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 July 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 No X .
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 December 6, 2004 is 15,939,291 shares.
FLOW INTERNATIONAL CORPORATION
| Page | ||||
| Part I - FINANCIAL INFORMATION | ||||
| Item 1. |
Condensed Consolidated Financial Statements (unaudited) |
|||
|
Condensed Consolidated Balance Sheets - |
3 | |||
|
Condensed Consolidated Statements of Operations - |
4 | |||
|
Condensed Consolidated Statements of Cash Flows - |
5 | |||
| 6 | ||||
| 7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
18 | ||
| Item 3. |
27 | |||
| Item 4. |
27 | |||
| Item 1. |
30 | |||
| Item 2. |
30 | |||
| Item 3. |
30 | |||
| Item 4. |
30 | |||
| Item 5. |
30 | |||
| Item 6. |
30 | |||
| 32 | ||||
- 2 -
FLOW INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except share amounts)
| July 31, 2004 |
April 30, 2004 |
|||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and Cash Equivalents |
$ | 9,356 | $ | 11,734 | ||||
| Restricted Cash |
1,281 | 1,101 | ||||||
| Receivables, Net |
42,357 | 44,860 | ||||||
| Inventories, Net |
27,062 | 26,384 | ||||||
| Deferred Income Taxes |
822 | 970 | ||||||
| Other Current Assets |
6,875 | 5,562 | ||||||
| Total Current Assets |
87,753 | 90,611 | ||||||
| Property and Equipment, Net |
13,366 | 14,200 | ||||||
| Patents and Other Intangible Assets, Net |
14,376 | 14,251 | ||||||
| Goodwill |
11,211 | 11,260 | ||||||
| Other Assets |
5,367 | 4,749 | ||||||
| $ | 132,073 | $ | 135,071 | |||||
| LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ DEFICIT |
| |||||||
| Current Liabilities: |
||||||||
| Notes Payable |
$ | 6,539 | $ | 8,687 | ||||
| Current Portion of Long-Term Obligations |
35,495 | 40,040 | ||||||
| Accounts Payable |
17,708 | 15,123 | ||||||
| Accrued Payroll and Related Liabilities |
6,250 | 7,734 | ||||||
| Other Accrued Taxes |
1,901 | 4,212 | ||||||
| Deferred Revenue |
3,025 | 3,028 | ||||||
| Customer Advances |
10,406 | 10,181 | ||||||
| Other Accrued Liabilities |
12,348 | 10,666 | ||||||
| Total Current Liabilities |
93,672 | 99,671 | ||||||
| Long-Term Obligations |
42,392 | 38,081 | ||||||
| Other Long-Term Liabilities |
3,720 | 4,511 | ||||||
| Total Liabilities |
139,784 | 142,263 | ||||||
| Commitments and Contingencies |
||||||||
| Minority Interest |
2,366 | 2,360 | ||||||
| Shareholders’ Deficit |
||||||||
| 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, 15,876,748 shares outstanding at July 31, 2004 and 15,509,853 shares outstanding at April 30, 2004 |
159 | 156 | ||||||
| Capital in Excess of Par |
56,683 | 54,686 | ||||||
| Accumulated Deficit |
(62,305 | ) | (59,965 | ) | ||||
| Accumulated Other Comprehensive Loss |
(4,614 | ) | (4,429 | ) | ||||
| Total Shareholders’ Deficit |
(10,077 | ) | (9,552 | ) | ||||
| $ | 132,073 | $ | 135,071 | |||||
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 July 31, |
||||||||
| 2004 |
2003 |
|||||||
| (restated) | ||||||||
| Sales |
$ | 48,982 | $ | 37,182 | ||||
| Cost of Sales |
31,087 | 23,797 | ||||||
| Gross Margin |
17,895 | 13,385 | ||||||
| Expenses: |
||||||||
| Sales and Marketing |
7,309 | 7,433 | ||||||
| Research and Engineering |
2,604 | 2,732 | ||||||
| General and Administrative |
5,728 | 5,497 | ||||||
| Restructuring |
- | 1,348 | ||||||
| Financial Consulting |
623 | - | ||||||
| 16,264 | 17,010 | |||||||
| Operating Income (Loss) |
1,631 | (3,625 | ) | |||||
| Interest Expense, Net |
(3,095 | ) | (3,299 | ) | ||||
| Other (Expense) Income, Net |
(170 | ) | 727 | |||||
| Loss Before Provision for Income Taxes |
(1,634 | ) | (6,197 | ) | ||||
| (Provision) Benefit for Income Taxes |
(706 | ) | 4 | |||||
