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
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 0-21828
GREENFIELD INDUSTRIES, INC.
470 Old Evans Road
Evans, Georgia 30809
706/863-7708
I.R.S. Employment I. D. 04-2917072
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 twelve months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days.
Yes X No
---------- ----------
The number of shares of common stock outstanding at May 8, 1997 is
16,398,757 shares.
Page 1
<PAGE>
GREENFIELD INDUSTRIES, INC.
INDEX
Page
Number
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statement of Operations -
three months ended March 31, 1997 and
1996 (unaudited) 3
Consolidated Balance Sheet -
March 31, 1997 (unaudited) and
December 31, 1996 4
Consolidated Statement of Cash Flows -
three months ended March 31, 1997 and
1996 (unaudited) 5
Consolidated Statement of Changes in
Stockholders' Equity for the three
months ended March 31, 1997 (unaudited) 6
Notes to Consolidated Financial Statements 7 - 11
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 12 - 17
Part II - Other Information
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits 18
(b) Reports on Form 8-K 18
Signature 19
Page 2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
Three months ended
March 31,
---------
<S> <C> <C>
1997 1996
---- ----
Net sales $130,369 $132,698
Cost of sales 92,477 92,128
-------- --------
Gross profit 37,892 40,570
Selling, general and
administrative expenses 23,994 22,626
-------- --------
Operating income 13,898 17,944
Interest expense 2,666 3,513
Dividends on company-obligated,
mandatorily redeemable convertible
preferred securities of subsidiary
Greenfield Capital Trust at 6% per annum 1,725 --
-------- --------
Income before provision for
income taxes 9,507 14,431
Provision for income taxes 3,850 5,862
-------- --------
Net income $ 5,657 $ 8,569
======== ========
Earnings per share:
Primary $ 0.35 $ 0.53
======== ========
Fully diluted (see Note 8)(1) $ 0.35 $ --
======== ========
Weighted average common and common
equivalent shares outstanding:
Primary 16,386 16,272
======== ========
Fully diluted 19,174 --
======== ========
</TABLE>
(1) For the quarter ended March 31, 1996, there was no dilutive effect.
See accompanying Notes to Consolidated Financial Statements.
Page 3
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
March 31, December 31,
1997 1996
---- ----
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 914 $ 1,721
Accounts receivable, net 96,087 83,199
Inventories, net 171,009 152,659
Prepaid expenses and other 6,069 8,034
----------- -----------
Total current assets 274,079 245,613
Property, plant and equipment, net 159,936 144,300
Goodwill, net 182,740 169,958
Other assets, net 3,060 2,773
----------- -----------
Total assets $ 619,815 $ 562,644
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 6,435 $ 513
Accounts payable 32,940 22,392
Accrued liabilities 38,353 35,411
----------- -----------
Total current liabilities 77,728 58,316
Long-term debt 193,604 162,625
Deferred income taxes 10,252 9,524
Other long-term liabilities 18,179 16,451
----------- -----------
Total liabilities 299,763 246,916
----------- -----------
Commitments and contingencies (see Note 10)
Company-obligated, mandatorily redeemable
convertible preferred securities of subsidiary
Greenfield Capital Trust 115,000 115,000
----------- -----------
Stockholders' equity:
Preferred stock; $0.01 par value; 1,500,000 shares
authorized; no shares issued and outstanding
Common stock; $0.01 par value; 100,000,000
shares authorized; 16,398,257 and 16,374,925
shares issued and outstanding, respectively 164 164
Additional paid-in capital and other 110,333 109,759
Retained earnings 97,262 92,425
Cumulative translation adjustment (2,707) (1,620)
---------- ----------
Total stockholders' equity 205,052 200,728
---------- ----------
Total liabilities and stockholders' equity $ 619,815 $ 562,644
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
Three months ended
March 31,
---------
<S> <C> <C>
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 5,657 $ 8,569
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 4,255 3,383
Amortization 1,152 1,096
Deferred income taxes 2,633 723
Tax benefits relating to exercise of stock options 4 118
Other 644 (196)
Changes in operating assets and liabilities, net of
the effects of acquisitions:
Accounts receivable, net (5,670) (8,395)
