UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission file number 33-63914
STANT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 35-1768429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
425 Commerce Drive
Richmond, Indiana 47374
(address of principal executive offices)
(zip code)
(317) 962-6655
(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 outstanding of the Registrant's common stock, par
value $.01 per share, at August 1, 1996 was 16,226,815 shares.
<PAGE>
STANT CORPORATION
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1 -- FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statement of Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION 9
PART II - OTHER INFORMATION
Item 1 -- LEGAL PROCEEDINGS 12
Item 2 -- CHANGES IN SECURITIES
None
Item 3 -- DEFAULT UPON SENIOR SECURITIES
None
Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF
SECURITY 12
HOLDERS
Item 5 -- OTHER INFORMATION
None
Item 6 -- EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits 12
(b) No Form 8-K's were filed during the quarter
ended June 30, 1996
SIGNATURE PAGE 13
Page 2
<PAGE>
<TABLE>
STANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ In Thousands, Except Share Data)
<CAPTION>
June 30, December 31,
1996 1995
--------------- -------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $2,867 $3,258
Trade accounts receivable, net 111,552 116,155
Other accounts receivable, net 5,058 6,189
Inventory 96,179 92,135
Prepaid expenses 6,131 7,014
Deferred income taxes 1,413 1,413
--------------- -------------
Total current assets 223,200 226,164
--------------- -------------
PROPERTY, PLANT AND EQUIPMENT , NET 176,137 174,211
--------------- -------------
OTHER ASSETS:
Intangible assets, net 162,698 166,470
Deferred financing costs, net 4,316 4,746
Other 1,892 1,945
--------------- -------------
Total other assets 168,906 173,161
--------------- -------------
TOTAL ASSETS $568,243 $573,536
--------------- -------------
--------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and notes payable $33,670 $29,620
Accounts payable 45,880 48,850
Accrued liabilities 45,308 46,949
Income taxes payable 4,592 5,027
--------------- -------------
Total current liabilities 129,450 130,446
--------------- -------------
LONG TERM LIABILITIES:
Long-term debt 205,150 220,763
Deferred income taxes 8,396 7,396
Accrued pension and other benefit liabilities 27,912 27,622
Other 9,500 9,213
--------------- -------------
Total long-term liabilities 250,958 264,994
--------------- -------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value per share, 21,000,000 shares
authorized and 16,226,815 shares issued and outstanding 162 162
Additional paid-in capital 155,349 155,349
Foreign currency translation adjustment (319) (825)
Minimum pension liability adjustment (1,761) (1,761)
Retained earnings 34,404 25,171
--------------- -------------
Total stockholders' equity 187,835 178,096
--------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $568,243 $573,536
--------------- -------------
--------------- -------------
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE>
<TABLE>
STANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ In Thousands, Except Share Data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
1996 1995 1996 1995
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
NET SALES $156,691 $144,240 $320,478 $304,878
COST OF SALES 117,831 110,458 241,175 232,877
-------------- ------------ -------------- ------------
GROSS MARGIN 38,860 33,782 79,303 72,001
-------------- ------------ -------------- ------------
OPERATING EXPENSES:
Selling, general and administrative 25,065 22,793 49,751 46,452
Amortization of intangible assets 1,287 1,152 2,571 2,290
Management fee and expenses 212 212 425 425
Restructuring charges 589 1,561
-------------- ------------ -------------- ------------
Total Operating Expenses 26,564 24,746 52,747 50,728
-------------- ------------ -------------- ------------
INCOME FROM OPERATIONS 12,296 9,036 26,556 21,273
-------------- ------------ -------------- ------------
OTHER CHARGES (CREDITS):
Interest expense 4,453 5,722 9,057 11,238
Other (89) 262 (450) (351)
-------------- ------------ -------------- ------------
Total Other Charges 4,364 5,984 8,607 10,887
-------------- ------------ -------------- ------------
INCOME BEFORE INCOME TAXES 7,932 3,052 17,949 10,386
PROVISION FOR INCOME TAXES 3,592 1,581 8,067 4,753
-------------- ------------ -------------- ------------
NET INCOME $4,340 $1,471 $9,882 $5,633
-------------- ------------ -------------- ------------
-------------- ------------ -------------- -----------
PRIMARY INCOME PER
SHARE OF COMMON STOCK: $0.26 $0.09 $0.59 $0.34
-------------- ------------ -------------- ------------
-------------- ------------ -------------- ------------
Average Common Stock
and Equivalents Outstanding 16,646 16,729 16,625 16,811
