<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
-
ACT OF 1934
For the Quarterly Period Ended May 31,1997 Commission File Number 0-288
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Robbins & Myers, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 31-0424220
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Kettering Tower, Dayton, Ohio 45423
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(Address of Principal executive offices) (Zip Code)
Registrant's telephone number including area code (937) 222-2610
-------------------------------
None
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Former name, former address and former fiscal year if changed since last report
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
- ---
Common shares, without par value, outstanding as of May 31, 1997: 10,928,041
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<PAGE> 2
<TABLE>
<CAPTION>
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
($ in thousands) May 31, August 31,
1997 1996
--------------- --------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $12,008 $7,121
Accounts receivable, net 67,712 51,158
Inventories:
Finished products 12,768 12,424
Work in process 20,441 18,249
Raw materials 17,774 17,744
--------------- --------------
50,983 48,417
Deferred taxes 5,375 5,180
Other current assets 3,778 2,184
--------------- --------------
Total Current Assets 139,856 114,060
Goodwill 128,163 95,101
Other Intangible Assets 20,259 13,068
Deferred Taxes 1,806 2,101
Other Assets 4,030 3,896
Property, Plant and Equipment 134,458 112,661
Less accumulated depreciation 48,828 40,547
--------------- --------------
85,630 72,114
--------------- --------------
$379,744 $300,340
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $25,677 $25,478
Accrued expenses 54,528 49,614
Current portion long-term debt 1,642 1,348
--------------- --------------
Total Current Liabilities 81,847 76,440
Long-Term Debt 120,599 72,185
Other Long-Term Liabilities 59,294 60,278
Shareholders' Equity:
Common stock without par value:
Authorized shares--25,000,000
Issued shares-- 11,065,967 (10,868,002 at August 31,1996) 29,720 26,617
Treasury shares--137,926 (270,610 at August 31,1996) (153) (2,481)
Retained earnings 86,146 66,996
Equity adjustment for foreign currency translation 2,641 655
Equity adjustment to recognize minimum pension liability (350) (350)
--------------- --------------
118,004 91,437
--------------- --------------
$379,744 $300,340
=============== ==============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
2
<PAGE> 3
<TABLE>
<CAPTION>
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENT
(in thousands except per share data)
(Unaudited) Three Months Ended Nine Months Ended
May 31, May 31,
1997 1996 1997 1996
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $97,588 $89,881 $284,618 $255,272
Cost of sales 60,916 59,813 183,759 170,336
-------------- --------------- -------------- --------------
Gross profit 36,672 30,068 100,859 84,936
Operating expenses 22,699 19,499 65,747 58,180
Other (income) expense 392 (269) (576) (1,027)
-------------- --------------- -------------- --------------
Operating income 13,581 10,838 35,688 27,783
Interest expense 1,798 1,735 4,752 5,304
-------------- --------------- -------------- --------------
Income before income taxes 11,783 9,103 30,936 22,479
Income taxes 3,888 3,368 10,209 8,317
-------------- --------------- -------------- --------------
Net income $7,895 $5,735 $20,727 $14,162
============== =============== ============== ==============
Income per share:
Primary $0.69 $0.52 $1.84 $1.29
============== =============== ============== ==============
Assuming full dilution $0.61 $0.52 $1.65 $1.28
============== =============== ============== ==============
Weighted average common shares outstanding:
Primary 11,428 11,026 11,293 10,976
============== =============== ============== ==============
Assuming full dilution 13,907 11,092 13,600 11,084
============== =============== ============== ==============
Dividends per share:
Declared $0.05000 $0.04375 $0.14375 $0.12500
============== =============== ============== ==============
Paid $0.05000 $0.04375 $0.14375 $0.12500
============== =============== ============== ==============
</TABLE>
See Notes to Consolidated Condensed Financial Statements
3
<PAGE> 4
<TABLE>
<CAPTION>
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands) Nine Months Ended
(Unaudited) May 31,
1997 1996
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<S> <C> <C>
Operating Activities
Net income $20,727 $14,162
Equity adjustment for foreign currency translation 6 (327)
Adjustment required to reconcile net income
to net cash and cash equivalents provided by operating activities:
Depreciation 8,217 7,622
Amortization 3,557 3,288
Deferred taxes 100 (4)
Equity income on unconsolidated investments (1,256) (1,500)
Other 975 869
Changes in operating assets and liabilities:
Accounts receivable, less allowances (10,005) (2,396)
Inventories 1,497 (3,648)
Prepaid expenses and Other Assets (582) 538
Accounts payable (2,977) (1,268)
Accrued expenses (1,151) (967)
Other long-term liabilities (884) (136)
------------- -----------
Net Cash and Cash Equivalents Provided by Operating Activities 18,224 16,233
Investing Activities:
Acquisition of Process Supply, Inc., Spectrum Products, Inc., Greerco
and Industrie Tycon S.p.A. (34,900) 0
Capital expenditures, net of nominal disposals (14,408) (9,277)
------------- -----------
Net Cash and Cash Equivalents Used by Investing Activities (49,308) (9,277)
Financing Activities:
Proceeds of convertible debt issuance, net of underwriters' discount 62,950 0
Proceeds from revolving line of credit 92,517 50,870
Payments of long-term debt (114,331) (39,812)
Proceeds from sale of common stock 1,995 662
Purchase of treasury shares, used for a portion of acquisition cost (3,660) 0
Debt issuance and organization costs incurred (1,923) 0
Retirement of stock appreciation rights and associated fees 0 (18,733)
Dividends paid (1,577) (1,317)
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Net Cash and Cash Equivalents Provided (Used) by Financing Activities 35,971 (8,330)
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Increase in Cash and Cash Equivalents 4,887 (1,374)
Cash and Cash Equivalents at Beginning of Period 7,121 10,210
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Cash and Cash Equivalents at End of Period $12,008 $8,836
============= ===========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
4
<PAGE> 5
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
May 31, 1997
(Unaudited)
NOTE--PREPARATION OF FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements of Robbins & Myers, Inc. and subsidiaries ("Company")
contain all adjustments, consisting of normally recurring items, necessary to
present fairly the financial condition of the Company and its subsidiaries as of
May 31, 1997, and August 31, 1996 and the results of their operations for the
three month and nine month periods ended May 31, 1997, and 1996, and their cash
flows for the nine month periods ended May 31, 1997, and 1996. All intercompany
transactions have been eliminated.
NOTE B--NET INCOME PER SHARE
Net income per share was calculated as disclosed in Exhibit 11.
NOTE C--NOTE C LONG-TERM DEBT
On November 26, 1996, the Company entered into a new $150,000,000 senior
revolving credit agreement ("Agreement"), replacing the previous senior term
loan and revolving credit agreement. Facility A of the Agreement is for
$100,000,000 and any amounts outstanding will be due in November 2001. Facility
B of the Agreement is for $50,000,000 and any borrowings are due within one year
of borrowing, but the due date may be extended with the approval of the lending
institutions. Interest is variable based upon prime or formulas tied to LIBOR,
at the Company's option, and is payable at least quarterly. Except for the
pledge of the stock of the Company's U.S. subsidiaries and the stock of certain
of its non U.S. subsidiaries, indebtedness under the Agreement is unsecured.
Indebtedness under the Agreement is senior to the Company's other long-term
agreements. Certain restrictive covenants exist including, limitations on cash
dividends and capital expenditures and requirements for interest coverage and
leverage ratios.
On September 23, 1996, the Company completed the sale of $65,000,000 of 6 1/2%
Convertible Subordinated Notes Due 2003 ("Notes"). The net proceeds of
approximately $63,000,000 (after underwriters' discount and expenses) were used
to repay term and revolving credit loans under the Company's senior debt
agreements with an average effective interest rate of approximately 8%. The
Notes are not common stock equivalents and do not impact primary net income per
share. If the Notes had been issued at the beginning of 1996, fully diluted net
income per share for the three and nine month periods ended May 31, 1996 would
have been $.48 and $1.22, respectively.
The following summarizes the Company's debt at May 31, 1997:
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
Senior debt:
Facility A $49,150
Senior subordinated debt 7,030
6 1/2% Convertible Subordinated Notes 65,000
Other 1,061
-----------------
Total debt 122,241
Less current portion 1,642
-----------------
Long-term debt $120,599
=================
</TABLE>
On March 1, 1997 the Company incurred subordinated debt and recorded additional
goodwill of $2,952,000 to record contingent purchase price provisions related to
the Pharoah acquisition.
5
<PAGE> 6
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--continued
May 31, 1997
(Unaudited)
NOTE D--INCOME TAXES
The estimated annual effective tax rates are 33.0% and 37.0% for 1997 and 1996,
respectively. The lower rate in 1997 reflects a greater proportion of income
before income taxes being generated in certain countries outside the U.S. where
the effective tax rate is below the U.S. rate.
NOTE E--BUSINESS ACQUISITIONS
The Company acquired on February 3, 1997, Process Supply , Inc., a manufacturer
of flouropolymer products and accessories for glass-lined equipment, and
Spectrum Products, Inc., an affiliated sales company, and on January 31, 1997,
the high shear industrial mixer business of Greerco Corp. These businesses were
purchased for a total of $18,557,000. The purchase price consisted of common
stock, valued at $6,457,000, obligations directly payable to the seller of
$3,500,000, long-term debt assumed of $800,000 and cash borrowed from the
Company's existing senior debt agreement of $7,800,000. The common stock was
issued from existing treasury shares.
