SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 31, 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 0-14787
WATTS INDUSTRIES, INC.
(Exact name of registrant as specified in itscharter)
DELAWARE 04-2916536
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
815 Chestnut Street, North Andover, MA 01845
(Address of principal executive offices) (ZipCode)
Registrant's telephone number, including area code (508)688-1811
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 report), 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 April 30,1994
- ---------------------------- ----------------------------
Class A Common, $.10 par value 17,971,178
Class B Common, $.10 par value 11,488,670
<PAGE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information Page #
Item 1. Condensed Consolidated Balance Sheets 3
at March 31, 1994 and June 30, 1993.
Condensed Statements of Consolidated 4
Earnings for the Three Months Ended
March 31, 1994 and March 31, 1993.
Condensed Statements of Consolidated 5
Earnings for the Nine Months Ended
March 31, 1994 and March 31, 1993.
Condensed Statements of Consolidated 6
Cash Flows for the Nine Months Ended
March 31, 1994 and March 31, 1993.
Notes to Condensed Consolidated 7,8,9
Financial Statements.
Item 2. Management's Discussion and Analysis 10,11,
of Financial Condition and Results of 12,13
Operations.
Part II. Other Information
Item 5. Other Information. 14
Item 6. Exhibits and Reports Filed on Form 8-K. 14
Exhibit 11 - Computation of Per Share 15,16
Earnings.
Signatures 17
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
PART I. FINANCIAL INFORMATION
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share information)
(Unaudited)
March 31, June 30,
ASSETS 1994 1993
---------- ---------
CURRENT ASSETS <C> <C>
Cash and cash equivalents.................. $ 13,367 $ 16,937
Short-term investments..................... 52,975 66,198
Trade accounts receivable, less allowance
for doubtful accounts of $4150 and $3565. 86,574 68,099
Inventories:
Finished goods........................... 53,721 48,910
Work in process.......................... 38,193 33,939
Raw materials............................ 49,452 49,064
---------- ---------
141,366 131,913
Prepaid expenses and other current assets.. 8,996 9,494
Deferred income taxes...................... 10,522 8,551
---------- ---------
Total Current Assets............... 313,800 301,192
OTHER ASSETS
Goodwill, net of accumulated amortization.. 90,612 87,017
Other...................................... 12,358 13,205
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment-at cost...... 229,772 218,247
Less allowance for depreciation............ ( 97,069) ( 83,986)
---------- ---------
Property, plant and equipment-net.......... 132,703 134,261
---------- ---------
TOTAL ASSETS................................. $ 549,473 $ 535,675
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable........................... $ 21,812 $ 21,180
Accrued expenses........................... 41,678 40,441
Accrued compensation and related items..... 8,301 10,059
Income taxes............................... 2,484 4,494
Notes payable and current portion of
long-term debt........................... 1,618 2,366
---------- ---------
Total Current Liabilities.......... 75,893 78,540
LONG-TERM DEBT, less current portion......... 99,160 101,468
DEFERRED INCOME TAXES........................ 14,280 13,435
OTHER LIABILITIES............................ 8,392 7,112
STOCKHOLDERS' EQUITY
Class A Common Stock,$.10 par value;
40,000,000 shares authorized, 17,971,178
shares issued and outstanding at March 31 1,797 923
Class B Common Stock,$.10 par value;
13,000,000 shares authorized, 11,488,670
shares issued and outstanding at March 31 1,149 574
Additional paid-in capital............... 92,564 101,491
Retained earnings........................ 261,442 235,052
Equity adjustment from translation....... ( 5,204) ( 2,920)
---------- ---------
Total Stockholders' Equity......... 351,748 335,120
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY... $ 549,473 $ 535,675
========== =========
<FN>
See accompanying notes to condensed consolidated financial statements.
Certain amounts as of June 30, 1993 have been reclassified to permit
comparison with March 31, 1994.