| Loss Before Discontinued Operations |
(2,340 | ) | (6,193 | ) | ||||
| Gain on Sale of Discontinued Operations, Net of Tax |
- | 650 | ||||||
| Discontinued Operations, Net of Tax |
- | (124 | ) | |||||
| Net Loss |
$ | (2,340 | ) | $ | (5,667 | ) | ||
| Basic and Diluted Loss Per Share: |
||||||||
| Loss Before Discontinued Operations |
$ | (.15 | ) | $ | (.40 | ) | ||
| Effect of Discontinued Operations, Net of Tax |
- | 03 | ||||||
| Net Loss |
$ | (.15 | ) | $ | (.37 | ) | ||
| Weighted Average Shares Used in Computing Basic and Diluted Loss Per Share |
||||||||
| Basic |
15,686 | 15,359 | ||||||
| Diluted |
15,686 | 15,359 | ||||||
See Accompanying Notes to
Condensed Consolidated Financial Statements
- 4 -
FLOW INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
| Three Months Ended July 31, |
||||||||
| 2004 |
2003 |
|||||||
| (restated) | ||||||||
| Cash Flows from Operating Activities: |
||||||||
| Net Loss |
$ | (2,340 | ) | $ | (5,667 | ) | ||
| Adjustments to Reconcile Net Loss to Cash Provided by Operating Activities: |
||||||||
| Depreciation and Amortization |
1,322 | 1,673 | ||||||
| Gain on Sale of Discontinued Operations |
- | (650 | ) | |||||
| Foreign Currency Losses (Gains) |
660 | (788 | ) | |||||
| Amortization of Debt Discount |
257 | 209 | ||||||
| Other Non-Cash Items |
365 | (104 | ) | |||||
| Decrease in Receivables |
2,483 | 2,919 | ||||||
| (Increase) Decrease in Inventory |
(740 | ) | 3,375 | |||||
| (Increase) Decrease in Other Operating Assets |
(1,488 | ) | 158 | |||||
| Increase in Customer Advances |
244 | 8,875 | ||||||
| Increase (Decrease) in Accounts Payable |
2,614 | (2,653 | ) | |||||
| Decrease in Deferred Revenue |
(14 | ) | (3,397 | ) | ||||
| (Decrease) Increase in Other Operating Liabilities |
(2,203 | ) | 288 | |||||
| Cash Provided by Operating Activities |
1,160 | 4,238 | ||||||
| Cash Flows from Investing Activities: |
||||||||
| Expenditures for Property and Equipment |
(329 | ) | (1,725 | ) | ||||
| Restricted Cash |
(184 | ) | - | |||||
| Proceeds from Sale of Discontinued Operations |
- | 1,837 | ||||||
| Other |
58 | 130 | ||||||
| Cash (Used in) Provided by Investing Activities |
(455 | ) | 242 | |||||
| Cash Flows from Financing Activities: |
||||||||
| Repayments under Line of Credit Agreements, Net |
(6,635 | ) | (588 | ) | ||||
| Payments of Long-Term Obligations, Net |
- | (1,009 | ) | |||||
| Borrowings on Long-Term Debt |
4,090 | - | ||||||
| Cash Used In Financing Activities |
(2,545 | ) | (1,597 | ) | ||||
| Effect of Changes in Exchange Rates on Cash |
(538 | ) | (675 | ) | ||||
| (Decrease) Increase in Cash and Cash Equivalents |
(2,378 | ) | 2,208 | |||||
| Cash and Cash Equivalents at Beginning of Period |
11,734 | 15,045 | ||||||
| Cash and Cash Equivalents at End of Period |
$ | 9,356 | $ | 17,253 | ||||
| Supplemental Disclosure of Noncash Financing Activity |
||||||||
| Issuance of warrants to lenders |
$ | 960 | $ | - | ||||
| Issuance of compensatory common stock on fiscal 2004 executive incentive compensation plan |
$ | 680 | $ | - | ||||
See Accompanying Notes to
Condensed Consolidated Financial Statements
- 5 -
FLOW INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(unaudited, in thousands)
| Three Months Ended July 31, |
||||||||
| 2004 |
2003 |
|||||||
| (restated | ) | |||||||
| Net Loss |
$ | (2,340 | ) | $ | (5,667 | ) | ||
| Other Comprehensive Income (Loss): |
||||||||
| Unrealized Gain on Equity Securities Available for Sale, Net of Tax |
- | 219 | ||||||
| Unrealized Loss on Cash Flow Hedges, Net of Tax |
(24 | ) | (168 | ) | ||||
| Cumulative Translation Adjustment, Net of Tax |
(161 | ) | (537 | ) | ||||
| Comprehensive Loss |
&nbs | |||||||