SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-5034
CORE INDUSTRIES INC
(Exact name of registrant as specified in its charter)
Nevada 38-1052434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 2000, Bloomfield Hills, Michigan 48303-2000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810)642-3400
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
Common Stock outstanding at June 30, 1995 - 9,808,992 shares.
<PAGE>
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<TABLE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<CAPTION>
Third Quarter Ended May 31
1995 1994
<S> <C> <C>
Net sales $63,499,000 $60,578,000
Cost of sales, exclusive
of depreciation
and amortization $43,095,000 $43,187,000
Depreciation and amortization 1,332,000 1,266,000
Selling, general and
administrative expenses 13,181,000 11,348,000
Interest expense 1,036,000 1,156,000
Other income (208,000) (215,000)
$58,436,000 $56,742,000
Earnings before taxes
on income $5,063,000 $3,836,000
Taxes on income 1,930,000 1,390,000
Net earnings $3,133,000 $2,446,000
Net earnings per share $.32 $.25
Dividends per share $.06 $.06
Average shares of
stock outstanding 9,809,000 9,801,000
<FN>
See notes to financial statements
</TABLE>
<PAGE>
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<TABLE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<CAPTION>
Nine Months Ended May 31
1995 1994
<S> <C> <C>
Net sales $173,255,000 $164,180,000
Cost of sales, exclusive
of depreciation
and amortization $116,911,000 $116,040,000
Depreciation and amortization 3,949,000 3,810,000
Selling, general and
administrative expenses 37,905,000 31,203,000
Interest expense 3,163,000 3,422,000
Other income (Note E) (788,000) (2,102,000)
$161,140,000 $152,373,000
Earnings before taxes
on income $12,115,000 $11,807,000
Taxes on income 4,600,000 4,310,000
Net earnings $7,515,000 $7,497,000
Net earnings per share (Note E) $.77 $.77
Dividends per share $.18 $.18
Average shares of
stock outstanding 9,809,000 9,799,000
<FN>
See notes to financial statements
</TABLE>
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<TABLE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
<CAPTION>
May 31, 1995
(Unaudited) Aug. 31, 1994
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $2,312,000 $14,643,000
Accounts receivable, less
collection allowances of
$1,125,000 in May
and $960,000 in August 51,630,000 47,444,000
Inventories 56,592,000 48,863,000
Prepaid expenses 451,000 808,000
Deferred taxes on income 1,907,000 2,027,000
TOTAL CURRENT ASSETS $112,892,000 $113,785,000
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements $1,295,000 $1,278,000
Buildings 18,732,000 18,161,000
Machinery and equipment 47,243,000 44,322,000
Total $67,270,000 $63,761,000
Less accumulated depreciation 38,924,000 36,377,000
TOTAL PROPERTY, PLANT
AND EQUIPMENT $28,346,000 $27,384,000
OTHER ASSETS:
Excess of cost over net
assets of companies acquired $9,669,000 $7,033,000
Investment in real estate
partnership 1,341,000 1,343,000
Note receivable 1,500,000 1,500,000
Prepaid pensions and other 5,505,000 5,342,000
TOTAL OTHER ASSETS $18,015,000 $15,218,000
$159,253,000 $156,387,000
<FN>
See notes to financial statements
</TABLE>
<PAGE>
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<TABLE>
LIABILITIES & STOCKHOLDERS' EQUITY
<CAPTION>
May 31, 1995
(Unaudited) Aug. 31, 1994
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $12,970,000 $11,485,000
Accrued payroll and other
expenses 12,836,000 12,817,000
Dividends payable 589,000 587,000
Taxes on income 1,452,000 1,585,000
Notes payable 1,297,000 --
Long-term debt due within
one year 4,610,000 4,610,000
TOTAL CURRENT LIABILITIES $33,754,000 $31,084,000
LONG-TERM DEBT,
less amount due within
one year 35,580,000 41,608,000
DEFERRED TAXES ON INCOME 2,020,000 1,770,000
ACCRUED EMPLOYEE BENEFITS 2,789,000 2,908,000
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1:
Authorized - 100,000 shares
Issued - none
Common stock, par value $1:
Authorized - 20,000,000 shares
Issued - 11,219,152 shares $11,219,000 $11,219,000
Additional paid-in capital 810,000 810,000
Retained earnings 78,775,000 73,025,000
Cumulative translation
adjustments 1,004,000 661,000
Treasury stock (1,410,160
shares) - at cost (6,698,000) (6,698,000)
TOTAL STOCKHOLDERS' EQUITY $85,110,000 $79,017,000
$159,253,000 $156,387,000
<FN>
See notes to financial statements
</TABLE>
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<TABLE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION> Nine Months Ended May 31
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $7,515,000 $7,497,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation $3,625,000 $3,593,000
Amortization 324,000 217,000
Gain on sale of division -- (915,000)
(Increase) decrease in assets:
Accounts receivable (2,618,000) (639,000)
Inventories (6,717,000) 957,000
