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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 SEPTEMBER 30, 2000MARCH 31, 2001
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 1-5641
INSTRON CORPORATION
(Exact name of registrant as specified in its Charter)
MASSACHUSETTS 04-2057203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 ROYALL STREET 02021
CANTON, MASSACHUSETTS (Zip Code)
(Address of Principal executive offices)
(781) 828-2500
(Registrant's telephone number, including area code)
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 periods 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 [ ]
As of September 30, 2000,March 31, 2001, the Registrant had 5,571,6405,566,120 shares outstanding of common
stock, all of which was held by affiliates of the Registrant.
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FORM 10-Q
PART I
ITEM I
INSTRON CORPORATION
Consolidated Balance Sheets
(Unaudited)
(In thousands, except sharesshare and per share data)
September 30, December 31,
2000 1999
-------------- ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 4,731 $ 10,978
Accounts receivable (net of allowance for
doubtful accounts of $871 in 2000 and
$830 in 1999) 52,532 65,481
Inventories 33,775 31,117
Income tax receivable 5,548 3,594
Deferred income taxes 3,781 3,879
Prepaid expenses and other current assets 1,721 2,428
-------- --------
Total current assets 102,088 117,477
Property, plant and equipment, net 20,943 23,143
Goodwill 9,755 10,879
Deferred income taxes 1,059 832
Other assets 4,349 5,551
Deferred financing costs, net 7,960 8,793
-------- --------
Total assets $146,154 $166,675
MARCH 31, DECEMBER 31,
2001 2000
---------- -----------
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 8,599 $ 8,008
Accounts receivable (net of allowance for doubtful accounts
of $861 in 2001 and $1,014 in 2000) 48,135 57,336
Unbilled revenues on contracts 791 --
Inventories 51,093 53,614
Contracts in process 1,164 --
Income tax receivable 2,582 2,621
Current deferred income taxes 7,438 7,001
Prepaid expenses and other current assets 3,151 1,802
-------- --------
Total current assets 122,953 130,382
Property, plant and equipment, net 19,348 20,439
Goodwill 9,009 9,386
Deferred income taxes 3,687 4,408
Other assets 3,752 3,910
Deferred financing costs, net 7,404 7,681
-------- --------
Total assets $166,153 $176,206
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Short term borrowings and current portion of long-term debt $ 5,405 $ 5,604
Accounts payable 9,819 12,661
Accrued liabilities 16,128 18,696
Accrued employee compensation and benefits 4,779 4,473
Deferred revenue 27,283 34,407
Excess of advance payments over accrued revenues 6,266 --
Advance payments received on contracts 9,871 13,433
-------- --------
Total current liabilities 79,551 89,274
Long-term debt 104,538 103,987
Pension and other long-term liabilities 9,787 9,896
-------- --------
Total liabilities 193,876 203,157
-------- --------
Commitments and contingencies
Stockholders' deficit:
Recapitalized common stock, $0.001 par value; 10,000,000
shares authorized; 5,566,120 shares issued. 6 6
Additional paid in capital 50,432 50,432
Accumulated deficit (68,775) (68,340)
Accumulated other comprehensive loss (9,386) (9,049)
-------- --------
Total stockholders' deficit (27,723) (26,951)
-------- --------
Total liabilities and stockholders' deficit $166,153 $176,206
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Short term borrowings and current portion of $ 5,049 $ 5,815
long-term debt
Accounts payable 9,492 11,947
Accrued liabilities 22,718 27,129
Accrued employee compensation and benefits 5,024 5,280
Advance payments received on contracts 10,362 6,907
-------- --------
Total current liabilities 52,645 57,078
Long-term debt - revolver 23,314 28,818
Senior debt - term loan 24,000 27,000
13-1/4% senior subordinated notes due 2009 60,000 60,000
-------- --------
Total long-term debt 107,314 115,818
Pension and other long-term liabilities 10,609 9,532
-------- --------
Total liabilities 170,568 182,428
-------- --------
Stockholders' deficit:
Common stock, $0.001 par value; 10,000,000
shares authorized; 5,571,640 shares issued
and outstanding 6 6
Additional paid in capital 50,432 50,432
Accumulated deficit (65,430) (59,043)
Accumulated other comprehensive loss (9,422) (7,148)
-------- --------
Total stockholders' deficit (24,414) (15,753)
-------- --------
Total liabilities and stockholders'
deficit $146,154 $166,675
======== ========
See accompanying Notes to Consolidated Financial Statements
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FORM 10-Q
PART I
ITEM I
INSTRON CORPORATION
Consolidated Statements of OperationsLoss
(Unaudited)
(In thousands, except share and per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- --------------------------
September 30, October 2, September 30, October 2,Three Months Ended
-------------------------
MARCH 31, APRIL 1,
2001 2000
1999 2000 1999
------------- ---------- ------------- ------------------- --------
Revenue:
Revenue:
Sales $ 34,72837,407 $ 41,992 $ 109,020 $ 125,43137,434
Service 7,436 7,956 23,098 25,522
--------- ---------7,664 7,562
--------- ---------
Total revenue 42,164 49,948 132,118 150,953
--------- ---------45,071 44,996
--------- ---------
Cost of revenue:
Sales 19,480 25,491 64,978 75,11721,665 23,731
Service 5,611 5,740 17,056 17,587
--------- ---------5,466 5,649
--------- ---------
Total cost of revenue 25,091 31,231 82,034 92,704
--------- ---------27,131 29,380
--------- ---------
Gross profit 17,073 18,717 50,084 58,249
--------- ---------17,940 15,616
--------- ---------
Operating expenses:
Selling and administrative 12,973 12,941 39,634 41,55813,017 13,285
Research and development 1,981 2,938 6,934 8,239
Recapitalization compensation expense -- 12,606 -- 12,6062,101 2,411
Restructuring costs -- -- 1,769 --
--------- ---------304
--------- ---------
Total operating expenses 14,954 28,485 48,337 62,403
--------- ---------15,118 16,000
--------- ---------
Income (loss) from operations 2,119 (9,768) 1,747 (4,154)
--------- --------- --------- ---------2,822 (384)
Other (income) expenses:
Interest expense net 3,557 114 10,751 3673,645 3,674
Interest income (258) (159)
Foreign exchange losses 133 238 185 26
--------- ---------134 34
--------- ---------
Total other (income) expense 3,690 352 10,936 393
--------- ---------3,521 3,549
--------- ---------
Loss before income taxes (1,571) (10,120) (9,189) (4,547)(699) (3,933)
Benefit for income taxes (212) (2,307) (2,802) (190)(264) (1,633)
--------- -------------------
Loss before cumulative effect of accounting change (435) (2,300)
Cumulative effect of accounting change, net of tax -- (4,269)
--------- ---------
Net loss $ (1,359)(435) $ (7,813) $ (6,387) $ (4,357)
========= ========= ========= =========
Weighted average number of basic and diluted
common shares 5,571 67,967 5,571 67,797
========= =========(6,569)
========= =========
Loss per common share - basic and dilutedBasic:
Before cumulative effect on accounting change $ (0.24)(0.08) $ (0.12)(0.41)
Cumulative effect on accounting change, net of tax -- (0.77)
--------- ---------
Net loss $ (1.15)(0.08) $ (0.06)(1.18)
========= =========
Diluted:
Before cumulative effect on accounting change $ (0.08) $ (0.41)
Cumulative effect on accounting change, net of tax -- (0.77)
--------- ---------
Net loss $ (0.08) $ (1.18)
========= =========
Shares used in computing loss per common share:
Basic 5,566,120 5,567,730
Diluted 5,566,120 5,567,730
See accompanying Notes to Consolidated Financial Statements
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FORM 10-Q
PART I
ITEM I
ITEM I
INSTRON CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
NineThree Months Ended
--------------------------
September 30, October 2,------------------------
MARCH 31, APRIL 1,
2001 2000
1999
------------- ----------
-------- -------
Cash flows from operating activities:
Net loss $ (6,387)(435) $ (4,357)(6,569)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 6,933 6,446
Non-cash recapitalization related costs 3,8742,202 2,364
Provision for losses on accounts receivable 187 103111 63
Deferred taxes (164) (962)(238) (2,733)
Changes in assets and liabilities, excluding the effects
from purchase of business:liabilities:
(Increase) decrease in accounts receivable 10,743 5,0157,668 8,921
(Increase) decrease in unbilled revenue (791) --
(Increase) decrease in inventories (3,829) (1,739)1,430 (27,052)
(Increase) decrease in contracts in progress (1,164) --
(Increase) decrease in income tax receivable (2,103) (3,684)(17) (2,648)
(Increase) decrease in prepaid expenses and other 644 (799)