Inventories, net (7,812) (4,606)
Prepaid expenses and other 2,285 (974)
Accounts payable 2,220 (11,637)
Accrued liabilities (761) 4,558
--------- ---------
Net cash provided by (used in) operating activities 4,607 (7,361)
--------- ---------
Cash flows from investing activities:
Capital expenditures (6,927) (8,615)
Purchase of businesses, net of cash acquired (see Note 3) (33,853) (83,344)
Other 957 36
--------- ---------
Net cash used in investing activities (39,823) (91,923)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 38,084 97,459
Payments on borrowings (466) (3,718)
Dividends paid on common stock (820) (651)
Other (603) 667
--------- ---------
Net cash provided by financing activities 36,195 93,757
--------- ---------
Effect of exchange rate changes on cash (1,786) 269
Net decrease in cash (807) (5,258)
Cash at beginning of period 1,721 5,258
--------- ---------
Cash at end of period $ 914 $ 0
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 5
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Additional Cumulative
Common Paid-In Retained Translation
Stock Capital & Other Earnings Adjustment Total
------ --------------- -------- ----------- -----
Balance, December 31, 1996 $ 164 $ 109,759 $ 92,425 $ (1,620) $ 200,728
Net income 5,657 5,657
Exercise of stock options and
tax benefits related thereto 18 18
Dividends declared and paid
($0.05 per common share) (820) (820)
Partial repayment of stock
subscriptions receivable 17 17
Executive stock awards 539 539
Cumulative translation
adjustment (1,087) (1,087)
------- --------- ------- --------- ----------
Balance, March 31, 1997 $ 164 $ 110,333 $ 97,262 $ (2,707) $ 205,052
======= ========= ======= ========= ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 6
<PAGE>
GREENFIELD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per share data)
1. Unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements of Greenfield
Industries, Inc. (Company or Greenfield) have been prepared in accordance with
the instructions for Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. However, in the opinion of management, such information
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations for the periods
presented. Operating results for any quarter are not necessarily indicative of
the results for any other quarter or for the full year. These statements should
be read in conjunction with the consolidated financial statements and notes to
the consolidated financial statements thereto included in the Company's Form
10-K for the year ended December 31, 1996.
2. Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions and
balances are eliminated in consolidation.
3. Acquisition
On March 27, 1997, the Company acquired the outstanding shares of Hanita
Metal Works, Ltd., an Israeli-based company, and its U. S. subsidiary Hanita
Cutting Tools, Inc. (collectively, Hanita) for approximately $20,800 and assumed
indebtedness of approximately $14,600. Hanita, with its primary manufacturing,
sales and distribution operations in Israel, is a leading manufacturer of
high-quality, high performance end mills and other cutting tools for the
metalworking industry. Hanita also sells and distributes products around the
world, including the United States, which accounts for approximately 40% of its
sales. The acquisition, which will be accounted for using the purchase method of
accounting, was financed through the Company's existing unsecured credit
facility. For the year ended December 31, 1996, Hanita had net sales of
approximately $27,000.
The pro forma effects of the acquisition on the Company's results of
operations are not material. The balance sheet of Hanita is included in the
Company's consolidated balance sheet at December 31, 1996.
Page 7
<PAGE>
4. Financing
The Company has a $180 million senior unsecured credit facility provided by
six institutions. The facility includes a $130 million multi-currency revolving
credit line and a $50 million U.S. acquisition line. The multi-currency
revolving facility provides for loans of up to DM30 million and (pound
sterling)15 million. As of March 31, 1997, the Company had approximately $81.3
million, (pound sterling)5.7 million and DM3.5 million outstanding under the
revolving credit line. The revolving credit line generally bears interest at
floating rates based upon the prime rate or LIBOR, at the option of the Company.
