOP No.
93-6, "Employers' Accounting for Employee Stock Ownership Plans"
as discussed in Note 3. Under the provisions of this new
accounting rule, unallocated shares of the Company's stock in the
ESOP are excluded from the average number of common shares
outstanding when computing earnings per share. In accordance
with this new rule, 677,000 unallocated ESOP shares were excluded
from the average number of common shares outstanding in the
second quarter of fiscal 1995 and 680,000 were excluded for the
six-month period ending April 30, 1995. As of April 30, 1994,
there were 705,000 ESOP common shares outstanding that would not
be considered outstanding for EPS calculations should SOP No. 93-
6 have been adopted in fiscal 1994. As required by the SOP, the
restatement of prior financial statements is not permitted.
(5) Common Stock Repurchase:
-----------------------
On December 21, 1994 the Company repurchased 1,236,833
shares of its common stock that were under the control of one
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
investment management company for the beneficial interest of
various clients for which it acts as an investment adviser. The
repurchase price was $9.50 per share for an aggregate purchase
price of $11,750,000. These shares are being held in the
treasury for possible future issuance.
(6) Capitalized Interest:
--------------------
The interest cost incurred by the Company for the second
quarter of fiscal 1995 and 1994 amounted to $662,000 and
$443,000, respectively. Interest cost incurred for the six-month
periods ended April 30, 1995 and 1994 amounted to $1,245,000 and
$657,000, respectively. The Company capitalized $85,000 of
interest cost in the second quarter of fiscal 1995 in accordance
with Statement of Financial Accounting Standards No. 34 -
Capitalization of Interest Cost. Interest capitalizable in prior
periods was not significant. As the Company expands and improves
its manufacturing facilities or equipment, it includes in the
cost of these assets a portion of the interest payments it makes
related to borrowings for the assets during the construction
phase. All of the interest capitalized in the period is related
to the manufacturing facility for piping system components.
(7) Effect of Accounting Change to Statement of Financial
Accounting Standards No. 115 - Accounting for Certain
Investments in Debt and Equity Securities:
-----------------------------------------------------
In the first quarter of fiscal 1995, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 115 -
Accounting for Certain Investments in Debt and Equity Securities.
The Company classifies its investment holdings as available-for-
sale, uses the specific identification method of determining
cost, and all investments are classified as current assets. For
the three-month and six-month periods ended April 30, 1995, gross
realized and unrealized investment gains and losses were not
material and net unrealized investment holding losses of $1,000
have been recorded as a separate component of shareholders'
equity as of April 30, 1995. The gross proceeds on sales and
maturities of investments for the three months ended April 30,
1995 were $300,000 and were $16,420,000 for the six months ended
April 30, 1995.
(8) Cumulative Effect of Accounting Change to Statement of
Financial Accounting Standards No. 109-Income Taxes:
------------------------------------------------------
In the first quarter of 1994, the Company adopted Statement
of Financial Accounting Standards ("SFAS") No. 109-Accounting for
Income Taxes. The Company elected to record the cumulative
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
effect of this accounting change by the recognition of a one-time
gain of $238,000 or $.05 per common share.
(9) Acquisition:
-----------
The Company purchased effective July 15, 1994, substantially
all of the business assets of a southeastern company primarily
engaged in manufacturing components for piping systems for a
purchase price of approximately $1.8 million. The assets consist
primarily of property, plant and equipment and were subject to
the assumption of certain obligations which will reduce the $1.8
million cash payment of the purchase price. The Company is
currently engaged in a substantial expansion of such facility to
accommodate the production of new products. This expansion is
expected to cost a total of approximately $12,000,000 and be
completed prior to December 1995.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Sales. Net sales for the second quarter of fiscal 1995
increased 47.4% to $37,990,000. Such sales were $12,224,000
greater than the $25,766,000 recorded in the second quarter of
fiscal 1994. Net sales for the first six months of fiscal 1995
were $71,704,000, 42.8% greater than the sales for the comparable
six-month period of fiscal 1994. The sales increases for both
the three-month and six-month periods of fiscal 1995 are
primarily due to improved market demand for fire sprinklers and
related products. Growth in new construction activity along with
increased levels of retrofit sprinkler usage have contributed to
the sales increase. While the Company experienced sales gains in
sales of virtually all major product groups, sales of certain
products were particularly strong. The Company's major product
line of fire sprinklers continued to experience strong sales
gains particularly for its Optima TM and Glass Bulb fire
sprinkler models. Larger percentage sales gains were
experienced, however, in other product lines such as CPVC plastic
products, steel pipe and the pipe fittings lines. Company
programs developed to expand the production and marketing of pipe
and fittings products have continued to have a significant impact
on sales of these products. In addition, incremental sales arose
from new products in virtually all of the Company's major product
lines.
