UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 1-10219
VULCAN INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-0810265
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
(302) 427-5804
(Registrant's telephone number, including area code)
N/A
(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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding shares of no par value common stock at March 31, 1997:
1,253,444 shares
<PAGE>
VULCAN INTERNATIONAL CORPORATION
INDEX
Part I. FINANCIAL INFORMATION PAGE
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income 2
Condensed Consolidated Statements of Cash Flows 3
Schedule Supporting Net Income Per Common
Share and Dividends Per Common Share 4
Notes to Condensed Consolidated Financial
Statements 5-6
Independent Accountants' Report 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
VULCAN INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
UNAUDITED
<S> <C> <C>
-ASSETS-
CURRENT ASSETS:
Cash $ 2,300,478 1,254,138
Marketable securities (At fair market
value-March 31, 1997, and December 31,
1996, cost $3,756,586) 25,724,278 23,981,345
Accounts receivable 1,913,417 2,490,485
Inventories 909,765 633,995
Prepaid expense 22,848 32,117
Refundable federal income tax - 108,703
---------- ----------
TOTAL CURRENT ASSETS 30,870,786 28,500,783
---------- ----------
PROPERTY, PLANT AND EQUIPMENT-at cost 15,534,532 15,667,654
Less-Accumulated depreciation and depletion 12,746,249 12,711,997
---------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 2,788,283 2,955,657
---------- ----------
INVESTMENT IN JOINT VENTURE 417,335 685,832
---------- ----------
MARKETABLE SECURITIES (At fair market value-
March 31, 1997, and December 31, 1996, cost
$2,623,283) 26,363,600 24,798,261
---------- ----------
DEFERRED CHARGES AND OTHER ASSETS 2,943,916 2,908,090
---------- ----------
TOTAL ASSETS $ 63,383,920 59,848,623
========== ==========
-LIABILITIES AND SHAREHOLDERS' EQUITY-
CURRENT LIABILITIES:
Deferred income tax $ 7,318,489 6,736,265
Other 1,028,954 1,128,778
---------- ----------
TOTAL CURRENT LIABILITIES 8,347,443 7,865,043
---------- ----------
DEFERRED INCOME TAX 8,551,431 7,973,105
---------- ----------
OTHER LIABILITIES - 24,109
---------- ----------
COMMITMENTS AND CONTINGENCIES - -
MINORITY INTEREST IN PARTNERSHIP 34,107 37,607
---------- ----------
<PAGE>
SHAREHOLDERS' EQUITY:
Capital stock 315,999 315,999
Additional paid-in capital 5,619,993 5,619,993
Retained earnings 24,130,216 23,782,656
Net unrealized holding gain 30,167,298 27,983,826
---------- ----------
60,233,506 57,702,474
Less-Common stock in treasury-at cost 13,782,567 13,753,715
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 46,450,939 43,948,759
---------- ----------
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 63,383,920 59,848,623
========== ==========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
<TABLE>
VULCAN INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months ended
UNAUDITED
<CAPTION>
MARCH 31, MARCH 31,
1997 1996
<S> <C> <C>
REVENUES:
Net sales $ 2,856,315 3,956,997
Dividends 393,099 373,875
--------- ---------
TOTAL REVENUES 3,249,414 4,330,872
--------- ---------
COST AND EXPENSES:
Cost of sales 2,657,883 4,043,426
General and administrative 329,746 466,073
Interest expense 15,305 36,039
--------- ---------
TOTAL COST AND EXPENSES 3,002,934 4,545,538
--------- ---------
EQUITY IN JOINT VENTURE INCOME AND
MINORITY INTEREST 130,301 109,828
--------- ---------
INCOME (LOSS) BEFORE GAIN ON
SALE OF ASSETS 376,781 (104,838)
NET GAIN ON SALE OF PROPERTY AND EQUIPMENT 396,268 171,349
--------- ---------
INCOME - BEFORE INCOME TAXES 773,049 66,511
INCOME TAX PROVISION (BENEFIT) 173,628 (61,184)
--------- ---------
NET INCOME $ 599,421 127,695
========= =========
NET INCOME PER COMMON SHARE $ .48 .10
========= =========
DIVIDENDS PER COMMON SHARE $ .20 .20
========= =========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
<TABLE>
VULCAN INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended
UNAUDITED
<CAPTION>
MARCH 31, MARCH 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 3,435,139 3,987,619
Cash paid to suppliers and employees (3,320,499) (5,052,924)
Dividends received 393,099 373,875
Interest paid (15,305) (38,201)
--------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES 492,434 (729,631)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, and equipment 447,975 268,820
Purchase of property and equipment (27,674) (184,521)
Distribution from joint venture 400,000 350,000
Collections on note receivable and other 14,318 17,412
--------- ---------
NET CASH FLOWS FROM INVESTING ACTIVITIES 834,619 451,711
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments under credit agreements - (75,000)
Purchase of common shares (28,852) (314,633)
Cash dividends paid (251,861) (242,876)
--------- ---------
NET CASH FLOWS FROM FINANCING ACTIVITIES (280,713) (632,509)
--------- ---------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,046,340 (910,429)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,254,138 1,136,553
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,300,478 226,124
========= =========
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 599,421 127,695