As of March 31, 1997, the interest rates on the revolving credit line ranged
from approximately 3.9% to 8.5%.
As of March 31, 1997, borrowings under the multi-currency facility were as
follows:
<TABLE>
Currency Amount US $ Equivalent Interest Rates
-------- ------ --------------- --------------
<S> <C> <C> <C> <C>
U. S. Dollars $81,300 $81,300 6.1% to 8.5%
British Pounds Sterling (pound)8,100 13,187 6.9% to 7.1%
German DeutscheMarks DM5,800 3,516 3.7 to 3.9%
</TABLE>
As of March 31, 1997, there were no borrowings under the acquisition facility.
5. Mandatorily Redeemable Convertible Preferred Securities
On April 24, 1996, the Company completed a private placement to
institutional investors of $115,000 of 6% Convertible Preferred Securities
(liquidation peference of $50 per Convertible Preferred Security). The placement
was made through Greenfield Capital Trust (Trust), a newly-formed Delaware
business trust. The securities represent undivided beneficial ownership interest
in the Trust and are fully, irrevocably and unconditionally guaranteed by
Greenfield. Greenfield owns all of the common securities of the Trust. The
assets of the Trust consist solely of Greenfield's 6% Convertible Junior
Subordinated Deferrable Interest Debentures Due 2016 which were acquired with
the proceeds from the offering. The Convertible Preferred Securities are
convertible at the option of the holders at any time into the common stock of
Greenfield at an effective conversion price of $41.25 per share and are
redeemable at Greenfield's option after April 15, 1999.
6. Dividends
On March 31, 1997, the Company paid a cash dividend of $0.05 per share to
common stockholders of record on March 10, 1997. Total dividends paid
approximated $820.
On March 31, 1997, Greenfield Capital Trust paid quarterly cash dividends
totalling approximately $1.7 million to holders of the Convertible Preferred
Securities.
Page 8
<PAGE>
7. Supplemental balance sheet information
<TABLE>
March 31, December 31,
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Inventories:
Raw material and component parts $ 56,861 $ 49,500
Work in process 39,493 38,055
Finished goods 74,655 65,104
------ -------
$ 171,009 $152,659
======= =======
Accrued liabilities:
Employee compensation and benefits $ 20,979 $ 19,151
Restructuring costs 3,732 3,371
Interest 2,935 1,656
Other 10,707 11,233
-------- --------
$ 38,353 $ 35,411
====== ======
</TABLE>
8. Stock option and stock incentive plans consist of the following:
Stock option plans
- ------------------
The Company has three stock option plans: the Amended and Restated Employee
Stock Option Plan (Employee Plan), the 1995 Directors Non-Qualified Stock Option
Plan (Directors Plan) and the 1993 Directors Non-Qualified Stock Option Plan
(1993 Directors Plan).
The Employee Plan provides for the granting of options to purchase up to
1,000,000 shares of common stock to the Company's executive officers and key
employees at prices equal to the fair market value of the stock on the date of
grant. The Employee Plan was amended effective May 6, 1997, to, among other
things, increase the number of options to purchase shares of common stock from
1,000,000 to 2,000,000.
The Directors Plan provides for the granting of options to purchase up to
125,000 shares of common stock to the Company's directors who are not employees
of the Company at prices equal to the fair market value of the stock on the date
of grant. Options are granted to each eligible director on the date such person
is first elected to the board of directors of the Company and on each subsequent
re-election date. In addition, eligible directors serving as Chairman of a
standing committee maintained by the Board receive options upon election and
re-election.
Page 9
<PAGE>
The 1993 Directors Plan provides for the granting of options to purchase up
to 100,000 shares of common stock to the Company's directors who are not
employees of the Company at prices equal to the fair market value of the stock
on the date of grant. Options are granted to each eligible director on the date
such person is first elected to the board of directors of the Company. No
further grants will be issued under the 1993 Directors Plan.