<PAGE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
(Amounts in thousands except per share data)
(Unaudited)
Three Months Ended
--------------------
March 31, March 31,
1994 1993
---------- ---------
<C> <C>
Net sales.................................... $ 133,532 $ 119,764
Cost of goods sold........................... 82,841 75,009
---------- ---------
GROSS PROFIT....................... 50,691 44,755
Selling, general & administrative expenses... 30,818 29,083
---------- ---------
OPERATING INCOME................... 19,873 15,672
Other (income) expense:
Interest income......................... ( 680) ( 1,189)
Interest expense........................ 2,161 2,430
Other-net............................... 321 13
---------- ---------
1,802 1,254
---------- ---------
EARNINGS BEFORE INCOME TAXES 18,071 14,418
Provision for income taxes................... 7,031 5,851
---------- ---------
NET EARNINGS....................... $ 11,040 $ 8,567
========== =========
Primary and fully-diluted earnings per share $ .37 $ .28
Cash dividends per share..................... $.055 $.045
<FN>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
(Amounts in thousands except per share data)
(Unaudited)
Nine Months Ended
--------------------
March 31, March 31,
1994 1993
---------- ---------
<C> <C>
Net sales.................................... $ 391,847 $ 343,289
Cost of goods sold........................... 242,542 213,449
---------- ---------
GROSS PROFIT....................... 149,305 129,840
Selling, general & administrative expenses... 91,175 80,162
Unusual charges.............................. 7,000
---------- ---------
OPERATING INCOME................... 58,130 42,678
Other (income) expense:
Interest income......................... ( 2,205) ( 3,770)
Interest expense........................ 6,729 7,158
Other-net............................... 1,075 519
---------- ---------
5,599 3,907
---------- ---------
EARNINGS BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES..... 52,531 38,771
Provision for income taxes................... 20,406 15,276
---------- ---------
EARNINGS BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE............... 32,125 23,495
Cumulative effect on prior years (to June 30,
1992) of change in accounting ............. 3,132
---------- ---------
NET EARNINGS....................... $ 32,125 $ 20,363
========== =========
Primary and fully-diluted earnings per share:
Earnings before cumulative effect
of accounting change....................... $ 1.08 $ .78
Cumulative effect of accounting change..... -.10
---------- ---------
Net earnings............................... $ 1.08 $ .68
========== =========
Cash dividends per share..................... $ .145 $ .115
========== =========
<FN>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended
---------------------
March 31, March 31,
1994 1993
---------- ---------
OPERATING ACTIVITIES <C> <C>
Net earnings $ 32,125 $ 20,363
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 16,621 14,757
Provision for deferred income taxes 336 ( 525)
Cumulative effect of change in accounting
for income taxes 3,132
(Gain)Loss on disposal of fixed assets ( 23) 18
Changes in operating assets and liabilities,net
of effects from business acquisitions:
Accounts receivable ( 16,857) ( 7,892)
Inventories ( 8,129) ( 2,287)
Prepaid expenses and other assets ( 54) ( 2,555)
Accounts payable and accrued expenses 2,593 ( 1,250)
---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 26,612 23,761
INVESTING ACTIVITIES
Additions to property, plant, and equipment ( 12,722) ( 18,993)
Proceeds from disposal of fixed assets 310 123
Increase in intangible assets ( 1,068) ( 970)
Business acquisitions, net of cash acquired:
Waletzko Armaturen ( 1,970)
Rockford Controls ( 1,958)
Intermes Group ( 6,094) ( 17,000)
Other Acquisitions ( 4,783)
Repayment of debt of acquired businesses ( 2,018) ( 6,000)
Net changes in short-term investments 13,223 27,232
---------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES ( 13,152) ( 19,536)
FINANCING ACTIVITIES
Purchase and retirement of treasury stock ( 12,064)
Proceeds from exercise of stock options 2,164 1,099
Proceeds of short-term borrowings 526 521
Payments of long-term debt ( 3,434) ( 665)
Cash dividends ( 4,263) ( 3,438)
---------- ---------
NET CASH (USED IN) FINANCING ACTIVITIES ( 17,071) ( 2,483)
Effect of exchange rates on cash and cash equivalents 41 ( 469)
---------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 3,570) 1,273
Cash and cash equivalents at beginning of period 16,937 9,989
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,367 $ 11,262
========== =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all
necessary adjustments, consisting only of adjustments of a
normal recurring nature, to present fairly Watts Industries,
Inc.'s Condensed Consolidated Balance Sheet as of March 31,
1994, the Condensed Statements of Consolidated Earnings for the
three and nine months ended March 31, 1994 and March 31, 1993,
and the Condensed Statements of Consolidated Cash Flows for the
nine months ended March 31, 1994 and March 31, 1993.
