-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jiNZa8BoWH454FNDHp6c0yji3W7ldDFISy3YtLhy3RLpCiLoTQj5x+rxKcsWNs9F FB10qCaChBHe96h55CrF0Q== 0000002034-95-000004.txt : 19950511 0000002034-95-000004.hdr.sgml : 19950511 ACCESSION NUMBER: 0000002034-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACETO CORP CENTRAL INDEX KEY: 0000002034 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 111720520 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04217 FILM NUMBER: 95536043 BUSINESS ADDRESS: STREET 1: ONE HOLLOW LANE CITY: LAKE SUCCESS STATE: NY ZIP: 11042 BUSINESS PHONE: 5166276000 MAIL ADDRESS: STREET 1: ONE HOLLOW LANE CITY: LAKE SUCCESS STATE: NY ZIP: 11042 FORMER COMPANY: FORMER CONFORMED NAME: ACETO CHEMICAL CO INC DATE OF NAME CHANGE: 19851203 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1995 Commission file number 0- 4217 ACETO CORPORATION (Exact name of registrant as specified in its charter) New York 11-1720520 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) One Hollow Lane, Lake Success, NY 11042 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 627-6000 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 (Title of Class) 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____ Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the close of the period covered by this report. Common Stock - 4,988,783 ACETO CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) For Nine Months Ended March 31st 1995 1994 Net sales $120,969 $109,541 Cost of sales 103,456 93,398 Gross profit 17,513 16,143 Selling, general and administrative expenses 9,713 8,870 Operating profit 7,800 7,273 Other income net of interest expense 1,130 612 Income before income taxes 8,930 7,885 Provision for income taxes 3,443 2,846 Net income $ 5,487 $ 5,039 Net income per common share: Primary $ 1.07 $ 0.98 Fully diluted $ 1.06 $ 0.97 See accompanying notes to condensed consolidated financial statements. ACETO CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) For Three Months Ended March 31st 1995 1994 Net sales $ 46,509 $44,272 Cost of sales 39,545 37,304 Gross profit 6,964 6,968 Selling, general and administrative expenses 3,203 3,313 Operating profit 3,761 3,655 Other income net of interest expense 464 226 Income before income taxes 4,225 3,881 Provision for income taxes 1,635 1,354 Net income $ 2,590 $ 2,527 Net income per common share: Primary $ 0.51 $ 0.50 Fully diluted $ 0.50 $ 0.49 See accompanying notes to condensed consolidated financial statements. ACETO CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) Mar. 31st June 30th 1995 1994 Assets Current assets: Cash and cash equivalents $ 1,578 $ 5,122 Short-term investments 6,096 6,794 Receivables: Trade, less allowance for doubtful accounts: (March $221; June $176) 29,684 23,579 Other 342 755 30,026 24,334 Inventories 28,062 26,613 Prepaid expenses 155 548 Deferred income tax benefit 1,281 1,652 Property held for sale 625 644 Total current assets 67,823 65,707 Long-term investments 16,418 14,617 Long-term notes receivable 192 213 Property and equipment, at cost: Land 140 140 Buildings and building improvements 886 886 Equipment 1,539 1,462 2,565 2,488 Less accumulated depreciation and amortization 1,576 1,418 989 1,070 Other assets 191 191 Total assets $ 85,613 $ 81,798 See accompanying notes to condensed consolidated financial statements. ACETO CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except par value) Mar. 31st June 30th 1995 1994 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Drafts and acceptances payable $ 1,372 $ 1,350 Current installments on long-term debt 500 250 Accounts payable 3,832 2,811 Accrued merchandise purchases 8,323 8,845 Accrued compensation 3,676 3,323 Accrued plant shut-down costs 956 1,670 Other accrued expenses 1,921 2,033 Income taxes payable 1,630 1,819 Total current liabilities 22,210 22,101 Long-term debt, excluding current installments 1,500 2,000 Deferred income taxes 30 30 Redeemable preferred stock (note 4) 821 821 Shareholders' equity (note 3): Common stock,$.01 par value per share; Authorized 10,000 shares; Issued: Mar., 5,530 shares; June, 55 55 5,530 shares; outstanding: Mar., 4,989 shares; June, 5,005 shares Capital in excess of par value 50,163 50,168 Retained earnings 17,389 12,842 67,607 63,065 Less: Cost of common stock held in treasury; Mar., 541 shares; June, 524 shares 6,555 6,219 Total shareholders' equity 61,052 56,846 Total liabilities and shareholders' equity $ 85,613 $ 81,798 See accompanying notes to condensed consolidated financial statements. ACETO CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended Mar. 31st. 1995 1994 Operating activities: Net income $ 5,487 $ 5,039 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 220 234 Write-down of assets to net realizable value -- 161 Loss on sale of assets -- 145 Effect of market value over original option price for options exercised 240 133 Increase in provision for losses on accounts receivable 45 102 Changes in operating assets and liabilities: Decrease in investments - trading securities 1,003 -- Increase in trade accounts receivable (6,150) (11,994) Decrease in other receivables 413 358 Decrease(increase)in inventories (1,449) 5,746 Decrease(increase)in