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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 25, 1996
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| | 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 1-13030
Bush Boake Allen Inc.
(Exact Name of Registrant as Specified in Its Charter)
Virginia 13-2560391
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification No.)
7 Mercedes Drive, Montvale, New Jersey 07645
(Address of Principal Executive Offices) (Zip Code)
(201) 391-9870
(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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO ______
19,218,000 shares of Registrant's Common Stock, Par Value $1 Per Share, were
outstanding as of the close of business on March 25, 1996.
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BUSH BOAKE ALLEN INC.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION*
Item 1. Financial Statements 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 6
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders 8
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
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*A summary of the Registrant's significant accounting policies is contained in
the Registrant's Form10-K for the year ended December 25, 1995 which has
previously been filed with the Commission.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BUSH BOAKE ALLEN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 25,
1996 1995
<S> <C> <C>
Net Sales $106,889 $97,338
Costs and other charges:
Cost of goods sold 67,543 60,818
Selling and administrative expenses 22,068 20,483
Research and development expenses 5,395 4,820
------ ------
Income from operations 11,883 11,217
------ ------
Interest expense 720 884
Other (income) expense, net 619 (621)
--- ----
Income before income taxes 10,544 10,954
------ ------
Income taxes 3,606 4,054
----- -----
Net Income $6,938 $6,900
====== ======
Net income per share $0.36 $0.36
========== ==========
Weighted average number of
shares outstanding 19,218,000 19,215,000
========== ==========
</TABLE>
See accompanying notes to the Consolidated Financial Statements.
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BUSH BOAKE ALLEN INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
<TABLE>
<CAPTION>
MARCH 25, DECEMBER 25,
1996 1995
<S> <C> <C>
ASSETS
Cash and cash equivalents $4,547 $4,966
Receivables, net 81,729 82,538
Inventories 94,603 94,742
Other 9,090 8,449
----- -----
Total current assets 189,969 190,695
Property, plant and equipment, net 135,327 131,203
Other assets 28,819 27,955
------ ------
Total Assets $354,115 $349,853
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of long-term debt $41 $442
Notes payable 35,683 34,052
Accounts payable 31,415 34,315
Accrued liabilities 18,374 22,825
Income and other taxes 7,884 5,358
----- -----
Total current liabilities 93,397 96,992
Long-term debt 3,901 3,731
Deferred income taxes 18,015 17,231
Other long-term liabilities 10,093 10,117
Stockholders' equity (Shares outstanding
1996: 19,218,000; 1995: 19,218,000) 228,709 221,782
------- -------
Total Liabilities and Stockholders' Equity $354,115 $349,853
======= =======
See accompanying notes to the Consolidated Financial Statements.
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BUSH BOAKE ALLEN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 25,
1996 1995
<S> <C> <C>
Cash provided by (used for) operations:
Net income $6,938 $6,900
Adjustments to reconcile net income
to cash provided by operations:
Depreciation and amortization 3,157 3,071
Deferred income taxes 605 558
Other (38) (56)
Changes in operational assets and liabilities:
Receivables, net 390 (5,239)
Inventories (330) (5,697)
Other assets (1,335) (1,688)
Accounts payable, taxes and other liabilities (4,902) 9,066
------ -----
Cash provided by operations 4,485 6,915
----- -----
Cash provided by (used for) investment activities:
Capital expenditures (6,780) (3,394)
Other 488 (2,012)
--- ------
Cash used for investment activities (6,292) (5,406)
------ ------
Cash provided by (used for) financing activities:
Change in notes payable, net 1,619 1,501
Other (231) (473)
---- ----
Cash provided by financing activities 1,388 1,028
----- -----
Effect of exchange rate changes on cash 0 87
- --
Increase (decrease) in cash and cash equivalents (419) 2,624
Balance at beginning of period 4,966 2,010
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Balance at end of period $4,547 $4,634
====== ======
</TABLE>
See accompanying notes to the Consolidated Financial Statements.
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BUSH BOAKE ALLEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The information furnished in this report is unaudited but includes
all adjustments which, in the opinion of management, are necessary for
a fair presentation of results for the interim periods reported. The
adjustments made were of a normal recurring nature.