The balance sheet at June 30, 1993 has been derived from the
audited financial statements at that date. The accounting
policies followed by the Company are described in the June 30,
1993 financial statements which are contained in the Company's
1993 Annual Report. It is suggested that these financial
statements be read in conjunction with the financial statements
and notes included in the 1993 Annual Report to stockholders.
2. On January 18, 1994, the Company's Board of Directors authorized
a 2-for-1 stock split in the form of a 100% stock dividend
payable on March 15, 1994 to stockholders of record March 1,
1994. All references in the financial statements to average
number of shares outstanding and related prices, and per share
amounts have been restated to reflect the split.
3. On November 6, 1992, an indirect subsidiary of the Company
acquired Intermes, S.p.A. ("Intermes") for an aggregate cash
purchase price of U.S. $17,000,000 plus a contingent payment
that will total U.S. $8,500,000, plus the assumption of
$23,000,000 of debt. $6,094,000 of this contingency was paid
during the quarter ended September 30, 1993 with the remainder
scheduled to be paid through 1997. Intermes, headquartered in
Caldaro, Italy, manufactures and sells plumbing and heating
valves and controls through wholesaler distribution. In
addition, Intermes partially owns I.S.I., S.p.A. ("ISI") located
in Pergine Valsugana, Italy. ISI manufactures butterfly valves
and other valve products relating to municipal water markets.
Intermes' sales for the twelve-month period ended June 30, 1993
were approximately U.S.$42,800,000.
<PAGE>
On May 18, 1993, the Company acquired Edward Barber (UK) Limited
("EBCO"). Headquartered in Tottenham, London, EBCO
manufactures and sells valves, meter boxes, and accessories to
the municipal water market. Sales of EBCO for the twelve months
ended December 31, 1992 were approximately U.S.$11,500,000.
EBCO, which was founded in 1908, also operates a non-ferrous
foundry operation in nearby Willesden.
4. Effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standard ("SFAS") No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions".
SFAS No. 106 requires that the projected future cost of
providing postretirement benefits, such as health care and life
insurance, be recognized on an accrual basis as employees render
service instead of when benefits are paid. The extent of these
types of benefits provided by the Company is limited to one of
its subsidiaries acquired on September 30, 1991. Based on the
acquisition date of this subsidiary and the adoption date of
July 1, 1993, the Company is required under the Statement to
account for the projected liability for these benefits on a
prospective basis and has elected to adjust its purchase price
allocation for the acquisition. Accordingly, the Company has
recorded a liability of $2,087,000 and a corresponding increase
to goodwill and related deferred tax asset. The effect of the
adoption of SFAS 106 on operating results from the date of
acquisition to June 30, 1993 was immaterial.
5. Effective July 1, 1992, the Company changed its method of
accounting for income taxes from the deferred method to the
liability method required by SFAS No. 109, "Accounting for
Income Taxes". As permitted under the new rules, prior years'
financial statements have not been restated. The cumulative
effect of adopting SFAS No. 109 as of July 1, 1992 was to
decrease net income by $3,132,000, for the fiscal year ended
June 30, 1993.
