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 November 30, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4903
PREMIER INDUSTRIAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 34-0661122
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
4500 Euclid Avenue, Cleveland, Ohio 44103
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (216) 391-8300
None
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
Number of shares of Common Stock outstanding at January 3, 1994:
85,909,135
Page 1 of 12 pages
Exhibit Index appears on page 11.
PREMIER INDUSTRIAL CORPORATION
Table of Contents
Part I. Financial Information
Item 1 - Financial Statements:
Consolidated Statement of Earnings for the three months and six
months ended November 30, 1993, and November 30, 1992 . . . . . . . . 3
Consolidated Balance Sheet at November 30, 1993, and
May 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows for the six months
ended November 30, 1993, and November 30, 1992 . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . 6
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 7
Liquidity, Capital Resources and Cash Flows (Financial Condition). . . 7
Part II. Other Information
Item 4 - Submission of Matters to a Vote of Security Holders . . . . . . 8
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Page 2 of 12 pages
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Earnings
(Unaudited)
(In thousands of dollars, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Operating revenues $183,166 $171,677 $360,924 $338,495
Other income, net 971 1,043 2,151 2,321
184,137 172,720 363,075 340,816
Costs and expenses:
Cost of sales 98,877 89,863 195,144 177,683
Selling, administrative and general 45,755 45,514 91,927 91,161
Depreciation 1,889 1,793 3,762 3,620
Amortization of other assets 104 80 185 215
Interest 69 134 139 211
146,694 137,384 291,157 272,890
Earnings before income taxes 37,443 35,336 71,918 67,926
Income taxes 13,395 12,797 25,790 24,836
Net earnings $ 24,048 $ 22,539 $ 46,128 $ 43,090
Net earnings per share (1) $ .28 $ .26 $ .54 $ .50
Dividends per share (1) $ .09 $ .08 $ .18 $ .16
Average number of common shares and
common stock equivalents (1) 86,036,896 86,699,831 86,211,574 86,685,329
(1) Adjusted to reflect 3-for-2 stock split effective December 23, 1992.
</TABLE>
See accompanying Notes to Consolidated Financial Statements
Page 3 of 12 pages
<TABLE>
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
<CAPTION>
(In thousands of dollars) November 30, May 31, 1993 1993
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and equivalents $ 34,527 $ 43,724
Temporary investments 99,597 100,859
Receivables, less allowance 100,222 102,888
Inventories 153,590 131,484
Prepaid expenses 10,812 5,352
Total current assets 398,748 384,307
Property, plant and equipment, at cost,
less accumulated depreciation 48,559 47,995
Other assets, at cost, less accumulated
amortization 36,848 33,758
$484,155 $466,060
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payables $ 29,552 $ 27,575
Accrued liabilities 16,745 20,643
Total current liabilities 46,297 48,218
Deferred income taxes 16,549 12,883
Long-term debt 6,500 6,500
Shareholders' equity:
Serial preferred stock, without par value;
1,500,000 shares authorized but unissued - -
Common stock, without par value;
stated value $1 per share; 100,000,000
shares authorized, 87,076,321
issued at November 30, 1993
and May 31, 1993 87,076 87,076
Retained earnings 359,440 332,498
Foreign currency translation adjustment (60) 766
Treasury shares at cost (1,158,276 and
792,956 shares at November 30, 1993
and May 31, 1993, respectively) (31,647) (21,881)
414,809 398,459
$484,155 $466,060
See accompanying Notes to Consolidated Financial Statements
</TABLE>
Page 4 of 12 pages
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
<TABLE>
Consolidated Statement of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended
November 30,
1993 1992
(In thousands of dollars)
<S> <C> <C>
Cash and equivalents at beginning of period $43,724 $39,450
Cash flows from operating activities:
Net earnings 46,128 43,090
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 3,947 3,835
Changes in:
Receivables and prepaid expenses (2,794) 1,350
Inventories (22,106) (7,063)
Payables 1,977 721
Accrued liabilities (3,898) (3,799)
Deferred income taxes 3,666 -
Other (3,794) (1,369)
Net cash provided by operating activities 23,126 36,765
Cash flows from investing activities:
Net additions to property, plant and
equipment (4,326) (4,751)
Purchase of temporary investments (348,863) (305,804)
Sale of temporary investments 350,125 295,411
Other (288) (4,686)
Net cash used in investing activities (3,352) (19,830)
Cash flow from financing activities:
Dividends paid (15,474) (13,807)
Purchase of treasury shares (22,828) (1,515)
Proceeds from stock plans 9,331 8,646
Net cash used for financing activities (28,971) (6,676)
Cash and equivalents at end of period $34,527 $49,709
</TABLE>
See accompanying Notes to Consolidated Financial Statements
Page 5 of 12 pages
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. The accompanying unaudited consolidated financial statements contain
all adjustments (consisting only of normal recurring adjustments)
which, in the opinion of management, are necessary to present fairly
the consolidated financial position of Premier Industrial Corporation
(the "Company") as of November 30, 1993 and the results of its
operations for the three months and six months ended November 30,
1993 and November 30, 1992 and its cash flows for the six months
ended November 30, 1993. Certain amounts in prior periods have been
reclassified to conform to the current period's presentation.
