-----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, KaFlO7OCEi9Y8D3iylI1A7G+4rRQdxRaEnkGef5oJG1F+NpE203qJ+XpxhYf5YJS RX9jjO18K9X0p3MlxcKbPA== 0001012364-96-000019.txt : 19960816 0001012364-96-000019.hdr.sgml : 19960816 ACCESSION NUMBER: 0001012364-96-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN INTERNATIONAL CORP CENTRAL INDEX KEY: 0000848446 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 310810265 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10219 FILM NUMBER: 96614381 BUSINESS ADDRESS: STREET 1: 300 DELAWARE AVE STE 1704 CITY: WILMINGTON STATE: DE ZIP: 19801 BUSINESS PHONE: 3024275804 MAIL ADDRESS: STREET 1: 30 GARFIELD PLACE STREET 2: SUITE 1040 CITY: CINCINNATI STATE: OH ZIP: 45202 10-Q 1 UNITED STATES 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 1-10219 VULCAN INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 31-0810265 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19801 (Address of principal executive offices) (Zip Code) (302) 427-5804 (Registrant's telephone number, including area code) N/A (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 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 classes of common stock, as of the latest practicable date. Outstanding shares of no par value common stock at June 30, 1996: 1,190,844 shares VULCAN INTERNATIONAL CORPORATION INDEX PAGE Part I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Income 2 Condensed Consolidated Statements of Cash Flows 3 Schedule Supporting Net Income Per Common Share and Dividends Per Common Share 4 Notes to Condensed Consolidated Financial Statements 5-6 Independent Accountant's Report 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 Part II - OTHER INFORMATION Item 1. Legal Proceedings 10 Item 6. Exhibits and Reports on Form 8-K 10 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. VULCAN INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, 1996 1995 UNAUDITED -ASSETS- CURRENT ASSETS: Cash $ 477,330 1,136,553 Marketable securities (At fair market value-June 30, 1996, and December 31, 1995, cost $3,756,586) 20,760,036 18,423,949 Accounts receivable 2,520,798 2,767,804 Inventories 1,137,931 1,071,952 Prepaid expense 47,351 35,053 Refundable federal income tax - 189,651 ---------- ---------- TOTAL CURRENT ASSETS 24,943,446 23,624,962 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT-at cost 19,766,989 19,553,473 Less-Accumulated depreciation and depletion 16,509,550 16,702,292 ---------- ---------- NET PROPERTY, PLANT AND EQUIPMENT 3,257,439 2,851,181 ---------- ---------- INVESTMENT IN JOINT VENTURE 642,096 671,700 ---------- ---------- MARKETABLE SECURITIES (At fair market value- June 30, 1996, and December 31, 1995, cost $2,623,283) 19,607,928 21,255,653 ---------- ---------- DEFERRED CHARGES AND OTHER ASSETS 2,726,330 2,673,332 ---------- ---------- TOTAL ASSETS $ 51,177,239 51,076,828 ========== ========== -LIABILITIES AND SHAREHOLDERS' EQUITY- CURRENT LIABILITIES: Notes payable-bank $ 2,100,000 2,175,000 Deferred income tax 5,612,903 4,786,941 Other 1,148,477 1,446,668 ---------- ---------- TOTAL CURRENT LIABILITIES 8,861,380 8,408,609 ---------- ---------- DEFERRED INCOME TAX 5,944,170 6,503,731 ---------- ---------- OTHER LIABILITIES - 23,609 ---------- ---------- COMMITMENTS AND CONTINGENCIES - - MINORITY INTEREST IN PARTNERSHIP 37,888 35,391 ---------- ---------- SHAREHOLDERS' EQUITY: Capital stock 315,999 315,999 Additional paid-in capital 4,333,543 4,283,961 Retained earnings 23,119,922 22,796,484 Net unrealized holding gain 22,432,185 21,977,823 ---------- ---------- 50,201,649 49,374,267 Less-Common stock in treasury-at cost 13,867,848 13,268,779 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 36,333,801 36,105,488 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 51,177,239 51,076,828 ========== ========== The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
-1- PART I - FINANCIAL INFORMATION (Continued) Item 1. Financial Statements. VULCAN INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME UNAUDITED
For the six months ended For the three months ended June 30, June 30, June 30, June 30, 1996 1995 1996 1995 REVENUES: Net sales $ 7,657,329 8,216,361 3,700,332 4,271,067 Dividends 754,478 747,503 380,603 376,178 --------- --------- --------- --------- TOTAL REVENUES 8,411,807 8,963,864 4,080,935 4,647,245 --------- --------- --------- --------- COST AND EXPENSES: Cost of sales 7,114,088 8,871,072 3,070,662 4,599,791 General and administrative 1,037,963 1,076,341 571,890 517,517 Interest expense 72,451 36,043 36,412 20,127 --------- --------- --------- --------- TOTAL COST AND EXPENSES 8,224,502 9,983,456 3,678,964 5,137,435 --------- --------- --------- --------- EQUITY IN JOINT VENTURE INCOME AND MINORITY INTEREST 317,899 549,481 208,071 360,456 --------- --------- --------- --------- INCOME (LOSS) BEFORE GAIN ON SALE OF ASSETS 505,204 (470,111) 610,042 (129,734) NET GAIN ON SALE OF MARKETABLE SECURITIES - 83,405 - 74,633 NET GAIN ON SALE OF PROPERTY AND EQUIPMENT 459,090 494,696 287,741 59,158 --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 964,294 107,990 897,783 4,057 INCOME TAX PROVISION (BENEFIT) 157,992 13,889 219,176 (4,400) --------- --------- --------- --------- NET INCOME $ 806,302 94,101 678,607 8,457 ========= ========= ========= ========= NET INCOME PER COMMON SHARE $ .67 .07 .57 .00 ========= ========= ========= ========= Dividends Per Common Share $ .40 .40 .20 .20 ========= ========= ========= ========= The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