<PAGE>
6. The Company is currently a party to or otherwise involved with
various administrative or legal proceedings under federal, state
or local environmental laws or regulations involving a number of
sites, in some cases as a participant in a group of potentially
responsible parties. Four of these sites, the Sharkey and Combe
Landfills in New Jersey, the San Gabriel Valley/El Monte,
California water basin matter, and the Jack's Creek/Sitkin
Smelting Superfund site in Pennsylvania, are listed on the
National Priorities List. With respect to the Sharkey Landfill,
the Company has been allocated .75% of the remediation costs, an
amount which is not material to the Company. Based on recent
developments, the Company elected not to enter into the de
minimis settlement proposal and has instead decided to
participate in the remediation as a participating party. No
allocations have been made to date with respect to the Combe
Landfill or San Gabriel Valley sites. While a formal allocation
has not been completed with respect to the Jack's Creek site,
the draft volumetric ranking allocated a .2847% share of the
total weight to the Company, which the Company believes should
entitle it to participate as a de minimis party. With respect
to the Combe Landfill, the Company is one of approximately 30
potentially responsible parties. The Company and all other
PRP's recently received a Supplemental Directive from the New
Jersey Department of Environmental Protection & Energy seeking
to recover approximately $9 million in the aggregate for the
operation, maintenance, and monitoring of the implemented
remedial action taken to date in connection with the Combe
Landfill North site.
Given the number of parties involved in most environmental
sites, the multiplicity of possible solutions, the evolving
technology and the years of remedial activity required, it is
difficult to estimate with certainty the total cost of
remediation, the timing and extent of remedial actions which may
be required, and the amount of liability, if any, of the
Company alone or in relation to that of other responsible
parties. Based on facts presently known to it, the Company does
not believe that the outcome of these proceedings will have a
material adverse effect on its financial condition.
<PAGE>
The Company has established balance sheet accruals which it
currently believes are adequate in light of the potential
exposure of pending and threatened environmental litigation and
proceedings of which it has knowledge. In this regard, with
respect to certain of these matters, the Company has resort
either to some degree of insurance coverage or indemnifications
from third parties which are expected to defray to some extent
the effect thereof. With respect to insurance, coverage of some
of these claims has been disputed by the carriers based on
standard reservations and, therefore, recovery may be somewhat
questionable, a factor which has been considered in the
Company's evaluation of these matters. Although difficult to
quantify based on the complexity of the issues and the
limitation on available information, the Company believes that
its accruals for the estimated costs associated with such
matters adequately provide for the Company's estimated
foreseeable liability for these sites, however, given the nature
and scope of the Company's manufacturing operations, there can
be no assurance that the Company will not become subject to
other environmental proceedings and liabilities in the future.
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Quarter Ended March 31, 1994 Compared to
Quarter Ended March 31, 1993
Net sales increased $13,768,000 (11.5%) to $133,532,000. This
increase was attributable to the inclusion of the net sales of
acquired companies and increased unit shipments of certain product
lines. The net sales of Edward Barber Company ("EBCO") acquired in
May 1993, and Ancon Products, Inc. ("Ancon") acquired in July 1993
represented approximately 40% of the increase. The Company had
increased unit shipments of water plumbing and heating valves, oil
and gas valves, as well as decreased unit shipments of water safety
and flow control valves and aerospace/military valves. While the
Company believes this decrease in aerospace/military valves to be a
long-term situation, the Company also believes there will be no
further material deterioration in this market in the foreseeable
future. The Company intends to maintain its strategy of seeking
acquisition opportunities as well as developing its international
sales to achieve sales growth.
Gross profit increased $5,936,000 (13.3%) to $50,691,000 and
increased as a percentage of net sales from 37.4% to 38.0%. This
increase in gross profit was primarily attributable to an improved
sales mix, increased absorption of fixed expenses in the
manufacturing plants associated with the increased level of
production and sales, and decreased costs of bronze ingot.
Selling, general and administrative expenses increased
$1,735,000 (6.0%) to $30,818,000 and decreased as a percentage of
sales from 24.3% to 23.1%. This increased spending is primarily
attributable to the inclusion of the expenses of acquired companies
discussed above, and increased commissions associated with the higher
sales volume. These increased expenses were partially offset by
reduced spending at several subsidiaries as a result of downsizing
programs implemented during fiscal year 1993.
Interest income decreased $509,000 (42.8%) to $680,000. This
decrease is primarily attributable to the decreased levels of cash
and short-term investments. Interest expense decreased $269,000
(11.1%) to $2,161,000. This decrease is attributable to the
decreased levels of long-term debt.
