<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1997 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
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THE RAYMOND CORPORATION
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(Exact name of registrant as specified in its charter)
SOUTH CANAL STREET, GREENE, NEW YORK 13778
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(Address of registrant's principal executive office)
(607) 656-2311
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(Registrant's telephone number)
New York 15-0372290
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(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 April 30, 1997 was
10,735,171.
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THE RAYMOND CORPORATION
INDEX to FORM-10Q
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PART I. FINANCIAL INFORMATION Page
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Item 1 - Financial Statements
Condensed Consolidated Balance Sheets - March 31, 1997
and December 31, 1996 3 - 4
Condensed Consolidated Statements of Income - Quarters
ended March 31, 1997 and 1996 5
Condensed Consolidated Statements of Cash Flows - Quarters
ended March 31, 1997 and 1996. 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 2 - Changes in Securities 16
Item 5 - Other Information 16
Item 6 - Exhibits and Reports on Form 8-K 16
Signature 16
</TABLE>
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Part I - Financial Information
Item I - Financial Statements
THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note)
ASSETS 3/31/97 12/31/96
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Manufacturing and Distribution Current Assets
Cash and cash equivalents $6,817,766 $12,389,071
Accounts receivable, net 52,693,442 50,776,303
Investment in leases, net 4,354,127 4,285,087
Inventories 44,410,459 47,203,818
Recoverable income taxes 389,765 774,051
Deferred income taxes* 5,234,712 5,012,215
Prepaid expenses and other current assets 8,778,358 8,651,725
-----------------------------------------
Total Manufacturing and Distribution Current Assets 122,678,629 129,092,270
Investments in and advances to unconsolidated
investees, at equity 9,329,696 9,462,438
Investment in leases, net 8,159,135 7,979,598
Property, plant and equipment, at cost 71,635,362 69,321,643
Less accumulated depreciation (41,991,152) (40,974,213)
-----------------------------------------
Net property, plant and equipment 29,644,210 28,347,430
Rental equipment, at cost 19,132,308 19,226,214
Less accumulated depreciation (12,845,267) (12,786,112)
-----------------------------------------
Net rental equipment 6,287,041 6,440,102
Other assets 6,158,286 7,343,355
-----------------------------------------
Total Manufacturing and Distribution Assets 182,256,997 188,665,193
-----------------------------------------
Financial Services
Cash and cash equivalents 33,043 31,012
Investment in leases, net 135,510,245 131,184,628
Property, plant and equipment, at cost 415,874 413,256
Less accumulated depreciation (242,851) (233,106)
-----------------------------------------
Net property, plant and equipment 173,023 180,150
Rental equipment, at cost 4,625,159 4,690,627
Less accumulated depreciation (2,021,213) (2,004,428)
-----------------------------------------
Net rental equipment 2,603,946 2,686,199
Other assets 202,119 190,995
-----------------------------------------
Total Financial Services Assets 138,522,376 134,272,984
-----------------------------------------
Total Assets $320,779,373 $322,938,177
=========================================
</TABLE>
*Includes Manufacturing and Distribution and Financial Services
Note: The December 31, 1996 balance sheet has been derived from
audited financial statements
The accompanying notes are a part of the financial statements.
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THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note)
LIABILITIES AND SHAREHOLDERS' EQUITY 3/31/97 12/31/96
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Manufacturing and Distribution Current Liabilities
Accounts payable $18,819,619 $20,804,292
Accrued liabilities 25,112,999 26,479,042
Current portion of long-term debt 9,024,187 7,573,164
-----------------------------------------
Total Manufacturing and Distribution Current Liabilities 52,956,805 54,856,498
Long-term debt 5,437,585 41,961,472
Deferred income taxes* 4,779,935 5,196,603
Other liabilities 6,911,595 6,500,346
-----------------------------------------
Total Manufacturing and Distribution Liabilities 70,085,920 108,514,919
-----------------------------------------
Financial Services
Income taxes* and accrued expenses 4,775,506 3,449,537
Notes payable - banks 68,512,500 74,062,500
Notes payable - insurance companies 4,000,000 4,000,000
-----------------------------------------
Total Financial Services Liabilities 77,288,006 81,512,037
-----------------------------------------
-----------------------------------------
Minority Interests 4,374,279 4,238,918
-----------------------------------------
Shareholders' Equity
Common stock (10,757,370 issued in 1997;
8,281,694 issued in 1996) 16,136,055 12,422,541
Capital surplus 75,781,257 41,787,444
Retained earnings 80,869,509 77,590,950
Cumulative translation adjustments (3,448,660) (2,821,639)
Treasury stock, at cost (306,993) (306,993)
-----------------------------------------
Total Shareholders' Equity 169,031,168 128,672,303
-----------------------------------------
Total Liabilities and Shareholders' Equity $320,779,373 $322,938,177
=========================================
</TABLE>
*Includes Manufacturing and Distribution and Financial Services
Note: The December 31, 1996 balance sheet has been derived from
audited financial statements
The accompanying notes are a part of the financial statements.
