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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 September 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
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Commission file number 0-15299
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NYCOR, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 22-2748564
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(State of Incorporation) (I.R.S. Employer Identification No.)
287 CHILDS ROAD, BASKING RIDGE, NEW JERSEY 07920
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (908) 953-8200
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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
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The registrant has outstanding 2,800,019 shares of Common Stock,
4,051,375 shares of Class A Stock, and 713,675 shares of Class B
Stock (which is immediately convertible into Common Stock on a
share-for-share basis) as of November 9, 1995.
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NYCOR, INC.
INDEX
PAGE
PART I FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated Statements of Operations 3-4
Consolidated Balance Sheets 5-7
Consolidated Statements of Cash Flows 8
Notes to the Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 13
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
NYCOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Third Quarter Ended
September 30
1995 1994
<S> <C> <C>
Revenues:
Net sales $15,844 $11,575
COGS 15,086 11,178
Selling, general and
administrative expense 2,226 1,948
-------- --------
Operating loss (1,468) (1,551)
Interest expense (240) -
Interest income 30 45
-------- --------
Loss before income taxes (1,678) (1,506)
Federal, state and foreign income
tax (benefit) 209 (194)
-------- --------
Net loss ($1,887) ($1,312)
======== ========
Primary earnings per share:
Loss per share ($0.31) ($0.24)
======== ========
Dividends per share declared:
Preferred Stock $0.425 $0.850
</TABLE>
See accompanying notes
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<TABLE>
<CAPTION>
Nine Months Ended
September 30
1995 1994
<S> <C> <C>
Revenues:
Net sales $56,587 $56,115
COGS 52,365 49,512
Selling, general and
administrative expense 6,946 6,193
-------- --------
Operating income (loss) (2,724) 410
Interest expense (240) -
Interest income 96 67
-------- --------
Income (loss) before income taxes (2,868) 477
Federal, state and foreign
income tax (benefit) 246 (98)
-------- --------
Net income (loss) ($3,114) $575
======== ========
Primary earnings per share:
Loss per share ($0.60) ($0.12)
======== ========
Dividends per share declared:
Preferred Stock $1.275 $2.550
</TABLE>
See accompanying notes
<PAGE 5>
NYCOR, INC.
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
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<S> <C> <C>
ASSETS
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Current assets:
Cash $1,117 $1,981
Accounts receivable (less allowance
of $421 at September 30, 1995 and 2,564 1,353
$409 at December 31, 1994)
Accounts receivable from
Fedders Corporation 5,074 5,970
Inventories:
Finished goods 597 897
Work in process 4,629 4,660
Raw materials and supplies 4,760 5,188
Other current assets 1,918 820
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Total current assets 20,659 20,869
Property, plant and equipment:
Land 2,664 2,664
Buildings and improvements 10,592 7,951
Machinery & equipment 26,756 19,622
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40,012 30,237
Less accumulated depreciation (8,674) (6,383)
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Net property, plant and equipment 31,338 23,854
Goodwill 41,403 42,240
Other assets 1,779 2,031
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Total assets $95,179 $88,994
======== =========
</TABLE>
See accompanying notes
<PAGE 6>
NYCOR, INC.