Cost of Sales and Gross Profit. Cost of sales, in terms of
dollars of expense increased 47.7% and 41.8% for the three-month
and six-month periods ended April 30, 1995, respectively, over
the same periods for fiscal 1994. The Company's cost of sales
for the second quarter of fiscal 1995 was 67.7% of net sales and
67.6% for the second quarter of fiscal 1994. This resulted in a
gross margin percentage of 32.3% in the second quarter of fiscal
1995 compared to 32.4% in the second fiscal quarter of 1994. For
the first six-months of fiscal 1995, the gross margin percentage
was 31.9% of net sales compared to 31.4% for the same period of
fiscal 1994. The gross profit margin percentage for the second
quarter of fiscal 1995 improved to 32.3% from the 31.5%
experienced in the first quarter of fiscal 1995. This reflected
primarily a strong sales mix of the higher margin sprinkler,
valve and CPVC plastic products lines. In the second quarter of
fiscal 1994, the gross profit margin percentage was virtually the
same as fiscal 1995 at 32.4%. The second quarter 1995 gross
profit margin percentage was somewhat lower than expected due to
costs related to the expansion and startup of the manufacturing
facility for piping products acquired in late fiscal 1994. The
increase in gross profit margin percentage for the six-month
period was due to several factors. They include a continued
strong market demand, additional contribution from new products,
10
<PAGE> 11
a favorable sales mix, and lower costs of certain products. The
strong market demand and the associated increase
in production of manufactured fire sprinkler products has
resulted in a lower product cost for certain products due
primarily to certain production efficiencies and absorption of
fixed production costs over a greater number of production units.
The gross margin also benefitted somewhat from sales price
increases that were put into effect in late 1994 and in fiscal
1995 on selected product lines. The gross margin was negatively
impacted by price increases to the Company from suppliers of
certain materials.
Operating Expenses. Operating expenses for the second quarter of
fiscal 1995 increased 24.8% from the second quarter of fiscal
1994. The overall increase in operating expenses was primarily
comprised of an increase in Selling, General and Administrative
expenses of 27.3% and an increase in Research and Development
expenses of 13.4%. For the first six months of fiscal 1995,
operating expenses increased 19.8% from the amount for the first
six months of fiscal 1994. The overall increase for the first
six months of fiscal 1995 was primarily comprised of an increase
in Selling, General and Administrative expenses of 20.7% and an
increase in Research and Development expenses of 14.1%. For both
periods, the majority of the increase in the Selling, General and
Administrative expenses is due to the increased levels of expense
associated with the increased sales volume. Selling and
Marketing costs comprised the majority of the overall increase in
both the three-month and six-month periods. Warehouse and
distribution facility costs had the greatest amount of increase
due to increased personnel, freight and other costs necessary to
handle the increased sales volume. In addition, such cost
increases included costs associated with certain distribution
center expansions along with the opening of three new
distribution centers in late fiscal 1994 in Salt Lake City, Utah,
Greensboro, North Carolina and Portland, Oregon. Other costs
which increased in connection with the higher sales volume were
increased sales personnel costs, commissions, travel and
entertainment and certain advertising and marketing costs.
Increased numbers of general and administrative personnel were
also required in connection with the sales increase to provide
necessary support services. The increased personnel along with
increases in salaries, wages, incentives and fringe benefits led
to significant increases in such costs. The Company has also
continued its high degree of emphasis on research and development
in efforts to develop new and improved products. The research
and development expense increases for the second quarter and six-
month period of fiscal 1995 were primarily related to increases
in the number of personnel and outside charges for the
development and testing of new and improved products.
Interest (Income) Expense, Net. Net interest expense of $485,000
and $912,000 was incurred in the three-month and six-month
11
<PAGE> 12
periods of 1995, respectively, compared to net interest expense
of $194,000 and $176,000 for the same periods of fiscal 1994.
This change is comprised of an increase in interest expense of
$134,000 and a decrease in interest income of $157,000 for the
second quarter of fiscal 1995 and an increase in interest expense
of $503,000 and a decrease in interest income of $233,000 for the
six-month period of fiscal 1995. The higher interest expense was
due to the overall increase in debt as well as an increase in
interest rates between periods. For the three-month and six-
month periods ended April 30, 1995, the Company capitalized
$85,000 of interest costs relating to the piping products
manufacturing facility expansion. Short and long-term debt
totaled $40,893,000 at April 30, 1995 as compared to $27,349,000
at April 30, 1994. The additional debt was required to finance
an acquisition, repurchase treasury stock, fund the Company's
expanded capital expenditure programs in primarily manufacturing
and distribution, and increased working capital needs. The
Company also had increased interest rates on its investment
portfolio which were offset by a decline in the investment
balance due primarily to the repurchase of 1,236,833 shares of
the Company's common stock for the treasury in December 1994.
