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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended NOVEMBER 30, 2000 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
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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 NOVEMBER 30, 2000:10,985,567
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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
November 30, August 31,
2000 2000
--------- ---------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 12,659 $ 11,244
Accounts receivable 77,168 80,872
Inventories:
Finished products 18,736 18,656
Work in process 13,373 14,624
Raw materials 29,259 26,816
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61,368 60,096
Other current assets 6,411 7,189
Deferred taxes 7,455 7,482
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Total Current Assets 165,061 166,883
Goodwill and Other Intangible Assets 200,835 204,319
Deferred Taxes 888 1,398
Other Assets 7,856 7,675
Property, Plant and Equipment 208,309 207,123
Less accumulated depreciation 95,236 91,719
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113,073 115,404
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$ 487,713 $ 495,679
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 30,012 $ 33,467
Accrued expenses 46,027 56,481
Current portion of long-term debt 1,581 1,341
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Total Current Liabilities 77,620 91,289
Long-Term Debt--Less Current Portion 180,919 176,523
Other Long-Term Liabilities 52,207 53,134
Minority Interest 7,538 7,551
Shareholders' Equity:
Common stock 28,212 27,794
Retained earnings 151,645 147,664
Accumulated other comprehensive loss (10,428) (8,276)
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169,429 167,182
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$ 487,713 $ 495,679
========= =========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENT
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
November 30,
-------------------------------
2000 1999
------- -------
<S> <C> <C>
Net sales $96,027 $93,499
Cost of sales 62,837 62,047
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Gross profit 33,190 31,452
SG&A expenses 21,049 20,844
Amortization expense 1,912 1,982
Other 0 161
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10,229 8,465
Interest expense 2,904 3,247
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Income before income taxes and minority interest 7,325 5,218
Income tax expense 2,489 1,879
Minority interest 252 273
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Net income $ 4,584 $ 3,066
======= =======
Net income per share:
Basic $ 0.42 $ 0.28
======= =======
Diluted $ 0.39 $ 0.27
======= =======
Dividends per share:
Declared $ 0.055 $ 0.055
======= =======
Paid $ 0.055 $ 0.055
======= =======
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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ROBBINS & MYERS, INC AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
November 30,
-----------------------------
2000 1999
-------- --------
<S> <C> <C>
Operating Activities:
Net income $ 4,584 $ 3,066
Adjustments to reconcile net income to net cash and
cash equivalents used by operating activities:
Depreciation 4,079 4,518
Amortization 1,912 1,982
Changes in operating assets and liabilities:
Accounts receivable 1,971 (3,102)
Inventories (2,540) (2,134)
Accounts payable (2,843) (1,965)
Accrued expenses (9,733) (4,173)
Other 1,761 371
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Net Cash and Cash Equivalents Used by Operating Activities (809) (1,437)
Investing Activities:
Capital expenditures, net of nominal disposals (2,964) (1,832)
Financing Activities:
Proceeds from debt borrowings 10,558 6,514
Payments of long-term debt (5,185) (1,409)
Proceeds from sale of common stock 418 279
Purchase of common stock and convertible subordinated notes 0 (2,041)
Dividends paid (603) (603)
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Net Cash and Cash Equivalents Provided by Financing Activities 5,188 2,740
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 1,415 (529)
Cash and Cash Equivalents at Beginning of Period 11,244 8,901
-------- --------
Cash and Cash Equivalents at End of Period $ 12,659 $ 8,372
======== ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
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ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
November 30, 2000
(Unaudited)
NOTE 1--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
November 30, 2000, and August 31, 2000, and the results of their operations and
cash flows for the three month periods ended November 30, 2000 and 1999. All
intercompany transactions have been eliminated. Certain amounts in the prior
period financial statements have been reclassified to conform to the current
year presentation.
NOTE 2--NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
November 30,
---------------------------------
2000 1999
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(In thousands, except per
share data)
<S> <C> <C>
Numerator:
Basic:
Net income $ 4,584 $ 3,066
Effect of dilutive securities:
Convertible debt interest 582 629
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Income attributable to diluted shares $ 5,166 $ 3,695
======= =======
Denominator:
Basic:
Weighted average shares 10,973 10,945
Effect of dilutive securities:
Convertible debt 2,191 2,367
Dilutive options and restricted shares 208 207
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Diluted shares 13,372 13,519
======= =======
Basic net income per share $ 0.42 $ 0.28
======= =======
Diluted net income per share $ 0.39 $ 0.27
======= =======
</TABLE>
NOTE 3 - INCOME STATEMENT INFORMATION
In fiscal 1999, due to the downturn in the Company's Energy Systems business
segment, the Company analyzed its capacity requirements for these products. As a
result, on February 10, 1999, the Company recorded a charge of $4,200,000 for
the closure and relocation of the Company's Fairfield, California, manufacturing
operations. The facility manufactured power sections and down-hole pumps.
