<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM-10Q
(MARK ONE)
X - QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 0-2129
------------
THE RAYMOND CORPORATION
(Exact name of registrant as specified in its charter)
SOUTH CANAL STREET, GREENE, NEW YORK 13778
(Address of registrants's principal executive office)
(607) 656-2311
(Registrant's telephone number)
New York 15-0372290
(State of Incorporation) (I.R.S. Employer
Identification Number)
----------------------------------
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Sectons 13 or
15(d) of the Securites 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____
The number of shares of common stock outstanding as of
October 31, 1996 was 7,438,432.
Page 1
<PAGE>
THE RAYMOND CORPORATION
INDEX to FORM-10Q
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets - September 30, 1996
and December 31, 1995 3 - 4
Condensed Consolidated Statements of Income - Quarters
and Nine Month Periods ended September 30, 1996 and
September 30, 1995 5
Condensed Consolidated Statements of Cash Flows - Nine Month
Periods ended September 30, 1996 and September 30, 1995. 6 - 7
Notes to Condensed Consolidated Financial Statements 8 - 9
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 15
PART II. OTHER INFORMATION
Item 5 - Other Information 16
Item 6 - Exhibits and Reports on Form 8-K 16
Signature 16
</TABLE>
Page 2
<PAGE>
Part I - Financial Information
Item I - Financial Statements
THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note)
Assets 9/30/96 12/31/95
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manufacturing Current Assets
Cash and cash equivalents $ 10,776,889 $ 12,341,383
Accounts receivable, net 39,520,748 36,349,825
Inventories 35,083,562 34,645,114
Recoverable income taxes 1,171,368 1,159,325
Deferred income taxes* 5,120,467 5,434,967
Prepaid expenses and other current assets 8,564,815 4,326,925
---------------------------------------
Total Manufacturing Current Assets 100,237,849 94,257,539
Investments in and advances to unconsolidated
investees, at equity 20,198,356 19,165,362
Property, plant and equipment, at cost 59,710,796 54,179,355
Less accumulated depreciation (34,787,477) (31,043,877)
---------------------------------------
Net property, plant and equipment 24,923,319 23,135,478
Other non-current assets 4,380,106 4,226,451
---------------------------------------
Total Manufacturing Assets 149,739,630 140,784,830
---------------------------------------
Financial Services
Cash and cash equivalents 15,982 17,664
Investment in leases, net 125,979,634 106,409,973
Property, plant and equipment, at cost 411,122 385,486
Less accumulated depreciation (223,474) (193,086)
---------------------------------------
Net property, plant and equipment 187,648 192,400
Rental equipment, at cost 4,480,880 4,379,990
Less accumulated depreciation (2,112,488) (2,145,390)
---------------------------------------
Net rental equipment 2,368,392 2,234,600
Other assets 234,587 287,702
---------------------------------------
Total Financial Services Assets 128,786,243 109,142,339
---------------------------------------
Total Assets $ 278,525,873 $ 249,927,169
=======================================
</TABLE>
*Includes both manufacturing and financial services
Note: The December 31, 1995 balance sheet has been derived from
audited financial statements
The accompanying notes are a part of the financial statements.
Page 3
<PAGE>
THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note)
LIABILITIES AND SHAREHOLDERS' EQUITY 9/30/96 12/31/95
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manufacturing Current Liabilities
Accounts payable $ 13,711,937 $ 13,656,877
Accrued liabilities 24,562,060 20,461,499
---------------------------------------
Total Manufacturing Current Liabilities 38,273,997 34,118,376
Long-term debt 51,240,000 51,260,000
Deferred income taxes* 4,285,759 3,982,867
Other liabilities 4,153,864 3,698,839
---------------------------------------
Total Manufacturing Liabilities 97,953,620 93,060,082
---------------------------------------
Financial Services
Income taxes* and accrued expenses 3,167,114 3,137,349
Notes payable - banks 57,812,500 41,537,500
Notes payable - insurance companies 8,000,000 10,858,000
---------------------------------------
Total Financial Services Liabilities 68,979,614 55,532,849
---------------------------------------
Shareholders' Equity
Common stock (7,461,401 issued in 1996;
7,100,444 issued in 1995) 11,192,102 10,650,666
Capital surplus 29,922,211 23,643,394
Retained earnings 73,291,433 69,945,200
Cumulative translation adjustments (2,506,114) (2,596,653)
Treasury stock, at cost (306,993) (308,369)
---------------------------------------
Total Shareholders' Equity 111,592,639 101,334,238
---------------------------------------
Total Liabilities and Shareholders' Equity $ 278,525,873 $ 249,927,169
=======================================
</TABLE>
*Includes both manufacturing and financial services
Note: The December 31, 1995 balance sheet has been derived from
audited financial statements
The accompanying notes are a part of the financial statements.