prepaid expenses 393 (403) Decrease(increase)in notes receivable 21 (218) Decrease in deferred tax benefit 371 -- Increase in drafts and acceptances payable 22 67 Increase in current installments on long-term debt 250 250 Increase in accounts payable 1,021 2,537 Increase in accrued compensation 353 164 Increase (decrease) in accrued merchandise purchases (522) 271 Decrease in accrued plant shut-down costs (714) (1,675) Decrease in other accrued expenses (112) (655) Increase(decrease)in current taxes payable (189) 808 Net cash provided by operating activities 703 1,070 Investing activities: Purchases of investments - held-to-maturity (5,784) (42,589) Proceeds from investments - held-to-maturity 3,678 43,032 Purchases of equipment (120) (92) Proceeds from sale of plant and equipment -- 301 Net cash provided by (used in) investing activities (2,226) 652 Financing activities: Payments of long-term debt (500) (500) Payments of cash dividends (940) (843) Proceeds from exercise of stock options 158 254 Payments for purchases of treasury stock (739) (793) Net cash used in financing activities (2,021) (1,882) Net decrease in cash and cash equivalents (3,544) (160) Cash and cash equivalents at beginning of period 5,122 5,616 Cash and cash equivalents at end of period $ 1,578 $ 5,456 See accompanying notes to condensed consolidated financial statements. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands except amounts and par value per share) Note 1: In the opinion of management, the accompanying unaudited condensed consolidated financial statements included all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position at March 31, 1995 and June 30, 1994 and the results of operations and statements of cash flows for the nine months ended March 31, 1995 and March 31, 1994. The results are not necessarily indicative of those to be expected for the full fiscal year. Note 2: Interest and Other Income For Nine Months For Three Months Ended Ended March 31 March 31 1995 1994 1995 1994 Dividends $ 15 $ 29 $ 4 $ 1 Interest on investments 1,154 965 394 319 Net gain (loss) on investments (17) (166) 39 (80) Miscellaneous other income (loss) 127 (29) 73 46 $1,279 $ 799 $ 510 $ 286 Note 3: Income per Common Share Income per common share is determined based on the weighted average number of common and common equivalent shares outstanding (primary 5,068 and 5,087 fully diluted, 5,165 and 5,187 for the quarters ended March 31,1995 and March 31, 1994, respectively; primary 5,074 and 5,101 fully diluted, 5,170 and 5,198 for the nine months ended March 31, 1995 and March 31, 1994, respectively). Fully diluted income per share calculations also include the shares issuable upon conversion of preferred stock, if dilutive. Note 4: Redeemable Preferred Stock The Company has 2,000,000 authorized shares of convertible preferred stock with a par value of $2.50 per share. The stock is redeemable at the option of either the holder or issuer at par. Redeemable preferred stock outstanding at March 31, 1995 and June 30, 1994 consists of the following: Shares Par Value Second series 28,316 $ 71 Third series 100,000 250 Fourth series 40,000 100 Fifth series 40,000 100 Sixth series 40,000 100 Seventh series 40,000 100 Eighth series 40,000 100 $ 821 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The second, third, fourth, fifth, sixth, seventh and eighth series of preferred stock are convertible beginning on the date of issue into the Company's common stock at ratios of 8.4, 6.4, 6.4, 5.1, 6.0, 6.0 and 4.2 shares of preferred stock to 1 share of common stock, respectively, subject to antidilution provisions. The second, third and sixth series pay 10%, the fourth and fifth series pay 8%, the seventh series pays 9.5% and the eighth series pays 9% annual cumulative cash dividends on par value. All series have voting rights. In the event of liquidation of the Company, all series share ratably in the remaining proceeds. Note 5: Supplemental Cash Flow Information Cash paid for interest and income taxes during the nine months ended March 31, 1995 and 1994 are as follows: 1995 1994 Interest $ 150 $ 190 Income taxes 3,152 1,916 Note 6: Investments Investments at March 31, 1995 and 1994 consist of U.S.Treasury, corporate debt and equity securities. The Company adopted the provision of Statement of Financial Accounting Standards No. 115, Accounting for Certain Investment in Debt and Equity Securities as of July 1, 1994. Under Statement 115, the Company classifies its debt and marketable equity securities as either trading or held-to-maturity securities. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity are those securities in which the Company has the ability and intent to hold until maturity. Trading securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included in earnings. Dividend and interest income are recognized when earned. Held-to-maturity securities are recorded at cost, adjusted for the amortization or accretion of premiums or discounts over the life of the related security. At March 31, 1995, short-term investments consisted of $5,873 trading securities and $223 held-to-maturity securities. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES: The Company's ability to generate cash from operations is considered adequate to cover both short-term and long-term liquidity. At March 31, 1995 and June 30, 1994 the Company's cash and short-term investments totaled $7.7 million and $11.9 million and working capital was $45.6 million and $43.6 million, respectively. Additionally, the Company had liquid long-term investments of $16.4 million at March 31, 1995 and $14.6 million at June 30, 1994. The significant increase in trade receivables to $29.7 million at March 31, 1995 from $23.6 million at June 30, 1994 can be attributed mostly to the granting of extended payment terms for sales of some of our agricultural products to meet competition. This increase in trade receivables is reflected somewhat in the decrease in cash and cash equivalents to $1.6 million at March 31, 1995 compared to $5.1 million at June 30, 1994. The shut-down of the Company's manufacturing facility has reduced the amount of cash required for working capital and capital expenditures. As a result, the increase in long- term investments to $16.4 million at March 31, 1995 compared to $14.6 million at June 30, 1994 can be attributed partially to the reduced capital requirement allowing a small shift of short-term investments to longer maturities. Expenditures relating mostly to environmental compliance accounted for the decrease in accrued plant shut-down costs to $1.0 million at March 31, 1995 compared to $1.7 million at June 30, 1994. RESULTS OF OPERATIONS: The increase in net sales of $11.4 million (10%) for the nine month period ended March 31, 1995 compared to the same period last year was the result of stronger sales of our agricultural, dye intermediate and industrial chemical products. The $2.2 million (5%) improvement in the three month comparable periods can be attributed to increased sales of agricultural and dye intermediate products. Gross profit margins declined slightly to 14.5% and 15.0% from 14.7% and 15.7% for the nine and three months ended March 31, 1995 compared to the same periods last year. Increased sales of a low margin agricultural herbicide accounted for the declines. Selling, general and administrative expenses were $9.7 million and $8.9 million for the nine months ended March 31, 1995 compared to March 31, 1994. An insurance recovery of $0.6 million received in September 1993 was the major factor for the lower level of expenses during last year's nine month period. The balance of expenses other than this non- recurring item were only slightly higher. For the three months ended March 31, 1995 expenses actually declined from the same period last year. Reductions in the amount accrued for compensation and prior period accruals for claims resulted in the decrease in expenses. Without these two adjustments expenses were virtually unchanged in the comparable three month periods. Realized and unrealized gains on trading securities of $55,000 and $53,000 for the nine and three months ended March 31, 1995 compared to losses of $166,000 and $75,000 for the same periods last year were the major factors for the increase in other income for both comparable periods. In addition, last year's nine month period included a loss on the sale of real estate of $145,000 which contributed to last year's lower level. The effective tax rates increased to 38.6% and 38.7% from 36.1% and 35.0% in the nine and three months ended March 31, 1995 compared to the same periods last year. The lower rates last year were due primarily to the use of state carryover tax losses by certain subsidiary companies. In addition, both the nine and three months ended March 31, 1994 included an adjustment of the prior year's tax accrual which was also a factor in last year's lower effective tax rate. Item 5: Other Information On February 10, 1995, the U.S. Department of Justice sent a letter and a draft complaint to Pfaltz & Bauer, Inc., a wholly owned subsidiary of Aceto Corporation, alleging that Pfaltz & Bauer had violated the Resource Conservation and Recovery Act (RCRA) with respect to the storage of certain hazardous wastes at Pfaltz & Bauer's Waterbury, Connecticut facility in 1991 - 1993. The letter indicated that if a settlement was not reached the government contemplated filing a lawsuit against Pfaltz & Bauer seeking civil penalties. The draft complaint did not allege that Pfaltz & Bauer's actions resulted in any discharge of hazardous materials to the environment, or in any harm to human health or the environment. While Pfaltz & Bauer believes that it has defenses to the allegations in the draft complaint, it has begun negotiations with the government to settle the matter. Negotiations are continuing, and the government has not filed its complaint with a court. 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. ACETO CORPORATION DATE April 28, 1995 BY (signed) / by Donald Horowitz Donald Horowitz, Chief Financial Officer DATE April 28, 1995 BY (signed) / by Arnold Frankel Arnold Frankel, Chief Executive Officer EX-27 2
5 9-MOS JUN-30-1995 MAR-31-1995 1,578 6,096 29,905 221 28,062 67,823 2,565 1,576 85,613 22,210 1,500 55 0 821 60,997 85,613 120,969 120,969 103,456 103,456 0 0 150 8,930 3,443 5,487 0 0 0 5,487 1.07 1.06
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