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 February 29, 1996
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 FARNELL CORP. (successor to Premier Industrial Corporation)
(Exact name of registrant as specified in its charter)
Delaware 51-0373145
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
4500 Euclid Avenue, Cleveland, Ohio P.O. Box 94884 44101-4884
(Address of principal executive offices) (Zip code)
(216) 391-8300
(Registrant's telephone number, including area code)
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 April 12, 1996: 100
Page 1 of 9 pages
PREMIER INDUSTRIAL CORPORATION
Table of Contents
Part I. Financial Information
Item 1- Financial Statements:
Consolidated Statement of Earnings for the three months
and nine months ended February 29, 1996 and
February 28, 1995 3
Consolidated Balance Sheet at February 29, 1996 and
May 31, 1995 4
Consolidated Statement of Cash Flows for the nine months
ended February 29, 1996 and February 28, 1995 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 6 - Exhibits and Reports on Form 8-K 9
Signatures 9
Page 2 of 9 pages
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 Nine Months Ended
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
1996 1995 1996 1995
Operating revenues $ 215,089 $ 198,440 $ 645,890 $ 598,084
Other income, net 1,591 1,311 5,078 3,282
216,680 199,751 650,968 601,366
Cost and expenses:
Cost of sales 120,791 108,352 361,204 326,099
Selling, administrative
and general 51,054 50,215 149,296 145,426
Depreciation 2,257 1,983 6,737 5,924
Amortization of other
assets 104 97 299 293
Interest 114 87 311 240
174,320 160,734 517,847 477,982
Earnings before income
taxes 42,360 39,017 133,121 123,384
Income taxes 15,758 14,538 49,332 46,298
Net earnings $ 26,602 $ 24,479 $ 83,789 $ 77,086
Net earnings per share $ .32 $ .29 $ 1.01 $ .91
Dividends per share $ .125 $ .11 $ .345 $ .31
Average number of common
shares and common stock
equivalents outstanding 82,325,000 84,676,000 83,023,000 84,870,000
See accompanying Notes to Consolidated Financial Statements.
Page 3 of 9 Pages
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands of dollars)
February 29 May 31,
1996 1995
ASSETS (Unaudited) (Audited)
Current assets:
Cash and equivalents $ 63,534 $ 43,413
Temporary investments 63,761 116,574
Receivables, less allowance 125,024 115,037
Inventories 193,574 164,238
Prepaid expenses and deferred income taxes 11,405 10,587
Total current assets 457,298 449,849
Property, plant and equipment, at cost,
less accumulated depreciation 66,645 62,728
Other assets, at cost, less accumulated
amortization 46,209 43,451
$ 570,152 $ 556,028
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payables $ 37,517 $ 28,136
Accrued liabilities 20,116 27,325
Total current liabilities 57,633 55,461
Deferred income taxes 22,449 20,469
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, 87,076,327 issued 87,076 87,076
Retained earnings 514,220 460,394
Foreign currency translation adjustment 1,230 1,384
Treasury shares at cost (4,870,840 and
3,073,732 shares at February 29,
1996 and May 31, 1995, respectively) (118,956) (75,256)
483,570 473,598
$ 570,152 $ 556,028
See accompanying Notes to Consolidated Financial Statements.
Page 4 of 9 pages
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
(In thousands of dollars)
Nine Months Ended
Feb. 29, Feb. 28,
1996 1995
Cash and equivalents at beginning of period $ 43,413 $ 42,122
Cash flows from operating activities:
Net earnings 83,789 77,086
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 7,036 6,217
Deferred income taxes 1,980 (8)
Changes in:
Receivables (9,987) (6,819)
Inventories (29,336) (10,632)
Prepaid expenses (818) 1,669
Payables 9,381 (294)
Accrued liabilities (7,210) (381)
Other (3,215) (2,476)
Net cash provided by operating
activities 51,620 64,362
Cash flows from investing activities:
Net additions to property, plant and
equipment (10,654) (11,551)
Purchase of temporary investments (474,198) (482,797)
Sale of temporary investments 527,011 453,116
Other 4 (118)
Net cash used in investing
activities 42,163 (41,350)
Cash flows from financing activities:
Dividends paid (28,657) (26,321)
Purchase of treasury shares (51,057) (27,308)
Proceeds from stock plans 6,052 7,597
Net cash used in financing
activities (73,662) (46,032)
Cash and equivalents at end of period $ 63,534 $ 19,102
See accompanying Notes to Consolidated Financial Statements.