Prepaid expenses 387,000 (28,000)
Taxes on income (133,000) 899,000
Deferred taxes on income 370,000 450,000
Increase (decrease) in
liabilities:
Accounts payable 581,000 (86,000)
Accrued payroll and
other expenses (19,000) (182,000)
TOTAL ADJUSTMENTS ($4,200,000) $4,266,000
NET CASH PROVIDED BY
OPERATING ACTIVITIES ($3,315,000) $11,763,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($4,488,000) ($3,145,000)
Proceeds from sale of division -- 5,898,000
Acquisition of businesses (3,515,000) (2,232,000)
Other 151,000 (20,000)
NET CASH FROM (USED FOR)
INVESTING ACTIVITIES ($7,852,000) $501,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid ($1,766,000) ($1,763,000)
Reductions in long-term debt (6,028,000) --
Net payments on short-term
bank loans -- (900,000)
NET CASH USED IN FINANCING
ACTIVITIES ($7,794,000) ($2,663,000)
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (12,331,000) 9,601,000
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 14,643,000 651,000
CASH AND CASH EQUIVALENTS,
END OF PERIOD $2,312,000 $10,252,000
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $3,719,000 $3,820,000
Income taxes paid $4,464,000 $2,236,000
<FN>
See notes to financial statements
</TABLE>
<PAGE>
<PAGE>
CORE INDUSTRIES INC AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A
The accompanying consolidated financial statements reflect
all adjustments which are, in the opinion of management,
necessary to a fair statement of the information presented
therein, and such adjustments are of a normal recurring nature.
NOTE B
Reference is made to the Company's Annual Report on Form
10-K for the year ended August 31, 1994, for a description of
accounting policies and other detailed footnote information.
<TABLE>
NOTE C - Inventories
<CAPTION> May 31 August 31,
1995 1994
<S> <C> <C>
Raw materials and supplies $30,112,000 $25,976,000
Work in process 10,313,000 8,940,000
Finished goods 16,167,000 13,947,000
$56,592,000 $48,863,000
</TABLE>
NOTE D - Acquisitions
Effective January 1, 1995, the Company purchased two
Companies. Core's Amprobe Instrument Division purchased Promax
Industries, Inc., a manufacturer of refrigerant recycling and
recovery products for the heating, ventilating, and air
conditioning (HVAC) industry. Core's Fluid Control Group
purchased Oil and Gas Specialties, Inc. (OGASCO), which designs
and fabricates skid-mounted pipeline metering systems and
fabricated strainers.
These acquisitions were accounted for as purchases, and
accordingly, the operating results of the acquired businesses
have been included in the Company's financial statements from
January 1, 1995. The pro forma results of operations, as if the
operations of the acquired businesses had been included from
September 1, 1994, would not differ materially from the amounts
reported in the consolidated statement of earnings. The total
cost of the above acquisitions was approximately $4,800,000,
including short-term notes payable of $1,372,000.
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<PAGE>
NOTE E - Sale of Division
In last year's first quarter, the Company sold one of its
farm equipment divisions, Du-Al Manufacturing Company, for a
pretax gain of $1,475,000 (total of $.09 per share, after tax).
This gain is included in other income on the Statement of
Earnings for the nine months ended May 31, 1995.
<PAGE>
<PAGE>
NOTE F - Product Segment Information
The Company classifies its products and services into three
general segments. Financial information by segment is summarized
below.
<TABLE>
<CAPTION> 1995
Earnings (Loss)
Before
Net Sales Income Taxes
<S> <C> <C>
Third quarter ended May 31:
Electronics $ 29,015,000 $ 2,457,000
Farm equipment 12,593,000 1,906,000
Fluid controls and
construction products 21,891,000 2,725,000
Corporate unallocated - (988,000)
Interest expense - (1,037,000)
Total $ 63,499,000 $ 5,063,000
Nine months ended May 31:
Electronics $ 79,163,000 $ 5,213,000
Farm equipment 33,869,000 4,870,000
Fluid controls and
construction products 60,223,000 8,013,000
Corporate unallocated - (2,818,000)
Interest expense - (3,163,000)
Total $173,255,000 $12,115,000
1994
Earnings (Loss)
Before
Net Sales Income Taxes
Third quarter ended May 31:
Electronics $ 26,094,000 $ 1,690,000
Farm equipment 11,956,000 2,032,000
Fluid controls and
construction products 22,528,000 2,116,000
Corporate unallocated - (846,000)
Interest expense - (1,156,000)
Total $ 60,578,000 $ 3,836,000
Nine months ended May 31:
Electronics $ 75,404,000 $ 5,365,000
Farm equipment 29,126,000 5,977,000 (A)
Fluid controls and
construction products 59,650,000 6,402,000
Corporate unallocated - (2,515,000)
Interest expense - (3,422,000)
Total $164,180,000 $11,807,000 (A)
<F1>
Note A: Includes first quarter pretax gain of $1,475,000 (total
of $.09 per share) related to the sale of Core's Du-Al division.
