<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23654
GARDNER DENVER MACHINERY INC.
(Exact name of Registrant as Specified in its Charter)
DELAWARE 76-0419383
(State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization) Identification No.)
1800 GARDNER EXPRESSWAY
QUINCY, ILLINOIS 62301
(Address of Principal Executive Offices and Zip Code)
(217) 222-5400
(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 requirement for the past 90 days.
Yes X No
---------- ----------
Number of shares outstanding of the issuer's Common Stock, par value $.01 per
share, as of August 11, 1997: 10,051,141 shares.
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
GARDNER DENVER MACHINERY INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1997 1996
------- -------
<S> <C> <C>
Revenues $69,447 $48,914
Costs and expenses:
Cost of sales (excluding depreciation
and amortization) 45,743 33,976
Depreciation and amortization 2,190 1,911
Selling and administrative expenses 9,292 6,376
Interest expense 936 500
------- -------
Income before income taxes 11,286 6,151
Provision for income taxes 4,473 2,460
------- -------
Net income $ 6,813 $ 3,691
======= =======
Earnings per share $ 0.65 $ 0.36
======= =======
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> 3
<TABLE>
GARDNER DENVER MACHINERY INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1996
-------- -------
<S> <C> <C>
Revenues $135,522 $97,483
Costs and expenses:
Cost of sales (excluding depreciation
and amortization) 90,196 67,532
Depreciation and amortization 4,450 3,798
Selling and administrative expenses 18,653 12,473
Interest expense 1,913 1,094
-------- -------
Income before income taxes 20,310 12,586
Provision for income taxes 8,173 5,034
-------- -------
Net income $ 12,137 $ 7,552
======== =======
Earnings per share $ 1.16 $ 0.75
======== =======
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> 4
<TABLE>
GARDNER DENVER MACHINERY INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except per share amounts)
<CAPTION>
(Unaudited)
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 5,688 $ 8,610
Receivables, net 61,388 47,547
Inventories, net 50,988 47,882
Deferred income taxes 4,468 2,910
Other 1,541 2,186
-------- --------
Total current assets 124,073 109,135
-------- --------
Plant and equipment, net 35,483 33,710
Intangibles, net 87,395 70,304
Deferred income taxes 17,639 18,437
Other assets 4,281 4,170
-------- --------
Total assets $268,871 $235,756
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 845 $ 932
Accounts payable and accrued liabilities 54,977 48,348
-------- --------
Total current liabilities 55,822 49,280
-------- --------
Long-term debt, less current maturities 69,429 55,069
Postretirement benefits other than pensions 54,814 56,662
Other long-term liabilities 1,022 627
-------- --------
Total liabilities 181,087 161,638
-------- --------
Stockholders' equity:
Common stock, $.01 par value; 50,000,000 shares
authorized; 10,055,733 shares issued at
June 30, 1997 100 99
Capital in excess of par value 136,831 135,161
Treasury stock at cost, 8,859 shares in 1997 (184) --
Retained deficit (48,946) (61,083)
Cumulative translation adjustment (17) (59)
-------- --------
Total stockholders' equity 87,784 74,118
-------- --------
Total liabilities and stockholders' equity $268,871 $235,756
======== ========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> 5
<TABLE>
GARDNER DENVER MACHINERY INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(Unaudited)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1996
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,137 $ 7,552
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,915 2,652
Amortization 1,535 1,146
Stock issued for employee benefit plans 725 614
Deferred income taxes (1,021) (707)
Changes in assets and liabilities:
Receivables, net (6,508) 4,396
Inventories, net 1,859 5,592
Accounts payable and accrued liabilities 1,760 (340)
Other assets and liabilities, net (2,023) (1,155)
-------- --------
Net cash provided by operating activities 11,379 19,750
-------- --------
Cash flows from investing activities:
Business acquisitions, net of cash (26,153) (843)
Capital expenditures (2,524) (1,042)
Disposals of plant and equipment 49 138
-------- --------
Net cash used for investing activities (28,628) (1,747)
-------- --------
Cash flows from financing activities:
Principal payments on long-term debt (9,435) (12,718)
Proceeds from long-term borrowings 23,000 --
Proceeds from stock options, net of
treasury stock transactions 762 357
-------- --------
Net cash provided by (used for)
financing activities 14,327 (12,361)
-------- --------
(Decrease) increase in cash and equivalents (2,922) 5,642
-------- --------
Cash and equivalents, beginning of period 8,610 1,869
-------- --------
Cash and equivalents, end of period $ 5,688 $ 7,511
======== ========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Basis of Presentation. The accompanying financial statements include the
accounts of Gardner Denver Machinery Inc. ("Gardner Denver" or the "Company")
and its wholly-owned subsidiaries. All significant intercompany transactions
and accounts have been eliminated. Investments in entities in which the
Company has twenty to fifty percent ownership are accounted for by the equity
method.
