UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 29, 1996
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 000-25l02
BRIDGEPORT MACHINES, INC.
(exact name of registrant as specified in its charter)
Delaware 06-ll69678
(State of Incorporation) (IRS Employer Identification No.)
500 Lindley Street, Bridgeport, CT 06606
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:
(203) 367-365l
NOT APPLICABLE
(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 Issuer's Common Stock, $.0l par value, outstanding on
June 29, l996 was 5,678,695 shares.
<PAGE>
BRIDGEPORT MACHINES, INC.
AND SUBSIDIARIES
INDEX
Part I - FINANCIAL INFORMATION
Item l. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of
June 29, 1996 and March 30, 1996
Consolidated Income Statements for
the three month periods ended June 29,
1996 and July 1, 1995
Consolidated Statements of Stockholders'
Equity for the three month periods ended
June 29, 1996 and July 1, 1995
Consolidated Statements of Cash Flows
for the three month periods ended
June 29, 1996 and July 1, 1995
Notes to Consolidated Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Part II - OTHER INFORMATION
Item l-4. OTHER INFORMATION
Item 5. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Signatures
<PAGE>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
<TABLE>
<CAPTION>
June 29, March 30,
l996 l996
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ..................................... $ 6,884 $ 4,960
Trade accounts receivable,
less allowance of $1,286
and $1,182, respectively ............... 46,331 41,321
Inventories .............................. 58,970 56,364
Deferred income taxes .................... 2,680 2,680
Prepaid expenses and other current
assets ................................... 1,283 1,275
--------- ---------
Total current assets ................. 116,148 106,600
PROPERTY, PLANT AND EQUIPMENT
Land ..................................... 337 334
Buildings, improvements and
leasehold improvements ................. 3,194 3,284
Machinery and equipment .................. 18,281 18,087
Furniture and fixtures ................... 4,336 4,174
--------- ---------
26,148 25,879
Less: Accumulated depreciation .................. (5,702) (4,903)
--------- ---------
Property, plant and equipment,
net .................................... 20,446 20,976
--------- ---------
INVESTMENTS IN AND ADVANCES TO AFFILIATES ........ 1,127 1,088
OTHER ASSETS, net of accumulated
amortization of $1,403
and $1,353 respectively .................. 432 492
--------- ---------
Total assets ........................ $ 138,153 $ 129,156
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
<TABLE>
<CAPTION>
June 29, March 30,
l996 l996
--------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdrafts .......................... $ 1,643 $ 1,974
Working capital revolver ................. 30,510 27,917
Accounts payable ......................... 23,241 20,707
Accrued expenses ......................... 13,211 11,618
Income taxes payable ..................... 3,977 3,548
Current portion of long-term debt
obligations ............................ 1,688 1,688
--------- ---------
Total current liabilities ........... 74,270 67,452
LONG-TERM DEBT OBLIGATIONS ....................... 4,053 4,475
OTHER LONG-TERM LIABILITIES ...................... 120 120
--------- ---------
Total liabilities ................... 78,443 72,047
STOCKHOLDERS' EQUITY
Preferred stock, $.0l par value,
2,000,000 shares authorized,
no shares issued ....................... -- --
Common stock, $.0l par value,
13,000,000 shares authorized;
5,678,695 shares issued and
outstanding at June 29, 1996
and 5,676,697 shares issued and
outstanding at March 30, 1996 .......... 57 57
Capital in excess of par value ........... 38,279 38,259
Retained earnings--subsequent to
reclassification of $6,750
deficit as part of the quasi-
reorganization as of January 3,
l993 ................................... 21,800 19,075
Cumulative translation adjustment ........ (426) (282)
--------- ---------
Total stockholders' equity .......... 59,710 57,109
--------- ---------
Total liabilities and stock-
holders' equity ..................... $ 138,153 $ 129,156
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
June 29, July 1,
1996 1995
-------- --------
<S> <C> <C>
Net sales .................................. $ 62,214 $ 47,273
Cost of sales .............................. 48,267 35,846
-------- --------
Gross profit ............................. 13,947 11,427
Selling, general and
administrative expenses .................. 8,750 7,479
-------- --------
Operating income ....................... 5,197 3,948
Interest expense ........................... (703) (411)
Other income
(expense), net ........................... (54) (234)
-------- --------
Income before provision
for income taxes ..................... 4,440 3,303
Provision for
income taxes ............................. 1,715 1,353
-------- --------
Net income ............................. $ 2,725 $ 1,950
======== ========
Primary earnings
per share ................................ $ .47 $ .34
======== ========
Weighted average number
of shares outstanding .................... 5,747 5,767
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
(In Thousands)
<TABLE>
<CAPTION>
CAPITAL IN CUMULATIVE
COMMON EXCESS OF RETAINED TRANSLATION
STOCK PAR VALUE EARNINGS ADJUSTMENT
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BALANCE, April 1, l995 ............................... $ 57 $ 38,106 $ 10,651 $ 1,395