Production was transferred to the Company's manufacturing facility near Houston,
Texas, which manufactures similar products. The closure and relocation
consolidated all power section and down-hole pump manufacturing into one
facility. The transfer of manufacturing was completed by March 31, 2000. The
Fairfield facility was sold in July 2000 resulting in a pretax gain of $918,000.
Certain machinery and equipment was also sold in fiscal year 2000 at amounts
approximating the written down estimated fair values. The $4,200,000 charge was
composed of the following:
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<TABLE>
<CAPTION>
(In thousands)
----------------
<S> <C>
Asset write-downs:
Land and building to be sold, $800 estimated fair value $ 600
Machinery and equipment to be scrapped, $200 estimated fair value 800
------
Total asset write-downs 1,400
Exit costs:
Employee related costs:
Severance, 50 Fairfield employees 300
Pay to stay costs and other employee costs 500
Environmental costs related to closure of facility 1,300
Holding costs of land and building until sold and other 700
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Total exit costs 2,800
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$4,200
======
</TABLE>
The asset write-downs were determined based on recent sales of similar assets.
As of August 31, 2000, the employee related costs and the holding and other
costs have been paid in full. Following is a progression of the environmental
costs related to closure of the facility:
<TABLE>
<CAPTION>
Environmental
costs
--------------
(In thousands)
<S> <C>
Liability at August 31, 2000 $836
Cash payments made 43
----
Liability at November 30, 2000 $793
====
</TABLE>
Due to ongoing monitoring requirements, the remaining liability for
environmental costs is expected to be paid over a period of five to ten years.
The Company incurred additional expenses relating to the Fairfield plant closure
of $161,000 in the three month period ended November 30, 1999. These costs were
for employee transfers, equipment relocation and training of new employees at
the Texas facility.
NOTE 4--LONG-TERM DEBT
<TABLE>
<CAPTION>
November 30, 2000
-----------------
(In thousands)
<S> <C>
Senior debt:
Revolving credit loan $ 17,569
Senior notes 100,000
Other 5,240
6.50% Convertible subordinated notes 59,691
--------
Total debt 182,500
Less current portion 1,581
--------
$180,919
========
</TABLE>
The Company's Bank Credit Agreement ("Agreement") provides that the Company may
borrow on a revolving credit basis up to a maximum of $150,000,000. All
outstanding amounts under the Agreement are due and payable on November 25,
2002. Interest is variable based upon formulas tied to LIBOR or prime, at the
Company's option, and is payable at least quarterly. At November 30, 2000, the
weighted average interest rate for amounts outstanding under the Agreement was
5.91%. The outstanding amount is primarily an Italian Lira based borrowing in
Italy. Indebtedness under the Agreement is unsecured, except for guarantees by
the Company's U.S. subsidiaries, the pledge of the stock of the Company's U.S.
subsidiaries and the pledge of the stock of certain non-U.S. subsidiaries. At
November 30, 2000, the Company has available borrowings of $74,000,000 under the
Agreement.
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The Company has $100,000,000 of Senior Notes ("Senior Notes") issued in two
series. Series A in the principal amount of $70,000,000 has an interest rate of
6.76% and is due May 1, 2008, and Series B in the principal amount of
$30,000,000 has an interest rate 6.84% and is due May 1, 2010. Interest is
payable semi-annually on May 1 and November 1.
The above agreements have certain restrictive covenants including limitations on
cash dividends, treasury stock purchases and capital expenditures and minimum
requirements for interest coverage and leverage ratios. The amount of cash
dividends and treasury stock purchases, other than in relation to stock option
exercises, the Company may incur in each fiscal year is restricted to the
greater of $2,500,000 or 50% of the Company's consolidated net income for the
immediately preceding fiscal year, plus a portion of any unused amounts from the
preceding fiscal year.
The Company has $59,691,000 of 6.50% Convertible Subordinated Notes Due 2003
("Subordinated Notes"). The Subordinated Notes are due on September 1, 2003, and
bear interest at 6.50%, payable semi-annually on March 1 and September 1 and are
convertible into common stock at a rate of $27.25 per share. Holders may convert
at any time until maturity and the Company may call for redemption at a price
ranging from the current price of 102.17% to 100% in fiscal 2003 and thereafter.
