UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the quarterly period ended March 31, 1995
| | 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 1-6176
AUGAT INC.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2022285
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
89 Forbes Boulevard, P.O. Box 448, Mansfield, Massachusetts 02048
----------------------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(508) 543-4300
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(Registrant's telephone number, including area code)
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
---- ----
The number of shares of the Registrant's common stock
outstanding on March 31, 1995 was 19,519,162.
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<PAGE>
AUGAT INC.
INDEX
Page No.
---------
Part I - Financial Information --------------------------------- 3
Financial Statements (Unaudited)
Statements of Consolidated Income - For the
Three Months Ended March 31, 1995 and 1994 ---------------- 3
Consolidated Balance Sheets - March 31, 1995
and December 31, 1994 ------------------------------------ 4-5
Statements of Consolidated Cash Flows For the
Months Ended March 31, 1995 and 1994 ---------------------- 6
Notes to Unaudited Consolidated Financial Statements ----------- 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations -------------------------- 8-9
Part II - Other Information ------------------------------------ 10
Signatures ----------------------------------------------------- 10
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<PAGE>
PART I - FINANCIAL INFORMATION
Statements of Consolidated Income
For the Three Months Ended March 31, 1995 and 1994
(In thousands, except per share data)
1995* 1994*
--------- ---------
Net sales $134,589 $127,403
Cost of products sold 106,732 100,981
--------- ---------
Gross margin 27,857 26,422
Selling, general and administrative expenses 18,005 16,348
--------- ---------
Income from operations 9,852 10,074
Other income (expense):
Interest income, etc. 124 (75)
Interest expense (911) (1,094)
--------- ---------
Net (787) (1,169)
--------- ---------
Income before taxes on income 9,065 8,905
Provision for taxes on income 3,265 3,205
--------- ---------
Net income $ 5,800 $ 5,700
========= =========
Earnings per share $0.30 $0.30
Average common shares outstanding 19,541 19,118
Dividends paid per share $.04 $.00
* Unaudited
See notes to unaudited consolidated financial statements.
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<PAGE>
Consolidated Balance Sheets, March 31, 1995 and December 31, 1994
(In thousands)
Assets
1995* 1994*
--------- ---------
Current Assets:
Cash and cash equivalents . . . . . $ 17,371 $ 20,535
Accounts receivable-net . . . . . . . 87,648 89,521
Inventories:
Finished goods . . . . . . . . . . 34,929 33,359
Work in process . . . . . . . . . 21,509 20,894
Raw materials . . . . . . . . . . 32,131 28,698
--------- ---------
Total inventories . . . . . . 88,569 82,951
Deferred income taxes . . . . . . . . 2,866 2,873
Prepaid expenses . . . . . . . . . . 3,771 2,580
--------- ---------
Total current assets . . . 200,225 198,460
Property, Plant, and Equipment:
Land . . . . . . . . . . . . . . . . 3,964 3,826
Buildings and building improvements . 65,570 63,365
Machinery and equipment . . . . . . 142,547 137,978
Furniture and fixtures . . . . . . . 23,281 22,590
Construction in progress - buildings and
machinery . . . . . . . . . . . . 17,242 13,543
--------- ---------
Total . . . . . . . . . . . . 252,604 241,302
Less accumulated depreciation . . . (127,785) (120,463)
--------- ---------
Property, plant, and equipment-net . . 124,819 120,839
Other Assets:
Goodwill-net . . . . . . . . . . . . 25,128 25,454
Property held for sale-net . . . . . 4,825 4,829
Other . . . . . . . . . . . . . . . 6,173 6,392
--------- ---------
Total other assets . . . . . . . . 36,126 36,675
--------- ---------
Total . . . . . . . . . . . . $361,170 $355,974
========= =========
* Unaudited
See notes to unaudited consolidated financial statements.
