FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 28, 1997
Commission File Number: 0-23400
DT INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
\
Delaware 44-0537828
=============================== ===============================
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1949 E. Sunshine, Suite 2-300, Springfield, Missouri 65804
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(Address of principal executive offices)
(Zip Code)
(417) 890-0102
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares of Common Stock, $0.01 par value, of the registrant
outstanding as of January 30, 1998 was 11,334,500.
<PAGE>
DT INDUSTRIES, INC.
Index
Page 1
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Page
Number
Part I Financial Information
Item 1. Financial Statements (Unaudited, except as noted)
Consolidated Balance Sheets at December 28, 1997
and June 29, 1997 (Audited) 2
Consolidated Statement of Operations for the
three and six months ended December 28, 1997 and
December 29, 1996 3
Consolidated Statement of Changes in
Stockholders' Equity for the six months
ended December 28, 1997 4
Consolidated Statement of Cash Flows for the
six months ended December 28, 1997 and
December 29, 1996 5-6
Notes to Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-20
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Balance Sheets
(Dollars in Thousands Except Per Share Data)
Page 2
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December 28, June 29,
1997 1997
(Unaudited)
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 12,379 $ 2,821
Accounts receivable, net 87,555 68,538
Costs and estimated earnings in excess of
amounts billed on uncompleted contracts 53,612 51,643
Inventories, net 58,145 42,198
Prepaid expenses and other 11,833 7,051
------------ ------------
Total current assets 223,524 172,251
Property, plant and equipment, net 64,634 51,132
Goodwill, net 185,226 168,401
Other assets, net 5,790 3,412
------------ ------------
$ 479,174 $ 395,196
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 123 $ 1,527
Accounts payable 30,556 31,353
Customer advances 31,732 18,404
Accrued liabilities 44,025 29,986
------------ ------------
Total current liabilities 106,436 81,270
------------ ------------
Long-term debt 93,972 46,978
Deferred income taxes 5,411 6,435
Other long-term liabilities 5,680 5,246
------------ ------------
Total long-term obligations 105,063 58,659
------------ ------------
Commitments and contingencies (See Note 9)
Company-obligated, mandatorily redeemable
convertible preferred securities of
subsidiary DT Capital Trust holding solely
convertible junior subordinated debentures
of the Company 70,000 70,000
------------ ------------
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; 11,333,125 and 11,300,875
shares issued and outstanding at December 28,
1997 and June 29, 1997, respectively 113 113
Additional paid-in capital 133,913 133,370
Retained earnings 64,894 51,784
Cumulative translation adjustment (1,245) ---
------------ ------------
Total stockholders' equity 197,675 185,267
------------ ------------
$ 479,174 $ 395,196
============ ============
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Operations
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 3
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<TABLE>
<CAPTION>
Three months ended Six months ended
December 28, December 29, December 28, December 29,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 132,431 $ 100,693 $ 248,195 $ 183,328
Cost of sales 96,454 73,023 181,310 132,893
------------ ------------ ------------ ------------
Gross profit 35,977 27,670 66,885 50,435
Selling, general and
administrative expenses 19,129 13,762 36,218 25,350
------------ ------------ ------------ ------------
Operating income 16,848 13,908 30,667 25,085
Interest expense 1,882 3,572 3,556 6,287
Dividends on Company-obligated,
mandatorily redeemable
convertible preferred
securities of subsidiary
DT Capital Trust
holding solely convertible
junior subordinated debentures
of the Company 1,253 --- 2,506 ---
------------ ------------ ------------ ------------
Income before provision for
income taxes and
extraordinary loss 13,713 10,336 24,605 18,798
Provision for income taxes 5,485 4,298 9,842 7,887
------------ ------------ ------------ ------------
Income before extraordinary
loss 8,228 6,038 14,763 10,911
Extraordinary loss on debt
refinancing less applicable
income tax benefits of $800
and $216, respectively --- --- 1,200 324
------------ ------------ ------------ ------------
Net income $ 8,228 $ 6,038 $ 13,563 $ 10,587
============ ============ ============ ============
Basic earnings per common share:
Income before
extraordinary loss $ 0.73 $ 0.61 $ 1.31 $ 1.16
Extraordinary loss --- --- 0.11 0.04
------------ ------------ ------------ ------------
Net income $ 0.73 $ 0.61 $ 1.20 $ 1.12
============ ============ ============ ============
Diluted earnings per common
and common equivalent share:
Income before extraordinary
loss $ 0.66 $ 0.58 $ 1.19 $ 1.09
Extraordinary loss --- --- 0.09 0.03
------------ ------------ ------------ ------------
Net income $ 0.66 $ 0.58 $ 1.10 $ 1.06
============ ============ ============ ============
Weighted average common and
common equivalent shares
outstanding:
Basic 11,322,312 9,828,672 11,312,088 9,416,768
Diluted 13,650,807 10,478,377 13,652,272 9,996,064
============ ============ ============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Changes in Stockholders' Equity
For the Six Months Ended December 28, 1997
(Dollars in Thousands Except Per Share Data)
Page 4
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<TABLE>
<CAPTION>
Additional Cumulative
Common Paid-In Retained Translation
Stock Capital Earnings Adjustment Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, June 29, 1997 $ 113 $ 133,370 $ 51,784 $ --- $ 185,267
Exercise of stock options
(unaudited) 543 543
Net income for the six months
ended December 28, 1997
(unaudited) 13,563 13,563
Cash dividend at $0.02 per
common share (unaudited) (453) (453)
Cumulative translation adjustment (1,245) (1,245)
----------- ----------- ----------- ----------- -----------
Balance, December 28, 1997
(unaudited) $ 113 $ 133,913 $ 64,894 $ (1,245) $ 197,675
=========== =========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Cash Flows
(Dollars in Thousands)
(Unaudited)
Page 5
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Six months ended
December 28, 1997 December 29, 1996
----------------- -----------------
Cash flows from operating activities:
Net income $ 13,563 $ 10,587
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation 4,147 2,881
Amortization 2,700 2,425
Deferred income tax provision (2,935) (582)
Loss on debt refinancing 2,000 540
Other (858) 87
(Increase) decrease in current
assets, excluding the effect
of acquisitions:
