10-Q/A 1 d10qa.txt FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A [ X ] Quarterly Report PURSUANT TO Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-5881 ------ BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 050113140 -------- --------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 275 West Natick Road, Warwick Rhode Island 02886 ------------------------------------------------- (Address of principal executive offices and zip code) (401) 244-4500 -------------------------------------------------- (Registrant's telephone number, including area code) Brown & Sharpe Manufacturing Company -------------------------------------------------- 200 Frenchtown Road, North Kingstown, Rhode Island -------------------------------------------------- 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 Sections 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 ------- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date, 2,825,000 of Class A common stock, 99,934 shares of Class B common stock, par value $0.01 per share, outstanding as of June 30, 2001. This form 10-Q/A for the quarter ended June 30, 2001 is being filed to record the unrealized accumulated comprehensive loss (cumulative foreign translation adjustments) related to the Metrology Business in the calculation of the realized gain reported from the sale of the Metrology Business as reflected in net income. The unrealized accumulated comprehensive loss (cumulative foreign translation adjustments) related to the Metrology Business was originally recorded directly to retained deficit rather than as a component of the realized gain from the sale of the Metrology Business reported in the consolidated statement of operations. This involved no changes to the consolidated balance sheet. All other references to the gain from the sale of the Metrology Business and net income have also been adjusted. A typographical error has been corrected in the Notes to Consolidated Financial Statements related to the weighted average shares for the six months ended June 30, 2001. 1 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS* ------ --------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands Except Per Share Data) (Unaudited)
For the quarter ended For the Six months ended June 30 June 30 2001 2000 2001 2000 ---- ---- ---- ---- Revenues $ - $ - $ - $ - Research and development 1,104 1,584 2,243 2,877 Selling, general and administrative 2,555 3,074 5,146 5,776 --------------------------------------------------------------- Operating loss (3,659) (4,658) (7,389) (8,653) Interest expense 627 2,142 2,682 3,802 Other income, net 1,231 995 1,678 1,420 --------------------------------------------------------------- Loss from continuing operations (3,055) (5,805) (8,393) (11,035) Discontinued operations: Loss from operations, net of income taxes of $540, $1,734, $1,240 and $1,695 (3,367) (16,732) (6,778) (10,895) Gain on sale of business 47,492 - 47,492 - --------------------------------------------------------------- Gain (loss) before extraordinary item, and cumulative effect of accounting change 41,070 (22,537) 32,321 (21,930) Extraordinary item-extinguishment of debt 6,566 - 6,566 - --------------------------------------------------------------- Income (loss) before cumulative effect of accounting change 34,504 (22,537) 25,755 (21,930) Cumulative effect of accounting change - - - (27,401) --------------------------------------------------------------- Net income (Loss) $ 34,504 $ (22,537) $25,755 $ (49,331) =============================================================== Net Income (Loss) Per Share Basic and Diluted from Continuing Operations $(1.06) $(2.10) $(2.98) $ (4.04) Discontinued Operations 15.34 (6.07) 14.45 (3.99) Extraordinary Item (2.28) - (2.33) - Cumulative Effect of Accounting Change - - - (10.03) --------------------------------------------------------------- Net Income (Loss) per Common Share Basic and Diluted $12.00 $(8.17) $9.14 $(18.06) ==============================================================
* The accompanying notes are an integral part of the financial statements. 2 Item 1. FINANCIAL STATEMENTS* ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
June 30, 2001 December 31, 2000 ASSETS Current Assets: Cash and cash equivalents $ 12,981 $ 8,882 Accounts receivable, net of allowances for doubtful accounts of $625 and $0 2,932 313 Assets held for sale or disposition 5,718 234,230 Prepaid expenses and other current assets 508 2,185 -------------------------------------- Total current assets 22,139 245,610 Property, plant and equipment: Land 337 415 Buildings and improvements 99 - Machinery and equipment 1,039 672 -------------------------------------- 1,475 1,087 Less accumulated depreciation (300) (255) -------------------------------------- 1,175 832 Other assets 3,667 4,203 -------------------------------------- $26,981 $250,645 ====================================== LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable to banks $ - $27,400 Accounts payable and accrued expenses 12,398 7,954 Current portion of long-term debt 3,815 54,344 Liabilities assumed - 142,734 -------------------------------------- Total current liabilities 16,213 232,432 Long-term debt - - Long-term liabilities 979 7,070 Commitments and contingencies Shareowners' Equity: Preferred stock, $1.00 par value; authorized 1,000,000 shares; none issued Common stock: Class A, par value, $.01; authorized 30,000,000 shares; issued 2,825,000 shares in 2001 and 2,665,867 shares in 2000 28 27 Class B, par value, $.01; authorized 2,000,000 shares; issued 99,934 shares in 2001 and 100,208 shares in 2000 1 1 Additional paid-in capital 85,951 127,276 Retained deficit (75,788) (101,543) Accumulated other comprehensive income (loss) 52 (14,163) Treasury stock: 8,518 shares in 2001 and 2000 at cost (455) (455) -------------------------------------- Total shareowners' equity 9,789 11,143 -------------------------------------- $ 26,981 $250,645 ======================================
