SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended February 28, 2003 File Number 0-288
| Ohio | 31-0424220 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
| 1400 Kettering Tower, Dayton, Ohio | 45423 | |
| (Address of Principal executive offices) | (Zip Code) | |
Registrant’s telephone number including area code (937) 222-2610
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 Exchange Act). YES X NO
Common shares, without par value, outstanding as of February 28, 2003: 14,363,672
1
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
| February 28, | August 31, | ||||||||||
| 2003 | 2002 | ||||||||||
| (Unaudited) | |||||||||||
ASSETS |
|||||||||||
Current Assets |
|||||||||||
Cash and cash equivalents |
$ | 11,062 | $ | 10,534 | |||||||
Accounts receivable |
113,085 | 113,711 | |||||||||
Inventories: |
|||||||||||
Finished products |
26,531 | 29,000 | |||||||||
Work in process |
31,324 | 22,487 | |||||||||
Raw materials |
40,104 | 40,959 | |||||||||
| 97,959 | 92,446 | ||||||||||
Other current assets |
10,335 | 12,318 | |||||||||
Deferred taxes |
14,465 | 14,071 | |||||||||
Total Current Assets |
246,906 | 243,080 | |||||||||
Goodwill |
290,300 | 271,948 | |||||||||
Other Intangible Assets |
17,715 | 17,604 | |||||||||
Other Assets |
6,990 | 6,201 | |||||||||
Property, Plant and Equipment |
274,348 | 261,926 | |||||||||
Less accumulated depreciation |
(129,179 | ) | (118,067 | ) | |||||||
| 145,169 | 143,859 | ||||||||||
| $ | 707,080 | $ | 682,692 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||||
Current Liabilities |
|||||||||||
Accounts payable |
$ | 44,502 | $ | 41,964 | |||||||
Accrued expenses |
78,722 | 83,871 | |||||||||
Current portion of long-term debt |
6,777 | 4,526 | |||||||||
Total Current Liabilities |
130,001 | 130,631 | |||||||||
Long-Term Debt—Less Current Portion |
208,905 | 203,920 | |||||||||
Deferred Taxes |
8,717 | 8,708 | |||||||||
Other Long-Term Liabilities |
73,225 | 70,863 | |||||||||
Minority Interest |
8,576 | 8,347 | |||||||||
Shareholders’ Equity |
|||||||||||
Common stock |
104,120 | 103,923 | |||||||||
Retained earnings |
180,091 | 176,627 | |||||||||
Accumulated other comprehensive loss |
(6,555 | ) | (20,057 | ) | |||||||
| 277,656 | 260,493 | ||||||||||
| $ | 707,080 | $ | 682,692 | ||||||||
See Notes to Consolidated Condensed Financial Statements
2
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENT
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||
| February 28, | February 28, | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
Net sales |
$ | 134,155 | $ | 130,002 | $ | 258,983 | $ | 269,389 | |||||||||
Cost of sales |
88,908 | 86,480 | 172,188 | 178,923 | |||||||||||||
Gross profit |
45,247 | 43,522 | 86,795 | 90,466 | |||||||||||||
SG&A expenses |
35,826 | 31,672 | 69,792 | 65,433 | |||||||||||||
Amortization expense |
571 | 623 | 1,110 | 1,181 | |||||||||||||
Other |
0 | 0 | 0 | 0 | |||||||||||||
Income before interest and income taxes |
8,850 | 11,227 | 15,893 | 23,852 | |||||||||||||
Interest expense |
3,852 | 4,566 | 7,710 | 8,619 | |||||||||||||
Income before income taxes and minority
interest |
4,998 | 6,661 | 8,183 | 15,233 | |||||||||||||
Income tax expense |
1,675 | 2,228 | 2,742 | 5,100 | |||||||||||||
Minority interest |
280 | 263 | 408 | 522 | |||||||||||||
Net income |
$ | 3,043 | $ | 4,170 | $ | 5,033 | $ | 9,611 | |||||||||
Net income per share: |
|||||||||||||||||
Basic |
$ | 0.21 | $ | 0.35 | $ | 0.35 | $ | 0.81 | |||||||||
Diluted |
$ | 0.21 | $ | 0.34 | $ | 0.35 | $ | 0.76 | |||||||||
Dividends per share: |
|||||||||||||||||
Declared |
$ | 0.055 | $ | 0.055 | $ | 0.110 | $ | 0.110 | |||||||||
Paid |
$ | 0.055 | $ | 0.055 | $ | 0.110 | $ | 0.110 | |||||||||
See Notes to Consolidated Condensed Financial Statements
3
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended | |||||||||||
| February 28, | |||||||||||
| 2003 | 2002 | ||||||||||
Operating Activities: |
|||||||||||
Net income |
$ | 5,033 | $ | 9,611 | |||||||
Adjustments to reconcile net income to net cash and
cash equivalents provided by operating activities: |
|||||||||||
Depreciation |
10,137 | 10,441 | |||||||||
Amortization |
1,110 | 1,181 | |||||||||
Deferred taxes |
156 | (571 | ) | ||||||||
Performance stock awards |
0 | 125 | |||||||||
Changes in operating assets and liabilities: |
|||||||||||
Accounts receivable |
7,369 | 4,144 | |||||||||
Inventories |
(96 | ) | 8,851 | ||||||||
Accounts payable |
152 | (4,692 | ) | ||||||||
Accrued expenses |
(9,242 | ) | (12,287 | ) | |||||||
Other |
821 | (1,491 | ) | ||||||||
Net Cash and Cash Equivalents Provided by Operating Activities |
15,440 | 15,312 | |||||||||