Earnings before income taxes increased $3,653,000 (25.3%) to
$18,071,000. Net earnings increased $2,473,000 (28.9%) to
$11,040,000.
<PAGE>
The weighted average number of common shares outstanding on
March 31, 1994, after giving effect for the 2-for-1 stock split,
decreased to 29,756,414 from 30,116,380 for primary earnings per
share. This decrease is the result of the repurchase by the Company
of 685,400 shares of Class A Common Stock purchased during the first
quarter of the fiscal year. Primary and fully diluted earnings per
share were $.37 for the quarter ended March 31, 1994 compared to $.28
for the quarter ended March 31, 1993.
Nine Months Ended March 31, 1994 Compared to
Nine Months Ended March 31, 1993
Net sales increased $48,558,000 (14.1%) to $391,847,000. This
increase is primarily attributable to the inclusion of the net sales
of acquired companies. The net sales of Intermes acquired in
November 1992, EBCO, and Ancon represented approximately 60% of the
increase. The Company had increased unit shipments of water plumbing
and heating valves, oil and gas valves, and increased international
sales, as well as decreased unit shipments of water safety and flow
control valves and aerospace/military valves.
Gross profit increased $19,465,000 (15.0%) to $149,305,000 and
increased as a percentage of sales from 37.8% to 38.1%. This
increase is primarily attributable to an improved sales mix, improved
manufacturing performance, and decreased costs of bronze ingot.
Selling, general and administrative expenses increased
$4,013,000 (4.6%) to $91,175,000. The Company recorded $7,000,000 of
unusual charges in the quarter ended December 31, 1992 for
environmental matters and costs associated with the downsizing and
restructuring of certain acquired companies. Selling, general and
administrative expenses would have increased $11,013,000 (13.7%)
without the $7,000,000 of unusual charges in the period ended
December 31, 1992. This increase is primarily attributable to the
inclusion of the expenses of acquired companies and increased
commissions associated with the higher sales volume. These increases
were partially offset by decreased spending at several subsidiaries
as a result of downsizing programs implemented during last fiscal
year.
The Company from time to time is involved with environmental
proceedings and incurs costs on an ongoing basis related to
environmental matters. See Note 5 to Notes of Condensed Consolidated
Financial Statements for further discussion.
<PAGE>
Interest income decreased $1,565,000 (41.5%) to $2,205,000 due
to decreased levels of cash and short-term investments.
Earnings before income taxes and unusual charges increased
$6,760,000 (14.8%) to $52,531,000. Net earnings before unusual
charges and the cumulative effect of the change in accounting method
due to the implementation of SFAS No. 109 as described in Footnote 4
increased $4,291,000 (15.4%) to $32,125,000.
The weighted average number of common shares outstanding on
March 31, 1994 decreased to 29,676,036 from 30,104,182 for primary
earnings per share. This decrease is the result of the purchase by
the Company of 685,400 shares of Class A Common Stock during the
current fiscal year. Primary and fully diluted earnings per share
were $1.08 for the nine months ended March 31, 1994 compared to $.92
before unusual charges and the cumulative effect of the accounting
change in accounting method for the nine months ended March 31, 1993.
The following table illustrates the impact of unusual charges
and the accounting change on earnings per share for the nine months
ended March 31st:
1994 1993
Earnings per share as reported $1.08 $.68
Unusual charges $.14
Cumulative effect of change in
accounting method $.10
----- ----
$1.08 $.92
Liquidity and Capital Resources
During the nine months ended March 31, 1994, the Company
repurchased 685,400 shares of its Class A Common Stock through open
market repurchases for an aggregate price of $12,064,000. The
Company's repurchase program is now complete. A subsidiary of the
Company purchased Ancon Products, Inc. located in Scarborough,
Ontario, Canada. Ancon manufactures a wide range of floor and roof
drains, intercepters, backwater valves, yard hydrants, and stainless
and carbon steel specialty products used primarily in commercial and
industrial construction applications. The Company also purchased
Enpoco Canada, Ltd., a manufacturer of drains located in Ontario,
Canada. The aggregate purchase price for these acquisitions was
U.S.$4,783,000. The Company also repaid $2,018,000 of debt acquired
with one of the companies. The Company made contingent payments of
$6,094,000 as part of the Intermes acquisition. The Company also
spent $12,722,000 on capital expenditures, primarily manufacturing
machinery and equipment, as part of its current fiscal year budget of
$22,000,000.