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the first nine months of fiscal 1995, the Company's net
sales increased 6%, rising to $173,255,000 from $164,180,000.
Net earnings for the nine month period of fiscal 1995 were
$7,515,000, or $.77 per share. Included in last year's nine
month results was a $.09 per share gain from the sale of a
division; excluding this gain, net earnings were up 14%.
For the third quarter of fiscal 1995, net sales increased 5%
to $63,499,000 compared to $60,578,000 in last year's third
quarter. This year's third quarter net earnings were $3,133,000,
or $.32 per share, up 28% from last year's net earnings of
$2,446,000, or $.25 per share.
For the first nine months of fiscal 1995, the Company's
Electronics Group provided 46% of total sales; the Farm Equipment
Group, 19% of total sales; and the Fluid Controls and
Construction Products Group, 35% of sales. The Electronics Group
had a strong third quarter with earnings up 45% over last year
due to improved performance in test, measurement and control
products. The Electronics Group's nine month performance
remained slightly behind last year due to the effect of the
Cherokee division's weak first half performance; Cherokee's third
quarter profit results rebounded and were slightly better than a
year ago. The Farm Equipment Group had a 16% increase in sales
and an 8% increase in earnings in the first nine months this year
(excluding prior year's gain on sale of a division). However,
third quarter earnings in the Farm Equipment Group were 6% short
of the prior year due to the effects of excessive rain and
related late planting in many areas. Earnings of the Fluid
Controls and Construction Products Group increased 25% in the
first nine months and 29% in the third quarter compared to last
year on nominal sales changes. This was primarily due to
improved performance of its fluid control products and the sale
of an unprofitable steel door manufacturing unit last year.
Overall gross margins on net sales for the first nine months
of fiscal 1995 improved to 32.5% from 29.3% last year as a result
of product mix changes. The increase in selling, general and
administrative expenses from 19% of sales to 21.9% in this year's
first nine months relates primarily to increased investments in
research and development and higher promotional and selling costs
related to new products and entering new markets.
Interest expense declined 7.6% in this year's first nine
months compared with last year due to reduced borrowings. Other
income for the nine months ended May 31, 1994 includes a
$1,475,000 gain related to the sale of the Company's Du-Al
division.
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1995, the Company had working capital of
$79.1 million and a current ratio of 3.3 to 1, and the Company's
capital employed (total debt and equity) amounted to
$125 million. Capital consisted of 32% debt and 68% equity, an
improvement from 39% of total capital employed a year ago.
During May 1995 the Company reduced its 10% long-term debt by
$6 million under maximum allowable prepayment options.
Management believes its current cash position, cash flows
from operations, along with its borrowing capacity, are adequate
to fund its strategies for future growth, including working
capital, expenditures for manufacturing expansion and
efficiencies, and acquisition activities. At the Company's
current dividend rate of $.06 per share, annual dividend payments
would approximate $2.4 million. Under the Company's debt
agreements with insurance companies, retained earnings of
approximately $24 million are available for dividends, subject to
future earnings levels.
Beginning this fiscal year the Company began using a new and
integrated financial measurement system called "Economic Value
Added" (EVA). EVA measures profit after a charge for the capital
employed. Extensive market research has shown this measure to
have a high correlation with long-term stock market valuation.
Thus, a framework is provided for resource allocation and
compensation decisions that focus more directly on creation of
shareholder value.
<PAGE>
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PART II - OTHER INFORMATION
Items 1 through 5 of Part II are omitted because they are
not applicable or because they are not required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed for the
three months ended May 31, 1995.
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<PAGE>
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.
CORE INDUSTRIES INC
(Registrant)
/s/ RAYMOND H. STEBEN, JR.
Date: July 5, 1995 --------------------------
Raymond H. Steben, Jr.
Vice President-Finance
and Chief Financial
Officer
/s/ THOMAS G. HOOPER
Date: July 5, 1995 ---------------------------
Thomas G. Hooper
Treasurer and Controller
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<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
*27 Financial Data Schedule
</TABLE>
*Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 2,312,000
<SECURITIES> 0
<RECEIVABLES> 52,755,000
<ALLOWANCES> (1,125,000)
<INVENTORY> 56,592,000
<CURRENT-ASSETS> 112,892,000
<PP&E> 67,270,000
<DEPRECIATION> 38,294,000
<TOTAL-ASSETS> 159,253,000
<CURRENT-LIABILITIES> 33,754,000
<BONDS> 35,580,000
<COMMON> 11,219,000
0
0
<OTHER-SE> 73,891,000
<TOTAL-LIABILITY-AND-EQUITY> 159,253,000
<SALES> 173,255,000
<TOTAL-REVENUES> 173,255,000
<CGS> 116,911,000
<TOTAL-COSTS> 158,765,000
<OTHER-EXPENSES> (788,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,163,000
<INCOME-PRETAX> 12,115,000
<INCOME-TAX> 4,600,000
<INCOME-CONTINUING> 7,515,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,515,000
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