Accounts receivable (6,726) (744)
Costs and earnings in excess
of amounts billed 20,771 (20,693)
Inventories (11,489) (8,459)
Prepaid expenses and other 61 4,557
Increase (decrease) in current
liabilities, excluding the
effect of acquisitions:
Accounts payable (8,081) 755
Accrued liabilities (1,546) (6,136)
Customer advances 8,527 (460)
Other 12 (19)
----------------- -----------------
Net cash provided (used)
by operating activities 20,146 (15,261)
----------------- -----------------
Cash flows from investing activities:
Capital expenditures (7,405) (5,742)
Acquisition of the stock of
Mid-West Automation Enterprises,
Inc. and Hansford Manufacturing
Corporation, net of cash
acquired of $21,572 (92,756)
Acquisition of Lucas Assembly and
Test Systems net assets, net of
cash acquired of $91 (46,721)
----------------- -----------------
Net cash used by investing activities (54,126) (98,498)
----------------- -----------------
(continued)
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Consolidated Statement of Cash Flows
(Dollars in Thousands)
(Unaudited)
(continued)
Page 6
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Six months ended
December 28, 1997 December 29, 1996
----------------- -----------------
Cash flows from financing activities:
Proceeds from issuance of term debt 96,424
Payments on borrowings (48,912) (88,096)
Net borrowings on revolving loans 93,275 33,725
Financing costs (915) (2,452)
Issuance of common stock 73,497
Exercise of stock options 543 170
Dividends (453) (360)
----------------- -----------------
Net cash provided by financing
activities 43,538 112,908
----------------- -----------------
Net increase (decrease) in cash 9,558 (851)
Cash and cash equivalents
at beginning of period 2,821 1,210
----------------- -----------------
Cash and cash equivalents
at end of period $ 12,379 $ 359
================= =================
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 7
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1. Unaudited consolidated financial statements
The accompanying unaudited consolidated financial statements of DT
Industries, Inc. (DTI or the Company) 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 Annual Report for the fiscal
year ended June 29, 1997.
2. Principles of consolidation and foreign currency translation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.
The accounts of the Company's foreign subsidiaries are maintained in their
respective local currencies. The accompanying consolidated financial
statements have been translated and adjusted to reflect U.S. dollars in
accordance with generally accepted accounting principles.
3. Acquisitions
On July 29, 1997, the Company completed the acquisition of certain of the
net assets of Lucas Assembly and Test Systems (LATS), a division of
LucasVarity plc of England in a transaction accounted for under the
purchase method of accounting. LATS, which has been renamed Assembly
Technology and Test (ATT), is a designer and manufacturer of integrated
assembly and testing systems for automotive OEMs and their tier-one
suppliers with manufacturing facilities in the United States, the United
Kingdom and Germany. The purchase price of approximately $46,721 was
financed by borrowings under the Company's multi-currency revolving credit
facility described in Note 4. The purchase price has been preliminarily
allocated to the acquired assets and assumed liabilities based on their
estimated fair value at the date of acquisition. The excess of purchase
price over the estimated fair value of net assets acquired has been
recorded as goodwill. The accompanying consolidated financial statements
include the results of ATT from the date of acquisition.
In July 1996 and September 1996, respectively, the Company acquired the
stock of Mid-West Automation Enterprises, Inc. (Mid-West) and Hansford
Manufacturing Corporation (Hansford). See the consolidated financial
statements and notes thereto included in the Company's Form 10-K Annual
Report for the fiscal year ended June 29, 1997 for additional information
relating to these acquisitions.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 8
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The following table sets forth pro forma information for DTI as if the
acquisitions of Mid-West, Hansford and ATT had taken place on June 30, 1997
and July 1, 1996, respectively. This information is unaudited and does not
purport to represent actual net sales, income before extraordinary loss and
earnings per share before extraordinary loss had the acquisitions actually
occurred on June 30, 1997 and July 1, 1996:
PRO FORMA INFORMATION
FOR THE PERIODS
June 30, 1997 July 1, 1996
to to
December 28, 1997 December 29, 1996
----------------- -----------------
Net sales $ 258,217 $ 251,613
Income before extraordinary loss $ 14,847 $ 11,005
Basic earnings per common share
before extraordinary loss $ 1.31 $ 1.16
Basic weighted average common
shares outstanding 11,312,088 9,416,768
4. Financing
As of December 28, 1997 and June 29, 1997, long-term debt consisted of the
following:
December 28, 1997 June 29, 1997
(Unaudited)
----------------- -----------------
Term loans $ 10,000 $ 30,347
Revolving loans 83,605 17,639
Capital lease obligations and
other long-term debt 490 519
----------------- -----------------
94,095 48,505
Less - current portion of long-term debt 123 1,527
----------------- -----------------
$ 93,972 $ 46,978
================= =================
On July 21, 1997, the Company replaced its credit facilities with a
$175,000 multi-currency revolving and term credit facility. The
multi-currency facility provides a $10,000 Canadian term loan and a
$165,000 revolving credit facility, which includes an approximate $80,000
sublimit for multi-currency borrowings in Pounds Sterling and Deutsche
Marks. Borrowings under the multi-currency facility bear interest at
floating rates based on the agent bank's base rate or LIBOR (at the option
of DTI), plus a specified percentage based on the ratio of funded debt to
operating cash flow and the ratings of DTI's corporate debt. The facility
requires commitment fees of 0.125% to 0.25% per annum (as determined by the
Company's ratio of funded debt to operating cash flow) payable quarterly on
any unused portion of the multi-currency facility. The agreement is secured
by the capital stock of each of the significant domestic subsidiaries and
65% of the capital stock of each significant foreign subsidiary of DTI. The
agreement contains certain financial and other covenants and restrictions,
which the Company was in compliance with at December 28, 1997, and matures
in July 2002. In conjunction with entering into the new credit facility,
the Company recognized an extraordinary loss in July 1997 of $1,200
attributable to the write-off of $2,000 of unamortized deferred financing
fees, net of related $800 tax benefit.