<PAGE>
The principal sources of funds to finance these acquisitions,
capital expenditures, debt repayments and stock repurchases were the
issuance by the Company on November 26, 1991 of $75,000,000 aggregate
principal amount of its 8.375% Notes Due 2003 and funds provided from
operations.
The change in foreign exchange rates since June 30, 1993 did not
have a material impact on the results of operations or the financial
condition of the Company.
Working capital at March 31, 1994 was $237,907,000 compared to
$222,652,000 at June 30, 1993. Cash and short-term investments were
$66,342,000 at March 31, 1994 compared to $83,135,000 at June 30,
1993. The ratio of current assets to current liabilities was 4.1 to 1
at March 31, 1994 compared to 3.8 to 1 at June 30, 1993. Debt as a
percentage of capital employed was 22.3% at March 31, 1994 compared
to 23.7% at June 30, 1993.
The Company anticipates that funds provided from operations will
be sufficient to meet operating requirements and anticipated capital
expenditures for at least the next 24 months.
<PAGE>
Item 5. Other Information
On January 18, 1994, the Board of Directors of the
Corporation declared a two-for-one stock split of the
Corporation's outstanding Class A Common Stock, par value
$.10 per share, and Class B Common Stock, par value $.10
per share, to be effected in the form of a stock dividend
equal to one share of Class A Common Stock for each share
of Class A Common Stock outstanding on the record date, and
one share of Class B Common Stock for each share of Class B
Common Stock outstanding on the record date, all such
shares to be fully paid and nonassessable. The stock
dividend was payable on March 15, 1994 to holders of Class
A Common Stock and Class B Common Stock of record as of the
close of business on March 1, 1994. Upon the effectiveness
of such dividend, there shall be designated as additional
capital of the Corporation an amount equal to the aggregate
par value of the shares of Class A Common Stock and Class B
Common Stock of the Corporation being declared as a
dividend.
Upon the effectiveness of such stock dividend, the
Corporation shall increase by 100% the number of shares of
Class A Common Stock reserved for issuance in connection
with, and decrease by 50% the exercise price with respect
to, any options heretofore granted and now outstanding and
hereafter granted under the Corporation's 1986 Incentive
Stock Option Plan, the 1989 Nonqualified Stock Option Plan,
and the 1991 Non-Employee Directors' Nonqualified Stock
Option Plan, all in accordance with the anti-dilution
provisions of each such Plan. The number of shares of
Class A Common Stock and the exercise price of each stock
option granted prior to and outstanding as of the effective
date of the dividend under the Corporation's 1986 Incentive
Stock Option Plan, the 1989 Nonqualified Stock Option Plan,
or the 1991 Non-Employee Directors' Nonqualified Stock
Option Plan, respectively, and each option agreement
outstanding thereunder, shall be adjusted so that the
number of shares that may be purchased upon exercise of any
such option agreement will be increased by 100% and the
exercise price will be decreased by 50% per share.
Item 6 Exhibits and Reports Filed on Form 8-K
There were no reports filed on Form 8-K for the quarter
ended March 31, 1994.
Watts Industries, Inc.
Exhibit 11 -- Computation of Per Share Earnings
Three Months Ended
March 31
-----------------------
1994 1993
-------- --------
[C] [C]
PRIMARY
- -----------
Average shares outstanding 29,447,848 29,926,476
Net effect of dilutive stock
options - based on the treasury
stock method using average market 308,566 189,904
price
----------- -----------
Total 29,756,414 30,116,380
=========== ===========
Earnings before income taxes and
cumulative effect of change in
accounting for income taxes $ 18,071,240 $ 14,418,081
Income taxes 7,031,320 5,850,726
----------- -----------
Earnings before cumulative effect
of accounting change 11,039,920 8,567,355
Cumulative effect as of June 30,
1992 of change in method of
accounting for income taxes
----------- -----------
Net earnings $ 11,039,920 $ 8,567,355
=========== ===========
Earnings per share:
Earnings before cumulative effect
of accounting change $ .37 $ .28
Cumulative effect of accounting
change
----------- -----------
Net earnings $ .37 $ .28
=========== ===========
<PAGE>
Watts Industries, Inc.