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<PAGE>
Consolidated Balance Sheets, March 31, 1995 and December 31, 1994
(In thousands)
Liabilities and Shareholders' Equity
1995* 1994*
Current Liabilities: --------- ---------
Notes payable . . . . . . . . . . . . . . . . $ 5,000
Current maturities of long-term debt . . . . . 9,314 $10,884
Accounts payable . . . . . . . . . . . . . . . 33,750 32,744
Federal, state and foreign taxes payable . . . 5,848 4,963
Accrued compensation and benefits . . . . . . . 7,346 11,274
Other accrued expenses . . . . . . . . . . . . 12,568 11,794
--------- ---------
Total current liabilities . . . . . . . . . 73,826 71,659
Long-Term Debt . . . . . . . . . . . . . . . . . 29,144 35,033
Deferred Income Taxes . . . . . . . . . . . . . 12,142 11,761
Shareholders' Equity:
Common stock . . . . . . . . . . . . . . . . . 1,954 1,947
Paid-in capital . . . . . . . . . . . . . . . 76,571 75,730
Retained earnings . . . . . . . . . . . . . . 148,547 143,526
Cumulative translation adjustment . . . . . . 19,812 17,088
Treasury stock, at cost . . . . . . . . . . . (110) (110)
Unearned compensation-restricted stock awards . (716) (660)
--------- ---------
Shareholders' equity . . . . . . . . . . . . 246,058 237,521
--------- ---------
Total . . . . . . . . . . . . . . . . . $361,170 $355,974
========= =========
* Unaudited
See notes to unaudited consolidated financial statements.
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<PAGE>
Statements of Consolidated Cash Flows
For the Three Months Ended March 31, 1995 and 1994
(In thousands)
1995* 1994*
Cash Flows From Operating Activities: -------- --------
Net income . . . . . . . . . . . . . . . . . . . . $ 5,800 $ 5,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . 5,467 4,652
(Gain) loss on the sale of property,
plant and equipment . . . . . . . . . . . . . . 56 (2)
Deferred federal income taxes - net . . . . . . 388 664
Amortization of restricted stock awards . . . . 126 47
Increase (decrease) in cash from changes
in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . 1,873 (6,210)
Refundable income taxes . . . . . . . . . . . . - (118)
Inventories . . . . . . . . . . . . . . . . . . . (5,618) (1,707)
Prepaid expenses . . . . . . . . . . . . . . . . (1,191) (350)
Other assets . . . . . . . . . . . . . . . . . 190 102
Accounts payable . . . . . . . . . . . . . . . . 1,006 7,008
Income taxes payable . . . . . . . . . . . . . . 885 2,673
Accrued compensation and other expenses . . . . (3,153) (1,212)
Effect of exchange rate changes on current assets
and liabilities (other than cash) . . . . . . . 636 123
-------- --------
Net cash provided by operating activities . . . . 6,465 11,370
-------- --------
Cash Flows From Investing Activities:
Purchase of property, plant, and equipment . . . (6,733) (7,665)
Proceeds from the sale of property, plant,
and equipment . . . . . . . . . . . . . . . . . 6 31
Net cash used for investing activities . . . . . (6,727) (7,634)
-------- --------
Cash Flows From Financing Activities:
Cash dividends paid . . . . . . . . . . . . . . (779)
Proceeds from short term borrowings . . . . . . 5,000 5,000
Payments for long-term debt . . . . . . . . . . (7,460) (105)
Common stock issued under employee benefit plans. 666 1,665
-------- --------
Net cash provided (used) by financing activities. . (2,573) 6,560
Effect of exchange rate changes on cash . . . . . . (329) 438
-------- --------
Net changes in cash and cash equivalents . . . . . . (3,164) 10,734
Cash and cash equivalents at beginning of the period. 20,535 8,540
-------- --------
Cash and cash equivalents at end of the period . . . $17,371 $19,274
======== ========
* Unaudited
See notes to unaudited consolidated financial statements.
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<PAGE>
AUGAT INC.
Notes to Unaudited Consolidated Financial Statements
------------------------------------------------------
1. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial position as of March 31, 1995, the
results of operations for the three months ended March 31, 1995
and 1994 and the cash flows for the three month periods then
ended.
2. The results of operations for the three month period ended
March 31, 1995 and 1994 are not necessarily indicative of the
results to be expected for the full year.
3. Earnings Per Share - Earnings per share are based on the
weighted average number of shares outstanding during each
period. The exercise of all presently issued outstanding stock
options and the issuance of shares under the "Employee Stock
Purchase Plan" would have no material dilutive effect on
earnings per share.
4. The acquisition of National Industries, Inc. in 1991 included a
liability of approximately $5.4 million to cover the estimated
costs of site remediation for certain National facilities.