The Company also maintains a separate revolving credit facility of
approximately Canadian $3,000 through its Canadian subsidiary. At December
28, 1997, total borrowings under such facility were approximately Canadian
$3,000.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 9
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5. Company-Obligated, Mandatorily Redeemable Convertible Preferred Securities
of Subsidiary DT Capital Trust Holding Solely Convertible Junior
Subordinated Debentures of the Company (Convertible Preferred Securities)
On June 12, 1997, the Company completed a private placement to
institutional investors of 1,400,000 7.16% Convertible Preferred Securities
(liquidation preference of $50 per Convertible Preferred Security). The
placement was made through the Company's wholly owned subsidiary, DT
Capital Trust (Trust), a newly-formed Delaware business trust. The
securities represent undivided beneficial ownership interests in the Trust.
The sole asset of the Trust is the $72,165 aggregate principal amount of
the 7.16% Convertible Junior Subordinated Deferrable Interest Debentures
Due 2012 of the Company which were acquired with the proceeds from the
offering as well as the sale of common securities of the Trust to the
Company. The Company's obligations under the Convertible Junior
Subordinated Debentures, the Indenture pursuant to which they were issued,
the Amended and Restated Declaration of Trust of the Trust and the
Guarantee of DTI, taken together, constitute a full and unconditional
guarantee by DTI of amounts due on the Convertible Preferred Securities.
The Convertible Preferred Securities are convertible at the option of the
holders at any time into the common stock of DTI at an effective conversion
price of $38.75 per share and are redeemable at DTI's option after June 1,
2000 and mandatorily redeemable in 2012. The net proceeds of the offering
of approximately $67,750 were used by DTI to retire indebtedness. A
registration statement relating to resales of such Convertible Preferred
Securities was declared effective by the Securities and Exchange Commission
on September 2, 1997.
6. Earnings per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share",
which changed the method of computation of earnings per share (EPS). SFAS
128 requires the computation of Basic EPS and Diluted EPS. Basic EPS is
based on the weighted average number of outstanding common shares during
the period but does not consider dilution for potentially dilutive
securities. Diluted EPS reflects the effects of conversion of the Company's
Convertible Preferred Securities and elimination of the related dividends,
net of applicable income taxes, plus common stock equivalents consisting of
certain shares subject to stock options and contingent purchase price
payable in common stock related to an acquired business. The common
equivalent shares arising from the effect of outstanding stock options were
computed using the treasury stock method, if dilutive. Earnings per share
for the three and six months ended December 29, 1996 have been restated in
accordance with SFAS 128.
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 10
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7. Stock option plans
A summary of stock option transactions pursuant to the 1994 Employee Stock
Option Plan, the 1994 Directors Non-Qualified Stock Option Plan and the
1996 Long-Term Incentive Plan follows:
AVERAGE SHARES SUBJECT
PRICE TO OPTION
------------- --------------
Options outstanding at June 29, 1997 $ 17.58 939,650
Options granted $ 29.62 206,500
Options exercised $ 16.83 (32,250)
Options forfeited $ 22.67 (32,000)
--------------
Options outstanding at December 28, 1997 $ 19.75 1,081,900
==============
Exercisable at December 28, 1997 $ 13.68 163,313
==============
8. Supplemental balance sheet information
December 28, 1997 June 30, 1997
(Unaudited)
----------------- -----------------
Inventories, net:
Raw materials $ 23,331 $ 13,117
Work in process 27,447 22,053
Finished goods 7,367 7,028
----------------- -----------------
$ 58,145 $ 42,198
================= =================
Accrued liabilities:
Accrued employee compensation
and benefits $ 11,568 11,860
Taxes payable and related reserves 7,830 4,321
Product liability 1,512 1,558
Other 23,115 12,247
----------------- -----------------
$ 44,025 $ 29,986
================= =================
<PAGE>
DT INDUSTRIES, INC.
Item 1. Financial Statements
Notes to Consolidated Financial Statements
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Page 11
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9. Commitments and contingencies
The Company is a party to certain lawsuits involving employee matters,
product liability and other matters. Management and legal counsel do not
expect the outcome of any litigation to have a material adverse effect on
the Company's financial position, results of operations or liquidity.
As part of the H.G. Kalish Inc. (Kalish) and Swiftpack Automation Ltd.
(Swiftpack) acquisitions, DTI has agreed to make additional payments of up
to $3,000 and $4,700, respectively, to the sellers. The amount of the
additional purchase prices will be determined by a formula based on the
earnings of the acquired businesses. The additional purchase price
specified within the Kalish agreement, based on earnings for the three
years after closing of the acquisition, may be paid in DTI stock at the
Company's option. Any additional purchase price specified within the
Swiftpack agreement is payable in cash. Any additional purchase price paid
is expected to result in additional goodwill related to these acquisitions.
During December 1997, an agreement was reached with the former owner of
Hansford which finalized the purchase price and cancelled the earnout
provisions of the Hansford purchase agreement. No additional purchase price
was paid as a result of this agreement.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 12
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GENERAL OVERVIEW
The following discussion summarizes the significant factors affecting the
consolidated operating results and financial condition of DT Industries,
Inc. (DTI or the Company) for the three and six months ended December 28,
1997 compared to the three and six months ended December 29, 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 Annual Report on Form 10-K for the fiscal year
ended June 29, 1997.
