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 December 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 its charter)
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)
(Zip Code)
(508) 688-1811
(Registrant's telephone number, including area code)
N/A
(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 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 January 31, 1995
- - ------------------------------ ---------------------------------
Class A Common, $.10 par value 18,175,516
Class B Common, $.10 par value 11,422,470
<PAGE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Condensed Consolidated Balance Sheets
at December 31, 1994 and June 30, 1994.
Condensed Statements of Consolidated
Earnings for the Three Months Ended
December 31, 1994 and December 31, 1993.
Condensed Statements of Consolidated
Earnings for the Six Months Ended
December 31, 1994 and December 31, 1993.
Condensed Statements of Consolidated
Cash Flows for the Six Months Ended
December 31, 1994 and December 31, 1993.
Notes to Condensed Consolidated
Financial Statements.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.
Part II. Other Information
Item 4. Submission of Matters to Vote of Security Holders
Item 5. Other Information.
Item 6. Exhibits and Reports Filed on Form 8-K.
Exhibit 11 - Computation of Per Share
Earnings.
Signatures
Exhibit 27 - Financial Data Schedule
<PAGE>
PART I. FINANCIAL INFORMATION
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share information)
(Unaudited)
Dec. 31, June 30,
ASSETS 1994 1994
--------- ---------
CURRENT ASSETS [C] [C]
Cash and cash equivalents.................. $ 7,697 $ 6,231
Short-term investments..................... 10,681 58,769
Trade accounts receivable, less allowance
for doubtful accounts of $5391 and $4488. 107,912 79,342
Inventories:
Finished goods........................... 72,001 60,104
Work in process.......................... 43,777 39,671
Raw materials............................ 64,752 53,305
--------- ---------
180,530 153,080
Prepaid expenses and other current assets.. 19,173 8,484
Deferred income taxes...................... 18,265 14,973
--------- ---------
Total Current Assets............... 344,258 320,879
OTHER ASSETS
Goodwill, net of accumulated amortization.. 131,781 89,500
Other...................................... 16,215 12,222
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment-at cost...... 257,591 230,375
Less allowance for depreciation............ (103,644) ( 94,126)
--------- ---------
Property, plant and equipment-net.......... 153,947 136,249
--------- ---------
TOTAL ASSETS................................. $ 646,201 $ 558,850
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable........................... $ 33,313 $ 24,672
Accrued expenses........................... 50,870 36,840
Accrued compensation and related items..... 7,924 8,355
Income taxes............................... 2,533 3,340
Notes payable and current portion of
long-term debt........................... 20,855 1,141
--------- ---------
Total Current Liabilities.......... 115,495 74,348
LONG-TERM DEBT, less current portion......... 111,132 97,479
DEFERRED INCOME TAXES........................ 19,622 16,357
OTHER LIABILITIES............................ 17,933 9,115
STOCKHOLDERS' EQUITY
Class A Common Stock,$.10 par value;
80,000,000 shares authorized, 18,126,116
shares issued and outstanding at Dec. 31 1,812 1,801
Class B Common Stock,$.10 par value;
25,000,000 shares authorized, 11,472,470
shares issued and outstanding at Dec.31 1,147 1,147
Additional paid-in capital............... 95,107 92,996
Retained earnings........................ 288,010 268,706
Equity adjustment from translation....... ( 4,057) ( 3,099)
--------- ---------
Total Stockholders' Equity......... 382,019 361,551
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY... $ 646,201 $ 558,850
========= =========
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)
Three Months Ended
------------------------
Dec.31, Dec.31,
1994 1993
--------- ---------
[C] [C]
Net sales.................................... $ 159,024 $ 127,734
Cost of goods sold........................... 101,495 78,392
--------- ---------
GROSS PROFIT....................... 57,529 49,342
Selling, general & administrative expenses... 36,219 30,263
--------- ---------
OPERATING INCOME................... 21,310 19,079
Other (income) expense:
Interest income......................... ( 380) ( 727)
Interest expense........................ 2,489 2,204
Other-net............................... 729 415
--------- ---------
2,838 1,892
--------- ---------
EARNINGS BEFORE INCOME TAXES 18,472 17,187