* The accompanying notes are an integral part of the financial statements. 3 Item 1. FINANCIAL STATEMENTS* ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Thousands)
For the Six Months Ended June 30 2001 2000 ---- ---- Cash Provided by (Used in) Operation: Net income (loss) $ 25,755 $ (49,331) Extraordinary item--extinguishment of debt 6,566 - Cumulative effect of accounting change - 27,401 Adjustments to reconcile net earnings to net cash provided by operating activities: Changes in operating assets and liabilities 5,140 20,736 Gain on sale of business (47,492) - -------------------- -------------------- Net Cash used in Operations (10,031) (1,194) Cash Flows from Investing Activities: Acquisition of property, plant and equipment (388) - Proceeds from sale of business, net of expenses 141,520 - -------------------- -------------------- Net Cash provided by Investing Activities 141,132 - Cash Flows for Financing Activities: Payment of notes payable (27,400) - Payment of long-term senior notes (58,278) (2,057) Distributions to stockholders (44,480) - Equity contributions 3,156 - -------------------- -------------------- Net Cash used in Financing Activities (127,002) (2,057) Cash and Cash Equivalents: Increase (decrease) in cash and cash equivalents 4,099 (3,251) Beginning balance 8,882 8,897 -------------------- -------------------- Ending balance $ 12,981 $ 5,646 ==================== ==================== Supplementary Cash Flow Information: Interest Paid $ 3,171 $ 4,500 ==================== ==================== Taxes paid $ 230 $ 519 ==================== ====================
4 Item 1. FINANCIAL STATEMENTS* ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY (Dollars in Thousands) For the six months ended June 30, 2001
Accumulated Common Additional paid other Stock $.01 in capital Retained comprehensive Treasury Total Shares par value deficit income (loss) stock Equity -------------------------------------------------------------------------------------------------- Balance at January 1, 2001 13,831 13,831 $113,473 $(101,543) $(14,163) $(455) $11,143 Net Income (loss) through (8,749) (8,749) March 31, 2001 Foreign currency translation (5,545) (5,545) Adjustment -------------------------------------------------------------------------------------------------- Balance March 31, 2001 13,831 13,831 113,473 (110,292) (19,708) (455) (3,151) Net Income for 34,504 34,504 Quarter Ended June 30, 2001 Foreign Currency Translation 4,879 4,879 Adjustment Foreign currency translation Adjustment included in net 14,881 14,881 income Dividend Paid ($15.25 per share) (44,480) (44,480) Exercise of stock options 798 798 974 1,772 Acquisition of subsidiary Minority Interest 1,384 1,384 Reverse 1:5 stock split (11,705) (14,600) 14,600 - -------------------------------------------------------------------------------------------------- Balance at June 30, 2001 2,924 $29 $85,951 $(75,788) $52 $(455) $9,789 ==================================================================================================
* The accompanying notes are an integral part of the financial statements. 5 BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands) 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2001 are not indicative of the results that may be expected for the year ended December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2000. At a special meeting held on April 27, 2001, the stockholders of BNS Co. (formerly Brown & Sharpe Manufacturing Company) approved the sale of substantially all assets of the Company, including a) the sale of its worldwide Metrology Business to Hexagon AB of Stockholm, Sweden, ("Hexagon") and b) the sale of its North Kingstown facility to Precision Park Partners, LLC. At the same meeting, the stockholders also approved the change of the Company's name to BNS Co., a reduction of the par value per share of the Class A Common Stock and Class B Common Stock from $1.00 to $.01 and a one-for-five reverse stock split of the Company's outstanding Class A Common Stock and Class B Common Stock. The record date for the one-for-five reverse stock split was May 10, 2001. All references to shares have been restated to reflect the stock split. Following the conclusion of the Special Meeting of Stockholders, the Company completed the closing of the sale of its worldwide Metrology Business to Hexagon AB, effective April 27, 2001. The purchase price for the sale of the Metrology Business was $170 million less a $12.4 million cash adjustment based on the terms of the Acquisition Agreement. After the estimated cash adjustment and payment of all U.S. bank debt and long-term senior noteholder obligations, the Company received net proceeds of approximately $70 million. Also in connection with the sale to Hexagon, Hexagon invested $2.5 million in Xygent Inc., the Company's software development subsidiary, in exchange for a 16.7% ownership interest in such subsidiary. The post-closing matters pending with Hexagon include finalizing the cash adjustment paid at the closing on April 27, 2001 and completion of arrangements to transfer to Hexagon the Company's interest in the Metrology Business Joint Ventures in China (which will require some net outlay of cash by the Company) and certain other matters. On May 25, 2001, the Company paid a special cash dividend of $15.25 per share (post reverse stock split) on its outstanding shares of Class A Common Stock and Class B Common Stock to stockholders of record at May 11, 2001. In addition, management plans to sell, at a later date, the Company's real estate adjacent to Heathrow Airport in the United Kingdom. The Company plans to make additional cash distribution to its stockholders when the sale of the North Kingstown facility and the U.K. property is complete. However, the amount of the cash distributions is subject to later determination by the Company's Board of Directors, based on a number of factors as earlier disclosed in the Company's Proxy Statement dated March 30, 2001 for the Special Meeting of Stockholders held on April 27, 2001. The Company will continue to operate its software development business through its controlled subsidiary Xygent. 