-------------- ------------ -------------- ------------
-------------- ------------ -------------- ------------
FULLY DILUTED INCOME PER
SHARE OF COMMON STOCK: $0.26 $0.09 $0.59 $0.34
-------------- ------------ -------------- ------------
-------------- ------------ -------------- ------------
Average Common Stock
and Equivalents Outstanding 16,696 16,729 16,710 16,811
-------------- ------------ -------------- ------------
-------------- ------------ -------------- ------------
DIVIDENDS PER SHARE $0.02 $0.02 $0.04 $0.04
-------------- ------------ -------------- ------------
-------------- ------------ -------------- ------------
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE>
<TABLE>
STANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
($ In Thousands)
(Unaudited)
<CAPTION>
Foreign Minimum
Additional Currency Pension Total
Common Paid-in Translation Liability Retained Stockholders'
Stock Capital Adjustment Adjustment Earnings Equity
----------- ------------ ------------ ------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $162 $155,349 ($825) ($1,761) $25,171 $178,096
Net income through June 30, 1996 9,882 9,882
Translation adjustment 506 506
Common stock dividends (649) (649)
----------- ------------ ------------ -------------- ---------- --------------
Balance at June 30, 1996 $162 $155,349 ($319) ($1,761) $34,404 $187,835
----------- ------------ ------------ -------------- ---------- --------------
----------- ------------ ------------ -------------- ---------- --------------
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE>
<TABLE>
STANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ In Thousands)
(Unaudited)
<CAPTION>
Six Months Ended June 30,
1996 1995
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $9,882 $5,633
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of intangible assets 13,353 12,359
Amortization of debt issuance cost 386 380
Loss on disposal of assets 208 34
Provision for deferred taxes 1,744 3,228
Changes in assets and liabilities:
Decrease in accounts receivable 5,740 9,846
Increase in inventories (4,044) (12,162)
Decrease (increase) in prepaid expenses and other current assets 886 (2,494)
Decrease in accounts payable and accrued liabilities (5,203) (24,426)
Decrease (increase) in other assets 693 (512)
Increase in other liabilities 577 987
---------------- -----------------
Net operating activities 24,222 (7,127)
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12,765) (9,749)
Proceeds from sale of fixed assets 266 185
---------------- -----------------
Net investing activities (12,499) (9,564)
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 3,420 0
Repayment of term loans (12,213) (3,818)
Net (repayments) borrowings on revolving loans (2,824) 20,002
Payment of dividends (649) (650)
---------------- -----------------
Net financing activities (12,266) 15,534
---------------- -----------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 152 488
---------------- -----------------
DECREASE IN CASH (391) (669)
CASH:
Beginning of period 3,258 1,517
---------------- -----------------
End of period $2,867 $848
---------------- -----------------
---------------- -----------------
</TABLE>
See notes to consolidated financial statements.
Page 6
<PAGE>
STANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1996
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Stant
Corporation and Subsidiaries (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete annual financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Financial information as of December 31, 1995 has been derived from
the audited consolidated financial statements of the Company. Revenue and
operating results for the three- and six-month periods ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information refer to the audited
consolidated financial statements and footnotes thereto for the year ended
December 31, 1995 included in the Company's Annual Report on Form 10-K.
Certain reclassifications have been made to the prior year's financial
statements to conform to current year presentation.
2. Inventory
Inventories at June 30, 1996 and December 31, 1995 consist of the following
($000's):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Raw materials $11,893 $12,295
Work in process and components 39,971 41,697
Finished goods 46,351 40,069
- -------------------------------------------------------------------------
Total valued on first-in,
first-out (FIFO) basis 98,215 94,061
Less reduction to last-in,
first-out (LIFO) cost (2,036) (1,926)
- -------------------------------------------------------------------------
Total $96,179 $92,135
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
At June 30, 1996 and December 31, 1995 approximately $75,321,000 and
$76,521,000, respectively, of inventories were valued using the LIFO method.