Adjustments-
Depreciation and amortization 144,653 150,497
Deferred income taxes 35,739 (39,468)
Equity in joint venture income and minority
interest (130,301) (109,828)
Net gain on sale of property and equipment (396,268) (171,349)
Stock compensation programs - 64,500
Decrease in accounts receivable 578,824 30,622
Increase in inventories (275,770) (141,927)
Increase (decrease) in accounts payable,
accrued expenses and other assets (63,864) (640,373)
--------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 492,434 (729,631)
========= =========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
</TABLE>
3
<PAGE>
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
<TABLE>
VULCAN INTERNATIONAL CORPORATION
SCHEDULE SUPPORTING NET INCOME PER COMMON SHARE AND
DIVIDENDS PER COMMON SHARE
For the three months ended
UNAUDITED
Exhibit "1"
<CAPTION>
MARCH 31, MARCH 31,
1997 1996
<S> <C> <C>
a) Net income $ 599,421 127,695
b) Dividends on preferred shares 992 992
--------- ---------
c) Net income attributable to
common shares $ 598,429 126,703
========= =========
d) Cash dividends on common shares $ 250,869 241,884
========= =========
Weighted Average Shares:
e) Common shares issued 1,999,512 1,999,512
f) Common treasury shares 745,292 789,887
--------- ---------
g) Common shares outstanding 1,254,220 1,209,625
========= =========
h) Income per common share (c/g) $ .48 .10
========= =========
i) Dividends per common share $ .20 .20
========= =========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
</TABLE>
4
<PAGE>
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 1997 and 1996
The Registrant has been advised that it is a potentially responsible party,
together with 18 other parties, with regard to the Resolve, Inc. Superfund
Site, located in North Dartmouth, Massachusetts, with potential joint and
several liability of $5.7 million. The Resolve site was a waste chemical
reclamation facility. The environmental problem at the site involves soil
contamination including, particularly, PCB contaminants. It is the
understanding of Registrant that clean-up at the site involves treatment of
contaminated soil and ground water. The Registrant is contesting all
liability. There may be other potential clean-up liability at other sites of
which the registrant has no specific knowledge.
The accompanying condensed consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary to reflect a
fair presentation of financial position, results of operations and cash flows
for the interim periods.
There were no securities of the Registrant sold by the Registrant during the
three months ended March 31, 1997, that were not registered under the
Securities Act of 1933, in reliance upon an exemption from registration
provided by Section 4(2) of the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
<TABLE>
INVENTORIES
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
UNAUDITED
<S> <C> <C>
Inventories consisted of:
Finished goods $ 263,785 203,394
Work in process 323,795 131,054
Raw materials 322,185 299,547
--------- ---------
Total inventories $ 909,765 633,995
========= =========
</TABLE>
5
<PAGE>
PART I - FINANCIAL INFORMATION
(Continued)
Item 1. Financial Statements.
VULCAN INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 1997 and 1996
(Continued)
REVIEW BY INDEPENDENT ACCOUNTANTS
The condensed consolidated financial statements at March 31, 1997, and for
the three-month period then ended have been reviewed, prior to filing, by
the Registrant's independent accountants, J.D. Cloud & Co. P.L.L., whose
report covering their review of the financial statements is included in
this report.
6
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Vulcan International Corporation
Wilmington, Delaware
We have reviewed the accompanying condensed consolidated balance sheet of
Vulcan International Corporation and subsidiaries as of March 31, 1997, and
the related condensed consolidated statements of income and cash flows for the
three-month periods ended March 31, 1997 and 1996. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
for them to be in conformity with generally accepted accounting principles.
We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheet of Vulcan International Corporation and
subsidiaries as of December 31, 1996, and the related consolidated statements
of income, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 15, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1996, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
J.D. CLOUD & CO. P.L.L.
Certified Public Accountants
Cincinnati, Ohio
April 25, 1997
7
<PAGE>
PART I - FINANCIAL INFORMATION
(Continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Net sales revenue for the three-month period ended March 31, 1997, decreased
$1,100,682 or 27.8% over the corresponding period in 1996. Cost of sales
decreased $1,385,543 or 34.3% during the three-month period. The foregoing
decreases were due primarily to the fact that on April 1, 1996, the Company
downsized its Rubber Division by discontinuing the production of civilian
heels and soles. The increase in inventories at March 31, 1997, as compared
to December 31, 1996, is due primarily to increases in the Rubber Division.
