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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 31,1996
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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)
__________________
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)
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, 1996 (shares)
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BW/IP, INC.
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INDEX
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<TABLE>
<CAPTION>
Page Number
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1996 (unaudited) and December 31, 1995 2-3
Condensed Consolidated Statements of Income -
Three months ended March 31, 1996 and
March 31, 1995 (unaudited) 4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1996 and
March 31, 1995 (unaudited) 5
Notes to Condensed
Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial 7-8
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
</TABLE>
1
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Part I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
BW/IP, INC.
Condensed Consolidated Balance Sheets
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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(Unaudited)
<S> <C> <C>
Assets
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Current assets:
Cash and cash equivalents $ 10,688 $ 9,162
Accounts and notes receivable (less allowance
for doubtful accounts of $3,855 at March 31,
1996 and $3,775 at December 31, 1995) 111,014 110,215
Inventories 89,375 85,381
Other current assets 23,684 22,462
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Total current assets 234,761 227,220
Property, plant and equipment, at cost
(net of accumulated depreciation and amortization
of $75,975 at March 31, 1996 and $73,291 at
December 31, 1995) 105,270 106,251
Goodwill (net of accumulated amortization
of $7,831 at March 31, 1996 and $6,556
at December 31, 1995) 52,560 53,835
Other assets 16,403 18,441
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Total assets $408,994 $405,747
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</TABLE>
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,
1996 1995
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(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
- - ------------------------------------
Current liabilities:
Current maturities on long-term debt $ 8,731 $ 8,836
Accounts payable 36,549 42,955
Other current liabilities 57,134 58,655
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Total current liabilities 102,414 110,446
Long-term debt 84,606 74,175
Other long-term liabilities 41,492 41,652
Stockholders' equity:
Preferred stock -- --
Common stock 245 245
Paid-in capital 85,763 85,763
Retained earnings 95,408 92,008
Cumulative translation adjustment (321) 2,071
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181,095 180,087
Less common stock in treasury, at cost (613) (613)
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Total stockholders' equity 180,482 179,474
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Total liabilities and
stockholders' equity $408,994 $405,747
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</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 per share data)
(Unaudited)
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<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
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<S> <C> <C>
Net sales $ 121,938 $ 107,032
Cost of sales 75,160 64,472
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Gross profit 46,778 42,560
Selling, administrative and operating
expenses 34,840 31,733
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Operating income 11,938 10,827
Interest expense, net 1,714 1,568
Other expenses 274 109
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Income before income taxes 9,950 9,150
Provision for income taxes 3,880 3,614
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Net income $ 6,070 $ 5,536
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Net income per share $ 0.25 $ 0.23
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Dividends declared per share $ 0.11 $ 0.10
============ ============
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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<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
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<S> <C> <C>
Cash flows (used in) provided by operating
activities $(3,384) $11,997
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Cash flows from investing activities:
Capital expenditures (3,251) (4,044)
Expenditures for acquisitions -- (1,140)
Other (249) 150
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Net cash used in investing activities (3,500) (5,034)
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Cash flows from financing activities:
Net borrowings under credit agreements 10,326 6,000
Dividends paid (2,670) (2,428)
Other -- (1,179)
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Net cash provided by financing activities 7,656 2,393
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Effect of exchange rate changes on cash 754 814
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Net increase in cash and cash equivalents 1,526 10,170
Cash and cash equivalents at beginning of period 9,162 9,152
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Cash and cash equivalents at end of period $10,688 $19,322
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</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
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The accompanying condensed consolidated balance sheet as of March 31, 1996,
and the related condensed consolidated statements of income and cash flows
for the three months ended March 31, 1996, and 1995 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 1995
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
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Inventories consist of the following (amounts in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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<S> <C> <C>
Finished parts $51,553 $47,985
Work in process 32,057 34,054
Raw materials and supplies 11,367 10,595
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94,977 92,634
Less progress billings (5,602) (7,253)
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Net inventories $89,375 $85,381
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</TABLE>
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales of $121.9 million for the three months ended March 31, 1996 were $14.9
million or approximately 14% higher than the corresponding period in 1995. The
increase in sales was primarily due to pump related sales from Europe and the
Pacific Rim. Original equipment (OE) sales were up approximately 17% over last
year while aftermarket sales were up approximately 12%. The gross profit margin
for the first three months of 1996 was negatively impacted by continued pricing
pressures within the OE sector.
Selling, administrative and operating expenses decreased as a percentage of
sales from 29.6% for the three months ended March 31, 1995 to 28.6% for the
corresponding period in 1996. The decrease was primarily due to the increased
sales volume.
Operating income for the three months ended March 31, 1996 was $11.9 million, or
approximately 10% over the comparable period in 1995. The increase in operating
income results from the higher sales volume negatively impacted by a slightly
lower gross profit margin.
Order input for the quarter ended March 31, 1996 was $139.7 million, or
approximately 17% over the comparable period in 1995. The portion of
aftermarket bookings in the first quarter decreased to 58% of total bookings
compared to 64% for the same period last year. The increase in bookings was
primarily due to pump related OE bookings in Europe and the Pacific Rim.
Backlog at March 31, 1996 was $162.3 million compared to $158.3 million at March
31, 1995.
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, 1996, is summarized as follows (amounts in thousands):
<TABLE>
<CAPTION>
Machinery
relocation, Asset disposal and
Personnel installation, and organizational
costs related costs realignment costs Total
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 $4,065 $2,949 $990 $8,004
Cash expenditures 410 763 114 1,287
Losses on asset disposals 4 4
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Balance, March 31, 1996 $3,655 $2,186 $872 $6,713
- - -----------------------------------------------------------------------------------------------
</TABLE>
The Company's effective tax rate decreased from 39.5% for the three months ended
March 31, 1995, to 39.0% in the corresponding period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1996, the Company used approximately
$3.4 million of net funds for operating activities, as compared to the
corresponding period in 1995 during which the Company generated approximately
$12.0 million of net funds from operating activities. The cash generated in 1995
reflects accounts receivable collections resulting from relatively high sales
volume in the fourth quarter of 1994. Accounts receivable balances increased
during the first quarter of 1996 due to the high volume of sales at the end of
the quarter.
At March 31, 1996, the Company had outstanding under its credit facilities
borrowings totaling $59.8 million and letters of credit totaling $11.8 million
and there was $37.8 million available for borrowing thereunder. As of March 31,
1996, the Company had outstanding $24.4 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,
1996.
9
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SIGNATURES
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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 14, 1996 By: /s/ E. P. Cross
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E. P. Cross
Executive Vice President, Finance
and Chief Financial Officer
(Duly Authorized Officer)
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 10,688
<SECURITIES> 0
<RECEIVABLES> 114,869
<ALLOWANCES> (3,855)
<INVENTORY> 89,375
<CURRENT-ASSETS> 234,761
<PP&E> 181,245
<DEPRECIATION> 75,975
<TOTAL-ASSETS> 408,994
<CURRENT-LIABILITIES> 102,414
<BONDS> 84,606
0
0
<COMMON> 245
<OTHER-SE> 180,237
<TOTAL-LIABILITY-AND-EQUITY> 408,994
<SALES> 121,938
<TOTAL-REVENUES> 121,938
<CGS> 75,160
<TOTAL-COSTS> 75,160
<OTHER-EXPENSES> 34,898
<LOSS-PROVISION> 216
<INTEREST-EXPENSE> 1,714
<INCOME-PRETAX> 9,950
<INCOME-TAX> 3,880
<INCOME-CONTINUING> 6,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,070
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