Provision for income taxes................... 7,307 6,639
--------- ---------
NET EARNINGS....................... $ 11,165 $ 10,548
========= =========
Primary and fully-diluted earnings per share: $ .38 $ .36
========= =========
Cash dividends per share..................... $ .055 $ .045
========= =========
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)
Six Months Ended
------------------------
Dec.31, Dec.31,
1994 1993
--------- ---------
[C] [C]
Net sales.................................... $ 311,701 $ 258,315
Cost of goods sold........................... 198,489 159,701
--------- ---------
GROSS PROFIT....................... 113,212 98,614
Selling, general & administrative expenses... 71,068 60,357
--------- ---------
OPERATING INCOME................... 42,144 38,257
Other (income) expense:
Interest income......................... ( 1,130) ( 1,525)
Interest expense........................ 4,899 4,568
Other-net............................... 993 754
--------- ---------
4,762 3,797
--------- ---------
EARNINGS BEFORE INCOME TAXES 37,382 34,460
Provision for income taxes................... 14,827 13,375
--------- ---------
NET EARNINGS....................... $ 22,555 $ 21,085
========= =========
Primary and fully-diluted earnings per share: $ .76 $ .71
========= =========
Cash dividends per share..................... $ .11 $ .09
========= =========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Amounts in thousands)
(Unaudited)
------------------------
Six Months Ended
--------- ---------
Dec. 31, Dec. 31,
1994 1993
--------- ---------
OPERATING ACTIVITIES [C] [C]
Net earnings $ 22,555 $ 21,085
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 12,028 11,027
Provision for deferred income taxes 534 ( 155)
(Gain)Loss on disposal of fixed assets ( 67) ( 21)
Changes in operating assets and liabilities, net
of effects from business acquisitions:
Accounts receivable ( 14,182) ( 11,419)
Inventories 1,525 ( 253)
Prepaid expenses and other assets ( 5,017) ( 265)
Accounts payable and accrued expenses 2,203 ( 5,385)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 19,579 14,614
INVESTING ACTIVITIES
Additions to property, plant, and equipment ( 11,944) ( 8,418)
Proceeds from disposal of equipment 206 67
Increase in intangible assets ( 482) ( 1,068)
Business acquisitions, net of cash acquired ( 56,241) ( 11,021)
Investment in joint venture ( 3,500)
Repayment of debt of acquired businesses ( 3,277) ( 1,964)
Net changes in short-term investments 48,088 14,033
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 27,150) ( 8,371)
FINANCING ACTIVITIES
Purchase and retirement of treasury stock ( 12,064)
Proceeds from exercise of stock options 1,663 1,444
Proceeds of short-term borrowings 114 415
Net proceeds under revolving credit agreement 13,000
Payments of long-term debt ( 2,361) ( 2,533)
Cash dividends ( 3,251) ( 2,643)
--------- ---------
NET CASH (USED IN) FINANCING ACTIVITIES 9,165 ( 15,381)
Effect of exchange rates on cash and cash equivalents ( 128) ( 991)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,466 ( 10,129)
Cash and cash equivalents at beginning of period 6,231 16,937
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,697 $ 6,808
========= =========
See accompanying notes to condensed consolidated financial statements.
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 December 31,
1994, the Condensed Statements of Consolidated Earnings for the three and six
months ended December 31, 1994 and December 31, 1993, and the Condensed
Statements of Consolidated Cash Flows for the six months ended December 31,
1994 and December 31, 1993.
The balance sheet at June 30, 1994 has been derived from the audited
financial statements at that date. The accounting policies followed by the
Company are described in the June 30, 1994 financial statements which are
contained in the Company's 1994 Annual Report. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes included in the 1994 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 July 28, 1994, a wholly owned subsidiary of the Company purchased
Jameco Industries, Inc. ("Jameco") of Wyandanch, New York. Jameco is a
manufacturer of metal and plastic water supply products, including valves,
tubular products and sink strainers that are sold primarily to residential
construction and home repair and remodeling markets in the United States.
Jameco had net sales of approximately $56,000,000 for the twelve months ended
June 30, 1994.
In August of 1994, a wholly owned subsidiary of the Company entered into a
joint venture with Tanggu Valve Company in Tianjin, Peoples Republic of China.
The Company's investment represented a 60% interest in the joint venture.