Page 4
<PAGE>
THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
3 Month period ended 9 Month period ended
September 30, September 30,
1996 1995 1996 1995
---------------------------- -------------------------------
<S> <C> <C> <C> <C>
REVENUES
Net sales $71,679,069 $65,418,877 $201,091,959 $204,481,791
Rental revenues 377,518 456,939 1,059,502 1,360,735
Lease finance revenues 3,057,855 2,470,979 8,724,008 6,854,218
Other income 640,798 611,813 2,305,247 2,111,928
----------------------------- -------------------------------
Total Revenues 75,755,240 68,958,608 213,180,716 214,808,672
----------------------------- -------------------------------
COSTS AND EXPENSES
Cost of sales 56,528,512 51,893,995 159,145,580 159,240,448
Cost of rentals 454,487 384,136 1,285,028 1,225,716
Selling, general and administrative 9,151,755 7,637,507 25,690,994 25,853,664
Employees' profit sharing 994,513 926,769 2,584,513 2,867,853
Interest expense:
Lease financing 1,199,330 833,194 3,195,308 2,088,165
Other 723,505 902,627 2,296,387 2,843,467
Other expenses 1,073,302 1,768,509 3,279,711 5,259,761
----------------------------- -------------------------------
Total Costs and Expenses 70,125,404 64,346,737 197,477,521 199,379,074
----------------------------- -------------------------------
INCOME BEFORE TAXES AND EQUITY IN NET
EARNINGS OF UNCONSOLIDATED INVESTEES 5,629,836 4,611,871 15,703,195 15,429,598
Income tax expense 2,193,127 1,708,761 6,130,324 6,106,217
----------------------------- -------------------------------
Income before equity in net
earnings of unconsolidated investees 3,436,709 2,903,110 9,572,871 9,323,381
Equity in net earnings of unconsolidated investees 391,094 98,438 946,285 238,227
----------------------------- -------------------------------
NET INCOME $3,827,803 $3,001,548 $10,519,156 $9,561,608
============================= ===============================
NET INCOME PER SHARE:
Primary $0.51 $0.41* $1.41 $1.35*
============================= ===============================
Fully Diluted $0.41 $0.33* $1.14 $1.06*
============================= ===============================
</TABLE>
* Adjusted for the 1996 5% stock dividend
The accompanying notes are a part of the financial statements.
Page 5
<PAGE>
THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
9 Month period ended September 30, 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $10,519,156 $9,561,608
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,179,612 3,567,898
Provision for losses on accounts receivable
and investment in leases 510,000 1,083,000
Earnings of unconsolidated investees,
net of dividends (694,781) (238,227)
Foreign currency transaction losses 131,886 352,889
Acquisition of rental equipment (1,888,834) (1,051,121)
Gains on sale of rental equipment (441,216) (689,324)
Proceeds from rental equipment sales 1,607,179 1,146,670
(Gains) Losses on sale of property, plant and equipment (249,082) 46,898
Other items, net 928,142 (424,440)
Changes in operating assets and liabilities:
Increase in accounts receivable (1,776,813) (11,263,646)
Increase in investment in leases (19,764,661) (16,136,743)
Increase in inventories, prepaid expenses
and other current assets (4,194,925) (6,118,597)
Increase in accounts payable and
accrued expenses 2,737,148 10,479,632
--------------------------------
Net cash used in operating activities (8,397,189) (9,683,503)
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of subsidiary, net of cash acquired 158,236 ---
Additions to property, plant and equipment (5,227,340) (5,397,521)
Proceeds received from sales of property,
plant and equipment 945,125 28,528
Investment in and advances to
unconsolidated investees (2,108,019) (3,595,111)
--------------------------------
Net cash used in investing activities (6,231,998) (8,964,104)
--------------------------------
</TABLE>
The accompanying notes are a part of the financial statements.