current assets (253) 29
Increase (decrease) in accounts payable, accrued expenses
and advance payments (2,351) 6,412(7,840) (4,037)
Increase (decrease) in deferred revenue (6,500) 33,424
Increase (decrease) in excess of advance payments over accrued
revenues 6,266 --
Other, net 588 5,913
--------- ---------(427) (439)
------- --------
Net cash provided by operating activities 4,261 16,22212 1,323
------- --------
Cash flows from investing activities:
Proceeds from the sale of property, plant and equipment 13116 --
Capital expenditures (2,285) (4,116)(444) (851)
Capitalized software costs (737) (1,698)(385) (287)
Other, net 245 274
--------- ---------59 59
------- --------
Net cash used in investing activities (2,777) (5,409)(754) (1,079)
------- --------
Cash flows from financing activities:
Net payments of line of credit and borrowing
arrangements prior to recapitalization (16,488)
Net paymentsBorrowings (payments) under short-term lines of credit (1,498) --
Net borrowings(432) (1,040)
Borrowings (payments) under revolving line of credit (3,757) 16,500
Issuance of senior subordinated notes 60,000
Issuance of senior term loan 30,000
Debt financing fees (6,391)
Recapitalization related fees (3,760)
Issuance of recapitalized common stock 54,1732,888 (4,001)
Payments under Senior Term Loan (2,250) --
Purchase of treasury stock, common stock and options
outstanding (143,041)
Cash dividends paid (268)
Proceeds from exercise of stock options 386
--------- ---------(1,000) (750)
------- --------
Net cash used inprovided by (used in) financing activities (7,505) (8,889)
--------- ---------1,456 (5,791)
------- --------
Effect of exchange rate changes on cash (226) (15)
--------- ---------(123) (28)
------- --------
Net increase (decrease) in cash and cash equivalents (6,247) 1,909591 (5,575)
Cash and cash equivalents at beginning of year 8,008 10,978
7,209
--------- ---------------- --------
Cash and cash equivalents at end of period $ 4,7318,599 $ 9,118
========= =========5,403
======= ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 11,4694,501 $ 7784,318
Income taxes 396 3,024
Conversion of common stock to preferred stock 325
Conversion of preferred stock to common stock 325
Issuance of common stock warrants 2,250
Retirement of treasury stock 1,330-- 55
See accompanying Notes to Consolidated Financial Statements
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FORM 10-Q
PART I
ITEM I
INSTRON CORPORATION
Consolidated Statements of Comprehensive Loss
(Unaudited)
(In thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- --------------------------
September 30, October 2, September 30, October 2,Three Months Ended
----------------------
MARCH 31, APRIL 1,
2001 2000
1999 2000 1999
------------- ---------- ------------- ----------------- -------
Net loss $ (1,359) $(7,813) $ (6,387) $ (4,357)(435) $(6,569)
Other comprehensive income loss:
Cummulative effect of accounting change, net of tax 745 --
Unrealized gain/(loss): on derivative instruments (36) --
Foreign currency translation adjustments (985) 1,083 (2,274) (1,460)
--------(1,046) (688)
------- -------- ---------------
Comprehensive loss $ (2,344) $(6,730) $ (8,661) $ (5,817)
========(772) $(7,257)
======= ======== ===============
See accompanying Notes to Consolidated Financial Statements
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FORM 10-Q
PART I
ITEM I1
INSTRON CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. For further information, refer
to the consolidated financial statements and footnotes included in the
Company's annual report on Form 10-K for the year ended December 31, 1999.2000.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that effect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reported periods. Actual results could differ from
those estimates.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three month and nine month periodsthree-month period ended September 30, 2000March 31,
2001 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2000.
On September 8, 2000, the Company effected a 10-for-1 stock split2001.
Prior year results have been restated to comply with Staff Accounting
Bulletin No. 101 "Revenue Recognition in the
form of a stock dividend. Shareholders of record on September 8, 2000,
received 9 additional shares of common stock for every share they owned on
September 8, 2000. The total number of shares of common stock authorized
increased from one million shares (par value $.01) to ten million (par
value $.001)Financial Statements" (SAB 101).
Share data for all periods presented herein has been
adjusted to give effect to the stock split.
CertainAlso, certain prior year amounts have been reclassified to conform with EITF
00-10 "Accounting for Shipping and Handling Fees and Cost" and with the
fiscal 20002001 presentation.
2. MERGER AGREEMENT AND RECAPITALIZATION
On May 6,September 29, 1999, the Company entered into an Agreementcompleted a merger by and Plan of Merger
(the "Merger Agreement"among the
Company, ISN Acquisition Corporation ("MergerCo") withand Kirtland Capital
Partners III L.P. ("Kirtland") and ISN Acquisition Corporation, a corporation newly formed by
Kirtland ("MergerCo"), pursuant to which Kirtland and certain
affiliates, together with members of Instron's management and certain
members of Instron's Board of Directors who arewere also stockholders
(collectively, the "Rollover Stockholders"), agreed to acquire acquired the Company.
On September 3, 1999, the Company's stockholders approved the Agreement and
Plan of merger dated as of May 6, 1999, as amended. The Company completed
its merger by and among Instron Corporation, ISN Acquisition Corporation
and Kirtland Capital Partners III L.P. on September 29, 1999. The merger
and related transactions were treated as a Recapitalizationrecapitalization (the
"Recapitalization") for financial reportingaccounting purposes. Accordingly, the historical
basis of the Company's assets and liabilities waswere not affected by these
transactions.
UnderIn the Merger Agreement, themerger, MergerCo merged with and into the Company with the Company
continuing as the surviving corporation (the "Merger").corporation. Pursuant to the Merger, each
outstanding share of the Company's common stock (except for shares held by
the Company, its subsidiaries and MergerCo), waswere converted into the right
to receive a cash payment of $22.00, without interest. Certain shares of the
Company's Series B
Preferred Stockcommon stock held by the Rollover Stockholders were converted into
shares of common stock of the surviving corporation. InAs a result of the third quarterMerger, the
Company's common stock no longer is registered under the Securities Exchange
Act of fiscal1934.
In 1999, the Company incurred compensation expenses of $12.6$13.0 million as a
result of the Recapitalization. In addition, the Company incurred costs of
$12.4$13.1 million directly related to the Recapitalization. Of these transaction
costs, $8.6$9.0 million was capitalized and is being amortized over the life of
the 13 1/4% Senior Subordinated Notes (the "Notes") and the Senior Credit
Facility, and $3.8$4.1 million was charged to stockholders' equity.
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The Notes were originally issued as part of a unit offering. Each unit
("Unit") consisted of a $1,000 principal amount Note and one warrant to
purchase 5.109 shares of Instron's recapitalized common stock (the
"Warrants"). On February 14, 2000, the Notes were registered with the
Securities and Exchange Commission (the "SEC"), at which time the Units
separated into their component Notes and Warrants. The Notes and Warrants
may now be traded separately and the Units have ceased to exist.
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3. NEW ACCOUNTING PRONOUNCEMENTSREVENUE RECOGNITION
In June 1998, the FASB issued SFAS No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 was amended on
July 7, 1999 by the issuancefourth quarter of Statement2000, effective as of Accounting Standards No. 137
("SFAS 137"), "Accounting for Derivative Instruments and Hedging Activities
- Deferral of the Effective Date of SFAS No. 133". In JuneJanuary 1, 2000, the FASB
issued SFAS No. 138 ("SFAS 138"), "AccountingCompany
changed its revenue recognition policy for Certain Derivative
Instruments and Certain Hedging Activities - an amendment of FASB Statement
No. 133. SFAS No. 133, as amended, is effective for fiscal quarters
beginning after January 1, 2001 for Instron, and we do not expect its
adoptioncertain product sales to have a material impact on our financial position or results of
operations.