Investing Activities: |
|||||||||||
Capital expenditures, net of nominal disposals |
(3,006 | ) | (9,625 | ) | |||||||
Purchase of Tarby |
(12,478 | ) | 0 | ||||||||
Proceeds from sale of equipment |
0 | 4,200 | |||||||||
Amended credit agreement fees |
0 | (1,871 | ) | ||||||||
Romaco earnout payment and acquisition costs |
0 | (18,919 | ) | ||||||||
Net Cash and Cash Equivalents Used by Investing Activities |
(15,484 | ) | (26,215 | ) | |||||||
Financing Activities: |
|||||||||||
Proceeds from debt borrowings |
31,677 | 42,362 | |||||||||
Payments of long-term debt |
(29,733 | ) | (37,637 | ) | |||||||
Proceeds from sale of common stock |
197 | 1,660 | |||||||||
Dividends paid |
(1,569 | ) | (1,297 | ) | |||||||
Net Cash and Cash Equivalents Provided by Financing Activities |
572 | 5,088 | |||||||||
Increase (Decrease) in Cash and Cash Equivalents |
528 | (5,815 | ) | ||||||||
Cash and Cash Equivalents at Beginning of Period |
10,534 | 16,122 | |||||||||
Cash and Cash Equivalents at End of Period |
$ | 11,062 | $ | 10,307 | |||||||
See Notes to Consolidated Condensed Financial Statements
4
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
February 28, 2003
(Unaudited)
NOTE 1—Preparation of Financial Statements
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements of Robbins & Myers, Inc. and subsidiaries (“we” “our”)
contain all adjustments, consisting of normally recurring items, necessary to
present fairly the financial condition as of February 28, 2003, and August 31,
2002, the results of our operations for the three and six month periods ended
February 28, 2003 and 2002, and our cash flows for the six month periods ended
February 28, 2003 and 2002. All intercompany transactions have been
eliminated. Certain amounts in the prior period financial statements have been
reclassified to conform to the current year presentation.
NOTE 2—Acquisition
On November 15, 2002, we purchased the stock of Tarby, Inc. (“Tarby”) for
$12,478,000. Tarby is a manufacturer and marketer of progressing cavity pumps
and components for the general industrial and municipal wastewater markets with
annual sales of approximately $6,000,000.
NOTE 3—Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the six month period ended
February 28, 2003, by operating segment, are as follows:
| Pharmaceutical | Energy | Industrial | ||||||||||||||
| Segment | Segment | Segment | Total | |||||||||||||
| (In thousands) | ||||||||||||||||
Balance as of September 1, 2002 |
$ | 161,138 | $ | 68,098 | $ | 42,712 | $ | 271,948 | ||||||||
Goodwill acquired during the period |
0 | 0 | 8,384 | 8,384 | ||||||||||||
Translation adjustments and other |
9,140 | 577 | 251 | 9,968 | ||||||||||||
Balance as of February 28, 2003 |
$ | 170,278 | $ | 68,675 | $ | 51,347 | $ | 290,300 | ||||||||
Information regarding our other intangible assets is as follows:
| As of February 28, 2003 | As of August 31, 2002 | |||||||||||||||||||||||
| Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||||||
| Amount | Amortization | Net | Amount | Amortization | Net | |||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
Patents and
Trademarks |
$ | 7,843 | $ | 1,451 | $ | 6,392 | $ | 7,260 | $ | 1,103 | $ | 6,157 | ||||||||||||
Non-
compete
Agreements |
10,752 | 8,074 | 2,678 | 10,752 | 7,823 | 2,929 | ||||||||||||||||||
Financing
Costs |
7,266 | 3,834 | 3,432 | 6,668 | 3,363 | 3,305 | ||||||||||||||||||
Pension
Intangible |
4,564 | 0 | 4,564 | 4,564 | 0 | 4,564 | ||||||||||||||||||
Other |
2,078 | 1,429 | 649 | 2,038 | 1,389 | 649 | ||||||||||||||||||
Total |
$ | 32,503 | $ | 14,788 | $ | 17,715 | $ | 31,282 | $ | 13,678 | $ | 17,604 | ||||||||||||
5
NOTE 4—Net Income per Share
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| February 28, | February 28, | ||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||
Numerator: |
|||||||||||||||||||
Basic: |
|||||||||||||||||||
Net income |
$ | 3,043 | $ | 4,170 | $ | 5,033 | $ | 9,611 | |||||||||||
Effect of dilutive securities: |
|||||||||||||||||||
Convertible debt interest |
601 | 582 | 1,183 | 1,164 | |||||||||||||||
Income attributable to diluted shares |
$ | 3,644 | $ | 4,752 | $ | 6,216 | $ | 10,775 | |||||||||||
Denominator: |
|||||||||||||||||||
Basic: |
|||||||||||||||||||
Weighted average shares |
14,358 | 11,832 | 14,351 | 11,802 | |||||||||||||||
Effect of dilutive securities: |
|||||||||||||||||||
Convertible debt |
2,256 | 2,191 | 2,223 | 2,191 | |||||||||||||||
Dilutive options and restricted shares |
29 | 92 | 30 | 121 | |||||||||||||||
Diluted shares |
16,643 | 14,115 | 16,604 | 14,114 | |||||||||||||||
Basic net income per share |
$ | ||||||||||||||||||