A summary of stock option transactions for the three months ended March 31,
1997 pursuant to the Employee Plan, Directors Plan and 1993 Directors Plan
follows:
<TABLE>
Weighted Shares
Average Subject
Exercise Price to Option
<S> <C> <C>
Summary of stock options:
Beginning of period $23.85 954,400
Options granted 23.17 33,000
Options exercised 16.13 (500)
Options cancelled 28.82 (2,875)
--------
End of period 23.82 984,025
========
Exercisable at March 31, 1997 168,000
========
</TABLE>
The following table summarizes information for options currently
outstanding and exercisable at March 31, 1997:
<TABLE>
Options Outstanding Options Exercisable
-------------------- -------------------
Weighted Average Weighted
<S> <C> <C> <C> <C> <C>
Range of Number Remaining Average Number Weighted Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
- --------------- ----------- ---------------- -------------- ----------- --------------
$14 - 21 331,750 7 16.65 120,750 16.27
$22 - 29 546,775 9 26.73 47,250 24.02
$30 - 37 105,500 9 31.26 -- --
------- -------
$14 - 37 984,025 8 23.82 168,000 18.45
======= =======
</TABLE>
Stock incentive plans
- ---------------------
The Company has two stock incentive plans: the 1995 Equity Incentive Plan
(Incentive Plan) and the 1995 Restricted Stock Bonus Plan (Ownership Plan).
The Incentive Plan provides for the granting of up to 273,000 shares of
common stock to certain senior executives of the Company in time-lapse
restricted stock,
Page 10
<PAGE>
performance contingent restricted stock and performance shares. Time-lapse
restricted stock vests in one-third increments over a three-year period
commencing four years after the date of the award. Performance contingent
restricted stock is earned when the price for the Company's stock reaches
certain predetermined levels, and then vests over a three- or five-year period.
Performance shares are earned based on attainment of a predetermined four-year
cumulative earnings per share level. Attainment of between 50% and 200% of the
predetermined objective will entitle the participants to receive restricted
performance shares of between 50% and 200% of the target award, which then vests
over a three-year period. No performance shares are earned if less than 50% of
the performance objective is obtained.
The Ownership Plan provides for the issuance of up to 250,000 shares of
common stock to certain employees, by allowing such employees to elect to defer
up to 50% of their annual cash bonus and receive, in lieu thereof, shares of the
Company's common stock. The Company will increase the employees' deferred bonus
by either 20% or 35% (depending on the employees' selection of three or five
years, respectively, for the restriction period).
Shares issued under these plans are restricted and are subject to
forfeiture upon termination of employment. During the restricted period, award
holders have the right to vote and to receive dividends on such shares.
A summary of stock issued pursuant to the Ownership Plan for the three
months ended March 31, 1997 follows:
<TABLE>
Market Value
Shares at Award Date Vesting Period
------ ------------- --------------
<S> <C> <C> <C>
Ownership Plan 22,832 $24.625 Feb 1998 - Feb 2002
======
</TABLE>
9. Commitments and contingencies
The Company is involved in certain claims and legal proceedings in
which monetary damages are sought. The Company is vigorously contesting these
claims. However, resolution of these claims is not expected to occur quickly and
their ultimate outcome presently cannot be predicted. It is the opinion of
management that any liability of the Company for claims or proceedings will not
materially affect its financial position.
Page 11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
The following discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of Greenfield Industries,
Inc. (Greenfield or the Company) for the three months ended March 31, 1997
compared to the three months ended March 31, 1996. This discussion should be
read in conjunction with the consolidated financial statements and notes to the
consolidated financial statements thereto included in the Company's Form 10-K
for the year ended December 31, 1996.