Note 2. Inventories
<TABLE>
<CAPTION>
March 25, 1996 December 25, 1995
($ in thousands)
<S> <C> <C>
Finished goods $27,540 $32,720
Raw materials 51,116 47,028
Work in process 12,266 10,749
Supplies 3,681 4,245
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Total $94,603 $94,742
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</TABLE>
Note 3. Stockholders' Equity (in thousands)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE TOTAL
COMMON STOCK PAID-IN RETAINED TRANSLATION STOCKHOLDERS'
SHARES AMOUNTS CAPITAL EARNINGS ADJUSTMENT EQUITY
<S> <C> <C> <C> <C> <C> <C>
Balance December 25, 1995 ............................ 19,218 $ 19,218 $167,337 $47,546 $(12,319) $ 221,782
Net Income 6,938 6,938
Foreign Currency Translation (11) (11)
Balance March 25, 1996 19,218 $19,218 $167,337 $54,484 $(12,330) $ 228,709
====== ======= ======== ======= ========= =========
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NET SALES
Net sales for the first quarter ended March 25, 1996 increased 9.8% to
$106.9 million from $97.3 million for the quarter ended March 25, 1995. The
primary reason for the increase in sales was the aroma chemicals segment, which
recorded growth in sales of 27.2% over the first quarter of 1995. This growth
mainly reflects increased volume of chemical shipments under a long-term supply
agreement with a major customer. The flavor and fragrance segment recorded
growth in first quarter sales of 5.6% over the first quarter of 1995 with the
increases being in Europe and the Americas regions. Net sales in both product
segments were adversely affected by the movement in foreign currency exchange
rates, primarily the Pound Sterling and currencies in India and Turkey, versus
the U.S. dollar. If exchange rates had remained unchanged from the first quarter
1995 to the first quarter 1996, the increase in total net sales would have been
approximately 12%.
COST OF GOODS SOLD
Cost of goods sold in the first quarter of 1996 increased to $67.5
million from $60.8 million in the first quarter of 1995 due primarily to
increased sales. Cost of goods sold as a percentage of net sales increased to
63.2% from 62.5% reflecting significantly higher raw material turpentine costs.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses in first quarter of 1996 increased
to $22.1 million from $20.5 million in the first quarter of 1995. This increase
includes the effect of additional sales and marketing personnel for the flavor
and fragrance segment. Selling and administrative expenses as a percentage of
net sales decreased to 20.6% from 21.0%.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses in the first quarter of 1996 increased
to $5.4 million from $4.8 million in the first quarter of 1995. The increase is
due primarily to additional creative and technical personnel for the flavor and
fragrance segment, and for services performed by Union Camp at its research
facility in Princeton, New Jersey. Research and development expenses as a
percentage of net sales was 5.0% for both periods.
INCOME FROM OPERATIONS
Income from operations in the first quarter of 1996 increased to $11.9
million from $11.2 million in the first quarter of 1995. Income from operations,
exclusive of corporate items, for the flavor and fragrance segment was $10.1
million compared to $10.7 million in the first quarter of 1995. A decrease in
operating income was reported in all regions except Europe. The Company's aroma
chemical segment recorded first quarter operating income (exclusive of corporate
items) of $7.1 million in 1996, compared to $4.7 million in the first quarter of
1995. Improved product mix resulting from large volume contract sales and
operating efficiencies at the Company's aroma chemical plants were the primary
reasons for the increase in operating income.
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OTHER (INCOME) EXPENSE, NET
Other (income) expense for the first quarter of 1996 was $600,000
expense compared to $600,000 income in the first quarter of 1995 which included
interest income received on foreign tax refunds and a gain on the sale of
surplus land in the UK.
INTEREST EXPENSE
Interest expense for the first quarter of 1996 decreased to $700,000
from $900,000 in the first quarter of 1995. The decrease in interest expense is
primarily due to capitalized interest on a manufacturing facility being
constructed in China.
