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 January 31, 2004
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 0-12448
FLOW INTERNATIONAL CORPORATION
| WASHINGTON | 91-1104842 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
23500 - 64th Avenue South
Kent, Washington 98032
(253) 850-3500
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 ¨ No x.
The number of shares outstanding of common stock, as of March 8, 2004 is 15,358,759 shares.
FLOW INTERNATIONAL CORPORATION
INDEX
| Page | ||||
| Part I - FINANCIAL INFORMATION | ||||
| Item 1. Condensed Consolidated Financial Statements | ||||
| Condensed Consolidated Balance Sheets - January 31, 2004 and April 30, 2003. |
3 | |||
| 4 | ||||
| Condensed Consolidated Statements of Cash Flows - Nine Months Ended January 31, 2004 and 2003 |
5 | |||
| 6 | ||||
| 7 | ||||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 14 | |||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 23 | |||
| Item 4. Controls and Procedures | 23 | |||
| Part II - OTHER INFORMATION | ||||
| Item 1. Legal Proceedings | 25 | |||
| Item 2. Changes in Securities and Use of Proceeds | 25 | |||
| Item 3. Defaults Upon Senior Securities | 25 | |||
| Item 4. Submission of Matters to a Vote of Security Holders | 25 | |||
| Item 5. Other Information | 25 | |||
| Item 6. Exhibits and Reports on Form 8-K | 25 | |||
| Signatures | 26 | |||
- 2 -
FLOW INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except share amounts)
| January 31, 2004 |
April 30, 2003 |
|||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and Cash Equivalents |
$ | 16,369 | $ | 15,045 | ||||
| Receivables, Net |
32,143 | 34,600 | ||||||
| Inventories, Net |
29,297 | 40,883 | ||||||
| Deferred Income Taxes |
1,130 | 957 | ||||||
| Assets of Discontinued Operations |
— | 1,191 | ||||||
| Other Current Assets |
7,550 | 7,464 | ||||||
| Total Current Assets |
86,489 | 100,140 | ||||||
| Property and Equipment, Net |
14,484 | 12,987 | ||||||
| Patents and Other Intangible Assets, Net |
11,916 | 11,866 | ||||||
| Goodwill |
10,891 | 10,141 | ||||||
| Other Assets |
8,087 | 11,130 | ||||||
| $ | 131,867 | $ | 146,264 | |||||
| LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ (DEFICIT) EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Notes Payable |
$ | 4,417 | $ | 4,610 | ||||
| Current Portion of Long-Term Obligations |
45,037 | 23 | ||||||
| Accounts Payable |
12,301 | 12,250 | ||||||
| Accrued Payroll and Related Liabilities |
6,368 | 4,512 | ||||||
| Other Accrued Taxes |
1,748 | 58 | ||||||
| Deferred Revenue |
1,884 | 4,803 | ||||||
| Customer Advances |
12,370 | 5,159 | ||||||
| Other Accrued Liabilities |
13,933 | 19,499 | ||||||
| Total Current Liabilities |
98,058 | 50,914 | ||||||
| Long-Term Obligations |
32,416 | 83,775 | ||||||
| Other Long-Term Liabilities |
4,187 | 3,791 | ||||||
| Total Liabilities |
134,661 | 138,480 | ||||||
| Commitments and Contingencies |
||||||||
| Minority Interest |
2,315 | 2,325 | ||||||
| Shareholders’ (Deficit) Equity |
||||||||
| Series A 8% Convertible Preferred Stock – $.01 par value, 1,000,000 shares authorized, none issued |
— | — | ||||||
| Common Stock - $.01 par value, 29,000,000 shares authorized, 15,358,759 shares outstanding at January 31, 2004 and at April 30, 2003 |
154 | 154 | ||||||
| Capital in Excess of Par |
56,234 | 55,869 | ||||||
| Accumulated Deficit |
(52,386 | ) | (40,806 | ) | ||||
| Accumulated Other Comprehensive Loss |
(9,111 | ) | (9,758 | ) | ||||
| Total Shareholders’ (Deficit) Equity |
(5,109 | ) | 5,459 | |||||
| $ | 131,867 | $ | 146,264 | |||||
See Accompanying Notes to
Condensed Consolidated Financial Statements
- 3 -
FLOW INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)