Page 6
<PAGE>
THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
9 Month period ended September 30, 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under line of
credit agreements 9,500,000 (1,000,000)
Proceeds from issuance of long-term debt 16,750,000 26,000,000
Repayment of long-term debt (12,833,000) (5,144,500)
Cash dividends paid (371,902) --
Capital stock transactions, net 608 101,579
--------------------------------
Net cash provided by financing activities 13,045,706 19,957,079
--------------------------------
Effect of foreign currency rate fluctuations
on cash and cash equivalents 17,305 174,846
--------------------------------
(Decrease) Increase in cash and cash equivalents (1,566,176) 1,484,318
Cash and cash equivalents at January 1, 12,359,047 5,423,463
--------------------------------
Cash and cash equivalents at September 30, $10,792,871 $6,907,781
================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes, net of refunds $5,326,634 $8,100,197
Interest $5,331,522 $3,884,088
Noncash activities:
Property acquired in exchange for retirement
of mortgage receivable -- $1,500,000
Common stock issued for conversion
of debentures $20,000 $6,240,000
</TABLE>
The accompanying notes are a part of the financial statements.
Page 7
<PAGE>
THE RAYMOND CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The unaudited financial statements presented herein have been prepared
in accordance with the instructions to Form 10-Q and do not include all
of the information and note disclosures required by generally accepted
accounting principles. These statements should be read in conjunction
with the Company's financial statements and notes thereto in its 1995
Annual Report to Shareholders which is incorporated by reference in its
entirety on Form 10-K for the year ended December 31, 1995. The
accompanying financial statements have not been examined by independent
accountants, but in the opinion of management such financial statements
include all adjustments, consisting only of normal recurring
adjustments, necessary to summarize fairly the Company's financial
position at September 30, 1996 and results of operations for the three
and nine month periods then ended. The results of operations for the
interim periods presented may not be indicative of the results that may
be expected for the year.
2. Inventories
The composition of inventories was:
9/30/96 12/31/95
-------------------------
Raw materials $17,695,058 $18,094,704
Work in process 14,470,466 14,804,024
Finished goods 2,918,038 1,746,386
-------------------------
$35,083,562 $34,645,114
=========================
3. Stock Dividend
On March 2, 1996, the Board of Directors declared an irregular five
percent stock dividend on the Company's outstanding common stock. On
April 12, 1996, shareholders of record as of March 29, 1996 received one
additional share of stock for each twenty shares held. Earnings per
share and weighted average shares outstanding for 1995 have been
restated to reflect the five percent stock dividend.
Page 8
<PAGE>
THE RAYMOND CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. Long-Term Debt
On August 30, 1996, the Company and Raymond Leasing Corporation entered
into a new Revolving Credit and Term Loan Agreement which made available
an additional $10.0 million. This committed facility provides for
working capital lines of credit through June 30, 1998 which can be
converted at the Company's option into three, four or five year term
loans. Also in 1996, an additional $5.0 million was made available to
Raymond Leasing Corporation under an existing line of credit
arrangement.
In the nine months ended September 30, 1996, Raymond Leasing Corporation
borrowed a total of $16.8 million under three separate five year term
loans to fund the growth of the lease portfolio. Interest rates on these
borrowings range from 7.05% to 7.58%.
5. Contingencies
The Company is currently defending a number of products liability and
similar lawsuits involving industrial accidents. The Company views these
actions, and related expenses of administration, litigation and
insurance, as part of the ordinary course of its business. The Company
has a policy of aggressively defending products liability lawsuits,
which generally take several years to ultimately resolve. A combination
of self-insured retention and insurance is used to manage these risks
and management believes that the insurance coverage and reserves
established for self-insured risks are adequate. The effect of these
lawsuits on future results of operations cannot be predicted because any
such effect depends on the operating results of future periods and the
amount and timing of the resolution of these proceedings. The Company's
Dealers contribute to the funding of the Company's products liability
program and, in turn, the Company indemnifies the Dealers against
products liability expense and manages products liability claims.
The Company is also one of fourteen defendants in a private
environmental lawsuit. The plaintiffs have alleged that scrap metal
purchased from the Company was hazardous and/or was coated with certain
solvents and/or cutting oils. Plaintiffs have the burden of proving the
nature and extent of the Company's contribution to the site, as well as
the burden of proving what portion of the material delivered to the site
was "hazardous" as that term is defined in the environmental statutes.
