<PAGE>
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, 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 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 11, 1995: 84,835,783
Page 1 of 12 pages
Exhibit Index appears on page 11<PAGE>
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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, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet at November 30, 1994, and
May 31, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Consolidated Statement of Cash Flows for the six months
ended November 30, 1994 and 1993. . . . . . . . . . . . . . . . . . . . .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
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Earnings
(Unaudited)
(In thousands of dollars, except per share data)
Three Months Ended Six Months Ended
November 30, November 30,
1994 1993 1994 1993
Operating revenues $ 201,272 $ 183,166 $ 399,644 $ 360,924
Other income, net 1,192 971 1,971 2,151
202,464 184,137 401,615 363,075
Costs and expenses:
Cost of sales 109,688 98,877 217,747 195,144
Selling, administrative
and general 47,238 45,755 95,211 91,927
Depreciation 1,995 1,889 3,941 3,762
Amortization of other
assets 98 104 196 185
Interest 79 69 153 139
159,098 146,694 317,248 291,157
Earnings before income taxes 43,366 37,443 84,367 71,918
Income taxes 16,151 13,395 31,760 25,790
Net earnings $ 27,215 $ 24,048 $ 52,607 $ 46,128
Net earnings per share $ .32 $ .28 $ .62 $ .54
Dividends per share $ .10 $ .09 $ .20 $ .18
Average number of common
shares and common stock
equivalents outstanding 84,988,310 86,036,896 84,966,080 86,211,574
See accompanying Notes to Consolidated Financial Statements.
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PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands of dollars)
November 30, May 31,
1994 1994
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and equivalents $ 55,619 $ 42,122
Temporary investments 92,368 87,466
Receivables, less allowance 109,648 107,911
Inventories 165,897 155,261
Prepaid expenses and deferred income taxes 10,883 10,177
Total current assets 434,415 402,937
Property, plant and equipment, at cost,
less accumulated depreciation 55,339 52,584
Other assets, at cost, less accumulated
amortization 40,442 38,227
$ 530,196 $ 493,748
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payables $ 23,302 $ 24,664
Accrued liabilities 20,169 23,252
Total current liabilities 43,471 47,916
Deferred income taxes 17,743 16,133
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 87,076 87,076
Retained earnings 423,672 390,087
Foreign currency translation adjustment 553 221
Treasury shares at cost (1,934,169 and
2,130,567 shares at November 30, 1994
and May 31, 1994, respectively) (48,819) (54,185)
462,482 423,199
$ 530,196 $ 493,748
See accompanying Notes to Consolidated Financial Statements.
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PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
November 30,
1994 1993
(In thousands of dollars)
Cash and equivalents at beginning of
period $ 42,122 $ 43,724
Cash flows from operating activities:
Net earnings 52,607 46,128
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 4,137 3,947
Deferred income taxes 1,610 3,666
Changes in:
Receivables (1,737) 2,666
Inventories (10,636) (22,106)
Prepaid expenses (706) (5,460)
Payables (1,362) 1,977
Accrued liabilities (3,083) (3,898)
Other (1,969) (3,794)
Net cash provided by operating activities 38,861 23,126
Cash flows from investing activities:
Net additions to property, plant and
equipment (6,696) (4,326)
Purchase of temporary investments (395,123) (348,863)
Sale of temporary investments 390,221 350,125
Other (110) (288)
Net cash used in investing activities (11,708) (3,352)
Cash flows from financing activities:
Dividends paid (16,967) (15,474)
Purchase of treasury shares (3,669) (22,828)
Proceeds from stock plans 6,980 9,331
Net cash used in financing activities (13,656) (28,971)
Cash and equivalents at end of period $ 55,619 $ 34,527
See accompanying Notes to Consolidated Financial Statements
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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 and
subsidiaries (the "Company") as of November 30, 1994 and the results of
their operations for the three month and six month periods ended
November 30, 1994 and 1993 and their cash flows for the six month
periods ended November 30, 1994 and 1993.
2. 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 $6,896,000 and $6,636,000 higher than reported at
November 30, 1994 and May 31, 1994.
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<PAGE>
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Second Quarter Ended November 30, 1994 versus Second Quarter Ended
November 30, 1993.
Operating revenues of $201,272,000 were 9.9%, or $18,106,000 ahead of the
$183,166,000 reported for the same period last year. The increase in
revenues largely reflects continued gains in the Electronics Distribution
Group and the General Products Group. Cost of sales of $109,688,000
increased 10.9%, primarily related to the revenue gain. Selling,
administrative, and general expenses increased only 3.2%, or $1,483,000,
as higher levels of payroll and operating costs related to increased sales
activity were partially offset by expense control efforts.
As a result of the foregoing factors, earnings before income taxes increased
15.8%. Income taxes rose 20.6%, or $2,756,000, due to higher effective tax
rates applied to the increased earnings. As a result, net earnings of
$3,167,000 and earnings per share of $.32 rose 13.2% and 14.3%,
respectively.