In December 1999, the Securities and Exchange Commission releasedcomply
with Staff Accounting BulletingBulletin No. 101, "Revenue Recognition in Financial
Statement"Statements" ("SAB 101"). This bulletinSAB 101 provides guidance fromguidelines on the staff on applying
generally accepted accounting principles totiming of
revenue recognition based upon factors such as passage of title,
installation, payment terms and customer acceptance. Prior to the adoption
of SAB 101, the Company recognized revenue on the sale of its systems when
the system was shipped to the customer and the title had passed to the
customer, although the Company often had a further obligation to install
the system. Since the Company had a long record of success in financial statements.installing
its systems and obtaining customer acceptance of the system, revenue was
recognized prior to the final customer acceptance but after the passage of
title. Based upon the new guidelines of SAB 101A was subsequently issued101, the Company has changed
its revenue recognition method for systems where installation is deemed to
be a critical element in March 2000,
deferring the requirementcontractual obligation to adopt the revised guidancecustomer. The
Company has termed these as "complex" systems. For complex systems, the
Company now recognizes revenue upon the completion of installation or
fulfilling the obligations to the customer under the terms of the contract.
For non-complex or "standard" systems, the Company has determined that
installation is inconsequential and perfunctory and thus recognizes revenue
on these systems upon shipment and the passing of title to the customer. In
certain instances, customer payment terms may provide that a minority of
the equipment purchase price is paid only after installation has been
completed. In those circumstances, the portion of the payment terms related
to installation is deferred until the third
quarterinstallation has been completed with
the majority portion of 2000, retroactiverevenue and the entire product cost recognized upon
shipment and passage of title. Systems installation is typically provided
by the Company, is generally not billed separately to the first quartercustomer and the
costs to complete the installation are accrued for at the time of 2000. In June 2000,
the SEC issued SAB101B, which further defers the effective date for
calender year companiesshipment.
If it is billed separately to the fourth quartercustomer then the installation revenue
will be recognized in the period that installation is performed. Revenue
from services are recognized as services are performed and ratably over the
contract period for service maintenance contracts.
The SAB 101 restatement has been applied retroactively to transactions that
occurred prior to 2000. The cumulative effect adjustment of 2000, still retroactivethe change in
accounting on prior years through December 31, 1999 was a reduction to
income of $4.3 million (after credit for income taxes of $3.5 million), or
$0.77 cents per diluted share, recorded in the first quarter of 2000.
The Company is currently in the processeffect of assessing the impact thatadopting SAB 101 may have onincreased first quarter 2000 sales by $3.9
million and decreased the financial statements.
In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions involving Stock Compensation." FIN 44
clarifies the application of APB Opinion No. 25 regarding (a) the
definition of employee for purposes of applying APB Opinion No. 25, (b) the
criteria for determining whether a stock option plan qualifies as a
noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock optionnet loss by $0.5 million or award, and
(d) the accounting for an exchange of stock compensation awards in a
business combination. FIN 44 is effective September 30, 2000, but certain
conclusions cover specific events that occur after either December 15,
1998, or January 12, 2000. The adoption of FIN 44, effective July 1, 2000,
did not have a material impact on the financial position or results of
operations of the Company.$0.08 cents per
diluted share.
In September 2000, the Emerging Issues Task Force (EITF) of the FASB
reached a consensus on EITF Issue 00-10, "Accounting for Shipping and
Handling Fees and Costs." This consensus requires that all shipping and
handling amounts billed to a customer in a sale transaction represent
revenues earned for the goods provided and should be classified as revenue.
Adoption of the consensus reached on EITF Issue 00-10 is required no later
than the required implementation date for SAB 101. The Company is in the
process of assessing the impact of the consensus reached onadopted EITF
Issue 00-10 in the year ended December 31, 2000 and anticipates a retroactive
reclassification was recorded on the historical statement of operations for
all historical
statementsquarters in 2000, 1999 and 1998. The first quarter of operations2000
reclassification resulted in an increase in revenues and cost of sales of
$331,000.
In accordance with American Institute of Certified Public Accountants
("AICPA") Statement of Position No. 81-1 ("SOP No. 81-1"), prior to 2001,
the Company accounted for long-term contracts using the completed contract
method as it was unable to make reasonable dependable estimates on a
consistent basis regarding contract costs. During 2000, the Company
completed a restructuring of its business, which included headcount
reductions, realignment and re-allocation of resources specifically with
regards to contracts that are complex and long-term in nature, and a
conscious management focus of accepting long-term contracts with less
technological risk. Additionally, the Company has refined its internal
process management controls in order to develop more dependable cost and
completion estimates. These changes have had a significant impact on the
Company's ability to estimate and control costs, as supported by the
results reported during the second half of fiscal year 2000, where the
Company consistently met its forecasts for long-term contracts.
Accordingly, commencing January 1, 2001, for certain long-term contracts
revenue is recognized using the percentage-of-completion method based upon
an efforts-expanded approach, whereby revenue and profit are recognized
throughout the performance and production period of the contract. In all
cases, changes to total estimated costs and anticipated losses, if any, are
recognized in the period in which determined. Long-term contracts that are
not eligible for percentage-of- completion accounting continue to be
recognized using the completed contract method. Revenue and gross profit
recognized under percentage of completion accounting method were
approximately $2.0 million and $0.5 million respectively, during the period
ended March 31, 2001.
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Unbilled revenue under customer contracts represents revenue earned under
the percentage-of-completion method but not yet billable under the terms of
the contract. These amounts are billable based on the terms of the contract
which include shipment of the product, achievement of milestones or
completion of the contract.
4. ACCOUNTING FOR DERIVATIVE INSTRUMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, " Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is
effective for fiscal year 2001. SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes
in the fair value of derivatives are recorded each period in either current
earnings or accumulated other comprehensive income/(expense), depending on
whether a derivative is designated as part of a hedge transaction and, if
it is, the type of hedge transaction.
The Company uses derivative instruments to enter into "cash-flow hedges",
as defined by SFAS 133. For cash-flow hedge transactions, in which the
Company is hedging the variability of cash flows related to these revenues from costa foreign
currency dominated forecasted transaction, changes in the fair value of revenuesthe
derivative instrument will be reported in accumulated other comprehensive
income/(expense). The gains and losses on the derivative instrument that
are reported in accumulated other comprehensive income/(expense) will be
reclassified to revenues.
4.earnings in the periods in which earnings are impacted by
the variability of the cash flows of the hedged item. The ineffective
portion of all hedges are recognized in current earnings.
The Company adopted SFAS 133 during the first quarter of 2001. As a result
of this adoption, effective January 1, 2001, all derivatives were
recognized on the balance sheet at fair value with the offsetting
adjustment recorded in other comprehensive loss. Accordingly, the Company
recorded an adjustment as of January 1, 2001 to the Statement of
Comprehensive Loss to account for the cumulative effect of the accounting
change. This adjustment resulted in a gain/(loss), net of tax of $0.5
million, totaling $0.7 million. The amount of the adjustment reclassified
into earnings during the three month period ended March 31, 2001 totaled
$0.2 million, net of tax. The Company expects to reclassify to earnings
$0.2 million, net of tax, of the adjustment during the remainder of 2001.
The Company uses derivatives to hedge foreign currency cash flows, on a
continuing basis, for periods consistent with its forecasted exposures.
Since the Company is using foreign exchange forward contracts to hedge
foreign exchange exposures, the changes in the value of the derivatives are
highly effective in offsetting changes in the cash flows of the hedged
item. Any ineffective portion of the derivatives is recognized in current
earnings, which represented an immaterial amount in the first quarter of
2001. On March 31, 2001, the Company had no ineffective hedges.
5. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted
earnings per share is computed by dividing net income by the weighted
average number of common shares, plus the dilutive effect of common share
equivalents outstanding using the "treasury stock method." For the three
months and nine months ended September 30, 2000,March 31, 2001, outstanding options and warrants totaling
742,700749,500 and 306,540 shares, respectively, have been excluded from the
diluted earnings per share computation as their inclusion would be
antidilutive. 7For the three months ended April 1, 2000, outstanding options
and warrants totaling 459,050 and 306,540 shares, respectively, have been
excluded from the diluted earnings per share computation as their inclusion
would be antidilutive.
