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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31,1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-19162
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BW/IP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
__________________
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<S> <C>
DELAWARE 33-0270574
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 OCEANGATE BOULEVARD
SUITE 900
LONG BEACH, CALIFORNIA 90802
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(Address of principal executive offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 435-3700
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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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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
COMMON STOCK, $.01 PAR VALUE, 24,275,000
OUTSTANDING AT MARCH 31, 1995 (SHARES)
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BW/IP, INC.
INDEX
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<CAPTION>
PAGE NUMBER
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1995 (unaudited) and December 31, 1994 2-3
Condensed Consolidated Statements of Income -
Three months ended March 31, 1995 and
March 31, 1994 (unaudited) 4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1995 and
March 31, 1994 (unaudited) 5
Notes to Condensed Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
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1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BW/IP, INC.
Condensed Consolidated Balance Sheets
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
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(Unaudited)
<S> <C> <C>
Assets
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Current assets:
Cash and cash equivalents $ 19,322 $ 9,152
Accounts and notes receivable (less allowance
for doubtful accounts of $3,145 at March 31,
1995 and $2,967 at December 31, 1994) 94,670 111,390
Inventories 78,871 70,927
Other current assets 23,891 22,074
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Total current assets 216,754 213,543
Property, plant and equipment, at cost
(net of accumulated depreciation and amortization
of $66,335 at March 31, 1995 and $62,037 at
December 31, 1994) 97,184 94,909
Goodwill (net of accumulated amortization
of $5,263 at March 31, 1995 and $4,952
at December 31, 1994) 48,940 45,380
Other assets 13,298 14,062
-------- --------
Total assets $376,176 $367,894
======== ========
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See accompanying notes to condensed consolidated financial statements.
2
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BW/IP, INC.
Condensed Consolidated Balance Sheets
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
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(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 31,006 $ 38,166
Current maturities of long-term debt 10,760 12,101
Other current liabilities 53,596 54,895
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Total current liabilities 95,362 105,162
Long-term debt 58,936 52,973
Other long-term liabilities 45,052 43,845
Stockholders' equity:
Preferred stock -- --
Common stock 245 245
Paid-in capital 85,763 85,763
Retained earnings 82,205 79,097
Cumulative translation adjustment 9,226 1,422
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177,439 166,527
Less common stock in treasury, at cost (613) (613)
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Total stockholders' equity 176,826 165,914
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Total liabilities and stockholders' equity $376,176 $367,894
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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BW/IP, INC.
Condensed Consolidated Statements of Income
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
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<CAPTION>
Three Months Ended
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March 31, March 31,
1995 1994
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<S> <C> <C>
Net sales $107,032 $96,707
Cost of sales 64,472 58,335
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Gross profit 42,560 38,372
Selling, administrative and operating expenses 31,733 28,382
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Operating income 10,827 9,990
Interest expense, net 1,568 1,455
Other expenses 109 204
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Income from continuing operations
before income taxes 9,150 8,331
Provision for income taxes 3,614 3,018
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Income from continuing operations 5,536 5,313
Discontinued operations, net of tax -- (116)
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Net income $ 5,536 $ 5,197
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Earnings per share:
From continuing operations $ .23 $ .22
Discontinued operations, net of tax -- (.01)
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Net income per share $ .23 $ .21
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Dividends declared per share $ .10 $ .08
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Weighted average number of shares outstanding 24,275,000 24,275,000
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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BW/IP, INC.
Condensed Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
(Unaudited)
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<CAPTION>
Three Months Ended
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March 31, March 31,
1995 1994
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<S> <C> <C>
Cash flows from (used in) operating activities $11,997 $ (1,513)
Cash flows (used in) investing activities:
Capital expenditures (4,044) (1,959)
Expenditures for acquisitions (1,140) (22,977)
Proceeds from disposition of property
and equipment 150 20
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Net cash (used in) investing activities (5,034) (24,916)
Cash flows from financing activities:
Net borrowings under credit agreements 6,000 30,296
Dividends paid (2,428) (1,942)
Other (1,179) 131
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Net cash from financing activities 2,393 28,485
Effect of exchange rate changes on cash 814 663
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Net increase in cash and cash equivalents 10,170 2,719
Cash and cash equivalents at beginning of period 9,152 7,671
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Cash and cash equivalents at end of period $19,322 $ 10,390
======= ========
Supplemental cash flow disclosures:
Interest paid $ 1,022 $ 1,080
Income taxes paid 4,289 2,313
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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BW/IP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying condensed consolidated balance sheet as of March 31,
1995 and the related condensed consolidated statements of income and
cash flows for the three months ended March 31, 1995 and 1994 are
unaudited. In management's opinion, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of
such financial statements have been made.
The accompanying condensed consolidated financial statements and notes
in this Form 10-Q are presented as permitted by Regulation S-X, and do
not contain certain information included in the Company's annual
financial statements and notes. Accordingly, the accompanying
condensed consolidated financial information should be read in
conjunction with the Company's 1994 Annual Report to Stockholders.
Interim results are not necessarily indicative of results to be
expected for a full year and are subject to audit and adjustment at
the end of the year.
BW/IP, Inc. is the parent company of BW/IP International, Inc.