The Company has made the following acquisitions in the past two years:
January 1996 Rule Industries, Inc. (Rule)
June 1996 Boride Products, Inc. (Boride)
July 1996 Arkansas Cutting Tools, a division of Production
Carbide & Steel Company (ACT)
December 1996 Bassett Rotary Tool Company (Bassett)
March 1997 Hanita Metal Works, Ltd. (Hanita)
Certain statements included herein are forward-looking statements. Actual
results could differ materially from those anticipated as a result of various
factors, including cyclical or other downturns in demand for the Company's
products, manufacturing inefficiencies, dislocations arising from the
consolidation and/or restructuring of acquired businesses, the inability to
achieve cost reductions through consolidation and restructuring of acquired
companies, and possible future acquisitions that may not be complementary or
additive.
Page 12
<PAGE>
RESULT OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
net sales represented by certain items reflected in the Company's consolidated
statement of operations:
<TABLE>
Three months ended
March 31,
---------
<S> <C> <C>
1997 1996
---- ----
Net sales 100.0% 100.0%
Cost of sales 70.9 69.4
---- ----
Gross profit 29.1 30.6
Selling, general and administrative expenses 18.4 17.1
---- ----
Operating income 10.7 13.5
Interest expense 2.1 2.6
Dividends on mandatorily redeemable
convertible preferred securities 1.3 -
---- ----
Income before provision for income taxes 7.3 10.9
Provision for income taxes 3.0 4.4
--- ---
Net income 4.3% 6.5%
=== ===
</TABLE>
Page 13
<PAGE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Net sales for the three months ended March 31, 1997 were $130.4 million, a
decrease of $2.3 million, or 1.8%, from net sales of $132.7 million for the
three months ended March 31, 1996. Net sales for the three months ended March
31, 1997 were favorably affected by incremental sales of $4.5 million as a
result of acquisitions since March 31, 1996. Excluding the effects of
acquisitions, sales declined primarily due to softer market conditions,
particularly in Western Europe, and unfavorable foreign currency exchange rates.
Net sales of the six product groups, including the effects of acquisitions, were
as follows:
<TABLE>
($in millions)
Three months
ended March 31,
<S> <C> <C> <C> <C>
Increase
1997 1996 (Decrease)
---- ---- ----------
----------
Industrial $ 66.3 $ 70.7 $ (4.4)
Electronics 14.9 17.0 (2.1)
Engineered 18.4 16.4 2.0
Energy & Construction 16.0 14.4 1.6
Consumer 8.7 8.6 0.1
Marine 6.1 5.6 0.5
------ ------ ------
$130.4 $132.7 $ (2.3)
====== ====== ======
</TABLE>
The net sales of industrial and engineered products were positively
impacted in the amounts of $2.4 million and $2.1 million, respectively, as a
result of acquisitions since March 31, 1996. Sales for the industrial and
electronics products groups, excluding the effects of the acquisitions, declined
due to softer market conditions, particularly in Western Europe, and unfavorable
foreign currency exchange rates. In addition, the Company believes that certain
customers delayed orders in the first quarter of 1997 primarily as a result of
inventory planning. Sales in the remaining product groups increased due to
favorable market conditions and new product introductions.
Gross profit decreased 6.6% to $37.9 million from $40.6 million, and gross
margins decreased to 29.1% from 30.6% of net sales. The decline in gross profit
and gross margins is primarily from lower production levels and plant
inefficiencies resulting from a decline in net sales of existing businesses and
higher costs caused by operating interruptions and plant inefficiencies at
certain acquired operations.
Page 14
<PAGE>
Selling, general and administrative (SG&A) expenses increased $1.4 million
in 1997 primarily as a result of acquisitions. SG&A expenses as a percentage of
net sales increased to 18.4% from 17.1% as a result of acquisitions and lower
net sales of existing businesses.