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THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
3 Month period ended
March 31,
1997 1996
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REVENUES
Net sales $89,836,943 $65,867,785
Rental revenues 2,590,330 370,301
Lease finance revenues 3,458,494 2,748,616
Other income 738,356 641,110
-----------------------------------------
Total Revenues 96,624,123 69,627,812
-----------------------------------------
COSTS AND EXPENSES
Cost of sales 67,676,760 52,431,790
Cost of rentals 1,534,887 401,380
Selling, general and administrative 15,868,884 8,380,670
Stock appreciation rights 1,097,667 (550,970)
Employees' profit sharing 842,155 830,681
Interest expense:
Lease financing 1,522,544 953,974
Other 104,341 882,206
Other expenses 1,100,725 1,179,745
-----------------------------------------
Total Costs and Expenses 89,747,963 64,509,476
-----------------------------------------
INCOME BEFORE TAXES, MINORITY INTEREST AND EQUITY IN
EARNINGS OF UNCONSOLIDATED INVESTEES 6,876,160 5,118,336
Income tax expense 2,723,863 1,998,669
-----------------------------------------
Income before minority interest and equity in
earnings of unconsolidated investees 4,152,297 3,119,667
Minority interest in earnings of subsidiaries 164,813 ---
Net equity in earnings of unconsolidated investees 104,780 261,983
-----------------------------------------
NET INCOME $4,092,264 $3,381,650
=========================================
NET INCOME PER SHARE:
Primary $0.41 $0.45
=========================================
Fully Diluted $0.41 $0.37
=========================================
</TABLE>
The accompanying notes are a part of the financial statements.
Page 5
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THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
3 Month period ended March 31, 1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,092,264 $3,381,650
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,185,474 1,347,493
Provision for losses on accounts receivable
and investment in leases 217,602 120,000
Earnings of unconsolidated investees,
net of dividends received (104,780) (261,983)
Foreign currency transaction (gains) losses (308,746) 115,580
Acquisition of rental equipment (955,390) (593,323)
Gains on dispositions of rental equipment (139,110) (158,413)
Proceeds from rental equipment sales 710,601 321,240
Gains on sales of property, plant and equipment (10,790) (4,476)
Other items, net 819,355 (118,710)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (2,044,107) 3,862,548
Increase in investment in leases (4,667,477) (6,857,029)
Decrease (increase) in inventories, prepaid expenses
and other current assets 2,982,831 (191,295)
Decrease in accounts payable and
accrued expenses (1,976,825) (1,059,825)
-----------------------------------------
Net cash provided by (used in) operating activities 800,902 (96,543)
-----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of subsidiary, net of cash acquired --- 158,236
Additions to property, plant and equipment (2,880,822) (1,748,783)
Proceeds received from sales of property,
plant and equipment 45,343 15,255
Decrease in investments in and advances
to unconsolidated investees 237,522 234,068
-----------------------------------------
Net cash used in investing activities (2,597,957) (1,341,224)
-----------------------------------------
</TABLE>
The accompanying notes are a part of the financial statements.
Page 6
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THE RAYMOND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
3 Month period ended March 31, 1997 1996
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CASH FLOWS FROM FINANCING ACTIVITIES
<S> <C> <C>
Net additional borrowings under lines of credit $304,078 $5,000,000
Proceeds from long-term debt 2,793,233 ---
Repayment of long-term debt (5,666,175) (4,970,500)
Cash dividends paid (813,705) ---
Capital stock transactions, net (346,673) 6,204
-----------------------------------------
Net cash (used in) provided by financing activities (3,729,242) 35,704
-----------------------------------------
Effect of foreign currency rate fluctuations
on cash and cash equivalents (42,977) 60,056
-----------------------------------------
Decrease in cash and cash equivalents (5,569,274) (1,342,007)
Cash and cash equivalents at January 1, 12,420,083 12,359,047
-----------------------------------------
Cash and cash equivalents at March 31, $6,850,809 $11,017,040
=========================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes, net of refunds $1,648,800 $1,766,315
Interest 1,590,745 758,807
Noncash activities:
Issuance of common stock for conversion
of debentures, net of fees $37,181,847 ---
</TABLE>
The accompanying notes are a part of the financial statements.