Approximate replacement cost of inventories valued using the LIFO method totaled
$77,357,000 and $78,447,000 at June 30, 1996 and December 31, 1995,
respectively.
Page 7
<PAGE>
STANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1996
3. Accounting Method Changes
Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," which requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amounts of these
assets may not be recoverable. The adoption of SFAS No. 121 did not have a
material effect on the Company's Consolidated Financial Statements.
Effective January 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation," which encourages, but does not require, companies to
adopt the fair value based method of accounting for stock-based employee
compensation plans. The Company has elected to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, but will be
required to disclose in its 1996 annual Consolidated Financial Statements net
income and net income per share, on a pro forma basis, as if the fair value
based method had been applied in measuring compensation cost.
4. Contingencies
There are certain environmental matters and other potential or actual legal
claims pending against the Company, the most recent of which are described in
Part II, Item 1 of this Form 10-Q. The contingencies with no significant
activity during the first six months of 1996 are described in the audited
consolidated financial statements and footnotes thereto for the year ended
December 31, 1995 included in the Company's Annual Report on Form 10-K for such
year.
Page 8
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Financial Overview - For the second quarter of 1996, net income increased
nearly three fold to $4.4 million, or $.26 per share, versus net income of $1.5
million, or $.09 per share, for the same period last year. Year-to-date net
income in 1996 increased 75% to $9.9 million, or $.59 per share, from $5.6
million, or $.34 per share, last year; a Company record for the first six months
of a year. Net income in 1995 included a restructuring charge of $.02 per share
($.4 million net of tax) for the second quarter and $.05 per share ($.9 million
net of tax) on a year-to-date basis. Net sales increased 9% to $156.7 million
for the second quarter of 1996 and increased 5% to $320.5 million year-to-date,
compared with $144.2 million and $304.9 million, respectively, for the same
periods last year. Income from operations increased 36% to $12.3 million for the
second quarter and increased 25% to $26.6 million on a year-to-date basis.
Financial results for 1995 were impacted by weaker demand in the aftermarket.
Demand for the Company's products in 1996 continues to be stronger than it was
last year and if this continues, management believes that financial results for
the remainder of 1996 should compare favorably with last year, although the
improvement in the second half of 1996 will not be as significant as it was in
the first half of the year.
Net sales - As a supplier to the automotive parts industry, the Company operates
within one business segment. The following table classifies the Company's
consolidated net sales by its operations in geographic areas. North America
includes the Company's operations in the United States as well as Mexico, while
foreign includes the United Kingdom, Australia and Argentina (in millions):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
- -----------------------------------------------------------------------
1996 1995 1996 1995
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
North America:
Original Equipment $ 80.5 $ 72.4 $152.5 $150.0
Aftermarket 52.1 47.7 121.2 106.0
Industrial 10.6 9.7 20.5 20.0
- -----------------------------------------------------------------------
Subtotal - North America 143.2 129.8 294.2 276.0
- -----------------------------------------------------------------------
Foreign:
Original Equipment 7.8 8.4 14.2 16.2
Aftermarket 5.7 6.0 12.1 12.7
- -----------------------------------------------------------------------
Subtotal - Foreign 13.5 14.4 26.3 28.9
- -----------------------------------------------------------------------
TOTAL $156.7 $144.2 $320.5 $304.9
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
</TABLE>
Three Months Ended June 30, 1996 Compared with the
Three Months Ended June 30, 1995
Total sales for North America were $143.2 million for the second quarter of
1996, a 10% increase over 1995 sales of $129.8 million. All markets experienced
sales increases over the same period last year. In the automotive original
equipment market (the "OE market"), North American combined production of cars
and light trucks for the second quarter of 1996 increased approximately 7% from
the 1995 level. As a result of increased production levels by vehicle
manufacturers, as well as new products and higher content on vehicle platforms,
the Company's OE market sales in North America increased 11% compared with the
prior year. Automotive aftermarket (the "aftermarket") sales in North America
increased 10% for the second quarter of 1996. While demand was weak in 1995, due
in part to a mild winter and high customer inventories, in 1996 demand for the
Company's "Exact Fit" wiper blade was strong and sales of aftermarket
thermostats and heaters posted substantial increases over the prior year. Sales
to the industrial market also increased 8% over the prior year.