2. During the fourth quarter of 2000, the Company changed its method of accounting for revenue recognition in accordance with Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial Statements. Pursuant to Financial Accounting Statements Board Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, effective January 1, 2000, the Company recorded the cumulative effect of the accounting change amounting to $27.4 million and, accordingly, the consolidated financial statements for the second quarter and year-to-date 6 period ended June 30, 2000 have been restated to reflect the new accounting method. The effect of adopting SAB 101 increased second quarter ended June 30, 2000 revenues by approximately $5.5 million and increased the net loss by $7,242, or $2.62 per share. The effect of adopting SAB 101 increased first half revenue in 2000 by approximately $6,169 and increased the loss by $33,965 or $12.44 per share. 3. Discontinued Operations - As mentioned above, the Company disposed of its Metrology Business effective April 27, 2001. This disposition is reflected in the accompanying financial statements in accordance with APB Opinion No. 30. Accordingly, the financial statements for prior periods have been restated. Also, in the second quarter of 2000, the Board of Directors approved a plan to discontinue the Electronics Division (ED). The results of operations of ED have also been classified as a discontinued operation. As a result, the results of operations for the second quarter and year-to-date period ending June 30, 2000, have been restated to present ED as a discontinued operation. 4. Income taxes through the date of the disposal of the Metrology Business included provisions for foreign income taxes and were based on the Company's estimate of the effective income tax rates for a full year. No provision for income taxes has been reflected subsequent to the disposal of the Metrology Business since the Company has net operating loss carry forwards fully offset by a valuation allowance. 5. The following table sets forth the computation of basic and diluted (loss) earnings per share:
For the For the -------- -------- Quarter Ended Six Months Ended -------------- ---------------- June 30 June 30 ------- ------- 2001 2000 2001 2000 ---- ---- ---- ---- Numerator: Loss from Continuing Operations $(3,055) $(5,805) $(8,393) $(11,035) (Loss) Income from Discontinued Operations 44,125 (16,732) 40,714 (10,895) Extraordinary Item (6,566) - (6,566) - Cumulative Effect of Change in Accounting Principle - - - (27,401) -------------------------------------------------- Net (Loss) Income $34,504 $(22,537) $25,755 $(49,331) ================================================== Denominator for Basic Earnings Per Share: Weighted-Average Shares 2,875 2,758 2,817 2,731 Effect of Dilutive Securities: Employee Stock Options - - - - -------------------------------------------------- Denominator for Diluted Earnings Per Share: 2,875 2,758 2,817 2,731 ================================================== Weighted-Average Shares and Assumed Conversions Basic and Diluted (Loss) Earnings Per Share $(1.06) $(2.10) $(2.98) $(4.04) from Continuing Operations Discontinued Operations 15.34 (6.07) 14.45 (3.99) Extraordinary Item (2.28) - (2.33) - Cumulative Effect of Change in Accounting Principle - - - (10.03) -------------------------------------------------- Basic and Diluted (Loss) Earnings Per Share $12.00 $(8.17) $9.14 $(18.06) ==================================================
Diluted income (loss) per share is the same as basic loss per share in 2001 and 2000 because the computation of diluted earnings per share would have an antidilutive effect on loss per share calculations in 2000 and all options excercisable prior to the sale of the Metrology Business were exercised and are included in the basic calculation. 7 At the Special Meeting of Stockholders on April 27, 2001, the stockholders approved a one-for-five reverse stock split. Accordingly, the above calculation reflects the effect of the reverse stock split. 6. Comprehensive income (loss) for the quarter ended June 30, 2001 and 2000 amounted to $54,264 and $(24,200) respectively. Comprehensive income (loss) for the six months ended June 30, 2001 and 2000 amounted to $39,970 and $(56,196), respectively. Accumulated other comprehensive income (loss) at June 30, 2001 and December 31, 2000 is comprised of foreign currency translation adjustments of $52 and $14,100. 7. Contingencies - The Company is a defendant in a variety of legal claims that arise in the normal course of business. Based upon the information presently available to management, the Company believes that any liability for these claims would not have a material effect on the Company's results of operations or financial condition. 8. Segment Information - Subsequent to the sale of the Metrology Business mentioned above, the Company conducts its business through its subsidiary Xygent Inc, its only segment. 9. Extraordinary Item - The repayment of the long-term private placement senior notes following the sale of the Metrology Business resulted in prepayment penalty and related cost of $6,566 or $2.28 per share. 8 BNS Co. (f/k/a Brown & Sharpe Manufacturing Company) By: /s/ Andrew C. Genor ------------------------------------- Andrew C. Genor President and Chief Financial Officer (Principal Financial Officer) March 15, 2002 9