Certain prior year amounts have been reclassified to conform with the current
year presentation.
All shares of common stock and per share amounts have been adjusted to give
retroactive effect to a two-for-one stock split effected in the form of a
stock dividend distributed on January 15, 1997 to stockholders of record at
the close of business on December 27, 1996.
The financial information presented as of any date other than December 31 has
been prepared from the books and records without audit. The accompanying
consolidated financial statements have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and the
footnotes required by generally accepted accounting principles for complete
statements. In the opinion of management, all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of such
financial statements, have been included.
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.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the year ended
December 31, 1996 contained in the Company's 1996 Annual Report to
Stockholders.
NOTE 2. ACQUISITIONS.
On June 30, 1997, the Company purchased 100% of the issued and outstanding
stock of Oy Tamrotor Ab ("Tamrotor"), a subsidiary of Tamrock Corp., located
in Tampere, Finland for $26.2 million. The purchase price was allocated to
assets and liabilities based on their respective fair values at the date of
acquisition and resulted in cost in excess of net assets acquired of $15.4
million, which is being amortized over 40 years using the straight-line
method.
On August 14, 1996, the Company purchased 100% of the issued and outstanding
stock of TCM Investments, Inc. ("TCM") for $7.2 million. The purchase price
was allocated to assets and liabilities based on their respective fair values
at the date of acquisition and resulted in cost in excess of net assets
acquired of $4.1 million, which is being amortized over 40 years using the
straight-line method.
<PAGE> 7
On August 9, 1996, the Company purchased 100% of the issued and outstanding
stock of NORAMPTCO, Inc. ("NORAMPTCO"), which has been renamed Gardner Denver
Holdings Inc., for $26.8 million. The purchase price was allocated to assets
and liabilities based on their respective fair values at the date of
acquisition and resulted in cost in excess of net assets acquired of $28.7
million, which is being amortized over 40 years using the straight-line
method.
The following presents the unaudited pro forma consolidated results of
operations as if the acquisition of NORAMPTCO had occurred at January 1,
1996. The results are not necessarily indicative of what would have occurred
had this transaction been consummated as of the beginning of the period
presented or of future operations of the consolidated companies. The
Company's pro forma results of operations for the six months ended June 30,
1996 were: revenues of $117.1 million, income before income taxes of $13.9
million, net income of $8.2 million and earnings per share of $0.82.
All acquisitions have been accounted for by the purchase method, and
accordingly, the results of operations of Tamrotor, NORAMPTCO (Gardner Denver
Holdings Inc.) and TCM are included in the Company's Consolidated Statement
of Operations from the dates of acquisition. Certain estimates of fair
market value of assets received and liabilities assumed were made with
adjustments to each separate company's historical financial statements.
These adjustments included estimates of various expenditures planned by
management totaling $7.2 million to fully integrate the acquisitions into
Gardner Denver's operations. These estimates and adjustments have not yet
been finalized.
NOTE 3. INCOME TAXES.
In the first six months of 1997 and 1996, the Company paid $8.6 million and
$5.4 million, respectively to the various taxing authorities and recognized
$8.2 million and $5.0 million, respectively in income tax expense. In
addition, during the first quarter of 1996, the Company received $2.3 million
in tax refunds from an overpayment of federal income taxes in the fourth
quarter of 1995.
