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 March 26, 2005 | ||
|
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: 1-5129 |
M
OOG INC.|
New York State |
16-0757636 |
|
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
|
|
East Aurora, New York |
14052-0018 |
|
|
(Address of principal executive offices) |
(Zip code) |
Telephone number including area code: (716) 652-2000
______________________________________________________________________________________
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No __
The number of shares outstanding of each class of common stock as of April 29, 2005 were:
| Class A Common Stock, $1.00 par value |
34,365,467 |
shares |
| Class B Common Stock, $1.00 par value |
4,235,941 |
shares |
MOOG INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
|
Page |
|||
| PART I. | FINANCIAL INFORMATION | ||
| Item 1. | Consolidated Condensed Balance Sheets | ||
| March 26, 2005 and September 25, 2004 | 3 | ||
| Consolidated Condensed Statements of Earnings | |||
| Three and Six Months Ended March 26, 2005 and | |||
| March 31, 2004 | 4 | ||
| Consolidated Condensed Statements of Cash Flows | |||
| Six Months Ended March 26, 2005 and | |||
| March 31, 2004 | 5 | ||
| Notes to Consolidated Condensed Financial | |||
| Statements | 6-14 | ||
| Item 2. | Management's Discussion and Analysis of | ||
| Financial Condition and Results of Operations | 15-24 | ||
| Item 3. | Quantitative and Qualitative Disclosures about | ||
| Market Risk | 25 | ||
| Item 4. | Controls and Procedures | 25 | |
| PART II. | OTHER INFORMATION | ||
| Item 2. | Unregistered Sales of Equity Securities and | ||
| Use of Proceeds | 26 | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 26-27 | |
| Item 5. | Other Information | 27 | |
| Item 6. | Exhibits | 27 | |
| SIGNATURES | 28 | ||
2
| Part I. FINANCIAL INFORMATION | ||||||||||||
| Item 1. Financial Statements | ||||||||||||
|
MOOG INC. |
||||||||||||
|
CONSOLIDATED CONDENSED BALANCE SHEETS |
||||||||||||
|
(Unaudited) |
||||||||||||
|
(dollars in thousands) |
||||||||||||
|
March 26, |
September 25, |
|||||||||||
|
2005 |
2004 |
|||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | $ |
72,319 |
$ |
56,701 |
||||||||
| Receivables |
277,187 |
261,776 |
||||||||||
| Inventories |
201,819 |
189,649 |
||||||||||
| Other current assets |
44,991 |
40,963 |
||||||||||
| TOTAL CURRENT ASSETS |
596,316 |
549,089 |
||||||||||
| PROPERTY, PLANT AND EQUIPMENT, net of accumulated | ||||||||||||
| depreciation of $306,022 and $298,387, respectively |
248,865 |
246,743 |
||||||||||
| GOODWILL |
291,712 |
288,563 |
||||||||||
| INTANGIBLE ASSETS, net |
14,076 |
14,471 |
||||||||||
| OTHER ASSETS |
31,981 |
26,062 |
||||||||||
| TOTAL ASSETS | $ |
1,182,950 |
$ |
1,124,928 |
||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Notes payable | $ |
885 |
$ |
923 |
||||||||
| Current installments of long-term debt |
17,304 |
18,700 |
||||||||||
| Accounts payable |
62,010 |
54,200 |
||||||||||
| Accrued liabilities |
122,195 |
108,134 |
||||||||||
| Contract loss reserves |
14,269 |
14,311 |
||||||||||
| Customer advances |
38,975 |
31,016 |
||||||||||
| TOTAL CURRENT LIABILITIES |
255,638 |
227,284 |
||||||||||
| LONG-TERM DEBT, excluding current installments | ||||||||||||
| Senior debt |
124,395 |
291,666 |
||||||||||
| Senior subordinated notes |
150,000 |
- |
||||||||||
| LONG-TERM PENSION AND RETIREMENT OBLIGATIONS |
103,573 |
97,901 |
||||||||||
| DEFERRED INCOME TAXES |
35,199 |
34,198 |
||||||||||
| OTHER LONG-TERM LIABILITIES |
2,183 |
2,223 |
||||||||||
| TOTAL LIABILITIES |
670,988 |
653,272 |
||||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||
| Common stock |
45,730 |
45,736 |
||||||||||
| Other shareholders' equity |
466,232 |
425,920 |
||||||||||
| TOTAL SHAREHOLDERS' EQUITY |
511,962 |
471,656 |
||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ |
1,182,950 |
$ |
1,124,928 |
||||||||
| See accompanying Notes to Consolidated Condensed Financial Statements. | ||||||||||||
3
|
MOOG INC. |
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|
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS |
|||||||||||||||
|
(Unaudited) |