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities :
Accounts payable $7,548 $4,364
Accrued expenses 5,693 5,164
Current portion of obligations under
capital leases 1,133 10
Other current liabilities 80 71
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Total current liabilities 14,454 9,609
Obligations under capital leases 5,994 23
Non-current portion of warranty expense 568 616
Stockholders' equity:
Preferred Stock, $1 par value,
5,000,000 shares authorized,
1,150,000 shares issued and
outstanding at September 30, 1995
and December 31, 1994 1,150 1,150
Common Stock, $1 par value,
115,000,000 shares authorized,
2,882,580 shares issued as of
September 30, 1995 and
December 31, 1994 2,882 2,882
Class A Stock, $1 par value,
100,000,000 shares authorized,
4,229,971 shares issued as of
September 30, 1995 and
December 31, 1994 4,230 4,230
Class B Stock, $1 par value,
7,500,000 shares authorized,
713,675 shares issued and
outstanding as of September 30, 1995
and December 31, 1994 714 714
Additional paid-in capital 37,779 37,779
Retained earnings from
January 1, 1988 28,561 33,144
Less-treasury stock at cost:
82,561 shares of Common
Stock; 178,596 shares of
Class A Stock (1,153) (1,153)
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Total stockholders' equity 74,163 78,746
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Total liabilities and
stockholders' equity $95,179 $88,994
======== ========
</TABLE>
See accompanying notes
<PAGE 8>
NYCOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
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<S> <C> <C>
Cash flows from operations:
Net income (loss) ($3,114) $ 575
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,394 3,200
Decrease (increase)in accounts receivable (315) 49
Decrease in inventories 759 1,838
Increase in other current assets (833) (47)
Decrease (increase) in other assets (280) 16
Increase (decrease) in accounts payable 3,184 (977)
Decrease (increase)in accrued expenses
and taxes payable 488 (316)
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Net cash provided by operations 3,283 4,338
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Cash flows from investing activities:
Proceeds from sale of equipment - 503
Additions to property, plant and
equipment (2,334) (1,358)
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Net cash used in investing activities (2,334) (855)
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Cash flows from financing activities:
Dividends paid (1,467) (2,933)
Proceeds from stock options - 329
Purchase of Treasury shares - (360)
Payments on capital lease obligations (346) (8)
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Net cash used in financing activities (1,813) (2,972)
-------- --------
Net increase (decrease) in cash and
cash equivalents (864) 511
Cash and cash equivalents, beginning
of period 1,981 1,336
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Cash and cash equivalents, end of period $1,117 $1,847
======== ========
Supplemental disclosure:
Leased asset additions and related obligations $7,441 -
</TABLE>
<PAGE 9>
NYCOR, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(a) Statement of information furnished
The accompanying unaudited consolidated financial
statements have been prepared in accordance with Form 10-Q
instructions and in the opinion of management contain all
adjustments (consisting of normal recurring accruals) necessary
to present fairly the financial position as of September 30, 1995
and December 31, 1994, the results of operations for the nine
months ended September 30, 1995 and 1994, and the cash flows for
the nine months ended September 30, 1995 and 1994.
(b) Earnings per share
Primary earnings per share are computed by dividing net
income less Preferred Stock dividends by the weighted average
number of shares of Common Stock, Class A Stock, Class B Stock
and other common stock equivalents outstanding: 7,580,000 in the
third quarter of 1995 and 1994. Fully diluted earnings per share
are computed by dividing net income by the weighted average
number of shares of Common Stock, Class A Stock, Class B Stock
and other common stock equivalents (assuming conversion of
Preferred Stock) outstanding during the year: 10,133,000 in the
third quarter of 1995 and 1994. (See Exhibit 11)
(c) Lease obligations
In June 1995, the Company entered into $7.4 million of new
capital leases reflecting investment in property, plant and
equipment at the Company's Rotorex operations. The obligations
extend through 2002. Minimum payments under the obligations will
be as follows: $464,000 in the fourth quarter 1995, $1,857,000 in
1996, 1997 and 1998, and $2,938,000 in total payments thereafter.
(d) Litigation
There has been no change in the status of the litigation
reported in Note 10 of the Company's 1994 Annual Report to
Stockholders. The Company continues to be adequately reserved
for the matters described therein.
(e) Subsequent event
On October 31, 1995 the Company and Fedders Corporation
jointly announced that they have reached agreement in principle
to merge. Under the terms of the agreement, stockholders of NYCOR
will receive shares of Fedders Corporation Class A Stock with a
value of $6.25 for each share of NYCOR Common Stock, Class A
Stock and Class B Stock which they own. No other terms of the
agreement were disclosed. The agreement is subject to the
approval of the stockholders and lenders of both companies in
addition to any required government approvals.
<PAGE 10>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have influenced the Company's financial
position and operating results during the periods included in the
accompanying consolidated financial statements.
RESULTS OF OPERATIONS
The third quarter is the seasonally weakest quarter of the year.
Net sales of $15.8 million for the quarter ended September 30,
1995 were $4.3 million higher than in the same period of 1994,
reflecting higher sales of rotary compressors as a result of
increased demand from Fedders Corporation and higher sales of
thermoelectric heating and cooling modules for special assembly
applications. Net sales include $1.3 million of royalty income
from rotary compressor licensing agreements for the quarter ended
September 30, 1995. There was no royalty income for the same
period in 1994.