The Company is aggressively defending the claim and does not believe it
is likely to have a material adverse effect on the Company.
In addition to the matters discussed above, the Company is subject to
various other legal proceedings, claims and liabilities which have
arisen in the ordinary course of business. In the opinion of management,
the amount of ultimate liability, if any, with respect to these actions
will not materially affect the financial results of operations or
financial position of the Company.
Page 9
<PAGE>
Part I - Financial Information
Item 2 - Management Discussion and Analysis of Financial
Condition and Results of Operations
A summary of the period changes in the principal items included in the
consolidated statements of income is shown below (in thousands):
<TABLE>
<CAPTION>
Changes from Changes from
3 Month period ended 9 Month period ended
September 30, 1995 to September 30, 1995 to
September 30, 1996 September 30, 1996
AMOUNT % AMOUNT %
----------------------- ------------------------
<S> <C> <C> <C> <C>
TOTAL REVENUES $6,797 10% ($1,628) -1%
----------------------- ------------------------
COSTS AND EXPENSES
Cost of sales and rentals 4,705 9% (36) 0%
Selling, general and administrative 1,514 20% (163) -1%
Employees' profit sharing 68 7% (283) -10%
Interest expense 187 11% 560 11%
Other expenses, net (695) -39% (1,980) -38%
----------------------- ------------------------
Total Costs and Expenses 5,779 9% (1,902) -1%
----------------------- ------------------------
INCOME BEFORE TAXES AND EQUITY IN NET
EARNINGS OF UNCONSOLIDATED INVESTEES 1,018 22% 274 2%
Income tax expense 484 28% 24 0%
----------------------- ------------------------
Income before equity in net
earnings of unconsolidated investees 534 18% 250 3%
Equity in net earnings of unconsolidated investees 293 298% 708 297%
----------------------- ------------------------
NET INCOME $ 827 28% $ 958 10%
======================= ========================
</TABLE>
Page 10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE RAYMOND CORPORATION AND SUBSIDIARIES
Three Months and Nine Months ended September 30, 1996 compared to the Three
Months and Nine Months ended September 30, 1995
Revenues
Total revenues for the three months ended September 30, 1996 increased by
approximately $6.8 million or 9.9% to $75.8 million from $69.0 million for the
three months ended September 30, 1995.
Total revenues for the nine months ended September 30, 1996 decreased by
approximately $1.6 million or 0.8% to $213.2 million from $214.8 million for the
nine months ended September 30, 1995.
Total revenues of $75.8 million for the third quarter ended September 30, 1996
represent a third quarter record which was primarily attributed to equipment
backlog (unfilled new equipment orders) being $4.3 million greater at the
beginning of 1996's third quarter as compared to the third quarter of 1995.
Total revenues for the nine months ended September 30, 1996 have declined from
the record levels achieved in 1995 due to a reduction in the equipment backlog
at the beginning of 1996 versus the record backlog level at the beginning of
1995. In addition, although the North American lift truck market remains strong
in 1996, it is not as large as the record years of 1994 and 1995. Increased
lease finance revenues realized as a result of the growth of the lease portfolio
have partially offset the decline in year to date net sales.
Cost of Sales
For the third quarter of 1996, cost of sales as a percentage of net sales was
78.9% as compared to 79.3% for the third quarter of 1995. Costs of sales as a
percentage of net sales was 79.1% for the first nine months of 1996 and 77.9%
for the comparable 1995 period.
Efforts to continue to reduce manufacturing costs through improved manufacturing
processes and research and development activities have been temporarily offset
by additional costs and short-term manufacturing inefficiencies incurred in
connection with the relocation of existing manufacturing equipment and the
installation of new manufacturing equipment at the Greene, New York facility.
This factory modernization project is on schedule and will be completed in the
fourth quarter of 1996.
The cost of sales percentage is affected by the volume produced for Original
Equipment Manufacturer ("O.E.M.") customers. Offsetting the percentage impact on
cost of goods sold is the benefit received from attaining these additional sales
without incurring additional marketing and distribution expenses.
Page 11
<PAGE>
Selling, General and Administrative Expenses
For the third quarter of 1996, selling, general and administrative expenses were
$9.2 million or 12.1% of total revenues as compared to $7.6 million or 11.1% of
total revenues in the third quarter of 1995. Selling, general and administrative
expenses were $25.7 million or 12.1% of total revenues for the first nine months
of 1996 and $25.9 million or 12.0% of total revenues for the first nine months
of 1995.