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89
The following is a reconciliation of the basic and diluted EPS
calculations:
Three Months Ended
---------------------
March 31, April 1,
(in thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- --------------------------
September 30, October 2, September 30, October 2,2001 2000
1999 2000 1999
------------- ---------- ------------- ------------------ -------
Loss before cumulative effect of accounting change $ (435) $(2,300)
Cumulative effect of accounting change, net of tax -- (4,269)
------ -------
Net lossLoss $ (1,359) $ (7,813) $ (6,387) $ (4,357)(435) $(6,569)
====== =======
Weighted average numbershares
Weighted average of basic common shares outstanding 5,571 67,967 5,571 67,797- basic 5,566 5,568
Dilutive effect of common stock equivalentsoptions and warrants outstanding -- --
-- --
-------- --------- -------- -------------- -------
Weighted average of common and dilutive shares 5,571 67,967 5,571 67,797
======== ========= ======== ========
Basic and- diluted 5,566 5,568
====== =======
Loss per common share:
Basic:
Before cumulative effect on accounting change $(0.08) $ (0.41)
Cumulative effect on accounting change, net of tax -- (0.77)
------ -------
Net loss per share$(0.08) $ (0.24)(1.18)
====== =======
Diluted:
Before cumulative effect on accounting change $(0.08) $ (0.12)(0.41)
Cumulative effect on accounting change, net of tax -- (0.77)
------ -------
Net loss $(0.08) $ (1.15) $ (0.06)
======== ========= ======== ========(1.18)
====== =======
Share data for all periods presented herein have been adjusted to effect to the
10 for 1 stock split.
5.6. INVENTORIES
(IN THOUSANDS) September 30,March 31, December 31,
2001 2000
1999
------------- -------------------- -----------
Raw materials $ 12,636 $ 13,346$11,895 $13,219
Work-in-process 13,441 9,82317,533 13,326
Finished goods 7,698 7,948
-------- --------
$ 33,775 $ 31,117
======== ========21,665 27,069
------- ------
$51,093 $53,614
======= =======
Inventories are valued at the lower of cost or market (net realizable
value). The last-in, first-out (LIFO) method of determining cost is used
for certain inventories in the United States and certain Asian branches.
The Company uses the first-in, first-out (FIFO) method for all other
inventories. Inventories valued at LIFO amounted to $8,019,000$8,955,000 and
$7,845,000$6,599,000 at September 30, 2000March 31, 2001 and December 31, 1999,2000, respectively. The
excess of current cost over stated LIFO value was $5,348,000$5,543,000 at September
30, 2000March 31,
2001 and $5,588,000$5,460,000 at December 31, 1999.
6. DEBT2000.
7. BORROWING ARRANGEMENTS
Total debt for the periods:
(IN THOUSANDS) September 30, DecemberMARCH 31, DECEMBER 31,
2001 2000
1999
------------- -------------------- -----------
Short-term borrowings $ 1,2991,155 $ 2,8151,604
Long-term debt - revolver 23,314 28,81823,175 21,374
Senior debt - term loan 27,750 30,00025,613 26,613
13-1/4% senior subordinated notes due 2009 60,000 60,000
-------- --------
Total debt 112,363 121,633109,943 109,591
Less: current portion (5,049) (5,815)(5,405) (5,604)
-------- --------
Long-term debt $107,314 $115,818$104,538 $103,987
======== ========
9
10
As part of the Recapitalization, the Company entered into a Senior Credit
Facility providing for a Revolving Credit Facility of up to $50.0 million
(subject to an available borrowing base) and a Term Loan Facility of $30.0
million, maturing in five and one-half years, unless terminated sooner upon
certain events of default. If terminated upon an event of default, all
outstanding advances under the credit facility may be required to be
immediately repaid. The revolving portion of the Senior Credit Facility can
be used to complete permitted acquisitions or for working capital and other
general corporate purposes. Borrowings under the Senior Credit Facility
currentlywill bear interest, at our option, at either the higher of the federal
funds rate plus 1.0% or the prime rate plus 1.75%, or a LIBOR rate plus
3.25%. Ability to borrow under the Senior Credit Facility will be subject
to the Company's compliance with the covenants described below.
In addition, as part of the Recapitalization, the Company issuedincurred $60 million of debt through the sale of
its 13 1/-1/4% Senior Subordinated Notes due 2009 and Warrants (the "Senior
Subordinated Notes"). The Warrants, when and if exercised, will entitle the
holder thereof to receive 5.109 of a fully paid and non-assessable share of
common stock, par value $0.001 per share at an exercise price of $0.001 per
share, subject to adjustment. The Warrants will be exercisable on or prior
to September 15, 2009. The value of the Warrants on the date of the
Recapitalization was $2.3 million and this value is being amortized to
interest expense over 10
years.
8
9
Under the mandatory repayment schedule of the Term Loan Facility, the
Company is required to make scheduled repayments in twenty-two quarterly
installments of principal andwith interest thereon on the first day of each
January, April, July and October commencing January 1, 2000. The Senior
Subordinated Notes, which mature in 2009, require interest to be paid
semi-annually in arrears each March 15 and September 15. The interest onIn addition to the
Revolving Creditregularly scheduled Term Loan Facility is due
quarterly in arrears.Payments for 2000, we made a
supplemental payment of $0.4 million during November, 2000.
The Company is also required, under the Terms of the Senior Credit
Facility, to pay a commitment fee based on the unused amount of the
Revolving Credit Facility at an annual rate of 0.50%, paid quarterly in
arrears.
All of our obligations under the Senior Credit Facility are and will be
secured by a first priority lien on substantially all of the properties and
assets of the CompanyInstron and our existing and future domestic subsidiaries. In
addition, our obligations under the Senior Credit Facility are and will be
secured by a first priority pledge of and security interest in all of the
outstanding capital stock of our existing domestic subsidiaries and future
domestic subsidiaries and a pledge of 65% of the outstanding capital stock
of some foreign subsidiaries. Certain of our foreign subsidiaries have also
granted a lien on substantially all of their properties and assets.
The Senior Credit Facility requires that the Company meet and maintain
certain financial ratios and tests, which includeincluding a minimum consolidated net
worth, consolidated adjusted EBITDA, consolidated capital expenditure,
consolidated interest coverage ratio, consolidated fixed charge coverage
ratio, maximum consolidated leverage ratio and senior leverage ratio. As of
March 31, 2001, the Company was in compliance with the amended Senior
Credit Facility covenants prior to the adoption of recently issued
accounting pronouncements. The Company anticipates that the covenants will
be amended during the second quarter of 2001 to reflect the adoption of
recently issued accounting pronouncements.
The Senior Subordinated Notes are governed by negative covenants that are
less restrictive than those of the Senior Credit Facility. In addition, the
Senior Subordinated Notes contain a provision whereby the Notes are in
default if there is an acceleration of payment under the terms of the
Senior Credit Facility.
The Senior Credit Facility also contains covenants that limit the ability
of the Company and its operating subsidiaries to take various actions,
without the consent of the Senior Lenders,lenders, including incurring additional
indebtedness and liens and entering into some leases, fundamentally
changing corporate structure, including mergers, consolidations and
liquidations, acquiring and disposing of property, making principal
payments on indebtedness prior to maturity, dividends and capital stock
purchases, investments, capital expenditures, some modifications to
organizational documents, changing fiscal periods, entering into sale and
leaseback transactions, entering into affiliate transactions, entering into
agreements restricting distributions, amending the acquisition documents,
granting negative pledges and making a material change in the nature of the
Company's business.
At July 1, 2000, the Company was not in compliance with three of the Senior
Credit Facility covenants: the minimum consolidated net worth covenant, the
minimum consolidated adjusted EBITDA covenant and the maximum consolidated
leverage ratio covenant. The Company requested and was granted waivers of
these covenants as of and for the period ended July 1, 2000, for which the
Company paid an administrative fee of $80,000 to the lenders. The Company
did not obtain waivers of covenants of the Senior Credit Facility that
extended over the twelve month period following July 1, 2000 and did not
believe it would be able to achieve compliance with future covenants of the
Senior Credit Facility that existed as July 1, 2000. Accordingly, as of
July 1, 2000, the amounts outstanding under the Senior Credit Facility were
reclassified from long term liabilities to current liabilities.
During the third quarter of 2000, the Company renegotiated and obtained
more lenient debt covenants for the Senior Credit Facility. As of September
30, 2000, the Company was in compliance with the amended Senior Credit
Facility covenants. The Company is confident that it will be able to meet
the new covenants over the next twelve months. Accordingly, as of September
30, 2000, the amounts outstanding under the Senior Credit Facility have
been reclassified back to long term liabilities.
