UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q/A
AMENDMENT NO. 1
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 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 No. 1-5375
TECHNITROL, INC.
(Exact name of registrant as specified in Charter)
PENNSYLVANIA 23-1292472
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1210 Northbrook Drive, Suite 385
Trevose, Pennsylvania 19053
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 215-355-2900
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 the filing requirements for at least the
past 90 days. YES X NO
--- ---
Common Stock - Shares Outstanding as of June 30, 1996: 8,007,882
Page 1 of 8
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Technitrol, Inc. hereby amends Item 1 Part I of its Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996. The heading
of the Consolidated Statements of Cash Flows included in the report
originally filed has been amended to reflect the correct number of
months included in the period covered by the Statements, and Item 1 of
Part I is hereby amended and restated in full as set forth on the
following pages.
Page 2 of 8
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TECHNITROL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
In thousands of dollars, except for share data
June 30, Dec. 31,
-------- --------
Assets 1996 1995
------ ---- ----
Current Assets:
Cash and cash equivalents $ 19,447 $ 13,894
Receivables:
Trade 37,892 33,431
Other 232 308
Inventories 31,514 32,962
Prepaid expenses and other current assets 2,831 2,019
-------- --------
Total current assets 91,916 82,614
Property, plant and equipment 82,433 81,063
Less accumulated depreciation 38,209 35,935
-------- --------
Net property, plant and equipment 44,224 45,128
Deferred income taxes 4,858 4,132
Excess of cost over net assets acquired 10,524 10,957
Other assets 808 2,109
-------- --------
$152,330 $144,940
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term debt $ 2,021 $ 2,023
Accounts payable 7,911 8,359
Accrued expenses 32,866 28,990
-------- --------
Total current liabilities 42,798 39,372
Long-term liabilities:
Long-term debt, excluding current installments 7,592 15,102
Other long-term liabilities 6,267 5,705
Shareholders' equity:
Common stock 1,361 1,342
Additional paid-in capital 39,113 36,907
Retained earnings 61,620 52,517
-------- --------
102,094 90,766
Less: Cost of treasury stock (4,509) (4,535)
Unearned compensation under stock award plan (1,051) (697)
Cumulative translation adjustment (861) (773)
-------- --------
Total shareholders' equity 95,673 84,761
-------- --------
$152,330 $144,940
======== ========
See accompanying Notes to Consolidated Financial Statements.
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TECHNITROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of dollars)
Three Months Six Months
------------ ----------
Ended June 30 Ended June 30
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
1. Net sales $68,028 $39,394 $130,880 $79,437
2. Costs and expenses applicable
to sales
a) Cost of goods sold 44,161 26,737 85,945 55,390
b) Selling, general and
administrative expenses 15,895 9,057 29,265 17,681
------- ------- -------- -------
Total costs and expenses
applicable to sales 60,056 35,794 115,210 73,071
------- ------- -------- -------
3. Other operating income
a) Gain on the sale of the
Products Division -- -- 1,471 --
------- ------- -------- -------
4. Operating profit 7,972 3,600 17,141 6,366
5. Other income (expense)
Interest (39) (313) (162) (548)
Other (51) -- (33) (96)
------- ------- -------- -------
Total other income (expense) (90) (313) (195) (644)
------- ------- -------- -------
6. Earnings before taxes 7,882 3,287 16,946 5,722
7. Income taxes 2,646 1,267 6,244 2,010
------- ------- -------- -------
8. Net earnings $ 5,236 $ 2,020 $ 10,702 $ 3,712
======= ======= ======== =======
9. Weighted average common and
equivalent shares 8,081 6,042 8,045 6,042
outstanding
10. Earnings per share $ .65 $ .33 $ 1.33 $ .61
11. Dividends declared per share $ .10 $ .10 $ .20 $ .195
Amounts are in thousands except for earnings per share and dividends per share.
See accompanying Notes to Consolidated Financial Statements.
Page 4 of 8
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TECHNITROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 and 1995
(In thousands of dollars)
June 30, June 30,
-------- --------
1996 1995
---- ----
Cash flows from operating activities:
Net earnings $10,702 $3,712
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 4,708 2,722
Gain on sale of Products Division assets (1,471) --
Changes in assets and liabilities net of
effect of sale of Products Division assets:
Increase in accounts payable and accrued expenses 5,106 1,293
(Increase) in accounts receivable (4,738) (1,034)
(Increase) decrease in inventories 290 (3,355)
Other, net (656) (501)
------- ------
Net cash provided by operating activities 13,941 2,837
------- ------
Cash flows from investing activities:
Proceeds from the sale of Products Division assets 3,671 --
Acquisition of common stock warrants of Pulse Engineering -- (4,769)
Capital expenditures (3,422) (2,920)
Proceeds from sale of property, plant and equipment 12 17
------- ------
Net cash provided by (used in) investing activities 261 (7,672)
------- ------
Cash flows from financing activities:
Dividends paid (1,591) (1,179)
Proceeds of long-term debt -- 5,000
Principal payments of long-term debt (7,511) (2,011)
Net repayment of short-term debt -- (769)
Proceeds from exercise of stock options 472 --
------- ------
Net cash provided by (used in) financing activities (8,630) 1,041
------- ------
Net effect of exchange rate changes on cash (19) 119
Net increase (decrease) in cash and cash equivalents 5,553 (3,675)
Cash and cash equivalents at beginning of year 13,894 8,716
------- ------
Cash and cash equivalents at June 30 $19,447 $5,041
------- ------
See accompanying Notes to Consolidated Financial Statements.