-2- PART I - FINANCIAL INFORMATION (Continued) Item 1. Financial Statements. VULCAN INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the six months ended UNAUDITED
JUNE 30, JUNE 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 7,907,585 8,354,236 Cash paid to suppliers and employees (8,408,895) (9,576,658) Dividends received 754,478 747,503 Interest paid (74,697) (36,582) Income tax refunds 194,199 - ---------- ---------- NET CASH FLOWS FROM OPERATING\ ACTIVITIES 372,670 (511,501) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of marketable securities - 124,293 Proceeds from sale of property and equipment 568,717 576,823 Purchase of property and equipment (813,971) (187,821) Collections on notes receivable 35,212 24,611 Purchase of investments - (64,179) Distribution from joint venture 350,000 850,000 ---------- ---------- NET CASH FLOWS FROM INVESTING ACTIVITIES 139,958 1,323,727 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net payments under credit agreements (75,000) (138,750) Purchase of treasury shares (613,987) (1,059,852) Cash dividends paid (482,864) (505,895) ---------- ---------- NET CASH FLOWS FROM FINANCING ACTIVITIES (1,171,851) (1,704,497) ---------- ---------- DECREASE IN CASH AND CASH EQUIVALENTS (659,223) (892,271) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,136,553 1,126,952 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 477,330 234,681 ========== ========== RECONCILIATION OF NET INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 806,302 94,101 Adjustments- Depreciation and amortization 300,732 334,523 Deferred income taxes 32,359 (31,443) Equity in joint venture income and minority interest (317,899) (549,481) Net gain on sale of property and marketable securities (459,090) (578,101) Compensation paid with treasury shares 64,500 52,125 Decrease in accounts receivable 250,256 137,875 Increase in inventories (65,979) (95,696) Increase (decrease) in accounts payable, accrued expenses and other assets (238,511) 124,596 ---------- ---------- NET CASH FLOWS FROM OPERATING ACTIVITIES $ 372,670 (511,501) ========== ========== The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
-3- PART I - FINANCIAL INFORMATION (Continued) Item 1. Financial Statements. VULCAN INTERNATIONAL CORPORATION SCHEDULE SUPPORTING NET INCOME PER COMMON SHARE AND DIVIDENDS PER COMMON SHARE UNAUDITED EXHIBIT 1
For the six months ended For the three months ended June 30, June 30, June 30, June 30, 1996 1995 1996 1995 a) Net income $ 806,302 94,101 678,607 8,457 b) Dividends on preferred shares 1,977 1,977 985 985 --------- --------- --------- --------- c) Net income attributable to common shares $ 804,325 92,124 677,622 7,472 ========= ========= ========= ========= d) Cash dividends on common shares $ 480,887 503,918 239,003 246,954 ========= ========= ========= ========= Weighted Average Shares: e) Common shares issued 1,999,512 1,999,512 1,999,512 1,999,512 f) Common treasury shares 797,153 735,769 804,420 755,591 --------- --------- --------- --------- g) Common shares outstanding 1,202,359 1,263,743 1,195,092 1,243,921 ========= ========= ========= ========= h) Income per common share (c/g) $ .67 .07 .57 .00 i) Dividends per common share $ .40 .40 .20 .20 The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
-4- PART I - FINANCIAL INFORMATION (Continued) Item 1. Financial Statements. VULCAN INTERNATIONAL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended June 30, 1996 and 1995 The Registrant has been advised that it is a potentially responsible party, together with 18 other parties, with regard to the Resolve, Inc. Superfund Site, located in North Dartmouth, Massachusetts, with potential joint and several liability of $5.7 million. The Resolve site was a waste chemical reclamation facility. The environmental problem at the site involves soil contamination including, particularly, PCB contaminants. It is the understanding of Registrant that clean-up at the site involves treatment of contaminated soil and ground water. The registrant is contesting all liability. There may be other potential clean-up liability at other sites of which the registrant has no specific knowledge. The Registrant's partner, Brunswick Bowling and Billiard Corporation (Brunswick),in its Joint Venture has made assertions against the Registrant in connection with bowling pins bases (bases) manufactured by the Registrant and supplied to the Joint Venture. Brunswick asserts that defective bases were supplied to the Joint Venture and that they should be reimbursed by the Registrant for their costs to replace the affected bases as well as