(BW/IP). Unless the context otherwise requires, references herein to
"the Company" are to BW/IP, Inc. and BW/IP International, Inc. and its
consolidated subsidiaries.
2. Inventories
Inventories consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
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<S> <C> <C>
Finished parts $50,328 $40,558
Work in process 25,597 22,841
Raw materials and supplies 9,794 13,312
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85,719 76,711
Less progress billings (6,848) (5,784)
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Net inventories $78,871 $70,927
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net sales of $107.0 million for the three months ended March 31, 1995 were
$10.3 million or 10.7% higher than the corresponding period in 1994. The
increase in sales was primarily due to an increase in pump-related sales in the
United States and Canada. Original equipment (OE) sales were up approximately
14% over last year while aftermarket sales were up 8%. Results for the first
quarter 1995 include approximately $2 million in gross profit related to the
acceleration of a long-term maintenance contract. The gross profit margin for
the first three months of 1995 was negatively impacted by continued pricing
pressures within the OE business sector and overhead underabsorption at
selected European plants.
Selling, administrative and operating expenses increased as a percentage of
sales from 29.3% for the three months ended March 31, 1994 to 29.6% for the
corresponding period in 1995. The increase was primarily due to an increase in
outside commissions, certain sales initiatives and ongoing integration costs
associated with 1994 acquisitions.
Operating income for the three months ended March 31, 1995 was $10.8 million, a
slight increase over the comparable period in 1994. The increase in operating
income reflects the slight improvement in gross profit margin, offset by
higher selling, administrative and operating expenses.
Order input for the quarter ended March 31, 1995 was $120.0 million as compared
with $115.9 million for the corresponding period in 1994. The portion of
aftermarket bookings in the first quarter increased to 64% of total bookings
compared to 60% for the same period last year. Bookings for the nuclear
aftermarket and for pump parts in the United States were notably higher in the
first quarter of this year compared to the same period a year ago. Backlog at
March 31, 1995 was $158.3 million compared to $177.5 million at March 31, 1994.
Backlog was reduced by approximately $5 million as a result of the contract
acceleration previously discussed.
The Company conducts substantial business activities in the Middle East,
including Iran. This region is subject to additional risks such as changes in
governmental policies, political risk, wars, transportation delays, tariffs
and import, export, exchange and tax controls.
7
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Activity under the Company's restructuring plan during the three months ended
March 31, 1995 is summarized as follows (amounts in thousands):
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<CAPTION>
Machinery
relocation, Asset disposal and
Personnel installation, and organizational
costs related costs realignment costs Total
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<S> <C> <C> <C> <C>
Balance, December 31, 1994 $7,673 $4,719 $5,494 $17,886
Cash expenditures 796 341 391 1,528
Losses on asset disposals -- -- 83 83
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Balance, March 31, 1995 $6,877 $4,378 $5,020 $16,275
====== ====== ====== =======
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The Company's effective tax rate increased from 36.2% for the three months
ended March 31, 1994 to 39.5% in the corresponding period in 1995. The
increase in the consolidated tax rate reflects lower utilization of foreign tax
credits in 1995 as compared to 1994 as the majority of credits generated in
earlier years were utilized.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1995, the Company generated $12.0
million in net funds from operating activities, as compared to the
corresponding period in 1994 during which the Company used $1.5 million of net
funds from operating activities. The increase reflects accounts receivable
collections resulting from record sales volume in the fourth quarter of 1994
and the impact of foreign currency fluctuations.
At March 31, 1995, the Company had outstanding under its credit facilities
borrowings totaling $26.3 million and letters of credit totaling $10.9 million
and there was $73.8 million available for borrowing thereunder. As of March
31, 1995, the Company had outstanding $26.1 million of obligations relating to
performance bonds.
Interest on the Company's outstanding senior notes is fixed at 7.92%. However,
all of the Company's borrowings under its other credit facilities are currently
at floating interest rates. Interest costs are therefore subject to
significant changes depending upon the movement of short-term interest rates.
8
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - 27. Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter ended March
31, 1995.
9
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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.
BW/IP, INC.
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(Registrant)
Date: May 12, 1995 By: /s/ E. P. Cross
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E. P. Cross
Vice President - Finance
(Duly Authorized Officer)
Date: May 12, 1995 By: /s/ N. A. Ludlam
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N. A. Ludlam
(Chief Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 11,842
<SECURITIES> 7,480
<RECEIVABLES> 85,051
<ALLOWANCES> (3,145)
<INVENTORY> 78,871
<CURRENT-ASSETS> 216,754
<PP&E> 163,519
<DEPRECIATION> 66,335
<TOTAL-ASSETS> 376,176
<CURRENT-LIABILITIES> 95,362
<BONDS> 58,936
<COMMON> 245
0
0
<OTHER-SE> 176,581
<TOTAL-LIABILITY-AND-EQUITY> 376,176
<SALES> 107,032
<TOTAL-REVENUES> 107,032
<CGS> 64,472
<TOTAL-COSTS> 64,472
<OTHER-EXPENSES> 31,634
<LOSS-PROVISION> 208
<INTEREST-EXPENSE> 1,568
<INCOME-PRETAX> 9,150
<INCOME-TAX> 3,614
<INCOME-CONTINUING> 5,536
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,536
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