Page 7
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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 Annual
Report on Form 10-K and Form 10-K/A for the year ended December 31,
1996. 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 March 31, 1997 and results of operations for the three month
period then ended. The results of operations for the interim period
presented may not be indicative of the results that may be expected for
the year.
2. Inventories
The composition of inventories was:
3/31/97 12/31/96
-----------------------------------
Raw materials $25,190,172 $26,238,476
Work in process 11,922,020 12,548,143
Finished goods 7,298,267 8,417,199
-----------------------------------
$44,410,459 $47,203,818
===================================
3. Long-Term Debt
On December 20, 1996, the Company issued a Call for Redemption of its
6.50% convertible subordinated debentures. Substantially all of the
$38.1 million in debentures outstanding at December 31, 1996 were
converted into 2,368,395 shares of common stock at the originally stated
conversion rate adjusted for stock dividends.
In the three months ended March 31, 1997, the Company and Raymond
Leasing Corporation entered into two separate Revolving Credit and Term
Loan Agreements which made available an additional $10.0 million. The
committed facilities provide for working capital lines of credit which
can be converted at the Borrower's option into three, four or five year
term loans.
In the three months ended March 31, 1997, the Company's Distribution
subsidiaries borrowed a total of $2.8 million under two term loans with
three and four year maturities. Interest is payable monthly on these
loans at a composite rate of 6.70%.
Page 8
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THE RAYMOND CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. 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 seventeen remaining defendents in a private
environmental lawsuit pertaining to a site remediation. 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. Plaintiffs have successfully
moved for partial summary judgement, on liability only, against two
co-defendents who contributed scrap metal to the site. Similar motions
as to the Company and two other co-defendents are pending. 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 its 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.
The Company has agreements with certain officers which provide, in the
event of a change in control of the Company, for continuing the
employment of the officer for a period of three years at compensation
and benefit levels not less than that which existed immediately prior to
the change in control. In the event of termination of employment without
cause during this three year period, the officer's noncash benefits
continue for the remainder of the three year period together with a
single advance payment of any cash compensation due for the remainder of
the three year period.
Page 9
<PAGE>
Part I - Financial Information
Item 2 - Management's 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):
Changes from
3 Month period ended
March 31, 1996 to
March 31, 1997
AMOUNT %
---------------------------
---------------------------
TOTAL REVENUES $26,996 39%
---------------------------
COSTS AND EXPENSES
Cost of sales and rentals 16,378 31%
Selling, general and administrative 7,488 89%
Stock appreciation rights 1,649 299%
Employees' profit sharing 11 1%
Interest expense (209) -11%
Other expenses (79) -7%
---------------------------
Total Costs and Expenses 25,238 39%
---------------------------
INCOME BEFORE TAXES, MINORITY INTEREST AND EQUITY
IN EARNINGS OF UNCONSOLIDATED INVESTEES 1,758 34%
Income tax expense 725 36%
---------------------------
Income before minority interest and equity in
earnings of unconsolidated investees 1,033 33%
Minority interest in earnings of subsidiaries 165 100%
Net equity in earnings of unconsolidated investees (157) -60%
---------------------------
NET INCOME $711 21%
===========================
Page 10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE RAYMOND CORPORATION AND SUBSIDIARIES
Three Months ended March 31, 1997 compared to the Three Months ended March 31,
1996
Revenues
Total revenues for the three months ended March 31, 1997 increased by
approximately $27.0 million, or 38.8% to $96.6 million from $69.6 million for
the three months ended March 31, 1996.
The increase in revenues was primarily attributable to approximately $22.2
million of incremental sales and service revenues recognized as a result of the
consolidation of G. N. Johnston Equipment Co. Ltd. (Johnston) and Associated
Material Handling Industries, Inc. (Associated) in the three month period ended
March 31, 1997. Johnston and Associated, both distributors of the Company's
products, were accounted for as equity investees in the three month period ended
March 31, 1996. Starting in the fourth quarter of 1996 the operating results of
Johnston and Associated, net of minority interests, have been consolidated with
those of the Company as a result of the acquisition of a controlling interest in
these entities. The remainder of the increase in revenues was due to
increased revenues associated with the Company's Dockstocker product lines,
National Accounts Program and joint venture and Original Equipment Manufacturer
(O. E. M.) supply agreements. In addition, Raymond Leasing Corporation, a
wholly-owned subsidiary of the Company, had increases in leasing and rental
revenues.