Foreign entity sales for the second quarter of 1996 were $13.5 million in
1996 compared with $14.4 million in the second quarter of 1995.
Page 9
<PAGE>
Gross margin for the second quarter of 1996 was $38.9 million, an increase of
$5.1 million, or 15%, compared with the same period of 1995. Gross margin, as a
percentage of net sales, increased to 24.8% in 1996 from 23.4% in 1995.
Increased sales volume and cost reduction programs contributed to improved
operating margins, particularly at Trico Products Corporation ("Trico"), the
Company's windshield wiper systems subsidiary, although the benefit of the cost
reduction programs continue to be shared with the Company's customers.
Selling, general and administrative ("SG&A") expense for the second quarter of
1996 was $25.1 million, a 10% increase over the $22.8 million for the same
period of 1995, primarily due to additional advertising and selling expenses.
SG&A expense as a percentage of net sales increased slightly to 16.0% from 15.8%
in 1995.
Income from operations for the second quarter of 1996 was $12.3 million on net
sales of $156.7 million, an increase of $3.3 million, or 36%, from $9.0 million
on net sales of $144.2 million for the same period of 1995. In 1995 income from
operations included a restructuring charge of $.6 million ($.4 million net of
tax, or $.02 per share) and other charges associated with the restructuring of
$.5 million ($.3 million net of tax, or $.02 per share).
Interest expense for the second quarter of 1996 was $4.5 million, compared with
$5.7 million for the same period in 1995. Lower interest rates and debt levels
in 1996 resulted in a $1.2 million decrease in interest expense for the second
quarter compared with the prior year.
The provision for income taxes of $3.6 million for the second quarter of 1996
and $1.6 million for the same period of 1995 represent effective tax rates of
45.3% and 51.8%, respectively. The decrease in the effective rate results from a
constant level of permanent differences and an increase in income before taxes.
Six Months Ended June 30, 1996 Compared with the Six Months Ended June 30, 1995
Total sales for North America were $320.5 million for the first half of 1996, a
5% increase over 1995 sales of $304.9 million. Aftermarket sales in North
America increased 14% compared with the prior year. While demand was weak in
1995, due in part to a mild winter and high customer inventories, in 1996
aftermarket sales of wipers and thermostats increased significantly. Promotional
programs for certain products and strong demand for Trico's newly introduced
"Exact Fit" wiper product also contributed to the increase in aftermarket sales.
In the OE market, North American combined production of cars and light trucks
for the first half of 1996 was slightly lower than the 1995 level. However, the
Company's North American OE sales increased 2% on a year-to-date basis, as
higher content on vehicle platforms and new product introductions more than
offset reduced OE production, price decreases and lost 1996 model year business.
Foreign entity sales for the first half of 1996 were $26.3 million in 1996
compared with $28.9 million in the first six months of 1995.
Gross margin for the first half of 1996 was $79.3 million, an increase of $7.3
million, or 10%, compared with the same period of 1995. Gross margin, as a
percentage of net sales, increased to 24.7% in 1996 from 23.6% in 1995. The
increase in gross margin was due principally to increased sales volume, a higher
mix of aftermarket sales, which historically carry a higher gross margin
percentage than sales to the OE market, and improved operating margins by Trico.
Although it appears that demand has rebounded from the reduced level experienced
in 1995, aftermarket margins have declined from historical levels, a result of
price competition and consolidation trends within distribution channels.
Additionally, the Company has partially offset the effect of OE market and
aftermarket price concessions on its gross margin by cost savings realized
through cost reduction programs.
Page 10
<PAGE>
Selling, general and administrative ("SG&A") expense for the first half of 1996
was $49.8 million, a 7% increase over the $46.5 million for the same period of
1995, primarily due to additional selling and engineering expense. SG&A expense
as a percentage of net sales increased slightly to 15.5% from 15.2% in 1995, the
result of a higher mix of aftermarket sales, which carry higher selling and
shipping expenses, than do sales to the OE market.
Income from operations for the first half of 1996 was $26.6 million on net sales
of $320.5 million, an increase of $5.3 million, or 25%, from $21.3 million on
net sales of $304.9 million for the same period of 1995. In 1995, income from
operations included a restructuring charge of $1.6 million ($.9 million net of
tax, or $.05 per share) and other charges associated with the restructuring of
$.5 million ($.3 million net of tax, or $.02 per share).