The $1.6 million increase in selling, general and administrative expenses in the
three months ended September 30, 1996 as compared to the three months ended
September 30, 1995 reflects increased costs associated with the Greene, New York
factory modernization project including a new business system, product research
and development activities and benefit accruals, including stock appreciation
rights. Selling, general and administrative expenses for the first nine months
of 1996 are comparable to those for the first nine months of 1995 as the
increase in selling, general and administrative expenses experienced in the
third quarter of 1996 was offset by certain costs incurred in the first quarter
of 1995 related to the Company's biannual International Sales Meeting and launch
of the Dockstocker(TM) product line which were not repeated in 1996.
Interest Expense
Lease financing operations are conducted through Raymond Leasing Corporation, a
wholly-owned subsidiary of the Company. Lease finance interest expense is
reported net of charges on intercompany borrowings and was approximately $1.2
million in the quarter ended September 30, 1996 as compared to $0.8 million in
the comparable quarter in 1995. For the nine month period ended September 30,
1996, lease financing interest expense was approximately $3.2 million versus
$2.1 million reported through September 30, 1995. The increase in lease finance
interest expense reflects the fact that the majority of the growth in the lease
portfolio has been financed with funds from external borrowings. It is expected
that lease financing interest expense will continue to fluctuate with the volume
of outstanding leases and the lease finance revenues they produce.
Other interest expense incurred by the manufacturing divisions was approximately
$0.7 million in the quarter ended September 30, 1996 as compared to $0.9 million
in the quarter ended September 30, 1995. For the nine months ended September 30,
1996, other interest expense was $2.3 million as compared to $2.8 million for
the comparable 1995 period. Other interest expense consists primarily of
interest on the Company's convertible subordinated debentures. The noted
decrease in other interest expense is primarily the result of the conversion of
$6.2 million of these debentures into equity in the third quarter of 1995. In
addition, other interest expense in the second and third quarters of 1996
reflect a portion of the interest subsidy grant received from New York State in
connection with the factory modernization project at the Greene, New York
facility.
Page 12
<PAGE>
Other Expenses
Other expenses were approximately $1.1 and $1.8 million, or 1.4% and 2.6% of
total revenues, for the quarters ended September 30, 1996 and 1995,
respectively. For the first nine months of 1996, other expenses were $3.3
million or 1.5% of total revenues as compared to $5.3 million or 2.4% of total
revenues for the first nine months of 1995.
The primary components of other expenses are cash discounts allowed to Dealers
for the timely payment of invoices and the provision for losses on accounts and
leases receivable. Decreases in the provision for losses on accounts and leases
receivable, certain costs incurred in connection with foreign currency
transactions and expenses associated with the conversion of $6.2 million of the
Company's convertible subordinated debentures into equity in 1995 were the main
components of both the dollar and percentage decreases in 1996.
The formula for computing the profit sharing provision is consistent for all
periods presented.
Income Tax Expense
During all periods reported, U.S. and foreign income tax provisions were
computed using the respective expected annual effective tax rates.
Earnings of Unconsolidated Investees
The Company's primary unconsolidated investee is G.N. Johnston Equipment Co.
Ltd. ("Johnston"), which is partially owned by R.H.E. Ltd., a wholly-owned
Canadian subsidiary of the Company. Johnston is the exclusive Canadian
distributor for all of the Company's products with sales and service outlets in
the principal business regions of the Dominion of Canada. Other unconsolidated
investees include several Dealerships located throughout the United States.
Equity in earnings of unconsolidated investees was $0.4 million in the quarter
ended September 30, 1996 versus $0.1 million in the quarter ended September 30,
1995. Equity in earnings of unconsolidated investees was $0.9 million for the
nine months ended September 30, 1996 versus $0.2 million for the comparable
period of 1995. The increase in the earnings of unconsolidated investees was
primarily attributable to the improved financial performance of several U.S.
Dealerships.
(See Part II, Item 5 of this Form 10-Q for additional information.)
Page 13
<PAGE>
Stock Dividend
On March 2, 1996, the Board of Directors declared an irregular 5% stock dividend
on the Company's outstanding common stock. On April 12, 1996, shareholders of
record as of March 29, 1996 received one additional share of stock for each
twenty shares held. Earnings per share and weighted average shares outstanding
for 1995 have been adjusted to reflect the 5% stock dividend.