In fiscal year 1997, the Company acquired the stock of Mid-West Automation
Enterprises, Inc. (Mid-West) and Hansford Manufacturing Corporation
(Hansford). During the six months ended December 28, 1997, the Company
acquired the assets of Lucas Assembly and Test Systems (LATS). LATS was
renamed Assembly Technology & Test (ATT). The acquisitions are elements of
a business strategy to acquire companies with proprietary products and
manufacturing capabilities which have strong market and technological
positions in the niche markets they serve and to accelerate the Company's
goal of providing customers a full range of integrated automated systems.
The Company believes that emphasis on complementary acquisitions of
companies serving target markets allows it to broaden its product offerings
and to provide customers a single source for complete integrated automation
systems. The acquisitions also expand the Company's base of customers,
creating greater opportunities for cross-selling among the various
divisions of the Company.
The Company operates in two business segments, Special Machines and
Components. The Special Machines segment designs and builds integrated
systems, custom equipment, and proprietary machines which assemble, test
and/or package industrial and consumer products. The Components segment
stamps and fabricates a range of standard and custom metal components.
The percentage of completion method of accounting is used by the Company's
Special Machines segment to recognize revenues and related costs. Under the
percentage of completion method, revenues for customer contracts are
measured based on the ratio of engineering and manufacturing labor hours
incurred to date compared to total estimated engineering and manufacturing
labor hours or, for certain customer contracts, the ratio of total costs
incurred to date to total estimated costs. Any revisions in the estimated
total costs or values of the contracts during the course of the work are
reflected when the facts that require the revisions become known. Revenue
from the sale of products manufactured by the Company's Components segment
is recognized upon shipment to the customer.
Costs and related expenses to manufacture the products are recorded as cost
of sales when the related revenue is recognized. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined.
Gross margins of the Special Machines segment may vary in a given period as
a result of the variations in profitability of contracts for large orders
of automated production systems or special machines. In addition, changes
in the product mix in a given period affect gross margins for the Special
Machines segment.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 13
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Certain information contained herein, particularly the information
appearing under the headings "Results of Operations", "Liquidity and
Capital Resources" and "Backlog", includes forward-looking statements.
These statements, comprising all statements herein which are not
historical, are based upon the Company's interpretation of what it believes
are significant factors affecting its businesses, including many
assumptions regarding future events, and are made pursuant to the safe
harbor provisions of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. Actual
results could differ materially from those anticipated in any
forward-looking statement as a result of various factors, including
economic downturns in industries served, delays or cancellations of
customer orders, delays in shipping dates of products, significant cost
overruns on certain projects, foreign currency exchange rate fluctuations,
delays in achieving anticipated cost savings or in fully implementing
project management systems, and possible future acquisitions that may not
be complementary or additive. Additional information regarding certain
important factors that could cause actual results of operations or outcomes
of other events to differ materially from any such forward-looking
statement appears elsewhere herein, including under the heading
"Seasonality and Fluctuations in Quarterly Results"; and in the
Corporation's other filings with the Securities and Exchange Commission,
including its registration statement on Form S-3 (Registration No.
333-30909) and prospectus dated September 2, 1997 including the section
therein entitled "Risk Factors".
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of consolidated net sales represented by certain items reflected in the
Company's consolidated statement of operations:
<TABLE>
<CAPTION>
Three months ended Six months ended
December 28, December 29, December 28, December 29,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 72.8 72.5 73.1 72.5
------------ ------------ ------------ ------------
Gross profit 27.2 27.5 26.9 27.5
Selling, general and
administrative expenses 14.4 13.7 14.6 13.8
------------ ------------ ------------ ------------
Operating income 12.8 13.8 12.3 13.7
Interest expense 1.4 3.5 1.4 3.4
Dividends on Company-
obligated, mandatorily
redeemable convertible
preferred securities of
subsidiary DT Capital
Trust 1.0 --- 1.0 ---
------------ ------------ ------------ ------------
Income before provision
for income taxes and
extraordinary loss 10.4 10.3 9.9 10.3
Provision for income taxes 4.2 4.3 4.0 4.3
------------ ------------ ------------ ------------
Income before
extraordinary loss 6.2 6.0 5.9 6.0
Extraordinary loss on debt
refinancing --- --- 0.5 0.2
------------ ------------ ------------ ------------
Net income 6.2% 6.0% 5.4% 5.8%
============ ============ ============ ============
</TABLE>
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 14
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THREE MONTHS ENDED DECEMBER 28, 1997
COMPARED TO THREE MONTHS ENDED DECEMBER 29, 1996
NET SALES
Consolidated net sales increased $31.7 million, or 31.5%, to $132.4 million
for the three months ended December 28, 1997 from $100.7 million for the
three months ended December 29, 1996. The increase in sales can be
attributed to the incremental sales of ATT which was acquired in July 1997
and an increase in sales from existing businesses of $6.5 million or 6.5%.
Sales by the Special Machines segment increased $31.0 million and sales by
the Components segment increased $0.7 million. The increase in sales by the
Special Machines segment was due to an increase in sales from existing
businesses of $5.8 million, or 6.5%, over the second quarter of fiscal 1997
and $25.2 million in incremental sales from recently-acquired businesses.
The sales growth of existing businesses in the Special Machines segment
reflects the continued growth in sales of welding systems and
pharmaceutical packaging systems. These increases were partially offset by
a drop in sales of RIGO thermoforming systems. The increase in sales by the
Components segment of $0.7 million, or 6.3%, reflects strong sales to
customers in the agricultural equipment and transportation industries
largely due to favorable industry trends and the expansion of business with
these customers.