|||||||||||||||
|
(dollars in thousands except per share data) |
|||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
March 26, |
March 31, |
March 26, |
March 31, |
||||||||||||
|
2005 |
2004 |
2005 |
2004 |
||||||||||||
| Net sales | $ | 255,237 | $ | 234,069 | $ | 504,540 | $ | 460,054 | |||||||
| Cost of sales | 174,344 | 160,209 | 348,227 | 319,697 | |||||||||||
| Gross profit | 80,893 | 73,860 | 156,313 | 140,357 | |||||||||||
| Research and development | 10,133 | 7,498 | 19,142 | 14,266 | |||||||||||
| Selling, general and administrative | 43,819 | 42,702 | 84,738 | 80,433 | |||||||||||
| Interest | 3,170 | 2,834 | 5,879 | 6,019 | |||||||||||
| Other | 10 | 413 | (34) | 888 | |||||||||||
| Earnings before income taxes | 23,761 | 20,413 | 46,588 | 38,751 | |||||||||||
| Income taxes | 7,991 | 6,328 | 15,843 | 12,010 | |||||||||||
| Net earnings | $ | 15,770 | $ | 14,085 | $ | 30,745 | $ | 26,741 | |||||||
| Net earnings per share | |||||||||||||||
| Basic | $ | .41 | $ | .36 | $ | .80 | $ | .69 | |||||||
| Diluted | $ | .40 | $ | .35 | $ | .78 | $ | .67 | |||||||
| Average common shares outstanding | |||||||||||||||
| Basic | 38,607,521 | 38,978,142 | 38,597,874 | 38,894,426 | |||||||||||
| Diluted | 39,528,401 | 39,817,820 | 39,486,535 | 39,719,017 | |||||||||||
| See accompanying Notes to Consolidated Condensed Financial Statements. | |||||||||||||||
4
|
MOOG INC. |
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|
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS |
|||||||||||
|
(Unaudited) |
|||||||||||
|
(dollars in thousands) |
|||||||||||
|
Six Months Ended |
|||||||||||
|
March 26, |
March 31, |
||||||||||
|
2005 |
2004 |
||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net earnings | $ |
30,745 |
$ |
26,741 |
|||||||
| Adjustments to reconcile net earnings | |||||||||||
| to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization |
17,602 |
17,934 |
|||||||||
| Other |
5,882 |
22,150 |
|||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES |
54,229 |
66,825 |
|||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Acquisition of businesses, net of acquired cash | (4,613) | (152,019) | |||||||||
| Purchase of property, plant and equipment | (14,756) | (13,496) | |||||||||
| Other |
283 |
49 |
|||||||||
| NET CASH USED BY INVESTING ACTIVITIES | (19,086) | (165,466) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Net repayments of notes payable | (72) | (10,086) | |||||||||
| Net (repayments of) proceeds from revolving lines of credit | (159,300) |
72,000 |
|||||||||
| Proceeds from long-term debt |
268 |
22,572 |
|||||||||
| Payments on long-term debt | (9,715) | (30,977) | |||||||||
| Proceeds from sale of senior subordinated notes, net of issuance costs |
147,164 |
- |
|||||||||
| Other |
365 |
848 |
|||||||||
| NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES | (21,290) |
54,357 |
|||||||||
| Effect of exchange rate changes on cash |
1,765 |
1,501 |
|||||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
15,618 |
(42,783) | |||||||||
| Cash and cash equivalents at beginning of period |
56,701 |
77,491 |
|||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ |
72,319 |
$ |
34,708 |
|||||||
| CASH PAID FOR: | |||||||||||
| Interest | $ |
5,333 |
$ |
4,783 |
|||||||
| Income taxes |
7,105 |
1,499 |
|||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||||||
| Assets acquired under capital leases | $ |
- |
$ |
3,978 |
|||||||
| See accompanying Notes to Consolidated Condensed Financial Statements. | |||||||||||
5
MOOG INC. (Unaudited) 1. Basis of Presentation The accompanying unaudited consolidated condensed financial
statements have been prepared by management in accordance with generally
accepted accounting principles and in the opinion of management contain all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the financial position of Moog Inc. as of March 26, 2005 and September
25, 2004 and the results of its operations for the three and six months ended
March 26, 2005 and March 31, 2004 and its cash flows for the six months ended
March 26, 2005 and March 31, 2004. The results of operations for the three and