Liquidity and Sources of Capital
The Company's manufacturing working capital at September 30, 1996 was $62.0
million and its ratio of manufacturing current assets to manufacturing current
liabilities was 2.6 to 1. At September 30, 1996, the Company and Raymond Leasing
Corporation, its wholly-owned leasing subsidiary, had unused lines of credit
aggregating $37.1 million, of which $24.0 million may be converted into
long-term debt at the option of the Company and/or Raymond Leasing Corporation.
These credit facilities will enable the Company to continue to fund its growth
strategy, including the Greene factory modernization project, and enable Raymond
Leasing Corporation to obtain the external funds necessary to fund the growth of
the lease portfolio and to repay intercompany borrowings with The Raymond
Corporation as the manufacturing divisions require additional funds.
For the nine months ended September 30, 1996, approximately $8.4 million was
used to fund operating activities compared to the $9.7 million used in the
comparable 1995 period. The cash generated from earnings was primarily used to
fund the growth in the lease portfolio and the increase in other working capital
components.
Cash used in investing activities decreased approximately $2.8 million for the
first nine months of 1996 compared to the first nine months of 1995. This
decrease was primarily due to the additional investments in the Company's Dealer
Network that were made in the first nine months of 1995 and proceeds received
from the sale of an idle facility in the third quarter of 1996.
Cash flows from financing activities primarily reflect the external borrowings
and related debt repayments made by Raymond Leasing Corporation to fund a
portion of the continued growth of the lease portfolio.
On April 8, 1996, the Board of Directors reinstated a regular quarterly cash
dividend of 2 1/2 cents on the Company's outstanding shares of common stock.
Payment of the third quarter dividend was made on September 27, 1996 to
shareholders of record on September 13, 1996. On October 10, 1996, the Board of
Directors declared that shareholders of record on December 13, 1996 will be paid
the regular quarterly cash dividend on December 27, 1996.
The restrictions pertaining to minimum tangible net worth in certain term loan
agreements will not be adversely impacted by the reinstatement of cash
dividends. In addition, Raymond Leasing Corporation is subject to certain debt
agreements that limit cash dividends and loans to the Company. These
restrictions are not expected to affect the Company's ability to meet its
working capital requirements.
Page 14
<PAGE>
Outlook
New equipment orders for the first nine months of 1996 were a record $203.6
million which represents a 2.6% increase from the $198.5 million reported in the
first nine months of 1995. Improved market share, achieved in part through the
efforts of our Dealer development programs and the continued success of our
National Accounts program, has enabled the Company to establish this record for
new equipment orders in a North American market that remains strong but that is
down from the record levels attained in 1994 and 1995.
Equipment backlog was $68.1 million at September 30, 1996, down $4.0 million or
5.5% from the $72.1 million reported at this time last year and up $2.5 million
or 3.7% from the $65.6 million reported at December 31, 1995. The Company
expects that the overall domestic market will continue to be strong for the
remainder of 1996 and expects a record-setting year in the key areas of new
equipment orders, shipments and net income. Net income has increased to 4.9% of
revenue, up from the 4.5% earned at this time last year.
The Company will continue to seek growth from new products serving new markets,
enhanced distribution through the Dealer Network, increased participation in
domestic and international markets through distribution and O.E.M. supply
agreements, and improvements in the manufacturing processes.
The Company's estimated $12 million modernization project at its Greene, New
York facility which encompasses production equipment, manufacturing processes
and management information systems is on schedule and will be completed in the
fourth quarter of 1996. This factory modernization project will significantly
upgrade the technology of the plant and also increase its efficiency. The
remaining expenditures will be funded by a combination of internally generated
resources and existing credit facilities. In addition, the Company is receiving
assistance from New York State and local governments in the form of grants for
employee training, a sales tax exemption program and an interest subsidy grant.
Page 15
<PAGE>
Part II - Other Information
ITEM 5 - OTHER INFORMATION
On October 10, 1996, Ross K. Colquhoun, Chairman of the Board and Chief
Executive Officer of The Raymond Corporation (the "Company"), sold his
shares of common stock of G.N. Johnston Equipment Co. Ltd. ("Johnston")
and Associated Material Handling Industries, Inc. ("Associated"), both
distributors of the Company's products. The shares were valued in
accordance with the terms and conditions set forth in shareholder
buy/sell agreements dated July 1, 1968 and August 15, 1980,
respectively.
