-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J1aBbVIKWfuUNl+FCUs+/9qjo2cXcPHwcTm8UXa1FX0d2UHNytu1mayk6tr+h02q UfKYQWmLTk17eLjnHiC+RA== 0000202356-96-000006.txt : 19960814 0000202356-96-000006.hdr.sgml : 19960814 ACCESSION NUMBER: 0000202356-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KYSOR INDUSTRIAL CORP /MI/ CENTRAL INDEX KEY: 0000202356 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 381909000 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08973 FILM NUMBER: 96611191 BUSINESS ADDRESS: STREET 1: ONE MADISON AVE CITY: CADILLAC STATE: MI ZIP: 49601 BUSINESS PHONE: 6167792200 10-Q 1 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 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 NUMBER 1-8973 KYSOR INDUSTRIAL CORPORATION (exact name of registrant as specified in its charter) Michigan (state or other jurisdiction of incorporation or organization) 38-1909000 (I.R.S. Employer Identification Number) One Madison Avenue, Cadillac, Michigan 49601 (Address of principal executive offices) ( Zip Code) (616) 779-2200 (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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement 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. Common stock, $1.00 par value, number of shares outstanding as of July 23, 1996: 5,806,039 KYSOR INDUSTRIAL CORPORATION Part I - FINANCIAL INFORMATION Item 1. Financial Statements The interim financial data presented herein is unaudited but, in the opinion of the management, reflects all adjustments (none of which was other than a normal recurring adjustment) necessary for a fair presentation of such information. Results for interim periods should not be considered indicative of results for a full year. There were no undisclosed material unusual charges or credits to income during the quarter or six months ended June 30, 1996, nor was there a change in independent accountants during the period. KYSOR INDUSTRIAL CORPORATION Consolidated Statement of Income (Unaudited , amounts in thousands except for per share data)
Quarter Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 SALES AND REVENUES Net sales 104,955 94,746 186,820 184,800 Interest and other revenues 390 518 1,708 1,090 TOTAL SALES AND REVENUES 105,345 95,264 188,528 185,890 COSTS AND EXPENSES Cost of sales 79,661 72,781 143,203 141,947 Selling and administrative expenses 16,568 13,489 30,178 28,198 Interest expense 540 435 1,015 922 Other expenses 299 276 223 591 TOTAL COSTS AND EXPENSES 97,068 86,981 174,619 171,658 INCOME BEFORE INCOME TAXES FROM CONSOLIDATED OPERATIONS 8,277 8,283 13,909 14,232 INCOME TAXES 3,000 3,650 5,050 6,290 INCOME FROM CONSOLIDATED OPERATIONS 5,277 4,633 8,859 7,942 EQUITY IN NET INCOME OF AFFILIATE 306 - 306 - NET INCOME 5,583 4,633 9,165 7,942 DIVIDENDS ON PREFERRED STOCK (Net of income tax benefit) 241 245 480 487 EARNINGS APPLICABLE TO COMMON STOCK 5,342 4,388 8,685 7,455 PRIMARY EARNINGS PER COMMON SHARE $.88 $.75 $1.44 $1.26 FULLY DILUTED EARNINGS PER COMMON SHARE $.78 $.65 $1.27 $1.10 Primary weighted average common shares and equivalents 6,075 5,849 6,039 5,912 Dividends declared per common share $.165 $.15 $.315 $.30 The accompanying notes are an integral part of the financial statements.