GROSS PROFIT
Gross profit increased $8.3 million, or 30.0%, to $36.0 million for the
three months ended December 28, 1997 from $27.7 million for the three
months ended December 29, 1996, as a result of the sales increases
discussed above. The gross margin decreased to 27.2% from 27.5% primarily
as a result of lower margins from the recent acquisition of ATT. Gross
margin exclusive of acquired operations increased slightly to 27.6%,
reflecting an increase in the Special Machines segment gross margin which
was offset by a decrease in the Components segment gross margin. The
increase in gross margin for the Special Machines segment reflects margin
improvements resulting from implementation of project management systems
and several large duplicate systems being manufactured during the quarter
with favorable margins. The Components segment's gross margin continues to
remain below historical levels as a result of production inefficiencies.
The Company has taken steps to bolster operating management and implement
systems and processes to improve productivity and profitability. The
Company has also discontinued producing certain low margin parts, focusing
on products with respect to which historical margin levels can be achieved.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES
SG&A expenses increased $5.3 million, or 39.0%, to $19.1 million for the
three months ended December 28, 1997 from $13.8 million for the three
months ended December 29, 1996. The increase was primarily due to the
recent acquisition of ATT, with the remaining increase largely associated
with the overall growth of the company, primarily personnel additions,
increased investment in marketing and research and development activities,
increased travel costs and higher professional fees related to tax and
human resource consulting. As a percentage of consolidated net sales, SG&A
expenses increased to 14.4% from 13.7%.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 15
================================================================================
OPERATING INCOME
Operating income increased $2.9 million, or 21.1%, to $16.8 million for the
three months ended December 28, 1997 from $13.9 million for the three
months ended December 29, 1996, as a result of the factors noted above. The
operating margin decreased to 12.8% from 13.8% in the prior year primarily
as a result of the lower operating margins of ATT.
INTEREST EXPENSE
Interest expense decreased to $1.9 million for the three months ended
December 28, 1997 from $3.6 million for the three months ended December 29,
1996. The decrease in interest expense is primarily the result of the
common stock offering in November 1996 and the Convertible Preferred
Securities (defined below) offering in June 1997 which allowed the Company
to retire debt.
DIVIDENDS ON COMPANY-OBLIGATED, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES OF SUBSIDIARY DT CAPITAL TRUST
Dividends on Company-obligated, mandatorily redeemable convertible
preferred securities of subsidiary DT Capital Trust (Convertible Preferred
Securities) were $1.3 million for the three months ended December 28, 1997.
The Convertible Preferred Securities offering was completed in June 1997.
INCOME TAXES
Provision for income taxes increased to $5.5 million for the three months
ended December 28, 1997 from $4.3 million for the three months ended
December 29, 1996, reflecting an effective tax rate of approximately 40.0%
and 41.6% for each period, respectively. This rate differs from statutory
rates due to permanent differences primarily related to non-deductible
goodwill amortization on certain acquisitions.
NET INCOME
Net income increased to $8.2 million for the three months ended December
28, 1997 from $6.0 million for the three months ended December 29, 1996 as
a result of the factors noted above. Diluted earnings per share were $0.66
for the three months ended December 28, 1997 versus $0.58 for the three
months ended December 29, 1996. On a diluted basis, the weighted average
number of common and common equivalent shares outstanding for the three
months ended December 28, 1997 was 13,650,807 versus 10,478,377 for the
three months ended December 29, 1996. The increase is primarily the result
of the common stock offering in November 1996 and the Convertible Preferred
Securities offering in June 1997. Basic earnings per share were $0.73 for
the three months ended December 28, 1997 compared to $0.61 for the three
months ended December 29, 1996. The basic weighted average common shares
outstanding for the three months ended December 28, 1997 were 11,322,312
versus 9,828,672 for the three months ended December 29, 1996. The increase
is primarily the result of the common stock offering in November 1996.
Prior year earnings per share and weighted average common and common
equivalent shares outstanding have been restated to reflect Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share."
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 16
================================================================================
SIX MONTHS ENDED DECEMBER 28, 1997
COMPARED TO SIX MONTHS ENDED DECEMBER 29, 1996
NET SALES
Consolidated net sales increased $64.9 million, or 35.4%, to $248.2 million
for the six months ended December 28, 1997 from $183.3 million for the six
months ended December 29, 1996. Of the $64.9 million increase in sales,
$52.6 million was due to the incremental sales of recently acquired
businesses, with the remaining $12.3 million, or 6.7%, relating to
increased sales from existing businesses. Recently acquired businesses
include Hansford in September 1996 and ATT in July 1997.
Sales by the Special Machines segment increased $62.3 million and sales by
the Components segment increased $2.6 million. The increase in sales by the
Special Machines segment was due to an increase in sales from existing
businesses of $9.7 million, or 6.0%, over the six months of fiscal 1997 and
$52.6 million in incremental sales from recently acquired businesses. Sales
from existing businesses were higher for the six months ended December 28,
1997 as a result of the expansion of business in automated assembly
systems, welding systems and tablet and liquid filling systems. The
increased sales of automated assembly and welding systems reflect the
growth in the customer base, capabilities and systems solutions of the
automation companies. Sales of tablet and liquid filling systems have grown
from strong market demand and the increased systems integration work. The
growth of the assembly, welding and packaging systems was partially offset
by a drop in sales of RIGO thermoforming systems to the appliance industry.
The increase in sales by the Components segment of $2.6 million, or 12.4%,
for the six month period resulted primarily from strong sales of parts to
customers in the transportation industry and the agricultural equipment
industry. The increased sales to these customers reflect favorable industry
trends and production of new parts for the customers.