Page 5 of 8
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TECHNITROL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Accounting Policies
-------------------
For a complete description of the accounting policies of
Technitrol, Inc. and its consolidated subsidiaries ("the Company"),
refer to Note 1 of Notes to Consolidated Financial Statements included
in the Company's Form 10-K filed for the year ended December 31, 1995.
Reclassifications
Certain amounts in the 1995 financial statements have been
reclassified to conform with the current year's presentation.
(2) Acquisitions and Divestitures
-----------------------------
On September 29, 1995, the Company completed the acquisition of
Pulse Engineering, Inc. ("Pulse"), pursuant to an Agreement and Plan
of Merger dated May 23, 1995. As a result of the merger, Pulse became
a wholly-owned subsidiary of the Company. Pulse, headquartered in San
Diego, California, and with manufacturing operations in the People's
Republic of China, Taiwan, the Philippines and Ireland, designs,
manufactures and markets electronic components and modules primarily
for manufacturers of local area networks and telecommunications
systems.
The total purchase price approximated $61.5 million and consisted
of cash due to the former Pulse stockholders, stock issued to the
former Pulse stockholders, stock options assumed, and related
acquisition costs. The fair value of the assets acquired and
liabilities assumed approximated $66.5 million and $14.0 million,
respectively. The excess of cost over net assets acquired
approximated $9.0 million and is being amortized over 15 years. The
purchase price was arrived at pursuant to arms-length negotiations
taking into account all pertinent factors including, but not limited
to, the nature, monetary and strategic value of the assets being
acquired, business prospects of Pulse and the synergies of Pulse with
the existing operations of the Electronic Components Segment of the
Company.
Approximately 1,785,000 shares of Technitrol common stock at a
then fair market value of $16.375 per share were issued to former
holders of Pulse common stock. The cash portion of the purchase
price, including cash paid to the former stockholders of Pulse and
related acquisition costs, was approximately $27.6 million. In
addition, all outstanding options to purchase Pulse common stock were
assumed by the Company. Approximately 269,000 shares of Technitrol
common stock became issuable upon exercise of such options. Except
for approximately 33,000 options which were not vested at the
acquisition date, all assumed options became immediately exercisable
at prices ranging from $1.73 to $15.61. The options have various
expiration dates, the latest of which is in April 2001.
The acquisition has been accounted for by the purchase method of
accounting. Had Pulse been acquired on January 1, 1995, unaudited
consolidated pro forma results of operations of the Company would have
been (in thousands, except for earnings per share):
Six Months Ended
June 30, 1995
-------------
Sales $128,480
Net earnings $7,450
Earnings per share $0.93
Page 6 of 8
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TECHNITROL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, continued
(2) Acquisitions and Divestitures (continued)
----------------------------
This unaudited information is provided for comparative purposes
only. It does not purport to be indicative of the results that
actually would have occurred if the acquisition had been consummated
on the date indicated or which may be obtained in the future. The pro
forma earnings per share amounts include the effect of shares issued
and stock options assumed in connection with the merger.
On February 27, 1996, the Company sold certain assets of the
Products Division to an unrelated party. As a result of the sale, the
Company discontinued its production and marketing of document counters
and dispensers, the sales of which approximated $4.9 million in 1995.
The consideration received approximated $3.7 million and the pre-tax
gain of approximately $1.5 million that was realized on the sale
(after recognition of related costs and expenses) was included in
operating profit for the quarter ended March 31, 1996.
(3) Inventories
-----------
Inventories consist of the following (in thousands):
June 30, December 31,
-------- ------------
1996 1995
---- ----
Finished goods $ 9,861 $12,926
Work in process 9,159 8,888
Raw materials 12,494 11,148
------- -------
$31,514 $32,962
(4) Supplemental Disclosure of Non-cash Transactions
------------------------------------------------
During the six months ending June 30, 1996 and 1995, the Company
issued to employees stock pursuant to the Company's Restricted Stock
Plan having a fair value of $555,000 and $406,000, respectively.
(5) Restructuring Charges
---------------------
Restructuring and related costs are recognized in accordance with
Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."
During the second quarter of 1996, the Company initiated a
restructuring plan aimed at reducing the costs of manufacturing within
its Electronics Components Segment. Accordingly, reserves were
established for employee separation costs related to the relocation of
a majority of the production capacity of the Company's production
facility in Taiwan to the Company's production facility in the
Philippines. Charges of $1,950,000 are included in selling, general
and administrative expenses for the second quarter, including payments
made to terminated employees during the quarter of $1,137,000. The
remaining reserve of $813,000 will be used for separation costs to be
paid during the second half of 1996. The employees involved in the
plan are primarily direct production workers in Taiwan. A limited
number of indirect employees are also involved. A total of 121 direct
and 12 indirect employees were terminated during the second quarter.
Approximately 160 additional employees have been notified of the
restructuring plan and will be terminated and paid during the second
half of 1996.
Page 7 of 8
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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.
TECHNITROL, INC.
----------------------------
(Registrant)
August 22, 1996 /s/Albert Thorp, III
- ---------------------------- -----------------------------------
(Date) Albert Thorp, III
Vice President - Finance, Treasurer and
Chief Financial Officer
August 22, 1996 /s/Drew A. Moyer
- --------------------------- -----------------------------------
(Date) Drew A. Moyer
Corporate Controller, Assistant Treasurer
and Principal Accounting
Officer
Page 8 of 8
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