NOTE 4. INVENTORIES.
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------- ------------
<S> <C> <C>
Raw materials $ 14,505 $ 7,787
Work-in-process 9,902 8,676
Finished goods, including parts
and subassemblies 45,868 49,408
Perishable tooling and supplies 2,644 2,644
-------- --------
72,919 68,515
Excess of current standard costs
over LIFO costs (11,353) (11,543)
Allowance for obsolete and slow-
moving inventory (10,578) ( 9,090)
-------- --------
Inventories, net $ 50,988 $ 47,882
======== ========
</TABLE>
<PAGE> 8
NOTE 5. LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS.
Long-term debt at June 30, 1997 consisted of certain industrial revenue bonds
and other notes and credit facilities due between 1999 and 2006. In
September 1996, the Company entered into an unsecured senior note agreement
for $35 million. This debt has a ten-year final, seven-year average maturity
with principal payments beginning in 2000. In November 1995, the Company
refinanced its existing bank debt with an unsecured three-year revolving loan
with the option of two one-year extensions. On September 30, 1996, the
Company requested, and its lenders agreed to, the first such extension. The
total credit line available on the revolving loan is $65 million, of which
$33 million remained available for additional borrowings or to issue as
letters of credit at June 30, 1997. The revolving loan will mature on
November 30, 1999. Maturities of long-term debt for the five years
subsequent to June 30, 1997 are $0.8 million for 1998; $0.9 million for 1999;
$32.8 million for 2000; $5.7 million for 2001; and $5.1 million for 2002.
Total interest expense during the first six months of 1997 and 1996 totaled
$1.9 and $1.1 million respectively. Interest paid for the first six months
of 1997 totaled $2.0 million, while the interest paid for the first six
months of 1996 was not materially different from the amount expensed.
NOTE 6. EARNINGS PER SHARE.
Earnings per share were calculated for the three-month and six-month periods
ended June 30, 1997 based on 10,532,722 and 10,492,444 weighted average
shares outstanding for each period respectively, while earnings per share for
the three-month and six-month periods ended June 30, 1996 were calculated
based on 10,168,764 and 10,095,342 weighted average shares outstanding
respectively, in each case adjusted for the stock split effected on January
15, 1997.
NOTE 7. INTEREST RATE SWAP AGREEMENTS.
At June 30, 1997, the Company had two interest rate swap agreements with a
commercial bank (the "Counter Party") outstanding, having a cumulative
notional principal amount of $30 million. The swaps provide an average fixed
LIBOR rate of 6%. Both interest rate swaps terminate in November 1997 but
the Counter Party has an option to extend one agreement for an additional
year. The Company is exposed to credit loss in the event of nonperformance
by the Counter Party to the interest rate swap agreements. However, the
Company does not anticipate such nonperformance.
NOTE 8. NEW ACCOUNTING STANDARDS.
The Financial Accounting Standards Board has issued SFAS No. 128, Earnings
Per Share, which becomes effective for periods ending after December 15,
1997. The Standard requires certain changes in the method of calculation and
disclosures of earnings per share. For a discussion of the expected impact
on the Company's financial statements, see "New Accounting Standards" in Item
2, Management's Discussion and Analysis of Financial Condition and Results of
Operations below.
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS.
Revenues
For the three months ended June 30, 1997, revenues increased $20.5 million
(42%) to $69.4 million, compared to $48.9 million in the same period of 1996.
Approximately $13.6 million of this increase is attributable to the
acquisitions of NORAMPTCO and TCM, which the Company completed in August
1996. Excluding acquisitions, revenues in the second quarter of 1997
increased approximately $6.9 million (14%) over the same period in 1996.