GROSS PROFIT
Gross profit increased $16.5 million, or 32.6%, to $66.9 million for the
six months ended December 28, 1997 from $50.4 million for the six months
ended December 29, 1996, as a result of the sales increases discussed
above. The gross margin decreased to 26.9% from 27.5% as a result of lower
margins from recently acquired businesses. Gross margin exclusive of
acquired operations increased to 28.0%, reflecting a higher Special
Machines segment gross margin partially offset by a lower gross margin for
the Components segment. The gross margin for the Special Machines segment
benefited from margin improvements resulting from implementation of project
management systems and several large duplicate system projects manufactured
during the six months ended December 28, 1997 at favorable margins. The
Components segment gross margin continues to remain below historical levels
as a result of production inefficiencies. The Company has bolstered
operating management and implemented systems and processes to improve
productivity and profitability. The Company has also discontinued producing
certain low margin parts, focusing on products with respect to which
historical margin levels can be achieved.
SG&A EXPENSES
SG&A expenses increased $10.8 million, or 42.9%, to $36.2 million for the
six months ended December 28, 1997 from $25.4 million for the six months
ended December 29, 1996. The increase was primarily due to recent
acquisitions, with the remaining increase largely associated with the
overall growth of the company, primarily personnel additions, increased
investment in marketing and research and development activities, increased
travel costs and higher professional fees related to tax and human resource
consulting. As a percentage of consolidated net sales, SG&A expenses
increased to 14.6% from 13.8%.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 17
================================================================================
OPERATING INCOME
Operating income increased $5.6 million, or 22.2%, to $30.7 million for the
six months ended December 28, 1997 from $25.1 million for the six months
ended December 29, 1996, as a result of the factors noted above. The
operating margin decreased to 12.4% from 13.7% in the prior year primarily
as a result of the lower operating margins of recently acquired businesses.
INTEREST EXPENSE
Interest expense decreased to $3.6 million for the six months ended
December 28, 1997 from $6.3 million for the six months ended December 29,
1996. The decrease in interest expense is primarily the result of the
common stock offering in November 1996 and the Convertible Preferred
Securities (defined below) offering in June 1997 which allowed the Company
to retire debt.
DIVIDENDS ON COMPANY-OBLIGATED, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES OF SUBSIDIARY DT CAPITAL TRUST
Dividends on Company-obligated, mandatorily redeemable convertible
preferred securities of subsidiary DT Capital Trust (Convertible Preferred
Securities) were $2.5 million for the six months ended December 28, 1997.
The Convertible Preferred Securities offering was completed in June 1997.
INCOME TAXES
Provision for income taxes increased to $9.8 million for the six months
ended December 28, 1997 from $7.9 million for the six months ended December
29, 1996, reflecting an effective tax rate of approximately 40.0% and 42.0%
for each period, respectively. This rate differs from statutory rates due
to permanent differences primarily related to non-deductible goodwill
amortization on certain acquisitions.
NET INCOME, EXTRAORDINARY LOSS AND EARNINGS PER SHARE
Income before extraordinary loss increased to $14.8 million for the six
months ended December 28, 1997 from $10.9 million for the six months ended
December 29, 1996 as a result of the factors noted above. An extraordinary
loss was recognized for costs incurred of $2.0 million, less applicable
income tax benefits of $0.8 million in July 1997 and costs inucrred of $0.5
million, less applicable income tax benefits of $0.2 million in July 1996,
related to the extinguishment and refinancing of debt by the Company. As a
result, net income was $13.6 million for the six months ended December 28,
1997 versus $10.6 million for the six months ended December 29, 1996. Basic
earnings per share before the extraordinary loss were $1.31 for the six
months ended December 28, 1997 versus $1.16 for the six months ended
December 29, 1996. After the extraordinary loss, basic earnings per share
were $1.20 and $1.12 for the six months ended December 28, 1997 and
December 29, 1996, respectively. The basic weighted average common shares
outstanding for the six months ended December 28, 1997 were 11,312,088
versus 9,416,768 for the six months ended December 29, 1996. The increase
is primarily the result of the common stock offering in November 1996.
Diluted earnings per share before the extraordinary loss were $1.19 for the
six months ended December 28, 1997 versus $1.09 for the six months ended
December 29, 1996. After the extraordinary loss, diluted earnings per share
were $1.10 and $1.06 for the six months ended December 28, 1997 and
December 29, 1996, respectively. On a diluted basis, weighted average
shares outstanding for the six months ended December 28, 1997 were
13,652,272 versus 9,996,064 for the six months ended December 29, 1996. The
increase in weighted average common and common equivalent shares
outstanding reflects the common stock offering in November 1996 and the
assumed conversion of the Convertible Preferred Securities.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 18
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
Net income plus non-cash operating charges provided $18.6 million of
operating cash flow for the six months ended December 28, 1997. Net
decreases in working capital balances provided operating cash of $1.5
million, resulting in net cash provided by operating activities of $20.1
million for the six months ended December 28, 1997. The decrease in working
capital resulted from the lower investment in costs and earnings in excess
of amounts billed and an increase in customer advances. These changes were
partially offset by an increase in inventories and accounts receivable and
a decrease in trade payables. The decrease in costs and earnings in excess
of amounts billed and the increase in accounts receivable can be attributed
to the substantial shipments and billings near the end of the quarter. The
decrease in costs and earnings in excess of amounts billed can also be
attributed to a lower level of project activity status of projects, the
overall early stage and smaller average size of projects received during
the period. A larger percentage of orders at an early stage in the
manufacturing process also accounts for the higher inventory levels. In
addition, several Special Machines businesses, with a strong backlog of
orders at December 28, 1997, showed an increase in customer advances as a
result of deposits on orders received.
During the six months ended December 28, 1997, financing activities
generated $44.9 million, including $0.5 million from the exercise of stock
options. Operating activities as discussed above generated $20.1 million.
These funds were used primarily to finance the acquisition of ATT for $46.7
million, net of cash acquired, pay dividends of $0.5 million and finance
capital expenditures of $7.4 million. The Company incurred $0.9 million of
financing costs in renegotiating its credit facility in July 1997 as
discussed below.