Six Months Ended November 30, 1994 versus Six Months Ended November 30, 1993.
Operating revenues of $399,644,000 were 10.7%, or $38,720,000 ahead of the
same period last year. The increase in revenues reflects gains in both
business segments. Cost of sales of $217,747,000 increased 10.9%, in line
with the revenue gain. Selling, administrative and general expenses
increased 3.6%, or $3,284,000, as we have continued our efforts to control
expenses.
The above-noted factors resulted in a 17.3% gain in earnings before income
taxes. Income taxes were up 23.1%, impacted by higher effective tax rates
and the earnings gains noted above. As a result, net earnings and earnings
per share increased 14% and 14.8%, respectively.
Liquidity, Capital Resources and Cash Flows (Financial Condition)
The Company continues to maintain a strong financial condition. At
November 30, 1994, working capital of $390,944,000 compared with $355,021,000
at May 31, 1994, an increase of $35,923,000. The ratio of current assets to
current liabilities was 10 to 1 at November 30, 1994. 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, new division start-ups and
acquisitions, and to have internal capital available for distribution to
shareholders. The Company continues to develop growth plans and to search
for suitable acquisitions.
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The Company's long-term debt of $6,500,000 in variable rate Industrial
Development Bonds continues at November 30, 1994 to represent less than 2% of
total capitalization.
The Company's principal source of cash continues to be 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. The Company expects that net
earnings generally will provide sufficient cash to meet the Company's
presently anticipated needs for cash, including funds for investing and
financing activities.
Net cash used in investing activities during the first six months of fiscal
1995 consisted of, among other things, net property, plant and equipment
additions of $6,696,000. Net cash used in financing activities included cash
dividends paid to shareholders of $16,967,000 and net additions to temporary
investments of $4,902,000. 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 1995 the Company purchased
approximately 162,000 of its shares for $3,669,000. Largely as a result of
these activities, coupled with cash generated from operations, cash and
equivalents increased $13,497,000.
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 11, 1994. Of the 84,837,057 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting, 75,012,810 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 74,488,251 524,559
Hugh Calkins 74,655,687 357,123
John C. Colman 74,480,072 532,738
Scott S. Cowen 74,637,329 375,481
William M. Hamilton 74,489,542 523,268
Bruce W. Johnson 74,483,935 528,875
Jack N. Mandel 74,475,007 537,803
Joseph C. Mandel 74,477,902 534,908
Morton L. Mandel 74,486,713 526,097
Philip S. Sims 74,483,264 529,546
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2. Ratification of KPMG Peat Marwick as independent auditors of the Company
for the fiscal year ending May 31, 1995.
Voting Results
For Against Abstain
74,760,764 176,289 75,757
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 multiracial/multicultural Board candidates
consistent with such public commitment. The results were as follows:
Voting Results
Broker
For Against Abstain Non-Votes
3,565,908 67,863,817 655,449 2,927,636
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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, 1994.
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 13, 1995 PREMIER INDUSTRIAL CORPORATION
(Registrant)
/s/ Philip S. Sims
Philip S. Sims
Vice Chairman of the Board
(Principal financial officer
and duly authorized signatory
on behalf of registrant)
<PAGE>
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.
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Exhibit 11
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PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Share
Three Months Ended Six Months Ended
November 30, November 30,
1994 1993 1994 1993
Primary:
Weighted average number
of common shares
outstanding during
the period 84,840,580 85,649,234 84,840,225 85,801,190
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 147,730 387,662 125,855 410,384
84,988,310 86,036,896 84,966,080 86,211,574
Net earnings $27,215,000 $24,048,000 $52,607,000 $46,128,000
Net earnings per share $ .32 $ .28 $ .62 $ .54
Fully diluted:
Weighted average number
of common shares
outstanding during the
period 84,840,580 85,649,234 84,840,225 85,801,190
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 149,603 415,015 139,694 424,060
84,990,183 86,064,249 84,979,919 86,225,250
Net earnings $27,215,000 $24,048,000 $52,607,000 $46,128,000
Net earnings per share $ .32 $ .28 $ .62 $ .54
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> NOV-30-1994
<CASH> 55,619
<SECURITIES> 92,368
<RECEIVABLES> 109,648
<ALLOWANCES> 0
<INVENTORY> 165,897
<CURRENT-ASSETS> 434,415
<PP&E> 55,339
<DEPRECIATION> 0
<TOTAL-ASSETS> 530,196
<CURRENT-LIABILITIES> 43,471
<BONDS> 6,500
<COMMON> 87,076
0
0
<OTHER-SE> 375,406
<TOTAL-LIABILITY-AND-EQUITY> 530,196
<SALES> 399,644
<TOTAL-REVENUES> 401,615
<CGS> 217,747
<TOTAL-COSTS> 317,248
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 153
<INCOME-PRETAX> 84,367
<INCOME-TAX> 31,760
<INCOME-CONTINUING> 52,607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,607
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