Income Taxes. The Company's effective tax rate for the second
quarter of fiscal 1995 was 37.4% compared to 34.6% in the
comparable period of 1994. For the six-month period of fiscal
1995, the effective income tax rate was 38.1% compared to 34.1%
in the comparable period in 1994. The increase in the overall
effective income tax rate includes an increase in the effective
state income tax rate due to several factors that also caused an
increase in the effective federal income tax rate. One factor
anticipated is a substantial reduction in the amount of
nontaxable investment income in fiscal 1995 resulting from a
lower balance in investments. In addition, the Company
anticipates a greater amount of pretax income and proportionately
lower percentage rate reductions from nontaxable income and
anticipated tax credits in fiscal 1995.
Seasonal Aspects of Business. The Company's sales are affected
by seasonal factors as well as the level of new construction
activity, remodeling and retrofitting of older properties in the
industrial, commercial, residential and institutional real estate
markets. The Company's sales tend to increase the most when
there is a high level of new construction activity in all such
real estate markets. In addition, as a result of relatively
higher levels of new construction during the warmer spring and
summer months, the demand for sprinkler system components tends
to be greater during the summer and fall than during other
seasons.
FINANCIAL CONDITION
April 30, 1995 Compared to October 31, 1994
Cash, Cash Equivalents and Short-Term Investments. Cash, cash
12
<PAGE> 13
equivalents and short-term investments totaled $11,475,000 as of
April 30, 1995 as compared to $20,522,000 at October 31, 1994.
The $9,047,000 decrease was due primarily to the use of
$11,750,000 in December 1994 for the repurchase of 1,236,833
shares of the Company's common stock for the treasury.
Inventories. Inventories totaled $31,605,000 at April 30, 1995
as compared to $28,653,000 at October 31, 1994. The $2,952,000
increase in inventories was comprised of $1,288,000 in raw
materials and work in process and an increase of $1,664,000 in
finished goods. The increase in raw materials and work in
process was primarily due to increased material requirements to
meet the anticipated increase in product demand. The increase in
finished goods was also due to an anticipation of a continued
strong demand for fire sprinklers and related products. The
Company has also increased its inventory levels at three
distribution centers opened in late 1994 and has introduced new
products into virtually all of its warehouse distribution
centers.
Property, Plant and Equipment. The Company's property, plant and
equipment rose by $7,605,000 to $35,151,000 at April 30, 1995.
Approximately $5,900,000 of this increase is due to the
continuing major expansion of the manufacturing facility for
piping products that was acquired in July 1994.
Total Debt. The Company's total debt increased to $40,893,000 at
April 30, 1995 as compared to $30,955,000 at October 31, 1994.
The additional borrowings of $9,938,000 were used primarily to
fund capital expenditures including the major expansion of the
piping products facility. Borrowed funds were also used in part
to finance increases in accounts receivable, inventories and for
other working capital needs resulting from the Company's growth.
The funds were principally borrowed under the Company's lines of
credit from banks.
Liquidity and Capital Resources. The Company's primary sources
of long-term and short-term liquidity are its current financial
resources, projected cash from operations and its borrowing
capacity. The Company believes that these sources are sufficient
to fund the programs necessary for future growth and expansion.
Cash, cash equivalents and short-term investments decreased
$9,047,000 to $11,475,000 as of April 30, 1995. The Company used
cash of $11,750,000 to repurchase 1,236,833 shares of the
Company's common stock for the treasury in December 1994. Cash
provided by operating activities for the six months ended April
30, 1995 totaled $555,000. This was an improvement from the six-
month period of fiscal 1994, when $4,826,000 was used for
operating activities due to a smaller net income and a larger
increase in inventories. In fiscal 1995, the Company has
developed programs to improve cash flow through better inventory
management, stronger collection efforts and other means. Cash
13
<PAGE> 14
was used for the purchase of $7,624,000 of property, plant, and
equipment during the six-month period primarily to expand and
enhance manufacturing capacity. Approximately $5,900,000 of such
amount has been expended on the expansion of the Company's piping
products manufacturing facility which was acquired in late fiscal
1994. The Company's net short-term borrowings for the six-month
period amounted to $11,476,000 and long-term debt repayments were
$1,538,000 in the period. The Company's cash, cash equivalents
and short-term investments are comprised of funds on deposit and
various government and corporate obligations which, along with
the Company's borrowing capacity, provide adequate liquidity to
meet the Company's obligations.
The Company purchases property, plant and equipment from time to
time as required to maintain and expand its offices,
manufacturing and research facilities and distribution centers.