Revenues for the Compressed Air Products segment increased 28% to $54.2
million in the second quarter of 1997 from $42.3 million in the same period
of 1996. The acquisition of NORAMPTCO contributed $8.7 million of this
increase. Excluding the acquisition, compressor product revenues increased
$3.2 million (8%) primarily to increased shipments of specially-engineered
compressor packages. Petroleum products segment revenues were $15.2 million
for the three months ended June 30, 1997, an increase of $8.6 million (130%)
over the same period of 1996. The acquisition of TCM contributed $4.8
million to petroleum products revenues in the second quarter of 1997.
Excluding the acquisition, petroleum products revenues increased
approximately 58% from $6.6 million for the comparable period of 1996,
primarily as a result of increased oil and gas drilling activity.
Compared to the first quarter of 1997, the Company's revenues increased $3.3
million (5%) in the three month period ending June 30, 1997. Compressor
products revenues increased $1.8 million (3%) due to stronger shipments of
specially-engineered compressor packages. Petroleum products segment
revenues increased $1.5 million (11%) in the second quarter of 1997, compared
to the first quarter of 1997, primarily due to continued growth in oil and
gas drilling activity.
Revenues increased $38.0 million (39%) to $135.5 million for the six months
ended June 30, 1997, compared to the same period in 1996. Revenues from
NORAMPTCO and TCM contributed $28.0 million of this increase. Excluding the
acquisitions, revenues increased $10.0 million (10%) over the same period in
1996.
For the six months ended June 30, 1997, compressor products segment revenues
increased $21.0 million (25%) to $106.6 million, compared to the same period
in 1996. Excluding the acquisition, which contributed $19.2 million,
revenues increased $1.8 million (2%). Petroleum products segment revenues
increased $17.0 million (143%) in the six months ended June 30, 1997,
compared to the same period in 1996. TCM contributed $8.8 million of this
increase. Excluding the acquisition, revenues in the petroleum products
segment increased $8.2 million (69%) in the six months ended June 30, 1997,
compared to the same period in 1996, primarily as a result of increased
drilling activity.
<PAGE> 10
Costs and Expenses
Gross margins (defined as sales less cost of sales exclusive of depreciation
and amortization) for the six month period of 1997 increased $15.4 million
(51%) to $45.4 million from $30.0 million in the same period of 1996. Gross
margin as a percentage of sales improved to 33.4% in the six month period of
1997 from 30.7% in the same period of 1996. The NORAMPTCO acquisition
enhanced the gross margin percentage since its products are sold by
commissioned sales representatives rather than through distributors who
resell to the end user, resulting in higher markups. These markups are
offset by higher sales commissions included in selling and administrative
expenses. Excluding the effect of the acquisitions, gross margin as a
percentage of revenues improved to 32.7%. For the second quarter of 1997 the
gross margin percentage improved to 34.1% from 30.5% in the second quarter of
1996. Excluding the effect of the acquisitions, gross margin as a percentage
of revenues improved to 33.5%. These increases in gross margin are primarily
attributable to increased volume, with some improvement resulting from cost
reduction efforts, such as manufacturing process improvements, and price
increases for petroleum products.
Depreciation and amortization increased 18% to $4.5 million in the first six
months of 1997, compared with $3.8 million for the same period of 1996. For
the second quarter, depreciation and amortization increased 16% to $2.2
million in 1997, compared to $1.9 million in 1996. The increase in
depreciation and amortization expense was due to the acquisitions, partially
offset by reductions as assets become fully depreciated. For the six-month
periods, depreciation and amortization expense as a percentage of revenues
decreased to 3.3% in 1997 from 3.9% in 1996, and for the three-month periods,
depreciation and amortization expense as a percentage of revenues decreased
to 3.2% in 1997 from 3.9% in 1996. These decreases are due to the effect of
increased revenues.