| Three Months Ended January 31, |
Nine Months Ended January 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues |
$ | 42,382 | $ | 30,546 | $ | 123,253 | $ | 112,381 | ||||||||
| Cost of Sales |
25,813 | 31,013 | 77,681 | 85,371 | ||||||||||||
| Gross Margin |
16,569 | (467 | ) | 45,572 | 27,010 | |||||||||||
| Expenses: |
||||||||||||||||
| Sales and Marketing |
6,531 | 10,827 | 19,766 | 27,047 | ||||||||||||
| Research and Engineering |
2,974 | 3,696 | 8,863 | 10,324 | ||||||||||||
| General and Administrative |
5,697 | 7,357 | 16,650 | 16,626 | ||||||||||||
| Restructuring |
1,312 | — | 3,614 | — | ||||||||||||
| Goodwill Impairment |
— | 7,145 | — | 7,145 | ||||||||||||
| 16,514 | 29,025 | 48,893 | 61,142 | |||||||||||||
| Operating Income (Loss) |
55 | (29,492 | ) | (3,321 | ) | (34,132 | ) | |||||||||
| Interest Expense, Net |
3,009 | 3,198 | 9,776 | 8,201 | ||||||||||||
| Other (Income) Expense, Net |
(2,590 | ) | 3,233 | (2,771 | ) | 4,052 | ||||||||||
| Loss Before Provision for Income Taxes |
(364 | ) | (35,923 | ) | (10,326 | ) | (46,385 | ) | ||||||||
| Provision for Income Taxes |
(775 | ) | (5,312 | ) | (1,780 | ) | (7,831 | ) | ||||||||
| Loss Before Discontinued Operations |
(1,139 | ) | (41,235 | ) | (12,106 | ) | (54,216 | ) | ||||||||
| Discontinued Operations, Net of Tax |
— | (384 | ) | 526 | (241 | ) | ||||||||||
| Net Loss |
$ | (1,139 | ) | $ | (41,619 | ) | $ | (11,580 | ) | $ | (54,457 | ) | ||||
| Basic and Diluted Loss Per Share: |
||||||||||||||||
| Loss Before Discontinued Operations |
$ | (.07 | ) | $ | (2.68 | ) | $ | (.78 | ) | $ | (3.53 | ) | ||||
| Effect of Discontinued Operations, Net of Tax |
— | (.03 | ) | .03 | (.02 | ) | ||||||||||
| Net Loss |
$ | (.07 | ) | $ | (2.71 | ) | $ | (.75 | ) | $ | (3.55 | ) | ||||
| Weighted Average Shares Used in Computing Basic and Diluted Loss Per Share |
||||||||||||||||
| Basic |
15,359 | 15,359 | 15,359 | 15,345 | ||||||||||||
| Diluted |
15,359 | 15,359 | 15,359 | 15,345 | ||||||||||||
See Accompanying Notes to
Condensed Consolidated Financial Statements
- 4 -
FLOW INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
| Nine Months Ended January 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Net Loss |
$ | (11,580 | ) | $ | (54,457 | ) | ||
| Adjustments to Reconcile Net Loss to Cash Provided by (Used In) Operating Activities: |
||||||||
| Depreciation and Amortization |
4,817 | 7,638 | ||||||
| Gain on Sale of Discontinued Operations |
(650 | ) | — | |||||
| Gain on Sale of Equity Securities |
(2,618 | ) | — | |||||
| Deferred Taxes |
310 | 7,095 | ||||||
| Goodwill Impairment |
— | 7,145 | ||||||
| Loss on Valuation of Operating Assets |
— | 8,052 | ||||||
| Provision for Losses on Trade Accounts Receivable |
187 | 3,269 | ||||||
| Provision for Losses on Inventory |
— | 3,272 | ||||||
| Other Non-Cash Items |
1,169 | 884 | ||||||
| (8,365 | ) | (17,102 | ) | |||||
| Decrease in Receivables |
3,045 | 18,966 | ||||||
| Decrease (Increase) in Inventory |
12,625 | (6,085 | ) | |||||
| Decrease (Increase) in Other Operating Assets |
389 | (1,257 | ) | |||||
| Increase (Decrease) in Customer Advances |
6,539 | (6,542 | ) | |||||
| (Decrease) Increase in Other Operating Liabilities |
(1,037 | ) | 2,522 | |||||
| Cash Provided by (Used in) Operating Activities |
13,196 | (9,498 | ) | |||||
| Cash Flows from Investing Activities: |
||||||||
| Expenditures for Property and Equipment |
(5,009 | ) | (3,635 | ) | ||||
| Proceeds from Sale of Property and Equipment |
— | 2,769 | ||||||
| Proceeds from Sale of Discontinued Operations |
1,837 | — | ||||||
| Proceeds from Sale of Equity Securities |
3,275 | — | ||||||
| Other |
354 | — | ||||||
| Cash Provided by (Used in) Investing A | ||||||||