The Company acquired on May 2, 1997, Industrie Tycon, S.p.A., ("Tycon") a
manufacturer of glass-lined storage and reactor vessels and related parts and
accessories. Tycon was purchased for $27,100,000 in cash which was borrowed from
the Company's existing senior debt agreement and assumed of $2,600,000.
NOTE F--NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute income per share and to restate all prior periods. Under the new
requirements primary income per share will be replaced with basic income per
share. Basic income per share excludes the dilutive effect of stock options.
Under the provisions of the new standard, basic income per share would be $.72
and $.55 for the three month periods ended May 31, 1997 and 1996, respectively.
On a year to date basis, basic income per share would be $1.93 and $1.36 for
1997 and 1996, respectively. Also, under the new requirements fully diluted
income per share is replaced with diluted income per share. There is no
material difference between diluted income per share and the fully
diluted income per share reported for the periods presented.
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
Reporting Comprehensive Income, and Statement No. 131, Disclosures about
Segments of an Enterprise and Related Information. These statements will not be
required to be adopted by the Company until its fiscal year 1999. The Company
has not yet determined any impact of these statements on the financial
statements of the Company.
6
<PAGE> 7
Part I--Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
The following table presents the components of the Company's income statement as
a percent of net sales for the quarter and year to date periods of 1997 and
1996, respectively.
<TABLE>
<CAPTION>
Three months Ended Nine months Ended
May 31, May 31,
1997 1996 1997 1996
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
%
Cost of sales 62.4 66.5 64.6 66.7
----------- ----------- ----------- -----------
Gross profit 37.6 33.5 35.4 33.3
Operating expenses 23.3 21.7 23.1 22.8
Other (income) expense 0.4 (0.3) (0.2) (0.4)
----------- -----------
Operating income 13.9 12.1 12.5 10.9
Interest expense 1.8 2.0 1.6 2.1
----------- ----------- ----------- ----------
Income before income taxes
taxes 12.1 10.1 10.9 8.8
Income taxes 4.0 3.7 3.6 3.3
----------- ----------- ----------- ----------
Net income 8.1 % 6.4 % 7.3 % 5.5 %
=========== =========== =========== ==========
</TABLE>
Net sales for the third quarter of fiscal 1997 were $97.6 million
compared to $89.9 million, an increase of 8.6%, over the same period of the
prior year. Year to date sales of $284.6 million were 11.5% higher than the
prior year. These increases were realized by all of the Company's products.
Company backlog at the end of the third quarter of 1997 is $113.0 million, up
from $112.6 million at the end of the second quarter and down from $113.7
million for the same period of the prior year. The increase in backlog from the
prior quarter is a result of the acquisition of Tycon which was slightly offset
by sales exceeding orders for the preexisting businesses.
The gross profit percentage increased by 4.1% and 2.1% for the quarter
and year to date, respectively. These increases are due to higher sales volume,
a shift in product mix to higher margin products for the oil industry and a
continuation of cost control programs by the Company.
Operating expenses have increased slightly for the periods presented.
This relationship is the result of the benefits of additional volume being more
than offset by the start-up costs of the Moyno Oilfield Products unit's new
manufacturing plant in Houston, Texas and the establishment of direct marketing
efforts to the Canadian oilfield services industry.
Interest expense increased to $1.8 million in the third quarter of
fiscal 1997 from $1.7 million in the third quarter of fiscal 1996. Year to date
interest expense has decreased to $4.8 million from $5.3 million in the same
period of the prior year. Interest expense has been favorably impacted by lower
interest rates, approximately 1%, associated with the $65 million of convertible
subordinated notes issued in September and the new senior debt agreement entered
into in November of first quarter of fiscal 1997. For the quarter, this is
offset by the higher average debt balances related to the acquisitions of PSI,
Spectrum, Greerco and Tycon.
The effective tax rate is 33.0% for fiscal 1997 compared to 37.0%
for fiscal 1996. This decrease is due to a greater proportion of income
before income taxes being generated in countries outside the U.S. where the
effective tax rate is below the U.S. rate.
Net income increased to $7.9 million, $.61 per share, fully diluted, in
the third quarter of fiscal 1997 from $5.7 million, $.52 per share, fully
diluted, in the third quarter of fiscal 1996. Year to date net income increased
to
7
<PAGE> 8
Part I--Management's Discussion and Analysis of Financial Condition and Results
of Operations--continued
RESULTS OF OPERATIONS--CONTINUED
$20.7 million, $1.65 per share, fully diluted, from $14.2 million, $1.28, fully
diluted. The prior year's fully diluted income per share for the quarter and
year to date periods are $.48 and $1.22, respectively, on a pro-forma basis for
the convertible notes. These increases are primarily a result of the higher
sales volume, lower interest rates and a lower effective tax rate in fiscal
1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased $4.9 million in the first nine
months of 1997. Significant cash uses for this period were $34.9 million for
acquisitions, $3.7 million for the purchase of treasury stock to be used for a
portion of the cost of the acquisitions, and $14.4 million for capital
expenditures. These cash uses were primarily funded by net debt borrowings of
$41.1 million and cash provided by operations.