Selling and administrative expenses increased in the first six months of 1997
by 50% to $18.7 million from $12.5 million in the same period of 1996. As a
percentage of revenues, selling and administrative expenses for the six
months increased to 13.8% in 1997 from 12.8% in 1996. Approximately $4.2
million of the $6.2 million increase is attributable to the newly acquired
operations. For the second quarter, selling and administrative expenses
increased 45% to $9.3 million in 1997 from $6.4 million in 1996. As a
percentage of revenues, selling and administrative expenses for the second
quarter increased to 13.4% in 1997 from 13.0% in 1996. Approximately $2.0
million of the $2.9 million increase is attributable to the newly acquired
operations. The remaining increases are due primarily to higher manpower
levels and an increase in purchased services.
Interest expense increased $0.8 million (73%) to $1.9 million for the six
month period of 1997 compared to the same period of 1996, due to incremental
debt incurred for the acquisitions and higher average interest rates. The
average interest rate for the six month period of 1997 was 7.5% compared to
6.8% for the same period of 1996. The higher interest rate is primarily due
to the $35 million senior note issued in September 1996 at a fixed rate of
approximately 7.3% and the assumption of a fixed rate industrial development
bond as part of one of the acquisitions. During the second quarter of 1997,
interest expense increased $0.4 million (80%) to $0.9 million
<PAGE> 11
compared to the same period in 1996. See Note 5 to the Financial Statements
contained in this document for further information on the Company's borrowing
arrangements.
Income before income taxes improved $7.7 million (61%) for the six months
ended June 30, 1997, compared to the same period of 1996. Approximately $3.5
million of this increase is attributable to the acquisitions, net of interest
expense on debt incurred to complete the acquisitions. The remaining $4.2
million increase is primarily a result of incremental revenues, improved
gross margin and lower interest expense (excluding debt related to
acquisitions) in 1997 compared to the previous year. For the second quarter,
income before income taxes improved $5.1 million (82%) compared to the same
period of 1996. Approximately $1.8 million of this increase is attributable
to the acquisitions. The remaining improvement is attributable to the
factors noted for the six-month period.
Compared to 1996, the provision for income taxes increased by $3.2 million to
$8.2 million for the first six months of 1997 and by $2.0 million to $4.5
million for the second quarter of 1997, as a result of the increase in income
before taxes. The Company's effective tax rate decreased to 40% in the
second quarter of 1997 which is consistent with the 1996 effective rate and
compares to the 41% rate for the first quarter of 1997. The reduction is due
to benefits generated through the implementation of various tax strategies.
Net income for the six months ended June 30, 1997 increased $4.5 million
(59%) to $12.1 million ($1.16 per share) from $7.6 million ($0.75 per share)
for the same period in 1996. For the second quarter, net income increased
$3.1 million (84%) to $6.8 million ($0.65 per share) compared to $3.7
million ($0.36 per share) in 1996, for the reasons previously discussed. Net
income for the six months included approximately $2.1 million ($0.20 per
share) from acquisitions, and net income for the second quarter included
approximately $1.1 million ($0.11 per share) from acquisitions. Compared to
the first quarter of 1997, net income for the second quarter of 1997
increased by $1.5 million (28%), primarily due to increased revenue and
improved gross margin.
LIQUIDITY AND CAPITAL RESOURCES
Operating Working Capital
During the six months ended June 30, 1997, operating working capital (defined
as receivables plus inventories, less accounts payable and accrued
liabilities) increased $10.3 million to $57.4 million, with $7.4 million of
the increase related to the acquisition of Tamrotor at June 30, 1997.
Receivables increased $13.8 million since the end of 1996, of which $7.3
million was due to Tamrotor. The remaining increase was due to the higher
revenues in the second quarter of 1997 compared to the first quarter of 1997
and due to the timing of the sales within the second quarter of 1997.
Inventories increased $3.1 million to $51.0 million during the six months
ended June 30, 1997. Tamrotor generated a $5.0 million increase while the
remainder of the Company generated a $1.9 million decline. Most of the
inventory drop was due to reductions in petroleum inventory as a result of
increased customer demand, partially offset by increases in compressor
inventory,
<PAGE> 12
primarily finished goods to enhance responsiveness to customer demand. The
$6.6 million increase in accounts payable and accrued liabilities resulted from
the Tamrotor acquisition ($4.9 million) and increased capital expenditures,
expenses and compressor inventory.
