-----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, O4lvKbsqwZkwDNVVBReJD5KVbmO5brLGgWAeO3osm+9EYkGVeaJTngZHmh/sAX/k kOIAzhE0a5ztRQrFxmWidw== 0000008462-94-000010.txt : 19940513 0000008462-94-000010.hdr.sgml : 19940513 ACCESSION NUMBER: 0000008462-94-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUGAT INC CENTRAL INDEX KEY: 0000008462 STANDARD INDUSTRIAL CLASSIFICATION: 3679 IRS NUMBER: 042022285 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06176 FILM NUMBER: 94525258 BUSINESS ADDRESS: STREET 1: 89 FORBES BLVD STREET 2: P O BOX 448 CITY: MANSFIELD STATE: MA ZIP: 02048 BUSINESS PHONE: 5085434300 10-Q 1 FORM 10-Q FOR AUGAT INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the quarterly period ended March 31, 1994 / / 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 1-6176 AUGAT INC. ----------------------------------------------------- (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2022285 ------------------------ ---------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 89 Forbes Boulevard, P.O. Box 448, Mansfield, Massachusetts 02048 ------------------------------------------------------------ --------- (Address of principal executive offices) (Zip Code) (508) 543-4300 ----------------------------------------------------------- (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 requirements for the past 90 days. Yes /X/ / / No The number of shares of the Registrant's common stock outstanding on March 31, 1994 was 19,179,659. 1 AUGAT INC. INDEX Financial Statements: Page No. Consolidated Balance Sheets - March 31, 1994 3-4 and December 31, 1993 Statements of Consolidated Income - For the Three Months Ended March 31, 1994 and 1993 5 Statements of Consolidated Cash Flows For the Three Months Ended March 31, 1994 and 1993 6 Notes to Unaudited Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 Part II - Other Information 10 Signatures 10 2 PART I - FINANCIAL INFORMATION Consolidated Balance Sheets, March 31, 1994 and December 31, 1993 (In thousands) Assets 1994 1993 (Unaudited) ----------- --------- Current Assets: Cash and cash equivalents ---------- $ 19,274 $ 8,540 Accounts receivable-net ------------ 79,843 73,633 Refundable income taxes ------------ 256 138 Inventories: Finished goods ------------------- 35,243 33,493 Work in process ------------------ 23,953 26,415 Raw materials -------------------- 29,073 26,654 --------- --------- Total inventories -------------- 88,269 86,562 Deferred income taxes -------------- 3,806 4,556 Prepaid expenses ------------------- 3,429 3,079 --------- --------- Total current assets ---- 194,877 176,508 Property, Plant, and Equipment: Land ------------------------------ 3,648 3,528 Buildings and building improvements -------------------- 57,356 54,674 Machinery and equipment ----------- 121,203 115,155 Furniture and fixtures ------------ 20,939 20,603 Construction in progress - buildings and machinery ------------------- 12,253 10,010 --------- --------- Total ----------------------- 215,399 203,970 Less accumulated depreciation ----- (110,003) (103,971) --------- --------- Property, plant, and equipment-net -- 105,396 99,999 Other Assets: Goodwill-net ---------------------- 26,433 26,759 Property held for sale-net -------- 8,330 9,179 Other ----------------------------- 5,261 5,415 --------- --------- Total other assets -------------- 40,024 41,353 --------- --------- Total ----------------------- $340,297 $317,860 ========= ========= See notes to unaudited consolidated financial statements. 3 Consolidated Balance Sheets, March 31, 1994 and December 31, 1993 (In thousands) Liabilities and Shareholders' Equity (Unaudited) 1994 1993 ------ ------ Current Liabilities: Notes payable ------------------------ $ 6,000 $ 1,000 Current maturities of long-term debt - 6,589 2,130 Accounts payable --------------------- 35,361 28,353 Federal, state and foreign taxes payable ---------------------------- 6,025 3,352 Accrued restructuring costs ---------- 1,718 1,751 Accrued compensation and benefits ---- 9,768 10,193 Other accrued expenses --------------- 10,047 10,801 -------- -------- Total current liabilities ---------- 75,508 57,580 Long-Term Debt ------------------------- 41,233 45,797 Deferred Income Taxes ------------------ 12,786 12,872 Shareholders' Equity: Common stock ------------------------- 1,920 1,903 Paid-in capital ---------------------- 71,282 69,262 Retained earnings -------------------- 124,578 118,878 Cumulative translation adjustment ---- 13,670 11,923 Treasury stock, at cost -------------- (110) (110) Unearned compensation-restricted stock awards ----------------------- (570) (245) --------- --------- Shareholders' equity --------------- 210,770 201,611 --------- --------- Total ---------------------------- $340,297 $317,860 ========= ========= See notes to unaudited consolidated financial statements. 