KYSOR INDUSTRIAL CORPORATION Consolidated Balance Sheet (Dollars in thousands)
June 30, December 31, 1996 1995 ASSETS CURRENT ASSETS Cash and equivalents 2,321 16,942 Accounts receivable less $2,583 and $2,211 allowance for doubtful accounts 66,225 45,733 Finished goods inventory 5,979 5,391 Work in process inventory 11,606 9,404 Raw material inventory 22,160 19,621 Prepaid expenses 2,758 2,485 Deferred income taxes 8,622 8,860 TOTAL CURRENT ASSETS 119,671 108,436 PROPERTY, PLANT AND EQUIPMENT Land 3,266 3,243 Buildings 33,075 32,042 Machinery and equipment 84,176 75,794 120,517 111,079 Less accumulated depreciation 65,670 62,518 TOTAL PROPERTY, PLANT AND EQUIPMENT 54,847 48,561 INVESTMENT IN AFFILIATE 18,324 0 OTHER ASSETS Goodwill, patents and other intangibles (net of amortization of 3,610 and 3,169 9,042 5,327 Cash value of officers' life insurance 11,795 11,644 Deferred income taxes 7,375 6,576 Miscellaneous receivables and other assets 5,823 6,429 TOTAL OTHER ASSETS 34,035 29,976 TOTAL ASSETS 226,877 186,973 LIABILITIES CURRENT LIABILITIES Current maturities of long-term debt 6,382 4,931 Accounts payable 26,370 21,150 Accrued income taxes payable 4,440 0 Accrued expenses and contingent liabilities 30,651 29,715 TOTAL CURRENT LIABILITIES 67,843 55,796 Long-term debt, less current maturities 42,459 26,028 Accumulated postretirement benefit obligation 14,105 13,729 Other long-term liabilities 12,075 11,185 TOTAL LIABILITIES AND DEFERRED CREDITS 136,482 106,738 PREFERRED SHAREHOLDERS' EQUITY Employee Stock Ownership Plan Preferred Stock, shares authorized 5,000,000 outstanding 795,595 and 797,517 19,393 19,440 Unearned deferred compensation under employee stock ownership plan (13,691) (14,447) TOTAL PREFERRED SHAREHOLDERS' EQUITY 5,702 4,993 COMMON SHAREHOLDERS' EQUITY Common stock, $1 par value, shares authorized 30,000,000 outstanding 5,799,017 and 5,639,028 5,799 5,639 Additional paid-in capital 6,153 3,645 Retained earnings 73,396 66,531 Translation adjustment 398 483 Notes receivable-common stock 77,747 and 78,009 shares (1,053) (1,056) TOTAL COMMON SHAREHOLDERS' EQUITY 84,693 75,242 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 226,877 186,973 The accompanying notes are an integral part of the financial statements.
KYSOR INDUSTRIAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, amounts in thousands)
Six Months Ended June 1996 1995 CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES: Net income $9,165 $7,942 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 4,986 4,526 Provision for losses on accounts receivable 239 227 (Gain) Loss on sales of fixed assets (2) (27) Deferred compensation (ESOP) 755 608 Deferred income taxes (561) (464) Changes in assets and liabilities providing (consuming) cash: Accounts receivable (18,787) (6,574) Inventories (2,879) (1,241) Prepaid expenses (246) (1,097) Accounts payable 1,370 3,211 Accrued expenses and contingent liabilities 660 1,255 Accrued income taxes payable 5,766 2,570 Other long-term liabilities 1,268 1,056 NET CASH PROVIDED BY OPERATING ACTIVITIES 1,734 11,992 CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES: Additions to property, plant and equipment (10,332) (6,036) Proceeds from sales of property and equipment 157 61 Acquisitions, net of cash acquired 9 - Investment in affiliate (18,823) - Decrease (Increase) in other long-term assets 953 323 Unrealized translation gain (loss) (85) (181) NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (28,121) (5,833) CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES: Current borrowings 19,000 2,247 Principal payments against long-term debt (6,474) (1,714) Proceeds from issuance of common stock 1,724 1,384 Purchase of common stock - (4,609) Common stock and preferred stock dividends paid (2,484) (2,365) NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 11,766 (5,057) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (14,621) 1,102 CASH AND EQUIVALENTS AT BEGINNING OF YEAR 16,942 15,850 CASH AND EQUIVALENTS AT END OF PERIOD $2,321 $16,952 The accompanying notes are an integral part of the financial statements.