six months ended March 26, 2005 are not necessarily indicative of the results
expected for the full year. The accompanying unaudited consolidated condensed
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Form 10-K for the fiscal year ended
September 25, 2004. All references to years in these financial statements are to
fiscal years. 2. Recent Accounting Pronouncements In December 2004, the FASB issued SFAS No. 123 R (revised
2004), "Share-Based Payment," which is a revision of SFAS No. 123, "Accounting
for Stock-Based Compensation." This statement will provide investors and other
users of financial statements with more complete and neutral financial
information by requiring that the compensation cost relating to share-based
payment transactions be recognized in the financial statements. Statement 123(R)
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the income statement based on their fair
values. This statement covers a wide range of share-based compensation
arrangements including share options, restricted share plans, performance-based
awards, share appreciation rights, and employee share purchase plans, and
replaces FASB SFAS No. 123, "Accounting for Stock-Based Compensation,"
and supersedes Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." SFAS No. 123, as originally issued in 1995,
established as preferable a fair-value-based method of accounting for
share-based payment transactions with employees. However, that statement
permitted entities the option of continuing to apply the guidance in APB Opinion
No. 25, as long as the footnotes to financial statements disclosed what net
income would have been had the preferable fair-value-based method been used.
SFAS No. 123(R) is effective for public companies (excluding small business
issuers) at the beginning of the next fiscal year beginning after June 15, 2005.
Upon adoption, all prior years for which SFAS No. 123 was effective may be, but
are not required to be, restated. Based on options outstanding at March 26,
2005, the Company expects that diluted earnings per share will be negatively
impacted by approximately $.05 per share for 2006. In November 2004, the FASB issued SFAS No. 151 "Inventory
Costs, an amendment of ARB No. 43, Chapter 4." The amendments made by this
statement clarify that abnormal amounts of idle facility expense, freight,
handling costs and wasted materials (spoilage) should be recognized as
current-period charges and require the allocation of fixed production overheads
to inventory based on the normal capacity of the production facilities. The
provisions of this statement are effective for inventory costs incurred during
fiscal years beginning after June 15, 2005. Earlier application is permitted for
inventory costs incurred during fiscal years beginning after November 2004. The
Company believes the adoption of this standard will not have a material impact
on its results of operations or financial position. 6
In October 2004, President Bush signed the American Job
Creation Act of 2004, which contains provisions related to the distribution of
the earnings of foreign subsidiaries. Although preliminary guidance has been
issued by the IRS, the Company is still evaluating the effect that this new tax
legislation will have on its results of operations and financial condition.
Therefore, the Company is not able at this time to determine the impact, if any,
of future repatriations. 3. Stock-Based Compensation The Company accounts for stock options under the intrinsic
value method as prescribed by APB Opinion No. 25. The exercise price equals the
market price of the underlying common shares on the date of grant and,
therefore, no compensation expense is recognized. The following table
illustrates the effect on net earnings and earnings per share as if the fair
value method had been applied to all outstanding awards in each period. Three Months Ended Six Months Ended March 26, March 31, March 26, March 31, 2005 2004 2005 2004 15,770 14,085 30,745 26,741
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 26, 2005
(dollars in thousands, except per share data)
Net
earnings, as reported
$
$
$
$
Less
stock based employee compensation
expense determined under fair value