Cash Flows
During the six months ended June 30, 1997, the Company generated cash flows
from operations totaling $11.4 million, a decrease of $8.4 million (42%) over
the comparable period in 1996. This decline was primarily the result of the
increase in the receivables compared to a decrease in the same period in the
previous year and the lower inventory reduction, partially offset by
increased net income and current liabilities discussed previously. The
Company borrowed $23.0 million to finance the purchase of Tamrotor, using
$3.2 million of internally generated cash to fund the balance of the purchase
price. The remaining cash flows enabled the Company to expend $2.5 million
on capital expenditures and repay $9.4 million of long-term debt, resulting
in a decrease in the cash balance of $2.9 million.
Capital Expenditures and Commitments
Capital projects to increase manufacturing efficiency and operating
flexibility, expand production capacity and improve management information
systems and product quality resulted in expenditures of $2.5 million in the
first six months of 1997, which was $1.5 million higher than the level of
capital expenditures in the comparable period in 1996. Most of the increase
was due to expenditures made for the implementation of a new integrated
management information system. Commitments for capital expenditures at June
30, 1997 totaled $5.3 million. Management expects additional capital
authorizations to be committed during the remainder of the year and that
capital expenditures for 1997 will approximate $10 to $12 million.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued SFAS No. 128, Earnings
per Share, which becomes effective for periods ending after December 15,
1997. SFAS No. 128 establishes standards for computing and presenting
earnings per share ("EPS"). The statement simplifies the standards for
computing EPS previously found in APB Opinion 15, and makes them comparable
to international standards. It replaces the presentation of primary EPS with
a presentation of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the income statement, along with various
disclosures regarding the computation of the earnings and the weighted
average number of shares outstanding. SFAS No. 128 requires restatement of
all prior-period EPS data, but early application is not permitted.
<PAGE> 13
The following table reflects the impact on EPS, as if SFAS No. 128 had been
adopted for the periods presented:
<TABLE>
<CAPTION>
Historical Pro Forma
Primary EPS Basic EPS Diluted EPS
----------- --------- -----------
<S> <C> <C> <C>
EPS for the three month period ending
June 30, 1997 $ 0.65 $ 0.68 $ 0.65
EPS for the three month period ending
June 30, 1996 $ 0.36 $ 0.38 $ 0.36
EPS for the six month period ending
June 30, 1997 $ 1.16 $ 1.22 $ 1.16
EPS for the six month period ending
June 30, 1996 $ 0.75 $ 0.78 $ 0.75
</TABLE>
PENDING LITIGATION
The Company is a defendant in a lawsuit alleging misappropriation of trade
secrets and interference with contractual relations in connection with
research and development of single screw design technology and its related
manufacturing techniques. The suit requests $4.7 million in compensatory
damages and an unspecified amount in punitive damages. In 1995, the
plaintiffs' complaint regarding tortious interference with contractual
relations was dismissed as a result of the expiration of the applicable
statute of limitations. In 1996, the court found that attorneys' fees
incurred by the plaintiffs in prior litigation, and requested by the
plaintiffs as compensatory damages in this litigation, were not recoverable.
These attorneys' fees constituted a large portion of the damages requested in
the plaintiffs' complaint. Although the extent of the liability, if any,
remains unknown, management does not believe the ultimate resolution of this
legal action will have a materially adverse impact on the results of
operations or the financial condition of the Company.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders (the "Annual Meeting") was held
pursuant to notice on May 6, 1997. At the Annual Meeting, Alan E. Riedel and
Ross J. Centanni were elected to serve as directors for a three-year term
expiring in 2000. There were 9,146,243 affirmative votes cast and 18,655
votes withheld concerning Mr. Riedel's election as a director, and 9,148,109
affirmative votes cast and 16,789 votes withheld concerning Mr. Centanni's
election as a director.
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits:
11.1 Computation of earnings per share for the three months ended
June 30, 1997.
11.2 Computation of earnings per share for the six months ended
June 30, 1997.