2. Cash and equivalents include time deposits of $13,000,000 and
$16,500,000, at November 30, 1993 and May 31, 1993, respectively.
Temporary investments include tax exempt bonds of $95,797,000 and
$96,793,000 at November 30, 1993 and May 31, 1993, respectively.
Temporary investments are carried principally at cost which
approximates market value.
3. The Company's inventories consist primarily of finished goods. Costs
of certain inventories are determined using the dollar value LIFO
method. If all inventory costs were determined on a FIFO basis,
inventories would have been $6,881,000 and $6,931,000 higher than
reported at November 30, 1993 and May 31, 1993, respectively.
4. Effective June 1, 1993, the Company adopted SFAS No. 109 "Accounting
for Income Taxes." This change in accounting principle had no
material impact on the Company's financial statements.
As of June 1, 1993, after the adoption of SFAS No. 109, the Company
had aggregate deferred tax assets of $5,418,000 and deferred tax
liabilities of $17,069,000. The principal components of the
Company's deferred tax accounts include deferred tax liabilities
relating to an investment in a tax lease of $10,376,000, depreciation
of $1,863,000, pension assets of $1,772,000 and oil and gas assets of
$1,106,000, and deferred tax assets relating to inventory of
$2,182,000.
5. In December, 1992 the Board of Directors approved a three-for-two
split of outstanding Common Stock in the form of a 50% stock
distribution. The distribution of shares to effect the three-for-two
split was made January 8, 1993 to shareholders of record December 23,
1992. All shares and per share amounts reflected herein, except
those shares in treasury, have been adjusted to give effect to this
transaction.
Page 6 of 12 pages
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Second Quarter Ended November 30, 1993 versus Second Quarter Ended
November 30, 1992.
Operating revenues of $183,166,000 were 6.7%, or $11,489,000 ahead of
the $171,677,000 reported for the same period last year. The increase
in revenues largely reflects continued gains in the Electronics
Distribution Group. Cost of sales of $98,877,000 increased 10.0%,
primarily related to the revenue gain and changes in overall product
mix. Selling, administrative, and general expenses were about even
with last year, as a result of success in controlling expenses.
Primarily as a result of the above-noted factors, net earnings of
$24,048,000 were up 6.7% and earnings per share of $.28 were up 7.7%,
compared with the second quarter of last year.
Six Months Ended November 30, 1993 versus Six Months Ended November 30,
1992
Operating revenues of $360,924,00 were 6.6%, or $22,429,000 ahead of
the same period last year. The increase in revenues reflects gains
particularly in the Electronics Distribution Group, where expansion and
refinement of product lines continued. Cost of sales of $195,144,000
increased 9.8%, primarily related to the revenue gain and changes in
overall product mix. Selling, administrative, and general expenses
increased only .8%, or $766,000, compared with a year ago.
Primarily as a result of the above-noted factors, net earnings of
$46,128,000 and earnings per share of $.54 were up 7.1% and 8.0%,
respectively, compared with the same period last year.
Liquidity, Capital Resources and Cash Flows (Financial Condition)
The Company continues to maintain a strong financial condition. At
November 30, 1993 working capital of $352,451,000 compared with
$336,089,000 at May 31, 1993, an increase of $16,362,000. The ratio of
current assets to current liabilities was 8.6 to 1 at November 30, 1993.
The Company requires significant funds to carry extensive product
inventories, as product availability and customer service, including rapid
delivery, are key factors in maintaining a strong competitive position in
each industry segment. In addition, the Company maintains cash and
invested funds to meet growth opportunities, including business expansion,
and to have internal capital available for distributions to shareholders.
Page 7 of 12 pages
The Company's long-term debt of $6,500,000 in variable rate Industrial
Development Bonds continues at November 30, 1993 to represent less than 2%
of total capitalization.