General and administrative expenses decreased $136,327 or 29.2% in the
three-month period ended March 31, 1997, as compared to the corresponding
quarter in 1996 due principally to the downsizing in the Company's Rubber
Division.
Interest expense for the three-month period ended March 31, 1997, decreased
$20,734 due to decreased borrowings.
Gains on the sale of property and equipment were $396,268 for the three-month
period ended March 31, 1997, as compared to $171,349 for the corresponding
quarter in 1996. These gains were substantially the result of the sale of
timber.
The Company has a 50% interest in a joint venture, Vulcan Brunswick Bowling
Pin Company (VBBPC) which manufactures bowling pins in Antigo, Wisconsin for
Brunswick and the Company. The Company received a cash distribution of
$400,000 from VBBPC during the first quarter of 1997.
<TABLE>
Summarized income statement information for VBBPC consists of the following:
<CAPTION>
Three Months ended March 31,
1997 1996
<S> <C> <C>
Net sales $3,225,914 3,965,173
Costs and expenses 2,962,910 3,742,991
--------- ---------
Net income $ 263,004 222,182
========= =========
Company's 50% equity in net income $ 131,502 111,091
========= =========
</TABLE>
8
<PAGE>
PART I - FINANCIAL INFORMATION
(Continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements during the first quarter of 1997 were funded
in part through earnings and noncash charges such as depreciation,
amortization, a $400,000 distribution from the joint venture and from the sale
of timber and fixed assets. The cash from these transactions was used
principally in operations. The Company expects, when necessary, to use
short-term borrowings to meet cash requirements not fully provided by
earnings, depreciation and amortization. In the first quarter of 1997, 900
shares of treasury stock were acquired for $28,852. There were approximately
$33,000 of commitments for capital expenditures as of March 31, 1997.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Registrant has been advised that it is a potentially responsible party,
together with 18 other parties, with regard to the Resolve, Inc. Superfund
Site, located in North Dartmouth, Massachusetts, with potential joint and
several liability of $5.7 million. The Resolve site was a waste chemical
reclamation facility. The environmental problem at the site involves soil
contamination including, particularly, PCB contaminants. It is the
understanding of Registrant that clean-up at the site involves treatment of
contaminated soil and ground water. The Registrant is contesting all
liability. There may be other potential clean-up liability at other sites of
which the Registrant has no specific knowledge.
The Registrant and its subsidiaries are party to other litigation matters and
claims which are normal in the course of operations. While the results of
litigation and claims cannot be predicted with certainty, based on advice of
counsel, the Registrant believes that the final outcome of such matters will
not have a materially adverse effect on its consolidated financial condition.
10
<PAGE>
PART II - OTHER INFORMATION
(Continued)
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
<TABLE>
<CAPTION>
Exhibit SB 601 Page
No. Ref. No. Description No.
<C> <C> <S> <C>
27 601(b)(27) Financial Data Schedule for
the Three Months Ended
March 31, 1997 12
</TABLE>
b. The Company was not required to file Form 8-K for the quarter
ended March 31, 1997.
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.
VULCAN INTERNATIONAL CORPORATION
By: Benjamin Gettler
Date May 9, 1997 Benjamin Gettler
Chairman of the Board, President
and Chief Executive Officer
By: Vernon E. Bachman
Date May 9, 1997 Vernon E. Bachman
Vice President, Secretary-Treasurer
and Principal Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION OF VULCAN
INTERNATIONAL CORPORATION. THIS INFORMATION IS SUMMARIZED FROM THE
QUARTERLY REPORT ON FORM 10Q FOR THE QUARTER ENDED MARCH 31, 1997.
</LEGEND>
<CIK> 0000848446
<NAME> VULCAN INTERNATIONAL
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,300,478
<SECURITIES> 52,087,878
<RECEIVABLES> 2,213,619
<ALLOWANCES> 300,202
<INVENTORY> 909,765
<CURRENT-ASSETS> 30,870,786
<PP&E> 2,788,283
<DEPRECIATION> 144,653
<TOTAL-ASSETS> 63,383,920
<CURRENT-LIABILITIES> 8,347,443
<BONDS> 0
0
66,060
<COMMON> 249,939
<OTHER-SE> 46,134,940
<TOTAL-LIABILITY-AND-EQUITY> 63,383,920
<SALES> 2,856,315
<TOTAL-REVENUES> 3,249,414
<CGS> 2,657,883
<TOTAL-COSTS> 2,657,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17,355
<INTEREST-EXPENSE> 15,305
<INCOME-PRETAX> 773,049
<INCOME-TAX> 173,628
<INCOME-CONTINUING> 599,421
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 599,421
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