During the six months ended December 29, 1996, net cash used by operating
activities was $15.3 million. Net income plus non-cash operating charges
provided $15.9 million of operating cash flow. A net unfavorable change in
working capital balances resulted in cash used of $31.2 million, resulting
in net cash used by operating activities of $15.3 million for the six
months ended December 29, 1996. The net increase in working capital
reflected the increased level of manufacturing activity occurring in the
Special Machines segment including several large dollar value and longer
lead-time projects which did not provide for advance or progress payments.
During the six months ended December 29, 1996, net cash of $112.9 million
was provided by financing activities primarily to fund the acquisitions of
Mid-West and Hansford for $92.8 million, net of cash acquired. The net cash
provided by financing activities was also used to finance capital
expenditures of $5.7 million, pay dividends of $0.4 million and fund
working capital requirements. Financing activities consisted of the
renegotiation of the Company's credit facility and the issuance of common
stock. The Company incurred $2.5 million of financing costs in conjunction
with renegotiating the credit facility.
Working capital balances can fluctuate significantly between periods as a
result of the significant costs incurred on individual contracts and the
relatively large amount invoiced and collected by the Company for a number
of large contracts.
On July 21, 1997, the Company replaced the Second Amended and Restated
Credit Facilities Agreement and the foreign currency denominated term
facility which were outstanding at that time with a $175 million
multi-currency revolving and term credit facility. The multi-currency
facility provides a $10 million Canadian term loan and a $165 million
revolving credit facility, which includes an approximate $80 million
sublimit for multi-currency borrowings in Pounds Sterling and Deutsche
Marks. Borrowings under the multi-currency facility bear interest at
floating rates based on the agent bank's base rate or LIBOR (at the option
of the Company) plus a specified percentage based on the ratio of funded
debt to operating cash flow and the ratings of the Company's corporate
debt. The agreement is secured by the capital stock of each of the
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 19
================================================================================
significant domestic subsidiaries and 65% of the capital stock of each
significant foreign subsidiary of the Company. The agreement contains
certain financial and other covenants and restrictions and matures in July
2002. In conjunction with entering into the new credit facility, the
Company recognized an extraordinary loss in July 1997 of $1.2 million
attributable to the write-off of $2.0 million of unamortized deferred
financing fees, net of related $0.8 million tax benefit. The acquisition of
certain of the net assets of LATS, a division of LucasVarity plc of England
on July 29, 1997 was financed by borrowings under the new multi-currency
revolving credit facility.
The Company also maintains a separate revolving credit facility of
approximately Canadian $3.0 million through its Canadian subsidiary. At
December 28, 1997, total borrowings under such facility were approximately
Canadian $3.0 million.
To manage its exposure to fluctuations in interest rates, the Company
entered into an interest rate swap agreement in June 1995 for a notional
principal amount of $30 million, maturing June 29, 1998. Swap agreements
involve the exchange of interest obligations on fixed and floating
interest-rate debt without the exchange of the underlying principal amount.
The differential paid or received on the swap agreement is recognized as an
adjustment to interest expense. The swap agreement requires the Company to
pay a fixed rate of 6.06% in exchange for a floating rate payment equal to
the three month LIBOR determined on a quarterly basis with settlement
occurring on specific dates.
Management anticipates that capital expenditures in the current fiscal year
will range from approximately $18 million to $22 million. This includes
recurring replacement or refurbishment of machinery and equipment, and
purchases to improve production methods or processes or to expand
manufacturing capabilities, all of which, in the aggregate, are expected to
approximate fiscal 1997 capital expenditures. Incremental capital
expenditures in the current fiscal year will include the first year costs,
estimated to be approximately $6 million, of an approximate four-year
implementation of an integrated core business system and will also include
adding capacity at certain automation and packaging facilities. Funding for
capital expenditures will be provided by cash from operating activities and
through the Company's credit facilities.
The Company paid quarterly cash dividends of $0.02 per share on September
15, 1997 and December 15, 1997 to stockholders of record on September 2,
1997 and November 28, 1997, respectively.
Based on its ability to generate funds from operations and the availability
of funds under its current credit facilities, the Company believes that it
will have sufficient funds available to meet its currently anticipated
operating and capital expenditure requirements.
BACKLOG
The Company's backlog is based upon customer purchase orders that the
Company believes are firm. As of December 28, 1997, the Company had $257.1
million of orders in backlog, which compares to a backlog of approximately
$173.5 million as of December 29, 1996. The acquisition of ATT increased
the backlog $74.6 million at December 28, 1997 in comparison to December
29, 1996.
The backlog for the Special Machines segment at December 28, 1997 was
$249.9 million, which increased $86.7 million from a year ago. Excluding
the acquisition effect of ATT, the Special Machines segment backlog
increased $12.1 million, or 7.4%. The higher backlog can be primarily
attributed to the strong bookings of extrusion systems and integrated
tablet and liquid filling systems.
<PAGE>
DT INDUSTRIES, INC.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 20
================================================================================
Backlog for the Components segment was $7.2 million, down $3.0 million or
29.5%. The lower Components segment backlog is a result of the Company's
efforts to discontinue production of certain low margin parts, including
certain customers who had placed orders equal to twelve months production.
The level of backlog at any particular time is not necessarily indicative
of the future operating performance of the Company. Additionally, certain
purchase orders are subject to cancellation by the customer upon
notification. Certain orders are also subject to delays in completion and
shipment at the request of the customer. The Company believes the majority
of the orders in the backlog will be recognized as sales during the current
fiscal year.