The Company's principal source of cash continues to be that provided by
operating activities. Net cash provided by operating activities
fluctuates as a result of variations in operating income, receivable and
inventory levels and the timing of payment of liabilities and taxes.
During the first six months of fiscal 1994, inventories increased
$22,106,000 to $153,590,000 as a result of new product additions. The
Company expects that net earnings generally will provide sufficient cash
to meet the Company's presently anticipated needs for cash.
Net cash used in investing activities during the first six months of
fiscal 1994 consisted of, among other things, net property, plant and
equipment additions of $4,326,000. Net cash used in financing activities
included cash dividends paid to shareholders of $15,474,000. The Company
from time to time purchases shares of its common stock which are then held
as treasury shares for general corporate purposes. During the first half
of fiscal 1994 the Company purchased approximately 842,000 of its shares
for $22,828,000.
Item 4 - Submission of Matters To a Vote of Security Holders
The Annual Meeting of Shareholders of the Company (the "Annual Meeting")
was held on October 13, 1993. Of the 85,844,160 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting, 75,800,444 shares
were present in person or by proxy, each entitled to one vote on all
matters to come before the meeting.
The following matters were submitted to a vote of security holders of the
Company at the Annual Meeting, with the results indicated below:
1. Election of Board of Directors. The shareholders voted to fix the
total number of Directors of the Company at ten and to re-elect all
of the ten incumbent Directors, as follows:
Name of Voting Results
Director Nominee For Withheld
Edward B. Brandon 75,204,636 595,808
Hugh Calkins 75,204,041 596,403
John C. Colman 75,204,634 595,810
Scott S. Cowen 75,204,366 596,078
William M. Hamilton 75,203,913 596,531
Bruce W. Johnson 75,202,673 597,771
Jack N. Mandel 75,202,662 597,782
Joseph C. Mandel 75,202,662 597,782
Morton L. Mandel 75,201,973 598,471
Philip S. Sims 75,202,971 597,473
Page 8 of 12 pages
2. Ratification of KPMG Peat Marwick as independent auditors of the
Company for the fiscal year ending May 31, 1994.
Voting Results
For Against Abstain
75,658,088 64,654 77,702
3. The shareholder proposal, co-sponsored by the Adrian Dominican
Sisters and Christian Brothers Investment Services, Inc., which
called for both a public commitment to greater diversity in senior
management and Board positions, with implementation plans including
time line expectations and periodic progress reports to
shareholders, and the establishment of a standing Nominating
Committee of the Board of Directors to assist in greater review of
women and minority Board candidates consistent with such public
commitment. The results were as follows:
Voting Results
Broker
For Against Abstain Non-Votes
3,925,058 68,578,999 614,625 2,681,672
Page 9 of 12
Part II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on page 11 of this Quarterly Report on
Form 10-Q.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended November 30, 1993.
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.
Date: January 12, 1994 Premier Industrial Corporation
(Registrant)
Philip S. Sims
Vice Chairman of the Board
(Principal financial officer and duly
authorized signatory on behalf of
registrant)
Page 10 of 12 pages
Exhibit Index
Exhibit
Number* Description of Exhibit Page Number
11 Computation of Net Earnings Per Share . . . . . . . . . 12
*Numbered in accordance with Item 601 of Regulation S-K.
Page 11 of 12
Exhibit 11
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
<TABLE>
Computation of Net Earnings Per Share
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30, November 30, November 30,
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Primary:
Weighted average number of common
shares outstanding during the 85,649,234 86,298,235 85,801,190 86,295,464
period
Common stock equivalents:
Incremental shares, as determined
under the treasury stock method,
upon the assumed exercise of options
outstanding during the period using
the average market price 387,662 401,596 410,384 389,865
86,036,896 86,699,831 86,211,574 86,685,329
Net earnings $24,048,000 $22,539,000 $46,128,000 $43,090,000
Net earnings per share $ .28 $ .26 $ .54 $ .50
Fully diluted:
Weighted average number of
common shares outstanding
during the period 85,649,234 86,298,235 85,801,190 86,295,464
Common stock equivalents:
Incremental shares, as determined
under the treasury stock method,
upon the assumed exercise of
options outstanding during the
period using the quarter-ended
market price if higher than
the average market price 415,015 475,389 424,060 440,127
86,064,249 86,773,624 86,225,250 86,735,591
Net earnings $24,048,000 $22,539,000 $46,128,000 $43,090,000
Net earnings per share $ .28 $ .26 $ .54 $ .50
</TABLE>
Page 12 of 12 pages