Gross profit for the quarter ended September 30, 1995 compared to
the quarter ended September 30, 1994 increased from $0.4 million
to $0.8 million. The increase in gross profit is attributable to
increase in sales at both of the Company's operations offset by
continuing inefficiencies at the Company's rotary compressor
operations. The manufacturing inefficiencies at Rotorex are not
expected to show significant improvement until investments being
made at the Rotorex facility are completed and the related
equipment and systems are fully operational. Implementation of
those projects has been delayed but is expected to be completed
during the fourth quarter.
Selling, general and administrative expenses for the quarter
ended September 30, 1995 were $2.2 million, a $0.3 million
increase versus the same period in 1994. The increase was
primarily due to increased sales and marketing expense and
increased research and development cost. Increased sales and
marketing expense is attributable to international sales efforts
at Rotorex and increased activity domestically and
internationally at the Melcor operations. Research and
development cost increased as a result of Rotorex's efforts to
continue building its design engineering capabilities.
Interest expense of $0.2 million is a result of new capital
leases reflecting investment in property, plant and equipment at
the Company's Rotorex operations.
The net loss amounted to $1.9 million for the quarter ended
September 30, 1995 compared to a $1.3 million net loss in the
same period in 1994.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital is $6.2 million at September 30,
1995 compared to $11.3 million at December 31, 1994. The decline
in the working capital is principally attributable to the current
portion of obligations under capital leases of $1.1 million and
increased accounts payable. In June 1995, the Company entered
into $7.4 million of new capital leases reflecting the Company's
investments in property, plant and equipment for projects
expected to increase efficiency and capacity. Management believes
that the Company's earnings and borrowing capacity are sufficient
to meet the needs of its operations and long-term requirements.
<PAGE 12>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit
(11) Statement re computation of per share earnings
b) Reports on Form 8-K
On August 16, 1995, the Company filed a Report on Form 8-K
reporting the appointment of BDO Seidman, LLP as its
independent accountants.
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SIGNATURE
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.
NYCOR, INC.
<TABLE>
<S> <C>
By /s/ Kent E. Hansen
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Vice President-Finance
and General Counsel
Date November 13, 1995 Signing both in his
----------------- capacity as Vice President
on behalf of the Registrant
and as Chief Financial
Officer of the Registrant
</TABLE>
Exhibit 11
NYCOR, INC.
EARNINGS PER SHARE COMPUTATIONS
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Third Quarter Ended
September 30,
1995 1994
<S> <C> <C>
PRIMARY:
Average number of common and common
equivalent shares outstanding 7,580 7,580
======== =======
Net loss less preferred stock dividends ($2,376) ($1,801)
======== =======
Net loss per common share ($0.31) ($0.24)
======== =======
FULLY DILUTED:
Average number of common and common
equivalent shares outstanding 7,580 7,580
Additional average number of common
shares assuming conversion of the
preferred stock 2,553 2,553
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Average number of common and common
equivalent shares outstanding assuming
conversion of the preferred stock
10,133 10,133
======== =======
Net loss ($1,887) ($1,312)
======== =======
Net loss per common share ($0.19) ($0.24)
======== =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
PRIMARY:
Average number of common and common
equivalent shares outstanding 7,580 7,584
======== =======
Net loss less preferred stock dividends ($4,581) ($891)
======== =======
Net loss per common share ($0.60) ($0.12)
======== =======
FULLY DILUTED:
Average number of common and common
equivalent shares outstanding 7,580 7,584
Additional average number of common
shares assuming conversion of the
preferred stock 2,553 2,553
-------- -------
Average number of common and common
equivalent shares outstanding assuming
conversion of the preferred stock
10,133 10,137
======== =======
Net income (loss) ($1,887) $575
======== =======
Net income (loss) per common share ($0.19) $0.06
======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27 should be read in conjunction with the Financial Statements filed in
the Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 2,008
<SECURITIES> 0
<RECEIVABLES> 8,003
<ALLOWANCES> 572
<INVENTORY> 10,136
<CURRENT-ASSETS> 22,191
<PP&E> 39,526
<DEPRECIATION> (7,913)
<TOTAL-ASSETS> 97,342
<CURRENT-LIABILITIES> 13,903
<BONDS> 0
<COMMON> 7,112
0
1,150
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 97,342
<SALES> 19,707
<TOTAL-REVENUES> 19,707
<CGS> 17,901
<TOTAL-COSTS> 20,028
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (321)
<INCOME-TAX> 7
<INCOME-CONTINUING> (328)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (328)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.03)
</TABLE>