Translation adjustment
for the three months
ended July 1, 1995 ................................. -- -- -- (433)
Net income for the three
months ended July 1, 1995 .......................... -- -- 1,950 --
Provision in lieu of
income taxes ....................................... -- (42) -- --
Exercise of stock options
for common stock ................................... -- 4 -- --
-------- -------- -------- --------
BALANCE, July 1, 1995 ................................ $ 57 $ 38,068 $ 12,601 $ 962
======== ======== ======== ========
BALANCE, March 30, 1996 .............................. $ 57 $ 38,259 $ 19,075 $ (282)
Translation adjustment
for the three months
ended June 29, 1996 ................................ -- -- -- (144)
Net income for the three
months ended June 29,
l996 ............................................... -- -- 2,725 --
Exercise of stock options
for common stock ................................... -- 20 -- --
-------- -------- -------- --------
BALANCE, June 29, 1996 ............................... $ 57 $ 38,279 $ 21,800 $ (426)
======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
(In Thousands)
<TABLE>
<CAPTION>
June 29, July 1,
1996 1995
------- -------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net income ....................................... $ 2,725 $ 1,950
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization ............. 861 622
Provision in lieu of income taxes ......... -- (42)
Net (gain) on sale of property,
plant and equipment ..................... -- (43)
Changes in operating assets and
liabilities:
(Increase) in net trade
accounts receivable .......................... (4,704) (9,639)
(Increase) in inventories ...................... (2,371) (1,026)
(Increase) in prepaid expenses
and other current assets ..................... -- (97)
(Increase) in other assets ..................... (19) (228)
Increase (decrease) in bank overdrafts ......... (331) 232
Increase in accounts payable
and accrued expenses ......................... 4,258 4,340
------- -------
Total adjustments ............................ (2,306) (5,881)
------- -------
Cash flows provided by (used in)
operating activities ......................... 419 (3,931)
------- -------
</TABLE>
<PAGE>
BRIDGEPORT MACHINES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
(In Thousands)
<TABLE>
<CAPTION>
June 29, July 1,
1996 l995
-------- --------
<S> <C> <C>
CASH FLOWS(USED IN)
INVESTING ACTIVITIES:
Capital expenditures ......................... $ (539) $(11,755)
Proceeds from sale of property,
plant and equipment ........................ -- 56
-------- --------
Cash flows (used in)
investing activities ..................... (539) (11,699)
-------- --------
CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES:
Sale of common stock ......................... 20 5
Borrowings under working
capital revolver, net ...................... 2,442 14,892
Payments of other debt and
capitalized lease obligations .............. (293) (176)
-------- --------
Cash flows provided by
financing activities ..................... 2,169 14,721
-------- --------
Effect of exchange rate changes
on cash .................................... (125) (30)
-------- --------
Net change in cash ......................... 1,924 (939)
CASH, begining of period ..................... 4,960 3,806
-------- --------
CASH, end of period .......................... $ 6,884 $ 2,867
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid ................................ $ 718 $ 217
Income taxes paid, net ....................... 304 21
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
<PAGE>
BRIDGEPORT MACHINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY AND BASIS OF PRESENTATION
Bridgeport Machines, Inc. and subsidiaries (the "Company") is a
manufacturer and distributor of metal cutting machine tools and
accessories. The Company manufactures its products in the U.S. and
Europe.
The consolidated balance sheet as of June 29, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows
for the three months ended June 29, 1996 and July 1, l995 have been
prepared by the Company without audit. In the opinion of management,
all adjustments necessary to present fairly the financial position,
results of operations and cash flows as of or for the periods ended
June 29, 1996 and July 1, l995 have been made. The accounting
principles followed during interim periods are generally consistent
with those applied for annual periods and are described in the
Company's financial statements included in its Form 10-K filed with the
Securities and Exchange Commission (the "SEC").
2. INTERIM STATEMENTS
The following accounting policies which are applied in the preparation
of the interim financial statements are different from those applied in
the year-end financial statements:
Inventories:
Inventories are valued at year-end based upon actual inventory
on hand verified by a physical count. Inventories are adjusted
during interim periods for purchases, production and shipments
based upon standard costs for material, labor and overhead.
Income Taxes:
The income tax provision is calculated based upon an estimated
effective tax rate for the year for each tax jurisdiction.
3. EARNINGS PER SHARE
Primary earnings per share has been computed based on the weighted
average number of common shares and common equivalent shares calculated
for stock options under the treasury stock method.