Cost of Sales
For the first quarter of 1997, cost of sales as a percentage of net sales was
75.3% as compared to 79.6% for the first quarter of 1996 and 78.1% for the
calendar year 1996. The improvement in cost of sales as a percentage of net
sales is due to the impact of the higher gross margins realized at the
distributor level by Johnston and Associated combined with improved margins at
the Company's Brantford, Ontario and Greene, New York manufacturing facilities.
Cost of Rentals
For the first quarter of 1997, cost of rentals as a percentage of rental
revenues was 59.3% as compared to 108.4% for the first quarter of 1996. The
improvement in the cost of rentals as a percentage of rental revenues is due to
the impact of higher rental margins realized at the distributor level by
Johnston and Associated.
Page 11
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Selling, General and Administrative Expenses
For the first quarter of 1997, selling, general and administrative expenses
increased by approximately $7.5 million or 89.4% to $15.9 million from the $8.4
million reported in the first quarter of 1996. As a percentage of total
revenues, these expenses increased from 12.0% in the first quarter of 1996 to
16.4% for the same period in 1997.
The dollar and percentage increases are primarily attributable to the inclusion
of costs associated with the distribution expenses of Johnston and Associated in
the first quarter of 1997 which were not included in the Company's consolidated
results in the first quarter of 1996. The Company's percentage of selling,
general and administrative expenses as a percentage of total revenues, excluding
Johnston and Associated, for the quarter ended March 31, 1997 was 12.6% versus
12.0% for the quarter ended March 31, 1996. This percentage increase reflects
additional sales, engineering and compensation expenses associated with product
development and increased efforts to expand market coverage.
Stock Appreciation Rights
Stock options issued to officers and key employees are subject to stock
appreciation rights covering up to one-half the number of optioned shares. As a
result of the increase in the Company's common stock price from $17.31 at
December 31, 1996 to $27.69 at March 31, 1997, approximately $1.1 million in
stock appreciation rights expense was recognized in the quarter ended March 31,
1997. The expense recognized in the current quarter reflects amounts recorded in
connection with options exercised as well as the stock appreciation rights
accrual for outstanding options. Due to a decline in the Company's common stock
price, stock appreciation rights income of approximately $0.6 million was
realized in the quarter ended March 31, 1996.
Options outstanding subject to stock appreciation rights were 372,154 at March
31, 1996 and December 31, 1996 and 105,997 at March 31, 1997.
Interest Expense
Lease financing operations are conducted in the United States by Raymond Leasing
Corporation and throughout Canada by Johnston. Lease finance interest expense is
reported net of charges on intercompany borrowings and was approximately $1.5
million in the quarter ended March 31, 1997 as compared with approximately $1.0
million in the comparable quarter in 1996. The increase in the current period
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.
Page 12
<PAGE>
Other interest expense incurred by the manufacturing and distribution division
was approximately $0.1 million for the quarter ended March 31, 1997 as compared
to approximately $0.9 million for the first three months of 1996. The decrease
in other interest expense is due to the Company's redemption of the $38.1
million in 6.50% convertible subordinated debentures outstanding at December 31,
1996 during the quarter ended March 31, 1997. The Call for Redemption of the
debentures was issued on December 20, 1996 and was completed on January 21,
1997. Substantially all of the $38.1 million in debentures outstanding at
December 31, 1996 were converted into common stock and approximately 2.4 million
shares of common stock were issued in January in conjunction with the
redemption.
Other Expenses
Other expenses were approximately $1.1 and $1.2 million, or 1.1% and 1.7% of
total revenues, for the quarters ended March 31, 1997 and 1996, respectively.
The primary components of other expenses are cash discounts paid to Dealers for
the timely payment of invoices and the provision for losses on accounts and
leases receivable. A decrease in certain costs incurred in connection with
foreign currency transactions pertaining to the Canadian dollar was the main
component of the dollar decrease in 1997. The decrease of other expenses as a
percentage of total revenues from 1.7% for the quarter ended March 31, 1996 to
1.1% for the quarter ended March 31, 1997 is primarily due to the revenue growth
resulting from Johnston and Associated which incur substantially less in other
expenses than the Company's manufacturing operations.