4 Statements of Consolidated Income For the Three Months Ended March 31, 1994 and 1993 (In thousands, except per share data) (Unaudited) (Unaudited) 1994 1993 ------------- ------------- Net sales ---------------- $127,403 $101,155 Cost of products sold ---- 100,981 79,610 ---------- ---------- Gross margin ------------- 26,422 21,545 Selling, general and admini- strative expenses ------ 16,348 15,994 ---------- ---------- Income from operations --- 10,074 5,551 Other income (expense): Interest income, etc. -- 90 211 Interest expense (1,094) (1,232) ---------- ---------- Net ---------------------- (1,169) (1,021) ---------- ---------- Income before taxes on income ----------------- 8,905 4,530 Provision for taxes on income ----------------- 3,205 1,630 ---------- ---------- Net income --------------- $ 5,700 $ 2,900 ========== ========== Earnings per share ------- $.30 $.16 Average common shares outstanding ------------ 19,118 18,442 Dividends paid per share - $.00 $.00 See notes to unaudited consolidated financial statements. 5 Statements of Consolidated Cash Flows For the Three Months Ended March 31, 1994 and 1993 (In thousands) (Unaudited) (Unaudited) 1994 1993 ----------- ----------- Cash Flows From Operating Activities: Net income ----------------------- $ 5,700 $ 2,900 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization -- 4,652 3,919 (Gain) loss on the sale of property, plant and equipment -- (2) 10 Deferred federal income taxes - net -------------------------- 664 (221) Amortization of restricted stock awards ------------------- 47 43 Increase (decrease) in cash from changes in assets and liabilities: Accounts receivable ------------ (6,210) (8,216) Refundable income taxes -------- (118) 113 Inventories -------------------- (1,707) (1,576) Prepaid expenses --------------- (350) (434) Other assets ------------------- 102 (24) Accounts payable --------------- 7,008 3,369 Income taxes payable ----------- 2,673 1,261 Accrued restructuring, com- pensation and other expenses --- (1,212) 148 Effect of exchange rate changes on current assets and liabilities (other than cash) -------------------------- 123 (94) --------- --------- Net cash provided by operating activities --------------------- 11,370 1,198 --------- --------- Cash Flows From Investing Activities: Purchase of property, plant, and equipment ---------------------- (7,665) (3,852) Proceeds from the sale of property, plant and equipment -- 31 60 --------- --------- Net cash used for investing activities --------------------- (7,634) (3,792) --------- --------- Cash Flows From Financing Activities: Proceeds from short term borrowings --------------------- 5,000 Payments for long-term debt ---- (105) (102) Common stock issued under employee benefit plans -------- 1,665 386 --------- --------- Net cash provided by financing activities -------------------- 6,560 284 --------- --------- Effect of exchange rate changes on cash ----------------------- 438 (445) --------- --------- Net changes in cash and time deposits ---------------------- 10,734 (2,755) Cash and cash equivalents at beginning of the period ------- 8,540 28,323 --------- --------- Cash and cash equivalents at end of the period ----------------- $19,274 $25,568 ========= ========= See notes to unaudited consolidated financial statements. 6 Notes to Unaudited Consolidated Financial Statements 1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 1994, the results of operations for the three months ended March 31, 1994 and 1993 and the cash flows for the three month period then ended. 2. The results of operations for the three month period ended March 31, 1994 and 1993 are not necessarily indicative of the results to be expected for the full year. 3. Earnings Per Share - Earnings per share are based on the weighted average number of shares outstanding during each period. The exercise of all presently issued outstanding stock options and the issuance of shares under the "Employee Stock Purchase Plan" would have no material dilutive effect on earnings per share. 4. The acquisition of National Industries Inc. included a liability of approximately $5.4 million to cover the estimated costs of site remediation for certain National facilities. The Company informed the State of Alabama about the possible contamination and its desire to voluntarily proceed with further study and, if necessary, remediation of the possible contamination. The Company has completed its investigation and provided this information to the State. The State has informed the Company that it believes further investigation is necessary. The Company, however, has considered and disagreed with the State's comments and is voluntarily proceeding to design and implement an appropriate remedy. The Company has included in its financial statements an allowance of $4.7 million for estimated environmental cleanup costs as of March 31, 1994. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Net Sales: Net sales for the quarter ended March 31, 1994 by product group, compared to the quarter ended March 31, 1993, are as follows (dollars in thousands): ---------------------------------------------------------------------------- Quarters Ended March 31, 1994 1993 ---------------- ------------------ Product Group % % --------------------------------------------------------------------------- Interconnection Products Business $ 32,510 25.5% $ 31,405 31.0% Wiring Systems and Components Business 74,028 58.1% 52,706 52.1% Communications Products Business 20,865 16.4% 17,044 16.9% -------- ------ -------- ------ Total $127,403 100.0% $101,155 100.0% ======== ====== ======== ====== -------------------------------------------------------------------------- Net sales for the quarter ended March 31, 1994 increased 26% over the first quarter of 1993 primarily due to the increased demand for the Company's products in the U.S. Automotive and cable television markets. Net sales of Interconnection Products Business were flat reflecting the continuing economic recession in the markets which it serves. Business conditions in the first quarter of 1994 continue to reflect improvement in the domestic markets in which the Company serves. In the European and Far East markets, there have been no significant economic improvement in the current quarter. Incoming orders for the first quarter of 1994 were $134 million, compared to $103 million for the same period of the prior year. The backlog at March 31, 1994 was $111 million compared with $92 million at March 31, 1993. Cost of Products Sold: Cost of products sold increased by .6% as a percentage of sales in the first quarter of 1994 compared to the first quarter of 1993. The margin decline in 1994 can be attributed to the significant sales increase of 40% in the Wiring Systems and Components Business which has much higher labor and material costs compared to other business units. In addition the dollars expended to manufacture the Company's products have increased due to increases in material costs, wage increases and overheads. These expenses have been partially offset by improved manufacturing methods and on going cost-cutting programs. Selling, General and Administrative Expenses: These expenses were 12.8% of sales in the first quarter of 1994 compared to 15.8% in the comparable quarter of the prior year. While the dollars spent in this area have only increased slightly, the leveraging of such expenses due to increased volume have lowered the SG&A percent of sales. These expenses may vary from period to period based on various factors, none of which, individually are significant. 8 Other Income (Expense): Interest income, etc. decreased in 1994 due to the significant decrease in cash available to invest over the comparable period. Interest expense decreased in the 1994 period compared to the same period in 1993 due to the decrease in total outstanding debt in 1994 when compared to 1993. Income Taxes: The effective income tax rate for the Company was 36% for the first quarter of 1994 and 1993. The tax rate in both periods is higher than the statutory rate due to income earned in jurisdictions with higher effective tax rates. Net Income: Net income was $5.7 million for the three months ended March 31, 1994, compared to net income of $2.9 million in the same period of the prior year. The increase in net income for the first quarter ended March 31, 1994 compared to the previous period of the prior year resulted principally from increased sales volume in our domestic automotive and communications business and on going productivity programs. Liquidity and Capital Resources: The Registrant continues to maintain sufficient liquidity and has adequate resources to fund its operations under current business conditions. The income generated from operations along with the cash on hand and established bank credit facilities are sufficient to cover expected sales growth and planned capital expenditure programs. 9 PART II - OTHER INFORMATION Item 1 - Legal Proceedings On April 13, 1994, the Registrant announced that the State Supreme Judicial Court of the Commonwealth of Massachusetts vacated a 1992 Superior Court judgement which had awarded Augat Inc. compensatory damages of $14,140,000 in lost profits as the result of unfair trade practices. Although the court let stand its earlier decision that the conduct of defendants Aegis, Inc. and Jeremy Scherer was a knowing violation of the state unfair trade practices statute, the court held that the profits of Isotronics, Inc., Augat's former subsidiary was limited to six months, not twenty-seven, following the departure of three employees. The Supreme Court remanded the case to the Superior Court and included in its opinion instructions about how to recalculate the damage award. The award was not recorded in the company's previously reported earnings. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on 8-K - None 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 thereto duly authorized. AUGAT INC. ----------------------------------- (Registrant) /s/ Ellen B. Richstone ----------------------------------- Ellen B. Richstone Vice President and Chief Financial Officer Date: April 29, 1994 10 -----END PRIVACY-ENHANCED MESSAGE-----