7.8. GUARANTOR AND NON-GUARANTOR SUBSIDIARY INFORMATION
SomeAs part of our wholly owned subsidiariesthe Recapitalization in 1999, Instron Corporation issued public
debt securities which are not guarantorsfully and unconditionally guaranteed by certain
of our Senior
Subordinated Notes. In the event of a bankruptcy, liquidation or
reorganization of any of these non-guarantor subsidiaries, these
non-guarantor subsidiaries will payCorporation's subsidiaries. Below is the holders of their debts and their
trade creditors before they will be able to distribute any of their assets
to us. Summarized below is selectedcondensed consolidating
financial information for the guarantor subsidiaries, which includes
Instron Corporation (parent company and issuer of the debt), Instron
Corporation, and the non-guarantor subsidiaries as of September 30,March 31, 2001 and
December 31, 2000 and for the ninethree month period then ended:ended March 31, 2001 and
April 1, 2000.
10
11
INSTRON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
COMBINED
COMPANY COMBINED
(IN THOUSANDS)March 31, 2001
-------------------------------
In thousands Guarantor Non-Guarantor Eliminations Total
--------- ------------- ------------ -----
ASSETS
Current assets:
Cash and cash equivalents $ 884 $ 7,715 $ -- $ 8,599
Accounts receivable, net 20,242 27,893 -- 48,135
Intercompany accounts receivable, net 17,661 (1,839) (15,822) --
Unbilled revenues on contracts 693 98 -- 791
Inventories 16,968 34,956 (831) 51,093
Contracts in process 197 967 -- 1,164
Income tax receivable 3,438 2,774 (3,630) 2,582
Deferred income taxes 6,200 746 492 7,438
Prepaid expenses and other current assets 1,203 1,948 -- 3,151
-------- ------- -------- --------
Total current assets 67,486 75,258 (19,791) 122,953
Property, plant and equipment, net 10,857 8,491 -- 19,348
Goodwill 8,917 78 14 9,009
Deferred income taxes 3,359 298 30 3,687
Other assets 3,243 546 (37) 3,752
Deferred financing costs, net 7,404 -- -- 7,404
-------- ------- -------- --------
Total assets $101,266 $84,671 $(19,784) $166,153
======== ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short term borrowings and current portion of
long-term debt 4,250 1,155 -- 5,405
Accounts payable 3,633 6,113 73 9,819
Accrued liabilities 8,137 7,946 45 16,128
Accrued employee compensation and benefits 3,264 1,515 -- 4,779
Deferred revenue 11,576 15,707 -- 27,283
Excess of advance payments over accrued revenues 2,971 3,295 -- 6,266
Advance payments received on contracts (1,649) 11,520 -- 9,871
-------- ------- -------- --------
Total current liabilities 32,182 47,251 118 79,551
Long-term debt 84,663 19,875 -- 104,538
Pension and other long-term liabilities 27,168 (1,700) (15,681) 9,787
-------- ------- -------- --------
Total liabilities 144,013 65,426 (15,563) 193,876
-------- ------- -------- --------
Stockholders' equity (deficit):
Intercompany investments (7,679) 10,809 (3,130) --
Minority interest -- 74 (74) --
Common stock 6 -- -- 6
Additional paid in capital 50,432 -- -- 50,432
Retained earnings (accumulated deficit) (83,891) 16,136 (1,020) (68,775)
Accumulated other comprehensive loss (1,615) (7,774) 3 (9,386)
-------- ------- -------- --------
Total stockholders' equity (deficit) (42,747) 19,245 (4,221) (27,723)
-------- ------- -------- --------
Total liabilities and stockholders'
equity (deficit) $101,266 $84,671 $(19,784) $166,153
======== ======= ======== ========
11
12
INSTRON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000
------------------------------
In thousands GUARANTOR NON-GUARANTOR SUBSIDIARIES SUBSIDIARIESELIMINATIONS TOTAL
--------- ------------- ------------ -----
ASSETS
Current assets:
Cash and cash equivalents $ 138 $ 7,870 $ -- $ 8,008
Accounts receivable, net 25,105 32,231 -- 57,336
Intercompany accounts receivable, net 12,619 3,091 (15,710) --
Inventories 21,981 32,313 (680) 53,614
Income tax receivable 3,696 2,555 (3,630) 2,621
Deferred income taxes 6,592 20 389 7,001
Prepaid expenses and other current assets 713 1,089 -- 1,802
---------- --------- --------- ----------
Total current assets 70,844 79,169 (19,631) 130,382
Property, plant and equipment, net 11,344 9,095 -- 20,439
Goodwill 9,276 96 14 9,386
Deferred income taxes 3,784 594 30 4,408
Other assets 3,369 587 (46) 3,910
Deferred financing costs, net 7,681 -- -- 7,681
---------- --------- --------- ----------
Total assets $ 106,298 $ 89,541 $ (19,633) $ 176,206
========== ========= ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short term borrowings and current portion of
long-term debt $ 4,350 $ 1,254 $ -- $ 5,604
Accounts payable 4,572 8,118 (29) 12,661
Accrued liabilities 8,588 10,096 12 18,696
Accrued employee compensation and benefits 2,833 1,640 -- 4,473
Deferred revenue 14,284 20,123 -- 34,407
Advance payments received on contracts 1,803 11,630 -- 13,433
---------- --------- --------- ----------
Total current liabilities 36,430 52,861 (17) 89,274
Long-term debt 82,913 21,074 -- 103,987
Pension and other long-term liabilities 27,527 (1,950) (15,681) 9,896
---------- --------- --------- ----------
Total liabilities 146,870 71,985 (15,698) 203,157
---------- --------- --------- ----------
Stockholders' equity (deficit):
Intercompany investments (7,681) 10,808 (3,127) --
Minority interest -- 78 (78) --
Common stock 6 -- -- 6
Additional paid in capital 50,432 -- -- 50,432
Retained earnings (accumulated deficit) (81,933) 14,343 (750) (68,340)
Accumulated other comprehensive loss (1,396) (7,673) 20 (9,049)
---------- --------- --------- ----------
Total stockholders' equity (deficit) (40,572) 17,556 (3,935) (26,951)
---------- --------- --------- ----------
Total liabilities and stockholders'
equity (deficit) $ 106,298 $ 89,541 $ (19,633) $ 176,206
========== ========= ========= ==========
12
13
INSTRON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands Three months ended
March 31, 2001
------------------------------
Guarantor Non-Guarantor Eliminations Total
--------- ------------- ------------ -----
Revenue:
Sales $23,510 $13,897 $ -- $37,407
Service 5,023 2,641 -- 7,664
Intercompany 2,628 6,532 (9,160) --
------- ------- ------- -------
Total revenue 31,161 23,070 (9,160) 45,071
------- ------- ------- -------
Cost of revenue:
Sales 17,575 11,115 (7,025) 21,665
Service 3,502 1,982 (18) 5,466
------- ------- ------- -------
Total cost of revenue 21,077 13,097 (7,043) 27,131
------- ------- ------- -------
Gross profit 10,084 9,973 (2,117) 17,940
------- ------- ------- -------
Operating expenses:
Selling and administrative 7,718 5,317 (18) 13,017
Research and development 1,388 713 -- 2,101
------- ------- ------- -------
Total operating expenses 9,106 6,030 (18) 15,118
------- ------- ------- -------
Income (loss) from operations 978 3,943 (2,099) 2,822
Other (income) expenses:
Intercompany (income) expense 556 1,170 (1,726) --
Interest expense 2,970 675 -- 3,645
Interest income (32) (226) -- (258)
Foreign exchange (gains) losses (74) 208 -- 134
------- ------- ------- -------
Total other (income) expense 3,420 1,827 (1,726) 3,521
------- ------- ------- -------
Income (loss) before income taxes (2,442) 2,116 (373) (699)
Provision (benefit) for income taxes (484) 323 (103) (264)
------- ------- ------- -------
Net income (loss) $(1,958) $ 1,793 $ (270) $ (435)
======= ======= ======= =======
13
14
INSTRON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands Three months ended
April 1, 2000
------------------------------------
Guarantor Non-Guarantor Eliminations Total
--------- ------------- ------------ -----
Revenue:
Sales $18,175 $19,259 $ -- $37,434
Service 4,941 2,621 -- 7,562
Intercompany 3,027 1,928 (4,955) --
------- ------- ------- -------
Total revenue 26,143 23,808 (4,955) 44,996
------- ------- ------- -------
Cost of revenue:
Sales 12,641 15,139 (4,049) 23,731
Service 3,737 1,967 (55) 5,649
------- ------- ------- -------
Total cost of revenue 16,378 17,106 (4,104) 29,380
------- ------- ------- -------
Gross profit 9,765 6,702 (851) 15,616
------- ------- ------- -------
Operating expenses:
Selling and administrative 7,712 5,327 246 13,285
Research and development 1,594 817 -- 2,411
Restructuring costs -- 304 -- 304
------- ------- ------- -------
Total operating expenses 9,306 6,448 246 16,000