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
Prior to its inclusion in the consolidated financial statements in the fourth
quarter of 1996, Johnston was the Company's primary unconsolidated investee.
Other unconsolidated investees include several Dealerships located throughout
the United States.
The net equity in earnings of unconsolidated investees decreased from $0.3
million in the first quarter of 1996 to $0.1 million in the first quarter of
1997 as a result of the consolidation of the operating results of Johnston and
Associated with those of the Company in the quarter ended March 31, 1997.
Page 13
<PAGE>
Liquidity and Sources of Capital
The Company's manufacturing and distribution working capital at March 31, 1997
was $69.7 million and its ratio of manufacturing and distribution current assets
to manufacturing and distribution current liabilities was 2.3 to 1. At March 31,
1997, the Company and Raymond Leasing Corporation, its wholly-owned leasing
subsidiary, had unused lines of credit aggregating $45.1 million, of which
approximately $37.1 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 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 required by the manufacturing operations.
For the three months ended March 31, 1997, $0.8 million was provided by
operating activities compared to the $0.1 million used to fund operating
activities for the comparable 1996 period. The cash generated from earnings and
the decrease in inventories, prepaid expenses and other current assets was
primarily used to fund growth in the lease portfolio and rental fleet.
Cash used in investing activities increased approximately $1.3 million for the
first three months of 1997 compared to the first three months of 1996. This
increase was primarily due to an increase in capital expenditures in the first
quarter of 1997 as compared to the first quarter of 1996.
Cash flows from financing activities primarily reflect the external borrowings
and related debt repayments made by Raymond Leasing Corporation and Johnston to
fund a portion of the continued growth of the lease portfolio and repay
intercompany borrowings.
On March 3, 1997, the Board of Directors increased the regular quarterly cash
dividend to 6 1/4 cents per share. This represents a 150% increase over the
2 1/2 cent per share quarterly cash dividend paid in the last three quarters of
1996. Payment of the first quarter's dividend was made on March 28, 1997 to
shareholders of record on March 14, 1997.
The restrictions pertaining to minimum tangible net worth in certain term loan
agreements will not be adversely impacted by the increase in 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
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Outlook
New equipment orders for the first quarter of 1997 were $95.9 million compared
with $96.8 million for 1996's fourth quarter and $61.4 million for the first
quarter of 1996. Approximately $22.9 million of the $34.5 million or 56.0%
increase in orders in the first quarter of 1997, as compared to the first
quarter of 1996, is due to the consolidation of Johnston and Associated.
Equipment backlog (unfilled new equipment orders) was $82.4 million at March 31,
1997. This compares with the $61.2 million reported at this time last year and
the $76.4 million reported at December 31, 1996. Approximately $11.8 million of
the backlog at March 31, 1997 related to the incremental backlog of Johnston and
Associated. The Company expects that the overall domestic market will continue
to improve in 1997. The Company will continue to look for growth from new and
existing O.E.M. agreements, product introductions for existing and incremental
markets, increased participation in domestic and international markets through
strategic alliances or acquisitions and continued improvements in the
manufacturing processes.
It is expected that the Company's revenues will increase in 1997 as a result of
the consolidation of Johnston and Associated for all of 1997 as opposed to only
the fourth quarter in 1996. Net income for these Dealers has historically been
a smaller percentage of total revenues than that attained by the Company in the
last few years.
In March 1997, the Company announced that it had retained an investment banking
firm to assist in evaluating strategic alternatives available to the Company to
increase shareholder value. In conjunction with this, the Company's Board of
Directors adopted a Shareholder Rights Plan. The Rights provide protection
against coercive or unfair takeover tactics. The Rights Plan is similar to plans
adopted by many public companies and should provide a sound and reasonable means
of safeguarding the interests of all shareholders should an effort be made to
acquire the Company at a price not reflective of its fair value.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted in the fourth quarter
of 1997. Under the new requirements for calculating basic (primary) earnings per
share, the dilutive effect of stock options will be excluded. As the dilutive
effect of stock options has historically been immaterial, Statement No. 128 is
not expected to require restatement of basic (primary) earnings per share. The
impact of Statement No. 128 on the calculation of diluted earnings per share is
also not expected to be material.
