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, 1995
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 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 January 5, 1996: 82,203,698
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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, 1995 and 1994 3
Consolidated Balance Sheet at November 30, 1995 and
May 31, 1995 4
Consolidated Statement of Cash Flows for the six months
ended November 30, 1995 and 1994 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
<PAGE>
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,
1995 1994 1995 1994
Operating revenues $ 216,947 $ 201,272 $ 430,801 $ 399,644
Other income, net 1,449 1,192 3,487 1,971
218,396 202,464 434,288 401,615
Cost and expenses:
Cost of sales 121,364 109,688 240,413 217,747
Selling, administrative
and general 48,665 47,238 98,242 95,211
Depreciation 2,257 1,995 4,480 3,941
Amortization of other
assets 97 98 195 196
Interest 102 79 197 153
172,485 159,098 343,527 317,248
Earnings before income taxes 45,911 43,366 90,761 84,367
Income taxes 16,891 16,151 33,574 31,760
Net earnings $ 29,020 $ 27,215 $ 57,187 $ 52,607
Net earnings per share $ .35 $ .32 $ .69 $ .62
Dividends per share $ .11 $ .10 $ .22 $ .20
Average number of common
shares and common stock
equivalents outstanding 83,042,000 84,988,000 83,370,000 84,966,000
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,
1995 1995
ASSETS (Unaudited) (Audited)
Current assets:
Cash and equivalents $ 8,627 $ 43,413
Temporary investments 118,113 116,574
Receivables, less allowance 118,636 115,037
Inventories 180,399 164,238
Prepaid expenses and deferred income taxes 11,398 10,587
Total current assets 437,173 449,849
Property, plant and equipment, at cost,
less accumulated depreciation 66,519 62,728
Other assets, at cost, less accumulated
amortization 44,811 43,451
$ 548,503 $ 556,028
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payables $ 31,435 $ 28,136
Accrued liabilities 21,067 27,325
Total current liabilities 52,502 55,461
Deferred income taxes 21,779 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 497,902 460,394
Foreign currency translation adjustment 1,399 1,384
Treasury shares at cost (4,856,021 and
3,073,732 shares at November 30, 1995 and
May 31, 1995, respectively) (118,655) (75,256)
467,722 473,598
$ 548,503 $ 556,028
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
(In thousands of dollars)
Six Months Ended
November 30,
1995 1994
Cash and equivalents at beginning of period $ 43,413 $ 42,122
Cash flows from operating activities:
Net earnings 57,187 52,607
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 4,675 4,137
Deferred income taxes 1,310 1,610
Changes in:
Receivables (3,599) (1,737)
Inventories (16,161) (10,636)
Prepaid expenses (811) (706)
Payables 3,299 (1,362)
Accrued liabilities (6,258) (3,083)
Other (1,552) (1,969)
Net cash provided by operating activities 38,090 38,861
Cash flows from investing activities:
Net additions to property, plant and
equipment (8,271) (6,696)
Purchase of temporary investments (325,941) (395,123)
Sale of temporary investments 324,402 390,221
Other 11 (110)
Net cash used in investing activities (9,799) (11,708)
Cash flows from financing activities:
Dividends paid (18,381) (16,967)
Purchase of treasury shares (51,057) (3,669)
Proceeds from stock plans 6,361 6,980
Net cash used in financing activities (63,077) (13,656)
Cash and equivalents at end of period $ 8,627 $ 55,619
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
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, 1995 and the results of
their operations for the three month and six month periods ended
November 30, 1995 and 1994 and their cash flows for the six month
periods ended November 30, 1995 and 1994.
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 $7,201,000 and $7,111,000 higher than reported at
November 30, 1995 and May 31, 1995, respectively.
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results Of Operations
Second Quarter Ended November 30, 1995 versus Second Quarter
Ended November 30, 1994
Operating revenues of $216,947,000 were 8%, or $15,675,000, ahead of the
$201,272,000 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, steady demand and expanded product offerings.