Exhibit 11 -- Computation of Per Share Earnings
Three Months Ended
March 31
-----------------------
1994 1993
-------- --------
[C] [C]
FULLY DILUTED
- -------------
Average shares outstanding 29,447,848 29,926,476
Net effect of dilutive stock
options - based on the treasury
stock method using the quarter-en
market price, if higher than 337,903 189,926
average market price
----------- -----------
Total 29,785,751 30,116,402
=========== ===========
Earnings before income taxes and
cumulative effect of change in
accounting for income taxes $ 18,071,240 $ 14,418,081
Income taxes 7,031,320 5,850,726
----------- -----------
Earnings before cumulative effect
of accounting change 11,039,920 8,567,355
Cumulative effect as of June 30,
1992 of change in method of
accounting for income taxes
----------- -----------
Net earnings $ 11,039,920 $ 8,567,355
=========== ===========
Earnings per share:
Earnings before cumulative effect
of accounting change $ .37 $ .28
Cumulative effect of accounting
change
----------- -----------
Net earnings $ .37 $ .28
=========== ===========
<PAGE>
Watts Industries, Inc.
Exhibit 11 -- Computation of Per Share Earnings
Nine Months Ended
March 31
-----------------------
1994 1993
-------- --------
[C] [C]
PRIMARY
- -----------
Average shares outstanding 29,450,991 29,877,632
Net effect of dilutive stock
options - based on the treasury
stock method using average market 225,045 226,550
price
----------- -----------
Total 29,676,036 30,104,182
=========== ===========
Earnings before income taxes and
cumulative effect of change in
accounting for income taxes $ 52,531,304 $ 38,770,208
Income taxes 20,405,934 15,275,235
----------- -----------
Earnings before cumulative effect
of accounting change 32,125,370 23,494,973
Cumulative effect as of June 30,
1992 of change in method of
accounting for income taxes (3,132,000)
----------- -----------
Net earnings $ 32,125,370 $ 20,362,973
=========== ===========
Earnings per share:
Earnings before cumulative effect
of accounting change $ 1.08 $ .78
Cumulative effect of accounting
change ( .10)
----------- -----------
Net earnings $ 1.08 $ .68
=========== ===========
<PAGE>
Watts Industries, Inc.
Exhibit 11 -- Computation of Per Share Earnings
Nine Months Ended
March 31
-----------------------
1994 1993
-------- --------
[C] [C]
FULLY DILUTED
- -------------
Average shares outstanding 29,450,991 29,877,632
Net effect of dilutive stock
options - based on the treasury
stock method using the quarter-en
market price, if higher than 337,903 238,446
average market price
----------- -----------
Total 29,788,894 30,116,078
=========== ===========
Earnings before income taxes and
cumulative effect of change in
accounting for income taxes $ 52,531,304 $ 38,770,208
Income taxes 20,405,934 15,275,235
----------- -----------
Earnings before cumulative effect
of accounting change 32,125,370 23,494,973
Cumulative effect as of June 30,
1992 of change in method of
accounting for income taxes (3,132,000)
----------- -----------
Net earnings $ 32,125,370 $ 20,362,973
=========== ===========
Earnings per share:
Earnings before cumulative effect
of accounting change $ 1.08 $ .78
Cumulative effect of accounting
change ( .10)
----------- -----------
Net earnings $ 1.08 $ .68
=========== ===========
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.
WATTS INDUSTRIES, INC.
Date: May 13, 1994 By: /s/Kenneth J. McAvoy
Kenneth J. McAvoy
Vice President of Finance
and Treasurer; Principal
Financial Officer