Interest expense for the first half of 1996 was $9.1 million, compared with
$11.2 million for the same period in 1995. Lower interest rates and debt levels
in 1996 resulted in a $2.1 million decrease in interest expense for the first
half of 1996 compared with the prior year.
The provision for income taxes of $8.1 million for the first six months of 1996
and $4.8 million for the same period of 1995 represent effective tax rates of
44.9% and 45.8%, respectively. The decrease in the effective rate results from a
constant level of permanent differences and an increase in income before taxes.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operating activities were strong in the first six months
of 1996, totalling $24.2 million compared with a negative $7.1 million in the
first six months of 1995. Operating cash flows for the first six months of 1995
reflected the use of significant cash to fund acquisition related expenditures
as shown by the reduction in accounts payable and accrued liabilities. In 1996,
increased net income, adjusted for non-cash charges for depreciation and
amortization, and a $5.7 million decrease in accounts receivable provided
significant operating cash flows, offset slightly by a $4.0 million increase in
inventory levels. Despite increased sales, inventory management and reduction
programs have enabled the Company to maintain inventories at a lower level than
during the same period last year. During 1996, management has placed significant
focus on working capital management.
Cash flows utilized by investing activities reflect $12.8 million for capital
expenditures in the first half of 1996, as compared with $9.7 million in 1995.
The higher level of capital expenditures includes the purchase of a previously
leased manufacturing facility located in Pontypool, Wales. The Company still
expects 1996 capital expenditures, excluding capital leases, to total between
$22 and $27 million. The Company also entered into a long-term capital lease in
early 1996 for a new wiper system technology center for which the Company
recently completed construction. This facility will now support all research and
development as well as sales activities of Trico. The lease requires aggregate
annual payments which range from $.9 million to $1.0 million through 2016.
Positive operating cash flows during the first half of 1996 were also used to
fund $15.0 million in debt reductions, including $12.2 million in payments on
the Company's term loans and $2.8 million in net payments on the Company's
revolving loans. Financing activities also included new borrowings of $3.4
million used to finance a portion of the Pontypool facility purchase discussed
above. At June 30, 1996 the Company had $82.4 million available for future
borrowings under its revolving and swing line credit facilities.
The Company expects that, absent a significant acquisition, cash flows from
operating activities will be sufficient to fund working capital needs, capital
expenditures and debt reductions in 1996. Revolving credit borrowings under the
Company's credit agreement are available to meet temporary working capital
requirements as well as for future acquisitions.
Page 11
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
On page 11 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 under the caption "Item 1. Business - Environmental Compliance
- - The Waltham, Massachusetts Facility" the Company reported with respect to the
presence of volatile organic compounds and petroleum hydrocarbons in the soil
and groundwater at the Waltham, Massachusetts facility (the "Waltham Plant") of
Standard-Thomson Corporation ("STC"), a wholly owned subsidiary of the
Corporation. On June 13, 1996, STC was notified by Raytheon Company ("Raytheon")
pursuant to the Massachusetts Oil and Hazardous Material Release Prevention and
Response Act (the "Massachusetts Act") of STC's potential liability for
groundwater contamination at Raytheon's property (the "Raytheon Site") which
adjoins the Waltham Plant. In that notice, Raytheon stated that (i) it had
already expended in excess of $2.5 million in connection with the investigation
and remediation of groundwater at its property, (ii) future costs associated
with the remediation may exceed $4 million, and (iii) the total of all past and
future investigation and remediation costs could total about $7 million. In the
notice, Raytheon proposed that STC pay 50% of all such investigation and
remediation costs.
In addition, Raytheon is a defendant in an action brought by Barry Wright
Corporation ("Barry Wright"), in which Barry Wright alleges that contaminated
groundwater is migrating from the Raytheon Site onto property owned by a Barry
Wright affiliate (the "Barry Wright Site"). In that action Barry Wright is
seeking approximately $1 million in response costs from Raytheon. Barry Wright
and Raytheon have both indicated their intention to name STC as a defendant in
that action. In addition, on July 1, 1996 STC was notified by Barry Wright
pursuant to the Massachusetts Act of STC's potential joint and several liability
with Raytheon for groundwater contamination of the Barry Wright Site. In that
notice Barry Wright did not suggest an apportionment of liability between
Raytheon and STC.