Cost of sales of $121,364,000 increased 11%, primarily related to the
revenue gain and changes in product mix. Selling, administrative, and
general expenses remained under good control, increasing only 3%, or
$1,427,000. 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 above-noted factors, net earnings increased
7%, while earnings per share, benefiting from a lower number of shares
outstanding due to increased shares purchased for treasury, rose 9%.
Six Months Ended November 30, 1995 versus Six Months Ended
November 30, 1994
Operating revenues of $430,801,000 were 8%, or $31,157,000 ahead of the
same period last year. The increase in revenues reflects gains in both
business segments. Other income increased $1,516,000 mainly due to
increased investment income on a higher level of cash and temporary
investments. Cost of sales of $240,413,000 increased 10%, primarily
related to the revenue gain and changes in product mix. Selling,
administrative and general expenses increased only 3%, or $3,031,000,
as a result of expense control measures.
The above-noted factors 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 continues to maintain a solid financial condition. At
November 30, 1995, working capital was $384,671,000 compared with
$394,388,000 at May 31, 1995. The ratio of current assets to current
liabilities was 8.3 to 1 at November 30, 1995. 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 business
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's long-term debt of $6,500,000 in variable rate Industrial
Development Bonds continues to represent less than 2% of total
capitalization at November 30, 1995.
<PAGE>
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, including funds for
investing and financing activities.
Net cash used in investing activities during the first six months of fiscal
1996 consisted of, among other things, net property, plant and equipment
additions of $8,271,000. Net cash used in financing activities for the
six month period included cash dividends paid to shareholders of
$18,381,000. During the same period, the Company purchased for $51,057,000
approximately 2,095,000 of its 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 decreased
$34,786,000 from May 31, 1995.
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 10, 1995. Of the 83,491,745 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting, 73,884,094 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 73,319,180 564,914
Hugh Calkins 73,504,856 379,238
John C. Colman 73,309,717 574,377
Scott S. Cowen 73,509,161 374,933
William M. Hamilton 73,296,249 587,845
Bruce W. Johnson 73,318,862 565,232
Jack N. Mandel 73,290,058 594,036
Joseph C. Mandel 73,290,058 594,036
Morton L. Mandel 73,296,499 587,595
Philip S. Sims 73,314,372 569,722
<PAGE>
2. Approval of the 1973 Stock Option Plan for Management Employees, as
Amended and Restated as of June 6, 1995 (the "Amended Employee Option
Plan"), which is more fully described in the Company's Proxy Statement
dated August 23, 1995. Among other things, the Amended Employee
Option Plan increased the total number of shares authorized and
available for issuance there under by 6,000,000 shares; extended
the term of options subject to payroll accumulation arrangements from
five to six years; and provided for a uniform period of one year in
which to exercise options following termination of an optionee's
employment upon normal or approved early retirement, qualifying
disability or death. The results were as follows:
Voting Results
Broker
For Against Abstain Non-Votes
67,140,016 2,712,463 248,212 3,783,403
3. Approval of the Director Stock Option Plan (the "Director Option
Plan"), as more fully described in the Company's Proxy Statement dated
August 23, 1995, which authorized 1000,000 shares of Common Stock
for issuance thereunder. The Director Option Plan provides for the
automatic grant to each eligible non-employee Director, on November 1
each year, of an option to purchase 1,500 shares of Common Stock at an
exercise price equal to the fair market value on the date of grant,
with each such option becoming exercisable beginning on the first
anniversary of its date of grant and expiring six years after its date
of grant, unless the optionee earlier ceases service as a Director.
The results were as follows:
Voting Results
Broker
For Against Abstain Non-Votes
67,717,662 2,127,744 255,285 3,783,403
4. Ratification of KPMG Peat Marwick LLP as independent auditors of
the Company for the fiscal year ending May 31, 1996.
Voting Results
For Against Abstain
73,736,500 44,683 102,911
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. None.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended November 30, 1995.
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 9, 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)
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