------- ------- ------- -------
Income (loss) from operations 459 254 (1,097) (384)
Other (income) expenses:
Intercompany (income) expense 354 680 (1,034) --
Interest expense 3,064 610 -- 3,674
Interest income (54) (105) -- (159)
Foreign exchange (gains) losses (96) 130 -- 34
------- ------- ------- -------
Total other (income) expense 3,268 1,315 (1,034) 3,549
------- ------- ------- -------
Loss before income taxes (2,809) (1,061) (63) (3,933)
Provision (benefit) for income taxes (435) (456) (742) (1,633)
------- ------- ------- -------
Loss before cumulative effect of accounting change (2,374) (605) 679 (2,300)
Cumulative effect of accounting change, net of tax 784 (5,053) -- (4,269)
------- ------- ------- -------
Net income (loss) $(1,590) $(5,658) $ 679 $(6,569)
======= ======= ======= =======
14
15
INSTRON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
In thousands Three months ended
March 31, 2001
------------------------------
Guarantor Non-Guarantor Eliminations Total
--------- ------------- ------------ -------
Balance Sheet Data as
Cash flows from operating activities:
Net income (loss) $(1,958) $ 1,793 $(270) $ (435)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 1,713 489 -- 2,202
Provision for losses on accounts receivable 104 7 -- 111
Deferred taxes (1,099) 861 -- (238)
Changes in assets and liabilities, excluding the effects from
purchase of September 30,business:
(Increase) decrease in accounts receivable (1,600) 9,268 -- 7,668
(Increase) decrease in unbilled revenue (693) (98) -- (791)
(Increase) decrease in inventories 3,922 (2,643) 151 1,430
(Increase) decrease in contract in progress (196) (968) -- (1,164)
(Increase) decrease in income tax receivable 201 (218) -- (17)
(Increase) decrease in prepaid expenses and other current assets (535) 282 -- (253)
Increase (decrease) in accounts payable, accrued expenses
and advance payments (3,560) (4,280) -- (7,840)
Increase (decrease) in deferred revenue (2,084) (4,416) -- (6,500)
Increase (decrease) in excess of advance payments over accrued revenue 2,971 3,295 -- 6,266
Other, net 961 (1,507) 119 (427)
------- ------- ----- -------
Net cash provided by (used in) operating activities $(1,853) $ 1,865 $ -- $ 12
------- ------- ----- -------
Cash flows from investing activities:
Proceeds from the sale of property, plant and equipment 291 (275) -- 16
Capital expenditures (144) (300) -- (444)
Capitalized software costs (321) (64) -- (385)
Other, net 239 (180) -- 59
------- ------- ----- -------
Net cash provided by (used in) investing activities 65 (819) -- (754)
------- ------- ----- -------
Cash flows from financing activities:
Borrowings (payments) under short-term lines of credit (332) (100) -- (432)
Borrowings (payments) under revolving line of credit 4,087 (1,199) -- 2,888
Payments under Senior Term Loan (1,000) -- -- (1,000)
------- ------- ----- -------
Net cash provided by (used in) financing activities 2,755 (1,299) -- 1,456
------- ------- ----- -------
Effect of exchange rate changes on cash (221) 98 -- (123)
------- ------- ----- -------
Net increase (decrease) in cash and cash equivalents 746 (155) -- 591
Cash and cash equivalents at beginning of year 138 7,870 -- 8,008
------- ------- ----- -------
Cash and cash equivalents at end of period $ 884 $ 7,715 $ -- $ 8,599
======= ======= ===== =======
15
16
INSTRON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands Three months ended
April 1, 2000
Current Assets 46,575 55,513 102,088-------------------------------------------------------
Guarantor Non-Guarantor Eliminations Total
Assets 80,984 65,170 146,154
Total Liabilities 124,773 45,795 170,568
Stockholders' Equity (Deficit) (43,789) 19,375 (24,414)
Statement--------- ------------- ------------ -----
Cash flows from operating activities:
Net income (loss) $(1,590) $ (5,658) $ 679 $ (6,569)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,817 547 -- 2,364
Provision for losses on accounts receivable -- 63 -- 63
Deferred taxes (1,151) (1,935) 353 (2,733)
Changes in assets and liabilities, excluding the effects from
purchase of Operations Data for the
Nine Months ended September 30, 2000
Total Revenue 77,580 54,538 132,118
Loss beforebusiness:
(Increase) decrease in accounts receivable 3,688 4,887 346 8,921
(Increase) decrease in inventories (4,570) (22,019) (463) (27,052)
(Increase) decrease in income taxes (5,555) (3,634) (9,189)tax receivable (270) (1,612) (766) (2,648)
(Increase) decrease in prepaid expenses and other current
assets 126 (97) -- 29
Increase (decrease) in accounts payable, accrued expenses
and advance payments (2,341) (1,584) (112) (4,037)
Increase (decrease) in deferred revenue 9,189 24,235 -- 33,424
Other, net (558) 124 (5) (439)
------- -------- ----- --------
Net Loss (4,679) (1,708) (6,387)cash provided by (used in) operating activities $ 4,340 $ (3,049) $ 32 $ 1,323
------- -------- ----- --------
Cash flows from investing activities:
Capital expenditures (550) (301) -- (851)
Capitalized software costs (198) (89) -- (287)
Other, net 59 -- -- 59
------- -------- ----- --------
Net cash used in investing activities (689) (390) -- (1,079)
------- -------- ----- --------
Cash flows from financing activities:
Borrowings (payments) under short-term lines of credit (1,086) 46 -- (1,040)
Borrowings (payments) under revolving line of credit (598) (3,403) -- (4,001)
Payments under Senior Term Loan (750) -- -- (750)
------- -------- ----- --------
Net cash used in financing activities (2,434) (3,357) -- (5,791)
------- -------- ----- --------
Effect of exchange rate changes on cash (194) 165 -- (28)
------- -------- ----- --------
Net increase (decrease) in cash and cash equivalents 1,024 (6,631) 32 (5,575)
------- -------- ----- --------
Cash and cash equivalents at beginning of year 846 10,132 -- 10,978
------- -------- ----- --------
Cash and cash equivalents at end of period $ 1,870 $ 3,501 $ 32 $ 5,403
======= ======== ===== ========
916
10
8. RESTRUCTURING17
FORM 10-Q
PART I
ITEM 2
INSTRON CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Quarter Ended March 31, 2001 vs. Quarter Ended April 1, 2000
Revenues for the first quarter of 2001 were $45,071,000, essentially flat
compared to the same period last year. Foreign sales accounted for approximately
56% of consolidated first quarter revenues compared with 58% for the first
quarter of 2000.
The consolidated gross margin as a percentage of revenue improved to 39.8% for
the first quarter of 2001 compared to 34.7% for the first quarter of 2000 due to
improved margins in the Structures and Service businesses.
During the first and second quarters of 2000, the Company completed a workforce
reduction of 84 people, of which 24 were in the U.S. and 60 were in Germany and
the UK.U.K. The personnel reductions were primarily in engineering, manufacturing
and administration. Severance costcosts associated with the workforce reductions
was $1.8were $0.3 million and $1.5 million during the first six months of 2000. As of September 30, 2000, the
liability remaining related to the workforce reduction was approximately
$0.8 million, consisting entirely of severance costs. Remaining severance
costs are expected to be paid through theand second quarter of 2001.
10
11
FORM 10-Q
PART I
ITEM I
INSTRON CORPORATION
Management's Discussion2000,
respectively.
Total selling and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
THIRD QUARTER ENDED SEPTEMBER 30, 2000 VS. THIRD QUARTER ENDED OCTOBER 2, 1999
Revenues foradministrative expenses decreased by 2.0% from the thirdfirst
quarter of 2000 were $42.2 million, compareddue primarily to $49.9
million forlower expenses in the third quarterStructures business as a
result of last year, a decrease of 15.6%. The decrease
in revenues was primarily due to a decline in Structures and European sales. A
significant portion of the decline in European sales was due to the weakness of
the Euro and Pound compared to prior year. Foreign sales were 55% of revenues
in the third quarter of 2000 and 1999.
Gross margin, asyear's restructuring. As a percentage of revenue, was 40.5% for the third quarter of
2000, compared to 37.5% for the third quarter of 1999. The higher gross margin
was primarily due to the improved margins in the Structures business.