Significant cash uses in the first nine months of 1996 were $9.3
million for capital expenditures and $18.7 million for the retirement of stock
appreciation rights. Cash uses were primarily funded by net debt borrowings of
$11.1 million, cash provided by operations and a reduction of cash balances.
The Company expects operating cash flow to be adequate for the
remainder of fiscal year 1997's operating needs, including scheduled debt
service and shareholder dividend requirements. Major cash requirements for the
remainder of 1997 are planned capital expenditures of approximately $9.0
million. Capital expenditures are related to additional production capacity,
cost reductions and replacement items.
The Company's significant foreign operations have the local currency as
their functional currency. The non U.S. operations primarily buy and sell within
the same country which mitigates the impact of currency fluctuations on
operations. To the extent that significant transactions are completed in a
different currency, the Company hedges its risk to future currency fluctuations
through foreign currency forward contracts with major financial institutions.
Currency translation rate changes had an immaterial effect on the second quarter
and year to date periods of fiscal 1997 and 1996.
At May 31, 1997, the Company had approximately $89.0 million available
under its current bank credit agreements which management believes is adequate
to meet its needs, including any potential acquisitions. The Company's senior
revolving credit agreement includes certain restrictive covenants, including
limitations on cash dividends and capital expenditures and requirements for
interest coverage and leverage ratios.
8
<PAGE> 9
ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K
a) See Index to Exhibits
b) Reports on Form 8-K. During the quarter ended May 31,
1997, the Company did not file any reports on Form 8-K.
9
<PAGE> 10
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.
<TABLE>
<CAPTION>
ROBBINS & MYERS, INC.
----------------------------------
<S> <C> <C>
DATE: JULY 15, 1997 BY /S/ GEORGE M. WALKER
----------------------------- ----------------------------------
GEORGE M. WALKER
VICE PRESIDENT & CFO
(PRINCIPAL FINANCIAL OFFICER)
DATE: JULY 15, 1997 BY /S/ KEVIN J. BROWN
----------------------------- ----------------------------------
KEVIN J. BROWN
CORPORATE CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
</TABLE>
10
<PAGE> 11
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
<S> <C>
(11) Statement Re: Computation of Earnings Per Share:
11.1 Computation of Earnings Per Share....................*
(27) Financial Data Schedule................................................*
</TABLE>
11
<PAGE> 1
ROBBINS & MYERS, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
EXHIBIT 11.1
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31,
1997 1996 1997 1996
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Primary Income per Share:
Net income $7,895 $5,735 $20,727 $14,162
=========== =========== ============ ============
Average shares outstanding 10,910 10,460 10,762 10,448
Effect of dilutive options and
restricted stock based on treasury
stock method 518 566 531 528
----------- ----------- ------------ ------------
Total 11,428 11,026 11,293 10,976
=========== =========== ============ ============
Net income per share $0.69 $0.52 $1.84 $1.29
=========== =========== ============ ============
Fully Diluted Income per Share:
Net income 7,895 5,735 20,727 14,162
After tax interest add-back for
convertible debt from issuance 634 0 1,742 0
----------- ----------- ------------ ------------
Net income attributable to fully
diluted shares $8,529 $5,735 $22,469 $14,162
=========== =========== ============ ============
Average shares outstanding 10,910 10,460 10,762 10,448
Shares issuable upon conversion of
convertible debt, adjusted for
portion of period outstanding 2,385 0 2,182 0
Effect of dilutive options and
restricted stock based on treasury
stock method 612 632 656 636
----------- ----------- ------------ ------------
Total 13,907 11,092 13,600 11,084
=========== =========== ============ ============
Net income per share $0.61 $0.52 $1.65 $1.29
=========== =========== ============ ============
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1996
<PERIOD-END> MAY-31-1997
<CASH> 12,008
<SECURITIES> 0
<RECEIVABLES> 69,023
<ALLOWANCES> (1,311)
<INVENTORY> 50,983
<CURRENT-ASSETS> 139,856
<PP&E> 134,458
<DEPRECIATION> 48,828
<TOTAL-ASSETS> 379,744
<CURRENT-LIABILITIES> 81,847
<BONDS> 120,599
<COMMON> 29,720
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 379,744
<SALES> 284,618
<TOTAL-REVENUES> 284,618
<CGS> 183,759
<TOTAL-COSTS> 183,759
<OTHER-EXPENSES> 65,171
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,752
<INCOME-PRETAX> 30,936
<INCOME-TAX> 10,209
<INCOME-CONTINUING> 20,727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,727
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.65
</TABLE>