The Notes are subordinated to all other indebtedness of the Company.
NOTE 5--INCOME TAXES
The estimated annual effective tax rates were 34% and 36% for the first quarter
of fiscal 2001 and fiscal 2000, respectively.
NOTE 6--COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Three Months Ended
November 30,
--------------------------------
2000 1999
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(In thousands)
<S> <C> <C>
Net income $ 4,584 $ 3,066
Other comprehensive income:
Foreign currency translation (2,152) (883)
Recognition of minimum pension liability 0 0
------- -------
Comprehensive income $ 2,432 $ 2,183
======= =======
</TABLE>
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NOTE 7--BUSINESS SEGMENTS
Sales and Income before Interest and Taxes ("IBIT") by operating segment is
presented in the following table. There has been no change in the presentation
basis or measurement of segment information from the prior year end.
Intersegment sales are immaterial and there is no material change in segment
assets since the prior year end.
<TABLE>
<CAPTION>
Three Months Ended
November 30,
-----------------------------------
2000 1999
-------- --------
(In thousands)
<S> <C> <C>
Unaffiliated customer sales:
Process systems $ 70,546 $ 75,878
Energy systems 25,481 17,621
-------- --------
Total $ 96,027 $ 93,499
======== ========
IBIT:
Process systems $ 6,606 $ 8,811
Energy systems 5,857 2,151
Corporate and eliminations (2,234) (2,497)
-------- --------
Total $ 10,229 $ 8,465
======== ========
</TABLE>
NOTE 8--NEW ACCOUNTING STANDARD
The Securities Exchange Commission issued Staff Accounting Bulletin 101, Revenue
Recognition. This pronouncement is not required to be adopted by the Company
until its fourth quarter of fiscal 2001. The Company anticipates no material
impact from adopting this pronouncement.
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PART I--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following tables present the components of the Company's
consolidated income statement and segment information for the first quarter of
fiscal 2001 and 2000.
<TABLE>
<CAPTION>
Three Months Ended
November 30,
--------------------------------
Consolidated: 2000 1999
------------- ----------
<S> <C> <C>
Net Sales 100.0 % 100.0 %
Cost of sales 65.4 66.4
------------ ----------
Gross profit 34.6 33.6
SG&A expenses 21.9 22.3
Amortization 2.0 2.1
Other 0.0 .1
------------ ----------
IBIT 10.7 % 9.1 %
============ ==========
<CAPTION>
Three Months Ended
November 30,
-------------------------------------
Segment: 2000 1999
-------------------------------------
Process systems: (In thousands)
<S> <C> <C>
Sales $70,546 $75,878
IBIT 6,606 8,811
% 9.4 % 11.6 %
Energy systems:
Sales $25,481 $17,621
IBIT 5,857 2,151
% 23.0 % 12.2 %
</TABLE>
First quarter of fiscal 2001 and 2000
Net sales for the first quarter of fiscal 2001 were $96.0 million
compared to $93.5 million in the prior year, an increase of $2.5 million or 2.7%
over the same period of the prior year.
The Process Systems segment had sales of $70.5 million in the first
quarter of fiscal 2001 compared to $75.9 million in fiscal 2000. The weakening
of the euro, and to a lesser extent the British pound sterling, against the U.S.
dollar had a negative translation effect on sales for the first quarter of $5.0
million. In addition, prices in the Company's U.K. operations have declined
15%-20%, or $.5 million to $.7 million, from a year ago levels to remain
competitive with continental European competitors. Incoming orders in this
segment were $77.3 million in the first quarter of fiscal 2001 compared to $87.3
million in the first quarter of fiscal 2000. The impact of currency exchange
rates caused a negative translation effect on orders of $6.0 million in the
first quarter. Backlog in this segment increased to $79.4 million at the end of
the first quarter of fiscal 2001 from $72.8 million at August 31, 2000.
The Energy Systems segment had sales of $25.5 million in the first
quarter of fiscal 2001 compared to $17.6 million in fiscal 2000, an increase of
$7.9 million or 44.6%. High crude oil and natural gas prices have spurred an
increase in exploration and production activities versus the first quarter of
fiscal 2000. Incoming orders in this segment improved to $28.3 million in the
first quarter of fiscal 2001, compared to $20.1 million in the first quarter of
fiscal 2000. Backlog increased to $10.5 million at the end of the first quarter
of fiscal 2001 from $7.6 million at August 31, 2000.