Operating income declined $4.0 million, or 22.5%, to $13.4 million and
operating margins decreased to 10.7% from 13.5% compared to the three months
ended March 31, 1996. The operating profit and operating margin decreases
resulted from the factors noted above.
Interest expense decreased $0.8 million to $2.7 million for the three
months ended March 31, 1997 from $3.5 million for the three months ended March
31, 1996. The decrease in interest expense resulted primarily from the decrease
in the debt level due to the issuance of $115 million of mandatorily redeemable
convertible preferred securities by the Company's wholly owned subsidiary,
Greenfield Capital Trust, in April 1996.
Dividends on company-obligated mandatorily redeemable convertible preferred
securities of Greenfield Capital Trust were $1.7 million for the three months
ended March 31, 1997.
Provision for income taxes decreased to $3.9 million for the three months
ended March 31, 1997, a decrease of $2.0 million over the three months ended
March 31, 1996, due to the decrease in pretax income.
Net income decreased to $5.7 million for the three months ended March 31,
1997, a decrease of $3.0 million, or 34.0%, from the same period in 1996 as a
result of the factors noted above. Primary earnings per share decreased to $0.35
from $0.53 for the three months ended March 31, 1997 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1997, cash provided by operating
activities was approximately $4.6 million while during the three months ended
March 31, 1996, cash used by operating activities was approximately $7.4
million. The increase in cash provided by operating activities is due primarily
to an increase in accounts payable offset by a decrease in accrued liabilities
primarily reflecting the payment of income taxes. In 1996, the Company paid
certain past due accounts payables of the acquired business of Rule.
Cash provided by operating and financing activities during the three months
ended March 31, 1997 was used to finance capital expenditures of approximately
$6.9 million and to pay dividends of approximately $0.8 million on the common
stock. Net borrowings of the Company increased by approximately $37.6 million in
the three months ended March 31, 1997, primarily due to the acquisition of
Hanita. During the three months ended
Page 15
<PAGE>
March 31, 1996, cash provided by operating and financing activities was used to
acquire the common stock of Rule of approximately $83.3 million to finance
capital expenditures of approximately $8.6 million and to pay dividends of
approximately $0.7 million on the common stock. Net borrowings of the Company
increased by approximately $93.7 million in the three months ended March 31,
1996, primarily due to the acquisition of Rule.
On March 27, 1997, the Company acquired all of the outstanding capital
stock of Hanita Metal Works, Ltd. for approximately $20.8 million, and assumed
indebtedness of approximately $14.6 million. Hanita is a leading manufacturer of
high quality, high performance end mills for the metalworking industry.
The Company has a $180 million senior unsecured credit facility provided by
six institutions. The facility includes a $130 million multi-currency revolving
credit line and a $50 million U.S. acquisition line. The multi-currency
revolving facility provides for loans of up to DM30 million and (pound)15
million. As of March 31, 1997, the Company had approximately $81.3 million,
(pound)5.7 million and DM3.5 million outstanding under the revolving credit
line. The revolving credit line generally bears interest at floating rates based
upon the prime rate or LIBOR, at the option of the Company. As of March 31,
1997, the interest rates on the revolving credit line ranged from approximately
3.9% to 8.5%. As of March 31, 1997, the buying rates for British pounds and
German DeutscheMarks were $1.6448 per British pound and DM1.6678 per dollar,
respectively. As of March 31, 1997, the Company had no borrowings outstanding
under the acquisition line.
The senior unsecured multi-currency credit facility has a scheduled
maturity in December 2001. The agreement relating to the facility contains
provisions which, among other things, limit certain additional borrowings and
capital expenditures, require maintenance of certain debt-to-capital and
debt-to-cash-flow ratios and net worth levels. At March 31, 1997 and 1996, the
Company was in compliance with such provisions.
On March 31, 1997, the Company paid a quarterly cash dividend of $0.05 per
share to shareholders of record on March 10, 1997.