INCOME TAXES
Income tax expense in the first quarter of 1996 decreased to $3.6
million from $4.1 million in the first quarter of 1995 primarily due to higher
foreign tax credits. The Company's effective tax rate in the first quarter of
1996 decreased to 34.2% from 37.0% for the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operations for the three months ended March 25,
1996 were $4.5 million compared to $6.9 million for the three months ended March
25, 1995. The decrease is primarily due to changes in operational assets and
liabilities, mainly from a reduction in accounts payable and other accrued
liabilities during the first quarter of 1996.
At March 25, 1996, working capital of the Company was $96.6 million, a
$2.9 million increase from $93.7 million at December 25, 1995. The change in
working capital is primarily due to the decrease in accounts payable and accrued
liabilities, partially offset by an increase in income and other taxes payable.
As of March 25, 1996, the Company had cash and cash equivalents of $4.5
million. The Company believes that its available cash, funds provided by
operations and available borrowing capacity under its credit facilities will be
sufficient to support its debt service, working capital and capital expenditure
requirements for the foreseeable future, including implementation of its
strategy to strengthen its position as a leading producer of flavors, fragrances
and aroma chemicals and for long-term growth.
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PART II.
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company's annual meeting of its stockholders was held on May 1,
1996.
At the annual meeting the Company's stockholders voted on two proposals:
(1) the election of seven nominees to serve as directors until the next
annual meeting of stockholders; and (2) the ratification of the
appointment of Price Waterhouse LLP as independent accountants for the
year 1996. The voting of the Company's stockholders as to these matters
was as follows:
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
NOMINEES VOTES FOR VOTES WITHHELD
<S> <C> <C>
Peter L. Acton 15,176,911 4,700
Julian W. Boyden 15,177,011 4,600
Thomas R. Crane, Jr. 15,177,011 4,600
L. Robert Pfund 15,175,211 6,400
James M. Reed 15,176,911 4,700
George J. Sella, Jr. 15,176,611 5,000
William H. Trice 15,176,911 4,700
</TABLE>
2. RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS
<S> <C> <C> <C>
15,178,327 1,984 1,300
</TABLE>
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
No. Description
11 Statement regarding computation of
per share earnings
27 Financial Data Schedule
b) REPORTS ON FORM 8-K
No current Report on Form 8-K was filed by the Registrant during the
first quarter of 1996.
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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.
BUSH BOAKE ALLEN INC.
Date: May 2, 1996 /s/ Fred W. Brown, Jr.
- ----------------------------------- ----------------------------------
Fred W. Brown, Jr.
Vice President Finance and
Chief Financial Officer
Date: May 2, 1996 /s/ Dennis M. Meany
- ----------------------------------- -----------------------------------
Dennis M. Meany
Vice President, General Counsel
and Secretary
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EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 25, 1996 March 25, 1995
<S> <C> <C>
Net Income $6,938,000 $6,900,000
Shares used to compute
earnings per share 19,218,000 19,215,000
Earnings Per Share $0.36 $0.36
Shares used to compute
earnings per share including
common stock equivalents - Primary Basis 19,398,927 19,370,971
Primary Earnings Per Share $0.36 $0.36
Shares used to compute
earnings per share including
common stock equivalents - Fully 19,398,927 19,384,594
Diluted Basis
Fully Diluted Earnings Per Share $0.36 $0.36
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-25-1996
<PERIOD-START> DEC-26-1995
<PERIOD-END> MAR-25-1996
<CASH> 4,547
<SECURITIES> 0
<RECEIVABLES> 81,729
<ALLOWANCES> 0
<INVENTORY> 94,603
<CURRENT-ASSETS> 189,969
<PP&E> 135,327
<DEPRECIATION> 0
<TOTAL-ASSETS> 354,115
<CURRENT-LIABILITIES> 93,397
<BONDS> 3,901
<COMMON> 228,709
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 354,115
<SALES> 106,889
<TOTAL-REVENUES> 106,889
<CGS> 67,543
<TOTAL-COSTS> 95,006
<OTHER-EXPENSES> (619)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 720
<INCOME-PRETAX> 10,544
<INCOME-TAX> 3,606
<INCOME-CONTINUING> 6,938
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,938
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