4. ACQUISITION OF ASSETS
In June 1995, the Company acquired, through a newly formed subsidiary,
for 6,000,000 (pounds) (approximately $9,600,000) certain assets of a
bankrupt German machine tool manufacturer. The assets acquired consist
of machinery and equipment that were used by the Company to establish
operations in the Republic of Germany.
<PAGE>
In addition, the subsidiary entered into a lease for manufacturing and
office space in Germany. The lease requires minimum annual rental
payments of approximately $525,000. The lease is for a minimum term of
seven years and can be extended at the Company's option up to twenty
years.
<PAGE>
BRIDGEPORT MACHINES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items reflected in the Company's
consolidated financial statements:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
June 29, 1996 July 1, 1995
------------- ------------
<S> <C> <C>
Net sales ...................................... 100.0% 100.0%
Gross profit ................................... 22.4% 24.2%
Selling, general and adminis-
trative expenses ............................. 14.1% 15.8%
Operating income ............................... 8.3% 8.4%
Interest expense ............................... (1.1%) (.9%)
Other income (expense) ......................... 0.0% (.5%)
Income tax expense ............................. 2.8% 2.9%
Net income ..................................... 4.4% 4.1%
</TABLE>
COMPARISON OF THE THREE MONTHS ENDED JUNE 29, 1996 ("FIRST QUARTER OF FISCAL
1997") TO THE THREE MONTHS ENDED JULY 1, 1995 ("FIRST QUARTER OF FISCAL 1996")
Net sales were $62.2 million in the first quarter of fiscal l997, an
increase of $14.9 million, or 31.6%, as compared to the first quarter of fiscal
l996. Net sales increased primarily as a result of increased shipments of
machining centers worldwide made possible by production capacity increases in
the Company's European and U.S. manufacturing facilities undertaken in fiscal
1996.
Gross profit was $13.9 million in the first quarter of fiscal l997, an
increase of $2.5 million, or 22.1%, as compared to the first quarter of fiscal
l996. Gross profit as a percent of sales was 22.4% compared with 24.2% in the
first quarter of fiscal 1996. The decrease in gross profit as a percentage of
net sales resulted from the shift in sales mix towards lower margin CNC products
and to a lesser extent, a change in the distribution of sales, primarily in
Europe, from direct-to-end customer toward distributors.
Selling, general and administrative expenses were $8.8 million in the
first quarter of fiscal l997, an increase of $1.3 million, or 17.0%, as compared
to the first quarter of fiscal l996. The increase in dollar amount consisted
primarily of increases in salaries ($0.5 million) and advertising and trade show
expenses ($0.4 million). As a percentage of net sales, selling, general and
administrative expenses were 14.1% in the first quarter of fiscal l997, as
compared to 15.8% for the first quarter of fiscal l996.
Operating income was $5.2 million in the first quarter of fiscal l997,
an increase of $1.2 million, or 31.6%, as compared to the first quarter of
fiscal l996. The increased operating income was a result of higher gross profit,
<PAGE>
resulting from increased sales. As a percentage of net sales, operating income
was 8.3% in the first quarter of fiscal l997 as compared to 8.4% in the first
quarter of fiscal l996.
Interest expense was $0.7 million in the first quarter of fiscal l997
and $0.4 million in the first quarter of fiscal l996.
Provision for income taxes was $1.7 million in the first quarter of
fiscal l997, an increase of $0.3 million or 26.8%. The effective tax rate was
38.6% in the first quarter of fiscal l997 as compared to 41.0% for the first
quarter of fiscal l996. The decline in the effective tax rate is a result in a
shift in income generated within different tax jurisdictions.
FOREIGN OPERATIONS:
During the three months ended June 29, 1996, net sales outside North
America represented approximately 50% of total net sales, as compared to 41% for
the three months ended July 1, 1995. A substantial portion of these net sales
were made by the Company's European operations. The Company's European
operations were expanded during fiscal 1996 through the establishment of a
manufacturing facility in Kempten, Germany in June 1995. In addition, during
fiscal 1996, approximately 50,000 square feet of leased assembly and warehouse
space was added to the Company's existing Leicester, England facility.
The Kempten, Germany operations were established in fiscal 1996 through
the acquisition of machinery and equipment by the Company's newly formed
indirectly wholly owned subsidiary, Bridgeport Machines GmbH. In addition, in
June 1995, Bridgeport Machines GmbH entered into a lease for 107,000 square feet
of manufacturing and office space. The Kempten, Germany operation machines parts
and produces sub-assemblies which are used by the Leicester facility to assemble
and manufacture the Company's machine tool products. In June 1995, the Company
paid approximately $9.6 million to acquire the machinery and equipment in
Kempten, Germany. This payment was financed through borrowings under the
Company's credit facility.