Management estimated the liability using third-party
consultants. Costs incurred as of March 31, 1995
(approximately $.9 million) represent amounts expended for
preliminary site evaluation and design and testing. The
Company has obtained the necessary permits and is in the
process of remediating the site. The Company is keeping the
state informed of its progress. The Company believes the
recorded liability of approximately $4.5 million at March 31,
1995 to be adequate.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Net Sales: Net sales for the quarter ended March 31, 1995 by
product group, compared to the quarter ended March 31, 1994, are as
follows (dollars in thousands):
Quarter Ended March 31,
1995 1994
----------------- --------------
Product Group % %
- ---------------------------------------------------------------------
Interconnection Products Business $ 33,254 24.7% $ 32,510 25.5%
Wiring Systems and Components Business 65,601 48.7% 74,028 58.1%
Communications Products Business 35,734 26.6% 20,865 16.4%
-------- ------ -------- -----
Total $134,589 100.0% $127,403 100.0%
- ---------------------------------------------------------------------
Net sales for the quarter ended March 31, 1995 increased over the
first quarter of 1994 primarily due to the increased demand for the
Company's products in the European automotive market and in the
worldwide communications and cable television markets. Domestic
automotive sales decreased in the first quarter of 1995 when
compared to the prior year's period due to the planned lower
production run rates of the Ford Aerostar vehicle. For the
Interconnection Products Business, domestic sales improved in 1995
while shipments into its Far East markets declined in 1995.
Business conditions in the first quarter of 1995 continue to
reflect improvement in the domestic and European markets in which
the Company serves. In the Far East markets, there have been no
significant improvement in the current quarter. Incoming orders
for the first quarter of 1995 were $138 million, compared to $134
million for the same period of the prior year. Incoming orders for
the current quarter increased approximately 29 percent for the
Communications Products Business and 20 percent for the
Interconnection Products Business while decreasing 14 percent in
the Wiring Systems and Components Business as compared to the same
period of the prior year. The backlog at March 31, 1995 was $122
million compared with $111 million at March 31, 1994.
Gross Margin: Gross Margin remained at approximately 21 percent of
sales in the first quarter of 1995 compared to the first quarter of
1994. The significant increase in Communication Products Business
sales in 1995 generated higher gross margins. However, gross
margin was negatively impacted by selected selling price decreases
in the other two businesses and increases in material costs, wage
increases and overhead. These increased expenses were partially
offset by improved manufacturing methods and on-going cost cutting
programs.
Selling, General and Administrative Expenses: These expenses were
13.4 percent of sales in the first quarter of 1995 compared to 12.8
percent in the comparable quarter of the prior year. While the
dollars spent in this area have increased, the Company intends to
maintain these expenses in the 13 percent to 15 percent range of
sales. These expenses may vary from period to period based on
various factors, none of which, individually, are significant.
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<PAGE>
Other Income (Expense): Interest income, etc. increased in 1995
versus 1994 due to the increase in cash available to invest and the
increased rate of return on short-term investments over the
comparable period.
Interest expense decreased in the 1995 period compared to the same
period in 1994 due to the decrease in total outstanding debt in
1995 when compared to 1994.
Income Taxes: The effective income tax rate for the Company was
36 percent for the first quarter of 1995 and 1994. The tax rate in
both periods is higher than the statutory rate due to income earned
in jurisdictions with higher effective tax rates.
Net Income: Net income was $5.8 million for the three months ended
March 31, 1995, compared to net income of $5.7 million in the same
period of the prior year.
The increase in net income for the first quarter ended March 31,
1995 compared to the previous period of the prior year resulted
principally from increased sales volume in our domestic
communications and European automotive business.
Liquidity and Capital Resources: The Registrant continues to
maintain sufficient liquidity and has adequate resources to fund
its operations under current business conditions. The income
generated from operations along with the cash on hand and
established bank credit facilities are sufficient to cover expected
sales growth and planned capital expenditure programs.
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<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
--------
(27) Financial Data Schedule
(b) Reports on Form 8-K - None
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 thereto duly authorized.
AUGAT INC.
---------------------------------
(Registrant)
Ellen B. Richstone
---------------------------------
Ellen B. Richstone
Vice President and
Chief Financial Officer
Date: May 11, 1995
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AUGAT INC. FOR THE QUARTER ENDED MARCH 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 17,371
<SECURITIES> 0
<RECEIVABLES> 88,929
<ALLOWANCES> (1,281)
<INVENTORY> 88,569
<CURRENT-ASSETS> 200,225
<PP&E> 252,604
<DEPRECIATION> (127,785)
<TOTAL-ASSETS> 361,170
<CURRENT-LIABILITIES> 73,826
<BONDS> 29,144
<COMMON> 1,954
0
0
<OTHER-SE> 244,104
<TOTAL-LIABILITY-AND-EQUITY> 361,170
<SALES> 134,589
<TOTAL-REVENUES> 134,589
<CGS> 106,732
<TOTAL-COSTS> 106,732
<OTHER-EXPENSES> 17,881
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 911
<INCOME-PRETAX> 9,065
<INCOME-TAX> 3,265
<INCOME-CONTINUING> 5,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,800
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