Statements included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature, are
intended to be, and are hereby identified as, forward looking statements for
purposes of the safe harbor provided by Section 21E of the Securities and
Exchange Act of 1934, as amended by Public Law 104-67. The Company cautions
readers that forward looking statements, including without limitation, those
relating to the Company's future business prospects, revenues, risks of foreign
operations, working capital and liquidity and new equipment orders, are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those indicated in the forward looking statements. These risks
and uncertainties include general economic and market conditions, including
demand for the Company's products and services, competition and price levels;
the possibility of catastrophic events that could impact the Company's
manufacturing, distribution and computer facilities; and changes in interest
rates and foreign currency fluctuations, among others. Additional risks and
factors are identified from time to time in the Company's reports filed with the
SEC.
Page 15
<PAGE>
Part II - Other Information
ITEM 2 - CHANGES IN SECURITIES
In March 1997, the Company's Board of Directors adopted a Shareholder
Rights Plan. The Rights provide protection against coercive or unfair
takeover tactics. The Rights Plan is similar to plans adopted by many
public companies and should provide a sound and reasonable means of
safeguarding the interests of all shareholders should an effort be made
to acquire the Company at a price not reflective of its fair value. The
Rights Plan was filed with the Securities and Exchange Commission on
Report Form 8-K/A dated March 17, 1997 and is incorporated herein by
reference.
ITEM 5 - OTHER INFORMATION
On May 5, 1997, The Raymond Corporation announced that it has reset its
annual stockholders meeting for August 6, 1997 and set the corresponding
record date for July 2, 1997.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A) Exhibits.
11 - Earnings Per Share Computation
27 - Financial Data Schedule
B) Reports on Form 8-K.
The following reports on Form 8-K were filed in the three months
ended March 31, 1997 and are incorporated herein by reference:
1) Form 8-K Report dated January 7, 1997 and filed January 7,
1997 with the Securities and Exchange Commission, File Number
000-02129.
2) Form 8-K Report dated February 5, 1997 and filed February 5,
1997 with the Securities and Exchange Commission, File Number
000-02129.
3) Form 8-K/A Report dated March 17, 1997 and filed March 17,
1997 with the Securities and Exchange Commission, File Number
001-12801.
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: May 15, 1997 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
March 31,
1997 1996
-----------------------------------------
<S> <C> <C>
PRIMARY
Average shares outstanding 10,068 7,436
Net effect of dilutive stock options
based on the treasury stock method
using average market price 24 58
-----------------------------------------
Total 10,092 7,494
=========================================
Net income $4,092 $3,382
=========================================
Per share amount $0.41 $0.45
=========================================
FULLY DILUTED
Average shares outstanding 10,068 7,436
Net effect of dilutive stock options based on the treasury stock method
using the period end market price, if higher
than average market price 33 58
Assumed conversion of 6.50% convertible
subordinated debentures 463 3,190
-----------------------------------------
Total 10,564 10,684
=========================================
Net income $4,092 $3,382
Add 6.50% convertible subordinated
debentures interest, net of federal
income tax effect 81 549
-----------------------------------------
Total $4,173 $3,931
=========================================
Per share amount $0.40(1) $0.37
=========================================
</TABLE>
(1) Fully diluted per share amount reported in the year to date consolidated
financial statements of $0.41 in 1997 excludes the net effect of
dilutive stock options and convertible subordinated debentures as the
aggregate dilution from these common stock equivalents and dilutive
securities was immaterial (less than three percent of earnings per
share).
Page 17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,851
<SECURITIES> 0
<RECEIVABLES> 54,403
<ALLOWANCES> 1,710
<INVENTORY> 44,410
<CURRENT-ASSETS> 122,679<F1>
<PP&E> 72,051
<DEPRECIATION> 42,234
<TOTAL-ASSETS> 320,779
<CURRENT-LIABILITIES> 52,957<F1>
<BONDS> 77,950
0
0
<COMMON> 16,136
<OTHER-SE> 152,895
<TOTAL-LIABILITY-AND-EQUITY> 320,779
<SALES> 89,837
<TOTAL-REVENUES> 96,624
<CGS> 67,677
<TOTAL-COSTS> 70,734
<OTHER-EXPENSES> 18,909
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104
<INCOME-PRETAX> 6,816
<INCOME-TAX> 2,724
<INCOME-CONTINUING> 4,092
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,092
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
<FN>
<F1>Reflects current portion of Manufacturing and Distribution operations only as
accounts for Financial Services are presented in a non-classified format.
</FN>
</TABLE>