On November 18, 1994, one or more wholley owned subsidiaries of the Company
purchased Pibiviesse S.p.A. ("PBVS") located in Mazzo Di Rho, Italy. PBVS
manufactures a complete range of trunnion mounted ball valves with
manufacturing capabilities up through 60 inch diameter and inclusive of Class
2500 pressure ratings to meet the demanding requirements of international
pipeline projects. PBVS had net sales of approximately $34,000,000 for the
twelve months ended June 30, 1994.
In August and December of 1994, a subsidiary of the Company acquired two
product lines. One product line is a line of cryogenic valves used in
industrial applications. The other product line is check and relief valves
used in aerospace and military applications.
The aggregate purchase price for these acquisitions and the establishment of
the joint venture totaled $66,400,000.
<PAGE>
4. Certain of the Company's operations generate solid and hazardous wastes,
which are disposed of elsewhere by arrangement with the owners or operators of
disposal sites or with transporters of such waste. The Company's foundry and
other operations are subject to various federal, state and local laws and
regulations relating to environmental quality. Compliance with these laws and
regulations requires the Company to incur expenses and monitor its operations
on an ongoing basis. The Company cannot predict the effect of future
requirements on its capital expenditures, earnings or competitive position
due to any changes in either federal, state or local environmental laws,
regulations or ordinances.
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 certain developments, the Company elected not to enter into the de
minimis settlement proposal and 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 .30446% share of the total
weight to the Company, which the Company believes should entitle it to
participate as a de minimis party. In addition to the foregoing, the Solvent
Recovery Service of New England site and the Old Southington landfill site,
both in Connecticut, are on the National Priorities List but, with respect
thereto, the Company has resort to indemnification from third parties and
based on currently available information, the Company believes it will be
entitled to participate in a de minimis capacity.
With respect to the Combe Landfill, the Company is one of approximately 30
potentially responsible parties. The Company and all other PRP's have 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,
however, with respect to the San Gabriel Valley/El Monte, California site, the
Company is currently unable to estimate the potential exposure because the
process of determining the causes and extent of contamination, the cost of
remediation and the method to allocate the cost among those ultimately
determined to be responsible is in a very early stage.
<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 is
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 which may be material to the Company.
<PAGE>
WATTS INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Quarter Ended December 31, 1994 Compared to
Quarter Ended December 31, 1993
Net sales increased $31,290,000 (24.5%) to $159,024,000. Of this increase,
7% was attributable to internal growth while the remainder was due to the
inclusion of the net sales of acquired companies and the new Chinese joint
venture. These acquisitions included Jameco Industries, Inc. ("Jameco")
acquired in July 1994 and located in New York, Pibiviesse S.p.A. ("PBVS")
acquired in November 1994 and located in Italy, and Enpoco Canada, Ltd.
("Enpoco") acquired in November 1993 and located in Canada. The Company
established a joint venture in China in August of 1994. The Company had
increased unit shipments of plumbing and heating valves, water quality valves,
and oil and gas valves. The Company intends to maintain its strategy of
seeking acquisition opportunities as well as expanding its existing market
position to achieve sales growth.
Gross profit increased $8,187,000 (16.6%) to $57,529,000 and decreased as
a percentage of net sales from 38.6% to 36.2%. This decreased percentage was
primarily attributable to the inclusion of Jameco, which currently operates at
a lower gross margin than the rest of the Company. Gross profit was also
adversely affected by increased raw materials costs primarily in bronze ingot
and brass rod.
Selling, general and administrative expenses increased $5,956,000 (19.7%)
to $36,219,000. This increase is primarily attributable to the inclusion of
the expenses of Jameco and other acquired companies discussed in Note 3 above,
increased selling expenses associated with international sales, and commissions
associated with the increased sales volumes.
Interest income decreased $347,000 (47.8%) to $380,000 due to decreased
levels of cash and short-term investments partially offset by higher rates of
return experienced on short term investments.
Interest expense increased $285,000 (12.9%) to $2,489,000. This increase
is attributable to the increased levels of debt incurred in association with
the acquisitions discussed in Note 3 above.
Net earnings increased $617,000 (5.9%) to $11,165,000.
The change in foreign exchange rates had an immaterial impact on the
results of operations.
The weighted average number of common shares outstanding on December
31, 1994, after giving effect to the two-for-one stock split described in
Note 2 above, increased to 29,695,522 from 29,632,927 for primary earnings per
share. Primary and fully diluted earnings per share were $ .38 for the
quarter ended December 31, 1994 compared to $ .36 for the quarter ended
December 31, 1993.