27.0 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended June 30,
1997.
<PAGE> 15
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.
GARDNER DENVER MACHINERY INC.
Date: August 13, 1997 By: /s/Ross J. Centanni
----------------------------------------
Ross J. Centanni
President and Chief Executive Officer
Date: August 13, 1997 By: /s/Philip R. Roth
----------------------------------------
Philip R. Roth
Vice President, Finance and
Chief Financial Officer
<PAGE> 16
GARDNER DENVER MACHINERY INC.
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<C> <S>
11.1 Computation of earnings per share for the three months ended
June 30, 1997.
11.2 Computation of earnings per share for the six months ended
June 30, 1997.
27.0 Financial Data Schedule.
</TABLE>
<PAGE> 1
Exhibit 11.1
<TABLE>
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share amounts)
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1997 1996
------- -------
<S> <C> <C>
Primary earnings
Net Income $ 6,813 $ 3,691
======= =======
Shares
Weighted average number of common
shares outstanding 10,017 9,732
Assuming conversion of options issued
and outstanding 516 436
------- -------
Weighted average number of common
shares outstanding as adjusted 10,533 10,168
======= =======
Primary earnings per common share $ 0.65 $ 0.36
======= =======
Fully diluted earnings<F*>
Net Income $ 6,813 $ 3,691
======= =======
Shares
Weighted average number of common
shares outstanding 10,017 9,732
Assuming conversion of options issued
and outstanding 552 450
------- -------
Weighted average number of common
shares outstanding as adjusted 10,569 10,182
======= =======
Fully diluted earnings per common share $ 0.64 $ 0.36
======= =======
<FN>
<F*>This calculation is submitted in accordance with Securities Exchange Act of
1934 Release No. 9083 although not required by footnote 2 to paragraph 14 of
APB Opinion No. 15 because it results in dilution of less than 3%.
</TABLE>
<PAGE> 1
Exhibit 11.2
<TABLE>
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share amounts)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1996
------- -------
<S> <C> <C>
Primary earnings
Net Income $12,137 $ 7,552
======= =======
Shares
Weighted average number of common
shares outstanding 9,956 9,694
Assuming conversion of options issued
and outstanding 536 402
------- -------
Weighted average number of common
shares outstanding as adjusted 10,492 10,096
======= =======
Primary earnings per common share $ 1.16 $ 0.75
======= =======
Fully diluted earnings<F*>
Net Income $12,137 $ 7,552
======= =======
Shares
Weighted average number of common
shares outstanding 9,956 9,694
Assuming conversion of options issued
and outstanding 563 442
------- -------
Weighted average number of common
shares outstanding as adjusted 10,519 10,136
======= =======
Fully diluted earnings per common share $ 1.15 $ 0.75
======= =======
<FN>
<F*>This calculation is submitted in accordance with Securities Exchange Act of
1934 Release No. 9083 although not required by footnote 2 to paragraph 14 of
APB Opinion No. 15 because it results in dilution of less than 3%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF GARDNER DENVER MACHINERY INC. FOR THE
YEAR-TO-DATE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,688
<SECURITIES> 0
<RECEIVABLES> 62,727
<ALLOWANCES> (2,904)
<INVENTORY> 50,988
<CURRENT-ASSETS> 124,073
<PP&E> 132,807
<DEPRECIATION> (97,324)
<TOTAL-ASSETS> 268,871
<CURRENT-LIABILITIES> 55,822
<BONDS> 70,274
<COMMON> 100
0
0
<OTHER-SE> 87,684
<TOTAL-LIABILITY-AND-EQUITY> 268,871
<SALES> 134,803
<TOTAL-REVENUES> 135,522
<CGS> 90,157
<TOTAL-COSTS> 90,196
<OTHER-EXPENSES> 39
<LOSS-PROVISION> 24
<INTEREST-EXPENSE> 1,913
<INCOME-PRETAX> 20,310
<INCOME-TAX> 8,173
<INCOME-CONTINUING> 12,137
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,137
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.15
</TABLE>