other losses arising from such base defects. The Registrant denies any liability related to the replaced bases and it is the Registrant's position that, if the materials were defective, the claims should be made against the supplier of the raw materials used to produce the bases. The Registrant intends to vigorously contest any claims in connection with this matter. The accompanying condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to reflect a fair presentation of financial position, results of operations and cash flows for the interim periods. There were no securities of the Registrant sold by the Registrant during the six months ended June 30, 1996, that were not registered under the Securities Act of 1933, in reliance upon an exemption from registration provided by Section 4(2) of the Act. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. -5- PART I - FINANCIAL INFORMATION (Continued) Item 1. Financial Statements. VULCAN INTERNATIONAL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended June 30, 1996 and 1995 (Continued) INVENTORIES
June 30, December 31, 1996 1995 UNAUDITED Inventories consisted of: Finished goods $ 749,206 498,630 Work in process 127,404 213,496 Raw materials 261,321 359,826 --------- --------- Total inventories $ 1,137,931 1,071,952 ========= =========
REVIEW BY INDEPENDENT ACCOUNTANTS The condensed consolidated financial statements at June 30, 1996, and for the six-month and the three-month periods then ended have been reviewed, prior to filing, by the Registrant's independent accountants, J.D. Cloud & Co. P.L.L., whose report covering their review of the financial statements is included in this report. -6- INDEPENDENT ACCOUNTANT'S REPORT To the Board of Directors Vulcan International Corporation Wilmington, Delaware We have reviewed the accompanying condensed consolidated balance sheet of Vulcan International Corporation and subsidiaries as of June 30, 1996, and the related condensed consolidated statements of income and cash flows for the six-month and three-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 Statements on Standards for Accounting and Review Services issued 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 condensed consolidated 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 Vulcan International Corporation and subsidiaries as of December 31, 1995, and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 10, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1995, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Certified Public Accountants Cincinnati, Ohio August 8, 1996 -7- PART I - FINANCIAL INFORMATION (Continued) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Net sales revenue for the six-month period ended June 30, 1996, decreased $559,032 or 6.8% over the corresponding period in 1995 due principally to a lower sales volume in the shoe products division. Cost of sales decreased $1,756,984 or 19.8% during the six-month period due principally to decreased costs in the shoe products division. Net sales revenue for the second quarter of 1996 decreased $570,735 or 13.4 and cost of sales decreased $1,529,129 or 33.2% compared to the corresponding quarter in 1995 due principally to lower sales in the shoe products division and decreased costs in the shoe products division as mentioned above. General and administrative expenses decreased $38,378 or 3.6% in the six- month period ended June 30, 1996, as compared to the corresponding six-month period in 1995 due principally to cost savings in connection with a reduction in the Company's sales force. General and administrative expenses for the second quarter of 1996 increased $54,373 or 10.5% compared to the corresponding quarter in 1995 due to costs in connection with reducing the workforce in the Rubber Division. Interest expense for the six-month period ended June 30, 1996, increased $36,408 due to increased borrowings. Interest expense for the second quarter of 1996 increased $16,285 compared to the corresponding quarter in 1995. There were no realized gains on marketable securities for the six months ended June 30, 1996, as compared to $83,405 in the same period in 1995. Realized gains on marketable securities for the quarter ended June 30, 1995 amounted to $74,633. Gains on the sale of property and equipment were $459,090 for the six-month period ended June 30, 1996, as compared to $494,696 for the corresponding period in 1995. The 1996 gains are primarily due to timber sales and sales of equipment in the Shoe Products Division. The 1995 gain was substantially the result of the sale of the land and buildings in Blanchester, Ohio, and timber. Gains on the sale of property and equipment were $287,741 in the second quarter of 1996 as compared to $59,158 in the second quarter of 1995, due primarily to timber sales and sales of equipment in the shoe Products Division. The Company has a 50% interest in a joint venture, Vulcan Brunswick Bowling Pin Company (VBBPC) which manufactures bowling pins in Antigo, Wisconsin, for Brunswick and the Company. The Company received a cash distribution of $350,000 from VBBPC during the first quarter of 1996. -8- PART I - FINANCIAL INFORMATION (Continued) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. (Continued) Summarized income statement information for VBBPC consists of the following:
Six Months Ended June 30, Three Months ended June 30, 1996 1995 1996 1995 Net sales $ 7,104,445 8,340,670 3,139,272 4,668,843 Costs and expenses 6,463,653 7,239,663 2,720,662 3,946,984 --------- --------- --------- --------- Net income $ 640,792 1,101,007 418,610 721,859 ========= ========= ========= ========= Company's 50% equity in net income $ 320,396 550,503 209,305 360,929 ========= ========= ========= =========
In January 1996, the Registrant announced plans to permanently lay off approximately 65% of its Rubber Division workforce in Clarksville, Tennessee. The Registrant, in accordance with its previously announced workforce reduction, began laying off personnel in late March, 1996. The Registrant will no longer produce heels and soles, except for military orders. The Registrant will continue to produce other rubber and foam products at the Clarksville facility. There is not expected to be any significant change in assets as a result of this downsizing. The Registrant does not expect to incur significant costs resulting from this reduction in its product line and workforce. LIQUIDITY AND CAPITAL RESOURCES The Registrant's cash requirements during the second quarter of 1996 were funded in part through earnings and noncash charges such as depreciation and amortization and from the sale of timber and equipment. The proceeds from these transactions was used to purchase property and equipment and to repurchase treasury shares. The Registrant expects to continue, when necessary, to use short-term borrowings to meet cash requirements not fully provided by earnings, depreciation and amortization. During the period ended June 30, 1996, 27,028 shares of treasury stock were acquired for $613,987 by the use of cash from operations. There were approximately $70,000 of commitments for capital expenditures as of June 30, 1996. -9- PART II - OTHER INFORMATION Item 1. Legal Proceedings. The Registrant has been advised that it is a potentially responsible party, together with 18 other parties, with regard to the Resolve, Inc. Superfund Site, located in North Dartmouth, Massachusetts, with potential joint and several liability of $5.7 million. The Resolve site was a waste chemical reclamation facility. The environmental problem at the site involves soil contamination including, particularly, PCB contaminants. It is the understanding of Registrant that clean-up at the site involves treatment of contaminated soil and ground water. The Registrant is contesting all liability. There may be other potential clean-up liability at other sites of which the Registrant has no specific knowledge. The Registrant's partner, Brunswick Bowling and Billiard Corporation (Brunswick), in its Joint Venture has made assertions against the Registrant in connection with bowling pin bases (bases) manufactured by the Registrant and supplied to the Joint Venture. Brunswick asserts that defective bases were supplied to the Joint Venture and that they should be reimbursed by the Registrant for their costs to replace the affected bases as well as other losses arising from such base defects. The Registrant denies any liability related to the replaced bases and it is the Registrant's position that, if the materials were defective, the claims should be made against the supplier of the raw materials used to produce the bases. The Registrant intends to vigorously contest any claims in connection with this matter. The Registrant and its subsidiaries are party to other litigation matters and claims which are normal in the course of operations. While the results of litigation and claims cannot be predicted with certainty, based on advice of counsel, the Registrant believes that the final outcome of such matters will not have a materially adverse effect on its consolidated financial condition. Item 6. Exhibits and Reports on Form 8-K. The Registrant was not required to file Form 8-K for the quarter ended June 30, 1996. -10- PART II - OTHER INFORMATION (Continued) 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. VULCAN INTERNATIONAL CORPORATION August 14, 1996 By: Benjamin Gettler Date Chairman of the Board, President and Chief Executive Officer August 14, 1996 By: Vernon E. Bachman Date Vice President, Secretary-Treasurer and Principal Accounting Officer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION OF VULCAN INTERNATIONAL CORPORATION. THIS INFORMATION IS SUMMARIZED FROM THE QUARTERLY REPORT ON FORM 10Q FOR THE SIX MONTHS ENDED JUNE 30, 1996. 0000848446 VULCAN INTERNATIONAL 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 477,330 20,760,036 2,463,950 261,269 1,137,931 24,943,446 19,766,989 16,509,550 51,177,239 8,861,380 0 0 66,060 249,939 36,017,802 51,177,239 7,657,329 8,411,807 7,114,088 7,114,088 0 39,317 72,451 964,294 157,992 806,302 0 0 0 806,302 .67 .67
-----END PRIVACY-ENHANCED MESSAGE-----