On March 31, 1997, Greenfield Capital Trust paid quarterly cash dividends
totalling approximately $1.7 million to holders of the convertible preferred
securities.
As of March 31, 1997, the Company had a backlog of $45.7 million, as
compared to $45.8 million as of December 31, 1996. The Company's backlog
consists of firm customer purchase orders which are subject to cancellation by
the customer upon notification. The Company anticipates that approximately 90%
of its backlog at any given time will be shipped within the next three-month
period.
Based on its current operating plans, the Company believes that it will
have sufficient cash from operations and its existing credit facilities to meet
its currently anticipated needs for liquidity and capital expenditures.
Page 16
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, Statement of Financial Accounting Standards No. 128,
Earnings Per Share, (FAS 128), was issued. Management intends to adopt FAS 128
for the quarter ending December 31, 1997 and does not expect any material effect
from this adoption.
FORWARD-LOOKING STATEMENTS
Certain statements included herein are forward-looking statements. Actual
results could differ materially from those anticipated as a result of various
factors, including cyclical or other downturns in demand for the Company
products, manufacturing inefficiencies, dislocations arising from the
consolidation and/or restructuring of acquired businesses, the inability to
achieve cost reductions through consolidation and restructuring of acquired
companies, and possible future acquisitions that may not be complementary or
additive.
Page 17
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
On January 21, 1997, the Company filed a report on
Form 8-K pertaining to the expected results of the Company's
operations for the year ended December 31, 1996.
Page 18
<PAGE>
SIGNATURE
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.
GREENFIELD INDUSTRIES, INC.
Date: May 13, 1997 /S/ Gary L. Weller
--------------------------------------------
Gary L. Weller
Senior Vice President
Chief Financial Officer
(Principal Accounting and Financial Officer)
<PAGE>
Exhibit 11
GREENFIELD INDUSTRIES, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (1)
(In thousands, except per share data)
<TABLE>
Three Months Ended
March 31
PRIMARY EARNINGS PER SHARE: 1997 1996
---- ----
<S> <C> <C>
Weighted average number of common shares outstanding 16,386 16,272
======= =======
Net income $5,657 $8,569
======= =======
Net income per common share $0.35 $0.53
======= =======
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of common shares outstanding 16,386 16,272
Shares issued upon assumed conversion of the Mandatorily
Redeemable Convertible Preferred Securities 2,788 --
------- -------
Weighted average number of common and common
equivalent shares outstanding 19,174 16,272
======= =======
Net income $5,657 $8,569
Interest expense on Mandatorily Redeemable Convertible
Preferred Securities, net of applicable income 1,035 --
------- -------
Net income, adjusted $6,692 $8,569
======= =======
Net income per common share $0.35 $0.53
======= =======
</TABLE>
(1) All numbers of shares in this exhibit are weighted on the basis of the
number of days the shares were outstanding or assumed to be outstanding
during each period. The effect of shares to be issued upon the exercise
of outstanding stock options using the treasury stock method is not
material.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ATTACHED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD FOR THE PERIOD ENDED
MARCH 31, 1997 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 914
<SECURITIES> 0
<RECEIVABLES> 99,973
<ALLOWANCES> 3,886
<INVENTORY> 171,009
<CURRENT-ASSETS> 274,079
<PP&E> 223,112
<DEPRECIATION> 63,176
<TOTAL-ASSETS> 619,815
<CURRENT-LIABILITIES> 77,728
<BONDS> 193,604
115,000
0
<COMMON> 164
<OTHER-SE> 204,888
<TOTAL-LIABILITY-AND-EQUITY> 619,815
<SALES> 130,369
<TOTAL-REVENUES> 130,369
<CGS> 92,477
<TOTAL-COSTS> 92,477
<OTHER-EXPENSES> 23,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,666
<INCOME-PRETAX> 9,507
<INCOME-TAX> 3,850
<INCOME-CONTINUING> 5,657
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,657
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