Notes to the financial statements Note A - Basis of Presentation The accompanying unaudited consolidated condensed 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 Rule 10-01 of Regulation 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 solely of normal recurring accruals) considered necessary for fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 1995. Note B - Income Taxes The provision for income taxes resulted in effective tax rates of 36% for both the quarter and six months ended June 30, 1996 compared to 44% for the same periods in 1995. All periods presented include provisions for state income taxes and the statutory Federal rate of 35%. The rate for 1995 was higher than the combined Federal and state rate due to large non-deductible foreign tax losses. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders Kysor Industrial Corporation: We have reviewed the accompanying consolidated balance sheet of Kysor Industrial Corporation and Subsidiaries as of June 30, 1996, and the related consolidated statements of income and cash flows for the three-month and six-month periods ended June 30, 1996 and 1995. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Kysor Industrial Corporation and Subsidiaries as of December 31, 1995 and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended (none of which are presented herein); and in our report dated January 30, 1996 we expressed an unqualified opinion on those consolidated financial statements. By s/COOPERS & LYBRAND L.L.P. Coopers & Lybrand L.L.P. July 17, 1996 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Kysor Industrial Corporation's sales and revenues for the second quarter 1996 were $105.3 million, up 11 percent from the $95.3 million reported for the same period in 1995. Net income for the second quarter of 1996 increased 21.0 percent to $5.6 million or $.88 per share compared to the $4.6 million or $.75 per share reported during the same period in 1995. The Commercial Products Group net sales increased 31 percent to $66.9 million for the second quarter of 1996 compared to $51.0 million reported for the same period a year ago. Operating profit for the Commercial Products Group for the second quarter of 1996 increased 56 percent to $8.8 million from the $5.6 million reported for the same period in 1995. The Commercial Products Group continues to grow through market share gains and the sales and earnings contributions from recent acquisitions. Sales and earnings in the Transportation Products Group were adversely impacted by the decline in the heavy-duty truck market. The Transportation Products Group net sales decreased 13 percent to $38.0 million for the second quarter of 1996 compared to $43.7 million reported for the same period a year ago. Operating profit for the Transportation Products Group for the second quarter 1996 was $4.0 million compared to $6.0 million reported for the same period in 1995. We continue to experience market share increases in the polymer fan and fan clutch product lines and anticipate that the earnings performance that this group has experienced in the past will return when the heavy-duty truck market recovers. The Company is presently involved in certain environmental proceedings with respect to soil and groundwater contamination in Cadillac, Michigan, as described in Note 10, Contingent Liabilities, to the Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995 ("the Form 10-K"). In addition, as disclosed in Note 10 and under the heading "Legal Proceedings" in the Form 10-K and below, the Company is also involved in various other legal proceedings including certain proceedings involving allegedly contaminated sites to which the Company has been named a potentially responsible party ("PRP") under the Federal Superfund law or comparable state laws. Although discovery in certain of these proceedings has not been completed, subject to the contingencies discussed in Note 10, management does not believe, based on information presently available to it, that the ultimate aggregate cost to the Company of such proceedings would have a material adverse effect on its financial condition, results of operations, or liquidity. Liquidity and Capital Resources At June 30, 1996, the Company had cash and equivalents of $2.3 million compared to $16.9 million at December 31, 1995. Accounts receivable and inventories have increased $25.8 million from December 31, 1995, reflecting higher working capital requirements associated with the higher sales level. Additions to property, plant and equipment for the six-month period ended June 30, 1996, totaled $10.3 million compared to $6.0 million during the same period in 1995. Working capital is sufficient for current requirements. At June 30, 1996, the Company had $19.0 million outstanding on its $30.0 million revolving line of credit. The proceeds from this borrowing was used for the purchase of 24.25% of Austral Refrigeration, Pty., Ltd. of Australia. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is presently involved in various legal proceedings, including certain environmental proceedings, as described in Note 10, Contingent Liabilities, to the Financial Statements included in the From 10-K and under the heading "Legal Proceedings" in the Form 10-K. During the quarter ended March 31, 1996, the Company completed the groundwater remedial design work with respect to contamination at the Cadillac Industrial Park in Cadillac, Michigan (the "Site"). Initial steps of the remedial action have begun in compliance with the unilateral administrative order issued by the U.S. EPA with respect to the Site Except as described in this paragraph, there have been no material changes in the legal proceedings described in the Form 10-K. Item 4. Submission of Matters to a Vote of Security Holders On April 26, 1996, the Company held its 1996 Annual Meeting of Shareholders. The purpose of the meeting was to elect three directors for three-year terms expiring in 1999 while one director was elected to a one-year term expiring in 1997. The candidates nominated by management were elected by the shareholders to serve as directors of the Company at the meeting. The following sets forth the results of voting with respect to each candidate: Name of Candidate Shares Voted Paul K. Gaston For: 6,051,181 Authority Withheld: 38,896 Grant C. Gentry For: 6,055,719 Authority Withheld: 34,358 Peter W. Gravelle For: 6,052,231 Authority Withheld: 37,847 Robert W. Navarre For: 6,050,821 Authority Withheld: 39,257 Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed as part of this report. 11 Computation of Consolidated Earnings Per Share 15 Coopers & Lybrand L.L.P. letter regarding unaudited Financial Statements 27 Financial Data Schedule (b) There were no reports on Form 8-K filed by the registrant during the quarter ended June 30, 1996. KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES FINANCIAL INFORMATION BY SEGMENT (Unaudited, amounts in thousands)
Quarter Ended June 30, Six Months Ended June 30, 1996 1995 1996 1995 NET SALES Commercial Products United States 66,898 46,933 113,811 88,561 Europe - 4,094 - 9,417 Total Commercial Products 66,898 51,027 113,811 97,978 Transportation Products United States 34,377 40,006 65,775 79,771 Europe 3,680 3,713 7,234 7,051 Total Transportation Products 38,057 43,719 73,009 86,822 NET SALES 104,955 94,746 186,820 184,800 OPERATING PROFIT Commercial Products United States 8,789 6,407 13,524 10,885 Europe - (773) - (2,045) Total Commercial Products 8,789 5,634 13,524 8,840 Transportation Products United States 3,658 5,752 6,537 11,742 Europe 335 249 681 404 Total Transportation Products 3,993 6,001 7,218 12,146 TOTAL OPERATING PROFIT 12,782 11,635 20,742 20,986 Corporate Administrative Expense (Net) (3,965) (2,917) (5,818) (5,832) Interest Expense (540) (435) (1,015) (922) INCOME BEFORE INCOME TAXES FROM CONSOLIDATED OPERATIONS 8,277 8,283 13,909 14,232
PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is presently involved in various legal proceedings, including certain environmental proceedings, as described in Note 10, Contingent Liabilities, to the Financial Statements included in the Form 10-K and under the heading "Legal Proceedings" in the Form 10-K. During the quarter ended March 31, 1996, the Company completed the groundwater remedial design work with respect to contamination at the Cadillac Industrial Park in Cadillac, Michigan (the "Site"). Initial steps of the remedial action have begun in compliance with the unilateral administrative order issued by the U.S. EPA with respect to the Site. Except as described in this paragraph, there have been no material changes in the legal proceedings described in the Form 10-K. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this report. 11 Computation of Consolidated Earnings Per Share 15 Coopers & Lybrand L.L.P. letter regarding unaudited Financial Statements 27 Financial Data Schedule (b) There were no reports on Form 8-K filed by the registrant during the quarter ended June 30, 1996. 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. KYSOR INDUSTRIAL CORPORATION Date: August 12, 1996 By s\Terry M. Murphy Terry M. Murphy Vice President, Chief Financial Officer (principal financial officer and duly authorized signatory for registrant) Date: August 12, 1996 By s\Robert L. Joseph Robert L. Joseph Comptroller (Chief Accounting Officer) EXHIBIT INDEX DESCRIPTION EXHIBIT NO. Statement Regarding Computation of Earnings Per Share 11 Letter from Coopers & Lybrand Regarding Unaudited Financial Statements 15 Financial Data Schedule 27 EX-11 2 EXHIBIT 11 - S-K Item 601 (b) (11) KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