SEASONALITY AND FLUCTUATIONS IN QUARTERLY RESULTS
In general, the Company's business is not subject to seasonal variations in
demand for its products. However, because orders for certain of the
Company's products can be several million dollars, a relatively limited
number of orders can constitute a meaningful percentage of the Company's
revenue in any one quarterly period. As a result, a relatively small
reduction or delay in the number of orders can have a material impact on
the timing of recognition of the Company's revenues. Certain of the
Company's revenues are derived from fixed price contracts. To the extent
that original cost estimates prove to be inaccurate, profitability from a
particular contract may be adversely affected. Gross margins in the Special
Machines segment may vary between comparable periods as a result of the
variations in profitability of contracts for large orders of special
machines as well as product mix between the various types of custom and
proprietary equipment manufactured by the Company. Accordingly, results of
operations of the Company for any particular quarter are not necessarily
indicative of results that may be expected for any subsequent quarter or
related fiscal year.
<PAGE>
DT INDUSTRIES, INC.
PART II. Other Information
Page 21
================================================================================
ITEM 4. Submission of Matters to a Vote of Security Holders
On November 10, 1997, the Annual Meeting of the Stockholders of DTI
was held, at which the following matters were voted upon:
1. Election of Directors. Each of the following nominees received
the number of affirmative votes set forth opposite his name:
Class I James J. Kerley 9,648,295
(term expires 2000) Charles F. Pollnow 9,648,895
John F. Logan 9,648,595
Class II Frank W. Jones 9,648,995
(term expires 1998)
Class III Graham L. Lewis 9,648,895
(term expires 1999)
2. Ratification of Appointment of Accountants for the fiscal year
ending June 28, 1998. The vote to ratify the appointment of Price
Waterhouse LLP as independent accountants for the fiscal year
ending June 28, 1998 was 9,633,633 for, 3,950 against and 26,197
abstaining.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11--Statement Regarding Computation of Earnings Per Share
Exhibit 27--Financial Detail Schedule (EDGAR version only)
(b) Reports on Form 8-K:
None.
<PAGE>
DT INDUSTRIES, INC.
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.
DT INDUSTRIES, INC.
Date: February 10, 1998 /s/ Bruce P. Erdel
----------------------------------------
(Signature)
Bruce P. Erdel
Vice President - Finance and Secretary
(Principal Financing and Accounting
Officer)
<PAGE>
EXHIBIT INDEX
Page No. in Sequential
Exhibit No. Description Numbering System
- ----------- ----------- ----------------------
11 Statement Regarding Computation of
Earnings Per Share
27 Financial Detail Schedule
(EDGAR version only)
DT INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
December 28, December 29, December 28, December 29,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income before extraordinary loss $ 8,228 $ 6,038 $ 14,763 $ 10,911
Extraordinary loss --- --- 1,200 324
------------ ------------ ------------ ------------
Net income $ 8,228 $ 6,038 $ 13,563 $ 10,587
============ ============ ============ ============
Basic:
Basic weighted average
shares outstanding 11,322 9,829 11,312 9,417
============ ============ ============ ============
Basic earnings per share before
extraordinary loss $ 0.73 $ 0.61 $ 1.31 $ 1.16
Extraordinary loss --- --- 0.11 0.04
------------ ------------ ------------ ------------
Basic net income per share $ 0.73 $ 0.61 $ 1.20 $ 1.12
============ ============ ============ ============
Income before extraordinary loss $ 8,228 $ 6,038 $ 14,763 $ 10,911
Extraordinary loss --- --- 1,200 324
------------ ------------ ------------ ------------
Net income 8,228 6,038 13,563 10,587
Interest expense on mandatorily
redeemable convertible preferred
securities, net of applicable
income taxes 752 --- 1,504 ---
------------ ------------ ------------ ------------
Net income, adjusted $ 8,980 $ 6,038 $ 15,067 $ 10,587
============ ============ ============ ============
Diluted:
Weighted average number of shares
outstanding 11,322 9,829 11,312 9,417
Add dilutive effect of stock
options based on treasury
stock method using average
market price 399 537 410 467
Add shares contingently issuable
to the former owner of Kalish
assuming maximum future earnings 124 112 124 112
Assumed conversion of convertible
preferred securities 1,806 --- 1,806 ---
------------ ------------ ------------ ------------
13,651 10,478 13,652 9,996
============ ============ ============ ============
Diluted earnings per share before
extraordinary loss $ 0.66 $ 0.58 $ 1.19 $ 1.09
Extraordinary loss --- --- 0.09 0.03
------------ ------------ ------------ ------------
Diluted net income per share $ 0.66 $ 0.58 $ 1.10 $ 1.06
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information (in thousands except per
share data) extracted from the unaudited Consolidated Balance Sheet at December
28, 1997 and the unaudited Consolidated Statement of Operations for the Six
Months Ended December 28, 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> 6-MOS
<FISCAL-YEAR-END> JUN-28-1998
<PERIOD-END> DEC-28-1997
<EXCHANGE-RATE> 1
<CASH> 12,379
<SECURITIES> 0
<RECEIVABLES> 89,002
<ALLOWANCES> 1,447
<INVENTORY> 58,145
<CURRENT-ASSETS> 223,524
<PP&E> 84,344
<DEPRECIATION> 19,710
<TOTAL-ASSETS> 479,174
<CURRENT-LIABILITIES> 106,436
<BONDS> 93,972
0
0
<COMMON> 113
<OTHER-SE> 197,562
<TOTAL-LIABILITY-AND-EQUITY> 479,174
<SALES> 248,195
<TOTAL-REVENUES> 248,195
<CGS> 181,310
<TOTAL-COSTS> 181,310
<OTHER-EXPENSES> 36,218
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,062
<INCOME-PRETAX> 24,605
<INCOME-TAX> 9,842
<INCOME-CONTINUING> 14,763
<DISCONTINUED> 0
<EXTRAORDINARY> 1,200
<CHANGES> 0
<NET-INCOME> 13,563
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.10
</TABLE>