<PAGE>
Six Months Ended December 31, 1994 Compared to
Six Months Ended December 31, 1993
Net sales increased $53,386,000 (20.7%) to $311,701,000. Of this increase,
7% was attributable to internal growth while the remainder was due to the
inclusion of the net sales of acquired companies and the new Chinese joint
venture. These acquisitions included Jameco Industries, Inc. ("Jameco")
acquired in July 1994 and located in New York, Pibiviesse S.p.A. ("PBVS")
acquired in November 1994 and located in Italy, and Enpoco Canada, Ltd.
("Enpoco") acquired in November 1993 and located in Canada. The Company
established a joint venture in China in August of 1994. The Company had
increased unit shipments of plumbing and heating valves, water quality valves,
and oil and gas valves. The Company intends to maintain its strategy of
seeking acquisition opportunities as well as expanding its existing market
position to achieve sales growth.
Gross profit increased $14,598,000 (14.8%) to $113,212,000 and decreased
as a percentage of net sales from 38.2% to 36.3%. This decreased percentage
was primarily attributable to the inclusion of Jameco, which currently operates
at a lower gross margin than the rest of the Company. Gross profit was also
adversely affected by increased raw materials costs primarily in bronze ingot
and brass rod.
Selling, general and administrative expenses increased $10,711,000 (17.8%)
to $71,068,000. This increase is primarily attributable to the inclusion of
the expenses of Jameco and other acquired companies discussed in Note 3 above,
increased selling expenses associated with international sales, and commissions
associated with the increased sales volumes.
Interest income decreased $395,000 (25.9%) to $1,130,000 due to
decreased levels of cash and short-term investments partially offset by higher
rates of return experienced on short term investments.
Interest expense increased $331,000 (7.3%) to $4,899,000. This increase is
attributable to the increased levels of debt incurred in association with the
acquisitions discussed in Note 3 above.
Net earnings increased $1,470,000 (7.0%) to $22,555,000.
The change in foreign exchange rates had an immaterial impact on
the results of operations.
The weighted average number of common shares outstanding on December
31, 1994, after giving effect to the two-for-one stock split described in
Note 2 above, increased to 29,696,957 from 29,635,847 for primary earnings
per share. Primary and fully diluted earnings per share were $ .76 for the
six months ended December 31, 1994 compared to $ .71 for the six months ended
December 31, 1993.
<PAGE>
Liquidity and Capital Resources
During the six months ended December 31, 1994, the Company invested in
six acquisitions. In July, 1994, a subsidiary of the Company purchased Jameco
Industries, Inc. located in Wyandanch, New York. Jameco is a manufacturer of
metal and plastic water supply products, including valves, tubular products and
sink strainers that are sold primarily to residential construction and home
repair and remodeling markets in the United States. Jameco had net sales of
approximately $56,000,000 for the twelve months ended June 30, 1994. In August
of 1994, a wholly owned subsidiary of the Company entered into a joint venture
with a valve company in Tianjin, Peoples Republic of China. The Company's
investment of $8,500,000 represented a 60% interest in the joint venture.
The joint venture immediately purchased $3,500,000 of inventory from the
minority partner in accordance with the joint venture agreement. The
remainder of the joint venture investment of $5,000,000 will be utilized for
working capital and fixed asset purchases. In November 1994, a subsidiary of
the Company purchased Pibiviesse S.p.A. located in Mazzo Di Rho, Italy.
PBVS is a manufacturer of oil and gas valves. In August and December of 1994,
a subsidiary of the Company acquired two product lines. One product line is
a line of cryogenic valves used in industrial applications. The other product
line is check and relief valves used in aerospace and military applications.
The aggregate purchase price for these investments was $66,400,000 plus
acquired debt of $26,000,000. The Company also repaid $3,277,000 of debt
acquired with one of the companies.
The Company also spent $11,944,000 on capital expenditures, primarily
manufacturing machinery and equipment. The Company is budgeting $27,000,000
for capital expenditures in the fiscal year ending June 30, 1995, as part of
its commitment to continuously improve its manufacturing capabilities.
Working capital at December 31, 1994 was $228,763,000 compared to
$246,531,000 at June 30, 1994. Cash and short-term investments were
$18,378,000 at December 31, 1994 compared to $65,000,000 at June 30, 1994.