Selling and administrative expenses for the third quarter of 2000 were $13.0
million, or 30.8% of revenues, compared to $12.9 million, or 25.9% of revenues,
in the third quarter of last year. The higher percentage of selling and
administrative expenses were 28.9% compared to revenue was a result of a decrease in Structures and
European sales.29.5% for the same period last
year.
Research and development expenses were $2.0 million, or 4.7% of revenues, in the
third quarter of 2000, compared to $2.9 million, or 5.9% of revenues, in the
third quarter of last year. Software development costs of $0.4 million were
capitalized during the third quarter of 2000, compared to $0.5 million in the
third quarter of last year.
Income from operations for the third quarter of 2000 was $2.1 million compared
to a $9.8 million loss in the third quarter of 1999. During the third quarter of
1999, the Company recorded recapitalization compensation expense of $12.6
million arising from the Merger Agreement between Instron Corporation and
Kirtland. Without this one-time charge, income from operations was $2.8 million.
Net interest expense was $3.6 million in the third quarter of 2000, compared to
$0.1 million in the third quarter of 1999. The significantly higher interest
costs reflect the debt assumeddecreased by the Company as a result of its
recapitalization in September 1999.
The tax benefit of $0.2 million, or 13.5% of the pre-tax loss, for the third
quarter of 2000 reflects the expected recovery of income taxes paid in prior
years from loss carry-back availability. Each quarter, the Company estimates its
annual effective tax rate and adjusts the provision or benefit for the
cumulative effect of the change in the estimate. The tax benefit for the third
quarter of 1999 was 22.8% of pre-tax income.
Net loss for the third quarter of 2000 was $1.4 million, or $0.24 loss per basic
and diluted share compared to net loss of $7.8 million, or $0.12 loss per basic
and diluted share for the third quarter of last year.
NINE MONTHS ENDED SEPTEMBER 30, 2000 VS. NINE MONTHS ENDED OCTOBER 2, 1999
Revenues for the nine months of 2000 were $132.1 million compared to $151.0
million12.9% for the first nine monthsquarter of
1999, a decrease of 12.5%. The lower
revenues were largely due to a $16.5 million decline in Structures revenue,
lower European and Japanese revenues, offset by an increase in Asian revenues.
Foreign sales were 57% of total revenues for2001 compared with the first nine months of 2000
compared to 56% for the first nine months of 1999.
11
12
Gross margin as a percentage of revenues was 37.9% for the first nine months of
2000 compared to 38.6% for the first nine months of 1999. The lower gross margin
is primarily a result of the higher costs associated with major Structures
orders during the first halfquarter of 2000. Gross margin improvedThis decrease reflects not only
the significant investment that Instron made in the third quarter
of 2000 as noted above.
Selling and administrative expenses were $39.6 million, or 30.0% of revenues,
for the first nine months of 2000, compared to $41.5 million, or 27.5% of
revenues, for the first nine months of 1999, a decrease of 4.6%. The higher
percentage of selling and administrative expenses to revenue was a result of a
decrease in structures and European sales.
Research andcertain key product
development expenses were $6.9 million, or 5.2% of revenues, for
the first nine months of 2000, compared to $8.2 million, or 5.5% of revenues,
for the first nine months of 1999. Software development costs of $0.7 million
were capitalized during the first nine months of 2000, compared to $1.7 million
during the first nine months of 1999. If software development costs were
reported as period expenses, research and development expenses would have
declined 2.3 million, or 23.2%, from 1999. The higher 1999 expense levels are
due primarily to the capitalization of costs associated with an integrated
software suite for the Structures business. In addition, the lower 2000 expenses
reflectareas, but also the benefit fromof integrating the development processes
of our past
acquisitions. DuringIn addition, software development costs of $385,000 were
capitalized during the thirdfirst quarter of 1999, the Company recorded recapitalization
compensation expense of $12.6 million arising from the Merger Agreement between
Instron Corporation and Kirtland.
During 2000, the Company completed a workforce reduction of 84 people, of which
24 were in the U.S. and 60 were overseas. The personnel reductions were
primarily in engineering, manufacturing and administration. Total severance
costs2001 compared with $287,000 in the first
six months of 2000 related to this workforce reduction was
$1.8 million. As of September 30, 2000, the liability remaining related to the
workforce reduction was approximately $0.8 million, consisting entirely of
severance costs. Remaining severance costs are expected to be paid through the
second quarter of 2001.
Income from operationslast year. Exclusive of software development costs, research and
development costs decreased by 7.9%.
Net interest expense decreased to $3,387,000 compared to $3,515,000 in the first
quarter of 2000. This decrease in 2001 is due to lower borrowings and lower
interest rates.
Loss before taxes for the first nine monthsquarter of 2001 was $1.7 million in 2000$699,000 compared to a loss
before taxes of $4.2 million$3,933,000 for the same period last year. This improvement in
1999. Excluding one-time charges,profitability is due to increased margins on the first nine months income from operationsStructures and Service
businesses and lower operating expenses.
The consolidated effective tax rate was $3.5 million in 2000 and $8.4
million in 1999.
Net interest expense was $10.8 million37.8% for the first nine monthsquarter of 2000,2001
compared to $0.4 million for41.5% in the first nine monthsquarter of 1999. The significantly
higher interest costs reflect the debt assumed by the Company as a result of its
recapitalization in September 1999.
The tax benefit of $2.8 million, or 30.5% of the pre-tax2000.
Net loss for the first
nine months of 2000 reflects the expected recovery of income taxes paid in prior
years from loss carry-back availability. Each quarter, the Company estimates its
annual effective tax rate and adjusts the provision or benefit for thebefore cumulative effect of theaccounting change in the estimate. The tax benefitwas $435,000 or $0.08 per
diluted share of common stock for the first
nine monthsquarter ended March 31, 2001 compared with
$2,300,000, or $0.41 per diluted share of 1999 was $0.2 million or 4.2% of pre-tax loss.
Thecommon stock for the quarter ended
April 1, 2000.
Instron reported net loss after cumulative effect of accounting change for the first nine monthsSAB
101 of 2000 was $6.4 million,$435,000 or $1.15 loss$0.08 per basic and diluted share compared to net loss of $4.4 million, or $0.06 loss
per basic and diluted share for the first nine monthsquarter of 1999.2001
compared to $6,569,000 or $1.18 per diluted share for the same period last year.
17
18
FINANCIAL CONDITION
During the first nine monthsquarter of 2000,2001, the Company generated $4.3 million$12 thousand of cash
from operating activities compared $16.2to $1.3 million for the same period in the
prior year, a $11.9year. The Company used $0.8 million decrease. The decrease on a year to year basis was
primarily due to an increase in net loss and a decrease in accrued expenses
offset by a decrease in accounts receivable. The net loss increase in 2000 was
mostly due to a decrease in revenue of $18.9 million, an increase in net
interest expense of roughly $10.4 million (related to the debt financing
obtained on September 29, 1999, as part of the recapitalization), and a
restructuring charge of $1.8 million offset by the recapitalization charge of
$12.6 million in 1999. The cash generated from operatingfor investing activities
during the first nine monthsquarter of 2000 was largely a result2001, compared to $1.1 million of the reduction in accounts
receivablecash used during
the period.same period in the prior year primarily to fund capital expenditures and
software development costs. The Company increased borrowings by $1.5 million
compared to paying down debt by $5.8 million during the same period last year.
Accounts receivable declined from $65.5$57.3 million at December 31, 19992000 to $52.5$48.1
million at September 30, 2000. The lower level of
accounts receivableMarch 31, 2001. This decrease was due primarily due to the lower level of
revenues in the three months ended September 30, 2000,first quarter as compared to the preceding three months ended
December 31, 1999.
The Company used $2.8 million in cash in investing activities during the first
nine months of 2000, compared to $5.4 in cash during the first nine months of
1999.2000.
Capital expenditures during the first nine monthsquarter of 20002001 were $2.3$0.4 million,
compared to $4.1$0.9 million in the first nine monthsquarter of 1999.2000. The lower level of
capital expenditures reflects the Company's lower fiscal 2000timing of the 2001 capital requirements, including the absence of equipment purchases relating to Y2K
compliance.requirements. The
Company plans to make capital expenditures of approximately $3.0$3.5 million during
the current fiscal year. In addition, the Company plans to continue to develop
and 12
13
enhance its software products and pursue its strategy of acquisitions.