A voluminous number of documents and technical data which are in the
possession of Raytheon and/or Barry Wright, and which relate to either the
Raytheon site or the Barry Wright site, have not yet been reviewed by the
Company. Accordingly, the Company is not able to make a fully informed judgment
as to whether, or to what extent, STC is liable to either Raytheon or Barry
Wright for investigation and remediation costs associated with the groundwater
contamination at the Raytheon and Barry Wright sites. However, based upon the
facts of which management is aware at this time, management does not believe
that the resolution of these matters will have a material adverse effect on the
Company's financial position, results of operations or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders
The following are the results of voting by stockholders present or represented
by proxy at the Annual Meeting of Stockholders held on May 1, 1996:
1. Election of Directors: The following directors were elected:
<TABLE>
<CAPTION>
Votes Term
Votes For Withheld Expiring
<S> <C> <C> <C>
Edward O. Gaylord 15,623,123 18,271 1999
Ward W. Woods 15,623,023 18,371 1999
</TABLE>
2. Approval of the appointment of Deloitte & Touche LLP: The proposal to
ratify the appointment of Deloitte & Touche LLP as the Company's auditors
was approved. There were 15,634,774 votes in favor of appointment, 2,420
votes against and 4,200 votes withheld.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are attached hereto:
11 - Statement Regarding Computations of Per Share Earnings
27.1 - Financial Data Schedule
Page 12
<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.
STANT CORPORATION
(Registrant)
August 14, 1996 David R. Paridy
- --------------- --------------------------
(Date) David R. Paridy, President
and Chief Executive Officer
August 14, 1996 Thomas E. Schmitt
- --------------- ----------------------------
(Date) Thomas E. Schmitt, Senior Vice President and
Chief Financial Officer
(Principal Accounting and Financial Officer)
Page 14
<TABLE>
PART II - OTHER INFORMATION Exhibit 11
STANT CORPORATION AND SUBSIDIARIES
COMPUTATION OF INCOME PER SHARE
($ in Thousands, Except Share Data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ------------------------------
1996 1995 1996 1995
------------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
Net Income $4,340 $1,471 $9,882 $5,633
------------ ----------- ------------- ------------
------------ ----------- ------------- ------------
Primary Income Per Share of Common Stock $0.26 $0.09 $0.59 $0.34
------------ ----------- ------------- ------------
------------ ----------- ------------- ------------
Weighted Average Common Shares Outstanding 16,227 16,227 16,227 16,227
Common Stock Equivalents - Effect of Exercise
of Stock Options 419 502 398 584
------------ ----------- ------------- ------------
Total 16,646 16,729 16,625 16,811
------------ ----------- ------------- ------------
------------ ----------- ------------- ------------
Fully Diluted Income Per Share of Common Stock $0.26 $0.09 $0.59 $0.34
------------ ----------- ------------- ------------
------------ ----------- ------------- ------------
Weighted Average Common Shares Outstanding 16,227 16,227 16,227 16,227
Common Stock Equivalents - Effect of Exercise
of Stock Options 469 502 483 584
------------ ----------- ------------- ------------
Total 16,696 16,729 16,710 16,811
------------ ----------- ------------- ------------
------------ ----------- ------------- ------------
Page 15
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000906523
<NAME> Stant Corporation
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Jun-30-1996
<CASH> 2,867
<SECURITIES> 0
<RECEIVABLES> 111,552
<ALLOWANCES> 0
<INVENTORY> 96,179
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<PP&E> 238,375
<DEPRECIATION> 62,238
<TOTAL-ASSETS> 568,243
<CURRENT-LIABILITIES> 129,450
<BONDS> 205,150
0
0
<COMMON> 162
<OTHER-SE> 187,673
<TOTAL-LIABILITY-AND-EQUITY> 568,243
<SALES> 320,478
<TOTAL-REVENUES> 320,478
<CGS> 241,175
<TOTAL-COSTS> 241,175
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,057
<INCOME-PRETAX> 17,949
<INCOME-TAX> 8,067
<INCOME-CONTINUING> 9,882
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,882
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