The ratio of current assets to current liabilities was 3.0 to 1 at December 31,
1994 compared to 4.3 to 1 at June 30, 1994. Debt as a percentage of total
capital employed was 25.7% at December 31, 1994 compared to 21.4% at June 30,
1994.
Non-current Other Liabilities increased $8,818,000 (49%) to $17,933,000.
This increase is primarily due to the inclusion of the minority interest
component of the Chinese joint venture.
In order to support the Company's acquisition program, working capital
requirements, and for general corporate purposes, the Company entered into a
five-year commitment for an unsecured line of credit for $125,000,000.
Borrowings under this credit line will be utilized to fund acquisitions,
support future working capital requirements and general corporate purposes.
During the quarter, the Company borrowed $13,000,000 under this credit
facility.
The Company from time to time is involved with environmental proceedings
and incurs costs on an ongoing basis related to environmental matters.
The Company has been or expects to be named a potentially responsible party
with respect to currently identified contaminated sites, which are in various
stages of the remediation process. The Company has evaluated its potential
exposure based on all currently available information and has recorded its
estimate of its liability for environmental matters.
<PAGE>
The ultimate outcome of these environmental matters cannot be determined.
The Company currently anticipates that it will not incur significant
expenditures in fiscal 1995 in connection with any of these environmentally
contaminated sites. Please see Note 4 to the accompanying consolidated
financial statements.
The Company anticipates that available funds and those funds provided from
current operations will be sufficient to meet current operating requirements
and anticipated capital expenditures for at least the next 24 months.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
(a) The annual meeting of stockholders of the Company was held on
October 18, 1994.
(c) The result of the voting on the proposals considered at the annual
meeting of stockholders are as follows:
1. Election of Directors
Timothy P. Horne, David A. Bloss, Sr., Frederic B. Horne, Kenneth J.
McAvoy, Noah T. Herndon, Wendy E. Lane, Gordon W. Moran, and
Daniel J. Murphy III were each elected as a Director of the Company for
a term expiring at the next annual meeting of stockholders. The voting
results were as follows:
Mr. T. Horne: 130,596,372 votes FOR; 78,022 votes WITHHELD
Mr. Bloss: 130,576,806 votes FOR; 97,588 votes WITHHELD
Mr. F. Horne: 130,596,226 votes FOR; 78,168 votes WITHHELD
Mr. McAvoy: 130,586,052 votes FOR; 88,342 votes WITHHELD
Mr. Herndon: 130,643,352 votes FOR; 31,042 votes WITHHELD
Ms. Lane: 130,640,026 votes FOR; 34,368 votes WITHHELD
Mr. Moran: 130,643,252 votes FOR; 31,142 votes WITHHELD
Mr. Murphy: 130,642,272 votes FOR; 32,122 votes WITHHELD
2. Ratification of Independent Auditors
The selection of Ernst & Young as the independent auditors
of the Company for the current fiscal year was ratified and voting
results were as follows:
130,655,042 FOR; 6,452 AGAINST; 12,900 ABSTAINED; and 0 Broker
Non-Votes.
3. Amendment to Article Fourth of the Company's Restated Certificate of
Incorporation to increase the Company's authorized shares of Class A
and Class B Common Stock.
Amending the Company's Restated Certificate of Incorporation as
described above required the affirmative vote of the holders of a
majority of the outstanding shares of the Company's Class A Common
Stock and Class B Common Stock, voting as separate classes.
The amendment to the Company's Restated Certificate of
Incorporation to increase the authorized shares of the Company's
capital stock was approved by the stockholders and the voting results
were as follows:
13,056,030 Class A votes FOR; 2,476,736 Class A votes AGAINST;
416,928 Class A votes ABSTAINED; and 0 Broker Non-votes.
114,724,700 Class B votes FOR; 0 Class B votes AGAINST; and 0
Class B votes ABSTAINED.
<PAGE>
Item 5. Other Information
On January 18, 1994, the Board of Directors of the Company declared a
two-for-one stock split of the Company'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 Company an amount equal
to the aggregate par value of the shares of Class A Common Stock and Class B
Common Stock of the Company being declared as a dividend.
Upon the effectiveness of such stock dividend, the Company 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
Company'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 Company'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
(a) Exhibits. The Exhibits are furnished elsewhere in this Report.