The Company has expanded and improved its operations over the
years with such purchases and the Company intends to continue
this policy in the future. The Company has commitments in the
ordinary course of business for such expansions of facilities and
equipment and for research and other contracts. The Company
expects that such sources of liquidity will be sufficient to fund
these expenditures as they occur. In addition, the Company has
made certain commitments to expand and improve the manufacturing
facility for piping system components bought in July 1994.
Capital expansions and improvements of such facility have been
made through April 30, 1995 that total approximately $5,900,000.
The Company has committed a total of approximately $12,000,000
for the expansion and improvement of such facility which includes
a new assembly and office building, a manufacturing plant
expansion and various machinery and equipment. It is expected
that such improvements will be completed prior to December 1995.
The Company intends to meet these requirements for funds from
cash provided by operations and from further borrowings.
14
<PAGE> 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following data summarizes the Annual Meeting
highlights:-
(a) The Annual Meeting of Shareholders of the Company was
held at the Company's offices in Lansdale, Pennsylvania
on March 13, 1995. Proxies for the Annual Meeting were
solicited pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended.
(b) At the Annual Meeting, shareholders re-elected the board
of directors to one-year terms and until their
successors are elected and qualified.
(c) The shareholders ratified the appointment of Arthur
Andersen LLP as independent auditors for the Company for
fiscal year ending October 31, 1995.
Number of Votes
For Against Abstain
--------- ------- -------
3,318,252 2,633 2,219
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following document is filed as an Exhibit and
attached as follows:
Exhibit 11 -- Computation of Earnings Per Common Share
Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended April 30, 1995.
15
<PAGE> 16
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.
CENTRAL SPRINKLER CORPORATION
-----------------------------
(Registrant)
/s/George G. Meyer
-----------------------------
George G. Meyer
Chief Executive Officer
DATE: June 12, 1995
- ---------------------------
/s/Albert T. Sabol
-----------------------------
Albert T. Sabol
Vice President-Finance
(Principal Financial and
Accounting Officer)
16
<PAGE> 17
Exhibit 11
CENTRAL SPRINKLER CORPORATION
EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Six
Months Ended Months Ended
April 30, April 30,
1995 1994 1995 1994
------ ------ ------- -------
(Amounts in thousands,
except per share amounts)
<S> <C> <C> <C> <C>
Income before cumulative effect
of accounting change $ 1,923 $ 769 $ 3,371 $ 1,193
Cumulative effect of accounting
change to SFAS No. 109-
Income Taxes -- -- -- 238
------- ------- ------- -------
Net income $ 1,923 $ 769 $ 3,371 $ 1,431
======= ======= ======= =======
Average number of common shares
outstanding 3,717 4,953 4,059 4,953
Adjustment to exclude average
unallocated common shares in ESOP (677) -- (680) --
Adjustment for assumed conversion
of stock options 154 59 101 71
------- ------- ------- -------
Average number of common shares 3,194 5,012 3,480 5,024
======= ======= ======= =======
Earnings per common share:
Before cumulative effect of
accounting change $ .60 $ .15 $ .97 $ .23
Cumulative effect of accounting
change to SFAS No. 109-
Income Taxes -- -- -- .05
------- ------- ------- -------
After cumulative effect of
accounting change $ .60 $ .15 $ .97 $ .28
======= ======= ======= =======
</TABLE>
Note: The total of the quarterly earnings per share may not equal the
year-to-date earnings per share due to changes in the number of shares
outstanding.
17
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000766041
<NAME> CENTRAL SPRINKLER CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> OCT-31-1995 OCT-31-1995
<PERIOD-START> FEB-01-1995 NOV-01-1994
<PERIOD-END> APR-30-1995 APR-30-1995
<CASH> 2,735 2,735
<SECURITIES> 8,740 8,740
<RECEIVABLES> 31,576 31,576
<ALLOWANCES> 4,028 4,028
<INVENTORY> 31,605 31,605
<CURRENT-ASSETS> 77,177 77,177
<PP&E> 35,151 35,151
<DEPRECIATION> 13,801 13,801
<TOTAL-ASSETS> 102,732 102,732
<CURRENT-LIABILITIES> 39,938 39,938
<BONDS> 17,853 17,853
<COMMON> 54 54
0 0
0 0
<OTHER-SE> 42,883 42,883
<TOTAL-LIABILITY-AND-EQUITY> 102,732 102,732
<SALES> 37,990 71,704
<TOTAL-REVENUES> 37,990 71,704
<CGS> 25,732 48,834
<TOTAL-COSTS> 25,732 48,834
<OTHER-EXPENSES> 8,699 16,515
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 485 912
<INCOME-PRETAX> 3,074 5,443
<INCOME-TAX> 1,151 2,072
<INCOME-CONTINUING> 1,923 3,371
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,923 3,371
<EPS-PRIMARY> .60 .97
<EPS-DILUTED> .60 .97
</TABLE>