Generally, the Company enters into forward exchange contracts to
provide economic hedges against foreign currency fluctuations on its
intercompany sales transactions between its U.S. and U.K. operations. At June
29, 1996, the Company is committed under outstanding forward purchase contracts
to purchase 800,000 U.K. pounds sterling for approximately $1.2 million in
stages through October 1996.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
As of June 29, 1996, the Company had working capital of $41.9 million
compared with $39.1 million at March 30, 1996. The Company meets its short-term
financing needs through cash from operations and its revolving credit facility
which provides for maximum borrowings of up to $23 million in the United States
and $16 million in the United Kingdom.
The table below presents the summary of cash flow for the periods
indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
June 29, 1996 July 1, 1995
------------- ------------
<S> <C> <C>
Net cash provided by (used in)
operating activities ....................... $ 419 $ (3,931)
Net cash (used in)
investing activities ....................... (539) (11,699)
Net cash provided by
financing activities ....................... 2,169 14,721
</TABLE>
Net cash provided by (used in) operating activities fluctuates between
periods primarily as a result of differences in net income, the timing of the
collection of accounts receivable, purchase of inventory and payment of accounts
payable. The net cash used in investing activities in the three months ended
July 1, 1995, includes the acquisition of machinery and equipment in Kempten,
Germany for approximately $9.6 million. The net cash provided by financing
activities in the three months ended June 29, 1996 and July 1, 1995, represents
primarily borrowings under the Company's line of credit.
During periods when the Company's sales are increasing, operating
activities generally use cash in order to support higher trade accounts
receivable and inventory levels. Management expects that if sales continue to
increase, the trend of using cash in operating activities would continue.
The Company believes that cash generated from operations and borrowings
available under the revolving credit facility will be sufficient to meet its
working capital and capital expenditure requirements for at least 12 months from
July 29, 1996. Such facility, together with cash from operations, is expected to
be sufficient to enable the Company to meet its working capital and capital
expenditure needs for the longer term. However, there can be no assurance that
liquidity would not be adversely impacted by a decline in general economic
conditions or other factors, or that future credit facilities will be available.
CHANGES IN FINANCIAL POSITION:
At June 29, 1996, trade accounts receivable and inventories increased
$5.0 million (12.1%) and $2.6 million (4.6%), respectively, as compared to March
30, 1996. The increased inventory level is a result of supporting the higher
sales level. The increased trade accounts receivable is a result of higher sales
and a higher percent of net sales being outside North America. Sales outside
North America generally have longer payment terms.
<PAGE>
PART II - OTHER INFORMATION
Item l Legal Proceedings None
Item 2 Changes in Securities None
Item 3 Defaults Upon Senior Securities None
Item 4 Submission of Matters to a None
Vote of Security Holders
Item 5 Other Information None
Item 6 Exhibits and Reports on Form 8-K Exhibit No.
-------------------------------- -----------
a) Exhibits
(2) Not Applicable
(4) Not Applicable
(l0) Not Applicable
(11) Statement regarding computation of per share earnings is not
required because the relevant computation can be determined
from the material contained in the Financial Statements
included herein.
(l5) Not Applicable
(l8) Not Applicable
(l9) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Not Applicable
(27) Not Applicable
(99) Not Applicable
There were no reports or exhibits on Form 8-K filed during the three months
ended June 29, 1996.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
BRIDGEPORT MACHINES, INC.
(Registrant)
August 9, 1996
By: /s/ Dan L. Griffith
Dan L. Griffith
President and
Chief Executive Officer
August 9, 1996 By: /s/ Walter C. Lazarcheck
Walter C. Lazarcheck
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-END> JUN-29-1996
<CASH> 6,884
<SECURITIES> 0
<RECEIVABLES> 47,617
<ALLOWANCES> 1,286
<INVENTORY> 58,970
<CURRENT-ASSETS> 116,148
<PP&E> 26,148
<DEPRECIATION> 5,702
<TOTAL-ASSETS> 138,153
<CURRENT-LIABILITIES> 74,270
<BONDS> 4,053
0
0
<COMMON> 57
<OTHER-SE> 59,653
<TOTAL-LIABILITY-AND-EQUITY> 138,153
<SALES> 62,214
<TOTAL-REVENUES> 62,214
<CGS> 48,267
<TOTAL-COSTS> 48,267
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 125
<INTEREST-EXPENSE> 703
<INCOME-PRETAX> 4,440
<INCOME-TAX> 1,715
<INCOME-CONTINUING> 2,725
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,725
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