(b) Reports on Form 8-K
A report on Form 8-K was filed with the Securities and Exchange
Commission on December 5, 1994. The following items were reported in the
Form 8-K:
(1) Item 2. Acquisition or Disposition of Assets
<PAGE>
(2) Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The following Pro Forma Condensed Consolidated Financial Statements
(unaudited) were filed with the Securities and Exchange Commission in a
Form 8-K/A, which amended the Form 8-K filed December 5, 1994, on
February 2, 1995:
(a) Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1994 (Unaudited).
(b) Pro Forma Condensed Consolidated Statement of Earnings,
Year ended June 30, 1994 (Unaudited).
(c) Pro Forma Condensed Consolidated Statement of Earnings, Three
months ended September 30, 1994 (Unaudited).
Watts Industries, Inc.
Exhibit 11 -- Computation of Per Share Earnings
Three Months Ended
December 31
-----------------------
1994 1993
-------- --------
[C] [C]
PRIMARY
- - -----------
Average shares outstanding 29,560,288 29,382,083
Net effect of dilutive stock
options - based on the treasury
stock method using average market
price 135,234 250,844
----------- -----------
Total 29,695,522 29,632,927
=========== ===========
Net earnings $ 11,164,652 $ 10,547,890
=========== ===========
Earnings per share $ .38 $ .35
=========== ===========
FULLY DILUTED
- - --------------
Average shares outstanding 29,560,288 29,382,083
Net effect of dilutive stock
options - based on the treasury
stock method using the quarter-end
market price, if higher than
average market price 135,511 324,359
----------- -----------
Total 29,695,799 29,706,442
=========== ===========
Net earnings $ 11,164,652 $ 10,547,890
=========== ===========
Earnings per share $ .38 $ .36
=========== ===========
<PAGE>
Watts Industries, Inc.
Exhibit 11 -- Computation of Per Share Earnings
Six Months Ended
December 31
-----------------------
1994 1993
-------- --------
[C] [C]
PRIMARY
- - -----------
Average shares outstanding 29,523,224 29,452,563
Net effect of dilutive stock
options - based on the treasury
stock method using average market
price 173,733 183,284
----------- -----------
Total 29,696,957 29,635,847
=========== ===========
Net earnings $ 22,554,652 $ 21,085,450
=========== ===========
Earnings per share $ .76 $ .71
=========== ===========
FULLY DILUTED
- - --------------
Average shares outstanding 29,523,224 29,452,563
Net effect of dilutive stock
options - based on the treasury
stock method using the quarter-end
market price, if higher than
average market price 181,451 324,359
----------- -----------
Total 29,704,675 29,776,922
=========== ===========
Net earnings $ 22,554,652 $ 21,085,450
=========== ===========
Earnings per share $ .76 $ .71
=========== ===========
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: February 14, 1995 By: /s/Timothy P. Horne
-------------------
Timothy P. Horne
President
Date: February 14, 1995 By: /s/Kenneth J. McAvoy
-------------------
Kenneth J. McAvoy
Chief Financial Officer
and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
registrants statements of consolidated earnings and consolidated
balance sheets for fiscal quarter ended December 31, 1994 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000795403
<NAME> WATTS INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 18,378<F1>
<SECURITIES> 0
<RECEIVABLES> 113,303
<ALLOWANCES> 5,391
<INVENTORY> 180,530
<CURRENT-ASSETS> 344,258
<PP&E> 257,591
<DEPRECIATION> 103,644
<TOTAL-ASSETS> 646,201
<CURRENT-LIABILITIES> 115,495
<BONDS> 92,264
<COMMON> 2,959
0
0
<OTHER-SE> 379,060
<TOTAL-LIABILITY-AND-EQUITY> 646,201
<SALES> 159,024
<TOTAL-REVENUES> 159,024
<CGS> 101,495
<TOTAL-COSTS> 137,714<F2>
<OTHER-EXPENSES> 2,838<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,489
<INCOME-PRETAX> 18,472
<INCOME-TAX> 7,307
<INCOME-CONTINUING> 11,165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,165
<EPS-PRIMARY> $.38
<EPS-DILUTED> $.38
<FN>
<F1>Includes 10,681 of Short-term investments.
<F2>Includes only cost of goods sold and selling, general and administrative
expenses.
<F3>Includes interest expense shown below.
</FN>
</TABLE>