Six Months Ended June 30, 1996 1995 ---- ---- PRIMARY EARNINGS PER SHARE CALCULATION Net Income $9,165,322 $7,942,079 Less dividends on preferred stock 773,364 783,785 Plus tax benefit from preferred dividends 293,000 297,000 ---------- ---------- Earnings (Loss) applicable to common stock 8,684,958 7,455,294 ========== ========== Weighted average common shares outstanding 5,651,070 5,538,421 Dilutive effect assuming excercise of certain stock options applying the treasury stock method based on year to date average price 388,181 373,208 -------- -------- Weighted average common shares and common equivalent shares outstanding 6,039,251 5,911,629 ========= ========= Primary earnings per share $1.44 $1.26 ======== ======== FULLY DILUTED EARNINGS PER SHARE CALCULATION A. Weighted average common shares outstanding 5,651,070 5,538,421 Dilutive effect assuming excercise of certain stock options applying the treasury stock method based on the greater of year to date average or end of period price 388,181 373,208 -------- -------- Weighted average common shares and common equivalent shares outstanding 6,039,251 5,911,629 ======== ======== Fully diluted earnings per share (A) $1.44 $1.26 ======== ======== B. Assuming preferred stock converted to common Vested Preferred shares issued 236,015 190,478 Non-vested Preferred shares issued 559,580 610,392 ---------- ---------- Total Preferred shares issued 795,595 800,870 Vested Preferred shares issued 236,015 190,478 Guaranteed floor price for involuntary conversions $24.375 $24.375 ---------- ---------- Subtotal $5,752,858 $4,642,898 The lower of year to date average or end of period common stock price $24.2500 $20.7500 -------- -------- Required common shares to be issued assuming involuntary conversion of vested shares at guaranteed floor price 237,231 223,754 Required common shares to be issued assuming voluntary conversion of non-vested shares on one-for-one basis 559,580 610,392 Weighted average common shares and common equivalent shares outstanding for fully diluted Part A. 6,039,251 5,911,629 ---------- ---------- Weighted average common shares and common equivalent shares outstanding for fully diluted Part B. 6,836,062 6,745,775 ========== ========== Net Income $9,165,322 $7,942,079 Additional ESOP expense presently funded by preferred dividend (773,364) (783,785) Plus tax benefit on additional ESOP expense 54,287 44,476 Common stock dividends to reduce ESOP expense 251,000 250,000 -------- -------- Adjusted Net Income $8,697,245 $7,452,770 ========= ========= Fully diluted earnings per share (B) $1.27 $1.10 ======== ======== Fully diluted earnings (loss) per share (Lower of (A) or (B)) $1.27 $1.10 ======== ========
EX-15 3 To the Board of Directors and Shareholders Kysor Industrial Corporation Re: Kysor Industrial Corporation Registration Statement Nos. 2-67607, 2-86346, 2-99855, 33-18438, 33-30463, 33-27360, 33-59412 and 33-71758 on Form S-8 We are aware that our report dated July 17, 1996 on our review of interim financial information of Kysor Industrial Corporation and Subsidiaries for the periods ended June 30, 1996 and 1995 and included in the Company's quarterly report on Form 10-Q for the quarters then ended are incorporated by reference in these registration statements. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act. By s/COOPERS & LYBRAND L.L.P. Coopers & Lybrand L.L.P. July 17, 1996 EX-27 4
5 This schedule contains summary financial information extracted from the unaudited consolidated condensed financial statements of Kysor Industrial Corporation and Subsidiaries for the six-months ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 0000202356 KYSOR INDUSTRIAL CORPORATION 1,000 US DOLLARS 6-MOS DEC-31-1996 JUN-30-1996 1 2,321 0 68,808 2,593 39,745 119,671 120,517 65,670 226,877 67,843 42,459 0 19,393 5,799 65,203 226,877 104,955 105,651 143,203 173,365 0 239 1,015 14,215 5,050 9,165 0 0 0 9,165 1.44 1.27
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