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<PAGE> 10
The gross margin percentage increased to 34.6% from 33.6% in the first
quarter of fiscal 2000. This increase is driven by higher sales volumes in the
Energy Systems segment which has gross margins of approximately 40%. Offsetting
this is lower selling prices in the U.K., and a higher content of lower margin
municipal projects. Finally the weakening European currencies against the dollar
caused a negative translation effect of $.6 million in the first quarter of
fiscal 2001.
SG&A expenses increased by $.2 million but decreased from 22.3% to
21.9% as a percentage of sales. The percentage decrease is due to the savings
from reduced employment levels and severance actions taken in the Process
Systems segment in fiscal 1999 as well as cost savings from the Fairfield, CA,
plant closure and administrative consolidation in the Energy Systems segment.
In fiscal 2000, other expense is from ongoing costs to close and
transfer the operations of the Fairfield, CA, manufacturing plant.
Interest expense decreased from $3.2 million in the first quarter of
fiscal 2000 to $2.9 million in the first quarter of fiscal 2000. This was due to
lower average debt levels, offset slightly by higher interest rates on the
Company's variable rate debt.
The effective tax rate is 34.0% in fiscal 2001 compared to 36.0% in
fiscal 2000. The decrease results from increased benefit of the Foreign Sales
Corporation tax incentive driven by increased Energy Systems' exports.
The increase in net income and diluted net income per share can be
attributed to the recovery in the Energy Systems business. However, the
translation effect of the European currencies into the dollar reduced diluted
net income per share for the quarter by $0.03 compared to first quarter of
fiscal 2000.
LIQUIDITY AND CAPITAL RESOURCES
Cash uses in the first three months of fiscal 2001 were $5.3 million in
semi-annual interest payments due on the Company's Senior Notes and Convertible
Subordinated Notes, $4.0 million for variable pay plans, $2.0 million in income
tax payments (all included in accrued expenses) and $3.0 million for capital
expenditures. Cash generated from operations and net borrowings under the
Company's revolving credit loan funded these cash uses.
Cash uses in the first three months of fiscal 2000 were $5.5 million in
semi-annual interest payments due on the Company's Senior Notes and Convertible
Subordinated Notes (included in accrued expenses), $2.0 million to purchase
Company stock and Convertible Subordinated Notes under the fiscal 2000 share
buyback program and $1.8 million for capital expenditures. Cash generated from
operations and net borrowings under the Company's revolving credit loan funded
these cash uses.
The Company expects operating cash flow to be adequate for the
remainder of fiscal year 2001 operating needs, scheduled debt service and
shareholder dividend requirements. The major cash requirement for the remainder
of fiscal 2001 is planned capital expenditures of approximately $14.5 million.
Capital expenditures are related to additional production capacity, cost
reductions and replacement items.
MARKET RISK
In its normal operations the Company has market risk exposure to
foreign currency exchange rates and interest rates. There has been no
significant change in the Company's exposure to these risks, which has been
previously disclosed.
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FORWARD-LOOKING STATEMENTS
In addition to historical information, this Report contains various
forward-looking statements. All statements which address operating performance,
events or developments that we expect or anticipate will occur in the future,
including statements related to growth, operating margin performance, net income
per share or statements expressing general opinions about future operating
results, are forward-looking statements.
These forward-looking statements and performance trends are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those statements and trends. Such factors include, but are not
limited to, a significant decline in capital expenditure levels in the Company's
served markets, a major decline in oil and gas prices, foreign exchange rate
fluctuations, continued availability of acceptable acquisition candidates and
general economic conditions that affect demand in the process industries. Any
forward-looking statements are made based on known events and circumstances at
the time. The Company undertakes no obligation to update or publicly revise
these forward-looking statements to reflect events or circumstances that arise
after the date of this report.
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PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) See Index to Exhibits
b) Reports on Form 8-K. During the quarter ended
November 30, 2000, the Company did not file any
reports on Form 8-K.
12
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBBINS & MYERS, INC.
-------------------------------------------
DATE: JANUARY 12, 2001 BY /S/ KEVIN J. BROWN
---------------------- -------------------------------------------
KEVIN J. BROWN
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
DATE: JANUARY 12, 2001 BY /S/ THOMAS J. SCHOCKMAN
---------------------- -------------------------------------------
THOMAS J. SCHOCKMAN
CORPORATE CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
13
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INDEX TO EXHIBITS
-----------------
(27) FINANCIAL DATA SCHEDULE *
------------
* Filed herewith
14