Page 5 of 9 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 and subsidiaries (the "Company") as of
February 29, 1996 and the results of their operations for the
three month and nine month periods ended February 29, 1996 and
February 28, 1995 and their cash flows for the nine month periods
ended February 29, 1996 and February 28, 1995.
2. The Company's inventories consist primarily of finished goods.
Cost of certain inventories is determined using the dollar value
LIFO method. If all inventory costs were determined on a FIFO
basis, inventories would have been $7,354,000 and $7,111,000
higher than reported at February 29, 1996 and May 31, 1995,
respectively.
Page 6 of 9 pages
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results Of Operations
Third Quarter Ended February 29, 1996 versus Third Quarter Ended
February 28, 1995
Operating revenues of $215,089,000 were 8%, or $16,649,000, ahead of the
$198,440,000 reported for the same period last year. The increase in
revenues reflects continued gains in both business segments as a result
of, among other things, stable demand and expanded product offerings.
Cost of sales of $120,791,000 increased 12%, or $12,439,000, primarily
related to the revenue gain and changes in product mix. Selling,
administration, and general expenses increased only 2%, or $839,000.
Higher levels of payroll and operating costs relating to the increased
sales activity, partially offset by expense control efforts, accounted
for the majority of the increase.
Primarily as a result of the foregoing factors, net earnings increased
9%, while earnings per share, benefiting from a lower number of shares
outstanding due to increased shares purchased for treasury, rose 10%.
Nine Months Ended February 29, 1996 versus Nine Months Ended
February 28, 1995
Operating revenues of $645,890,000 were 8%, or $41,806,000 higher compared
with the same period last year. The increase in revenues reflects gains
in both business segments. Other income increased $1,796,000 mainly due
to increased investment income on a higher level of cash and temporary
investments. Cost of sales of $361,204,000 increased 11%, or $35,105,000,
primarily related to the revenue gain and changes in product mix. Selling,
administrative and general expenses increased only 3%, or $3,870,000, as a
result of success in controlling expenses.
The above-noted factors, combined with a slightly lower effective income
tax rate, resulted in a 9% gain in net earnings. Earnings per share
rose 11%, based on the foregoing factors, coupled with a lower number
of shares outstanding.
Liquidity, Capital Resources and Cash Flows (Financial Condition)
The Company continued to maintain a solid financial condition.
At February 29, 1996, working capital was $399,665,000 compared with
$394,388,000 at May 31, 1995. The ratio of current assets to current
liabilities was 7.9 to 1 at February 29, 1996. 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 has maintained 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.
Page 7 of 9 pages
The Company's long-term debt of $6,500,000 in variable rate Industrial
Development Bonds continues to represent less than 2% of total
capitalization at February 29, 1996.
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.
The Company expects that net earnings generally will provide sufficient
cash to meet the Company's presently anticipated needs for cash, excluding
the impact on financing activities of the merger plan previously announced
by the Company on January 23, 1996.
Net cash used in investing activities during the first nine months of
fiscal 1996 consisted of, among other things, net property, plant and
equipment additions of $10,654,000. Net cash used in financing activities
for the nine month period included cash dividends paid to shareholders
of $28,657,000. During the same period, the Company purchased for
$51,057,000 approximately 2,095,000 of treasury shares to be held as
treasury shares for general corporate purposes. Primarily as a result
of these activities, coupled with cash generated from operations, cash
and equivalents increased $20,121,000 from May 31, 1995.
Page 8 of 9 pages
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. None.
(b) Reports on Form 8-K. On January 24, 1996, the Company filed
with the Securities and Exchange Commission a Current Report
on Form 8-K, dated January 23, 1996 (the "Form 8-K"), reporting
that the Company had entered into an Agreement and Plan of
Merger, dated as of January 23, 1996 (the "Merger Agreement"),
with Farnell Electronics PLC, an English public limited company
("Farnell"), and a wholly owned Farnell subsidiary, FAC Delaware
Corp., providing for the merger of the Company with and into FAC
Delaware Corp. The Form 8-K also reported that certain
shareholders of the Company concurrently entered into a Voting
Agreement with Farnell and certain shareholders of the Company
entered into a Shareholders Agreement with Farnell. Copies of
all such agreements were attached as exhibits to the Form 8-K.
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: April 12, 1996 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 9 of 9 pages
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> FEB-29-1996
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<SECURITIES> 63,761
<RECEIVABLES> 125,024
<ALLOWANCES> 0
<INVENTORY> 193,574
<CURRENT-ASSETS> 457,298
<PP&E> 66,645
<DEPRECIATION> 0
<TOTAL-ASSETS> 570,152
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87,076
0
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