The Johnston shares, which represent approximately 28% of the total
outstanding shares, were acquired by R.H.E. Ltd. ("R.H.E."), a
wholly-owned Canadian subsidiary of the Company. R.H.E. had previously
owned approximately 47% of the outstanding shares of Johnston. Johnston
is the exclusive Canadian distributor for the Company with sales and
service outlets in the principal business regions of Canada.
The Associated shares, which represent approximately 26% of the total
outstanding shares, were acquired by the Company. The Company had
previously owned approximately 44% of the outstanding shares of
Associated. Associated is a U.S. distributor based in Elmhurst, Illinois
that serves portions of the Midwest and Pacific Northwest.
The combined purchase price for the shares of Johnston and Associated
was not material to the financial statements of the Company. The
operating results of Johnston and Associated will be consolidated with
those of the Company starting in the fourth quarter of 1996.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A) Exhibits.
1) 11 - Earnings Per Share Computation
2) 27 - Financial Data Schedule
B) Reports on Form 8-K.
There were no reports on Form 8-K filed for the three months ended
September 30, 1996.
Signature
----------
Pursuant to 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.
THE RAYMOND CORPORATION
Date: November 13, 1996 by: /S/ William B. Lynn
--------------------------------
William B. Lynn
Executive Vice President
(Principal Financial Officer)
Page 16
<PAGE>
THE RAYMOND CORPORATION
EXHIBIT 11
Earnings Per Share Computation
(In thousands except per share data)
<TABLE>
<CAPTION>
3 Month period ended 9 Month period ended
September 30, September 30,
1996 1995(1) 1996 1995(1)
---------------------- ----------------------
<S> <C> <C> <C> <C>
PRIMARY
Average shares outstanding 7,437 7,250 7,437 7,100
Net effect of dilutive stock options
based on the treasury stock method
using average market price 47 60 48 70
---------------------- ----------------------
Total 7,484 7,310 7,485 7,170
====================== ======================
Net income $3,828 $3,002 $10,519 $9,562
====================== ======================
Per share amount $0.51 $0.41 $1.41 $1.33
====================== ======================
(2)
FULLY DILUTED
Average shares outstanding 7,437 7,250 7,437 7,100
Net effect of dilutive stock options based on the treasury
stock method using the period end market price, if higher
than average market price 53 60 51 73
Assumed conversion of 6.50% convertible
subordinated debentures 3,190 3,361 3,190 3,506
---------------------- ----------------------
Total 10,680 10,671 10,678 10,679
====================== ======================
Net income $3,828 $3,002 $10,519 $ 9,562
Add 6.50% convertible subordinated
debentures interest, net of federal
income tax effect 549 549 1,649 1,783
---------------------- ----------------------
Total $4,377 $3,551 $12,168 $11,345
====================== ======================
Per share amount $0.41 $0.33 $1.14 $1.06
====================== ======================
</TABLE>
(1) Adjusted for the 1996 five percent stock dividend.
(2) Primary per share amount reported in the year to date consolidated
financial statements of $1.35 in 1995 excludes the net effect of
dilutive stock options as the aggregate dilution from these common stock
equivalents was immaterial (less than three percent of earnings per
common share outstanding).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly period ended September 30, 1996 Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 10,793
<SECURITIES> 0
<RECEIVABLES> 40,820
<ALLOWANCES> 1,300
<INVENTORY> 35,084
<CURRENT-ASSETS> 100,238<F1>
<PP&E> 60,122
<DEPRECIATION> 35,011
<TOTAL-ASSETS> 278,526
<CURRENT-LIABILITIES> 38,274
<BONDS> 117,053
0
0
<COMMON> 11,192
<OTHER-SE> 100,401
<TOTAL-LIABILITY-AND-EQUITY> 278,526
<SALES> 201,092
<TOTAL-REVENUES> 213,181
<CGS> 159,146
<TOTAL-COSTS> 163,626
<OTHER-EXPENSES> 31,555
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,296
<INCOME-PRETAX> 16,649
<INCOME-TAX> 6,130
<INCOME-CONTINUING> 10,519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,519
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.14
<FN>
<F1>Reflects current portion of Manufacturing operations only as accounts for
Financial Services are presented in a non-classified format.
</FN>
</TABLE>