During the first nine months of 2000, the Company used $7.5 million of cash to
repay bank borrowings. During the first nine months of 1999, the Company used
cash of $0.3 million to pay dividends and received cash of $0.4 million from
stock option exercises.
During the first nine months of 1999, in connection with the Merger, the Company
entered into a Credit and Security Agreement (the "Senior Credit Facility")
consisting of a $30 million term loan facility (the "Term Loan Facility") and a
$50 million revolving credit facility, (the "Revolving Credit Facility"). The
Company borrowed $16.5 million against the revolving credit facility. In
addition, the Company incurred $60 million of debt through the sale of its
13 1/4% Senior Subordinated Notes and Warrants (the "Senior Subordinated
Notes"). Also during the first nine months of 1999, the Company used cash of
$143.0 million to purchase all of the treasury stock, common stock and options
outstanding, and used cash of $16.5 million to pay off bank debt. The Company
received cash of $54.2 million from the sales of recapitalized stock. As part of
the Merger and recapitalization, the Company paid $6.4 million for fees to
finance the debt and $3.8 million in fees related to the recapitalization.
At September 30, 2000,March 31, 2001, the Company had borrowings of $23.3$24.3 million, and additional
borrowing availability of $18.1$21.5 million, under its $50.0 million multi-currency
revolving credit facility, compared to $28.8$23.0 million in borrowings at December
31, 1999.2000. The Company had $27.8$25.6 million outstanding under its term loan at September 30, 2000,March
31, 2001, compared to $30.0$26.6 million outstanding at December 31, 1999.2000. At September 30, 2000 and DecemberMarch
31, 1999,2001, the Company also had $60.0 million of 13 1/4% Senior Subordinated
Notes Due 2009 outstanding.
The Senior Credit Facility requires that the Company meet and maintain certain
financial ratios and tests, including a minimum consolidated net worth,
consolidated adjusted EBITDA, consolidated capital expenditure, consolidated
interest coverage ratio, consolidated fixed charge coverage ratio, maximum
consolidated leverage ratio and senior leverage ratio. At April 1 and July 1,
2000, the Company was not in compliance with three of the original Senior Credit
Facility covenants; the minimum consolidated net worth covenant, the
minimum consolidated adjustedcovenants. The Company requested and was granted waivers of these covenants as of
and for the period ended July 1, 2000, for which the Company paid an
administrative fee of $80,000 to the lenders. The Company did not obtain waivers
of covenants of the Senior Credit Facility that extended over the twelve month
period following July 1, 2000 and did not believe it would be able to achieve
compliance with future covenants of the Senior Credit Facility that existed as
July 1, 2000. Accordingly as of July 1, 2000, the amounts outstanding under the
Senior Credit Facility were reclassified from long term liabilities to current
liabilities.covenants.
During the third quarter of 2000, the Company renegotiated and obtained more
lenient debt covenants for the Senior Credit Facility.
As of September 30,December 31, 2000 and March 31, 2001, the Company was in compliance with
the amended Senior Credit Facility covenants.prior to the adoption of recently issued
accounting pronouncements. The Company anticipates that the covenants will be
amended during the second quarter of 2001 to reflect the impact of the recently
issued accounting pronouncements. The Company is confident that it will be able
to meet these covenants for the new covenants over the
next twelve months. Accordingly, asremainder of September 30, 2000, the amounts
outstanding under the Senior Credit Facility have been reclassified back to long
term liabilities.
The Company's subsidiaries have other overdraft and borrowing facilities
allowing advances up to approximately $2.6 million. Short-term borrowings under
these facilities were $0 million and $2.8 million at September 30, 2000 and
December 31, 1999, respectively.2001.
The Company believes its present capital resources and anticipated operating
cash flows are sufficient to finance its planned operations and investing
activities for the next eighteen months. If the Company were to consider a
significant acquisition, it would have to seek alternative sources of equity
funds and/and or additional debt.
Bookings for the thirdfirst quarter of 20002001 were $47.2 million compared to $59.3
million in the third quarter of last year. For the first nine months of 2000,
bookings were $144.9$37.3 million, a decrease of 5.9% from17.9%
over the first nine months ofsame period last year. The year-to-year decrease in bookings was primarily in North
America and Europe for Structures
products.
At September 30, 2000, the material testing business.
The Company's order backlog was $75.7$99.6 million at the end of the first quarter of
2001, compared to $73.5$103.6 million at July 1, 2000, $71.6 million at April 1,the end of the first quarter of 2000 and
$68.9$111.4 million at December 31, 1999.
YEAR 2000
To date, the Company has not incurred significant incremental costs in order to
comply with Year 2000 requirements and does not believe it will incur
significant incremental costs in the foreseeable future. However, there can be
no assurance that Year 2000 errors or defects will not be discovered in the
Company's products or internal software systems and, if such errors or defects
are discovered, there can be no assurance that the costs of making such products
or internal systems Year 2000 compliant will not have a material adverse effect
on the Company's business, operating results and financial condition.2000.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 was amended on July
7, 1999 by the issuancefourth quarter of Statement2000, effective as of Accounting Standards No. 137 ("SFAS
137"), "Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of SFAS No. 133". In JuneJanuary 1, 2000, the FASB issued SFAS No.
138 ("SFAS 138"), "Accounting for Certain Derivative Instruments and Certain
Hedging Activities - an amendment of FASB Statement No. 133. SFAS 138 amends the
accounting and reporting standards of SFAS 133Company
changed its revenue recognition policy for certain derivative
instruments and certain hedging activities. SFAS No. 133, as amended, is
effective for fiscal quarters beginning after January 1, 2001 for Instron, and
we do not expect its adoptionproduct sales to have a material impact on our financial
position or results of operations.
13
14
In December 1999, the Securities and Exchange Commission releasedcomply with
Staff Accounting BulletingBulletin No. 101, "Revenue Recognition in Financial Statement" ("SABStatements"
(SAB 101"). This bulletinSAB 101 provides guidance fromguidelines on the staff on applying generally
accepted accounting principles totiming of revenue recognition
based upon factors such as passage of title, installation, payment terms and
customer acceptance.
The SAB 101 restatement has been applied retroactively to transactions that
occurred prior to 2000. The cumulative effect adjustment of the change in
financial statements.
SAB 101Aaccounting on prior years through December 31, 1999 was subsequently issued in March 2000, deferring the requirementa reduction to adopt the revised guidance until the third quarterincome of
2000, retroactive$4.3 million (after credit for income taxes of $3.5 million), or $0.77 cents per
diluted share, which has been accounted for as a change to the first quarter of
2000. In June 2000 the SEC issuedfinancial results.
The effect of adopting SAB 101B that further defers
the effective date for calendar year companies to the fourth quarter of 2000,
still retroactive to the101 increased first quarter of 2000. The Company is currently in2000 sales by $3.9
million and decreased the process of assessing the impact that SAB 101 may have on the financial
statements.
In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions involving Stock Compensation." FIN 44
clarifies the application of APB Opinion No. 25 regarding (a) the definition of
employee for purposes of applying APB Opinion No. 25, (b) the criteria for
determining whether a stock option plan qualifies as a noncompensatory plan, (c)
the accounting consequence of various modifications to the terms of a previously
fixed stock optionnet loss by $0.5 million or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 is effective September 30,
2000, but certain conclusions cover specific events that occur after either
December 15, 1998, or January 12, 2000. The adoption of FIN 44, effective July
1, 2000, did not have a material impact on the financial position or results of
operations of the Company.$0.08 cents per diluted
share.
In September 2000, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on EITF Issue 00-10, "Accounting for Shipping and Handling Fees and
Costs." This consensus requires that all shipping and handling amounts billed to
a customer in a sale transaction represent revenues earned for the goods
provided and should be classified as revenue. Adoption of the consensus reached
on EITF Issue 00-10 is required no later than the required implementation date
for SAB 101. The Company is in the process of assessing the impact of the
consensus reached onadopted EITF Issue 00-10 in the year ended December 31,
2000 and anticipates a retroactive reclassification was recorded on the historical statement
of operations for all historical statementsquarters in 2000, 1999 and 1998. The first quarter of operations related to these2000
reclassification resulted in an increase in revenues fromand cost of revenues to revenues.sales of
$331,000.
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19
ITEM 3. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK
The Company is exposed to market risk related to changes in foreign currency
exchange rates. The Company enters into foreign exchange contracts to manage and
reduce the impact of changes in foreign currency exchange rates. The Company
does not enter into derivatives or other financial instruments for trading or
speculative purposes. The exposures are associated with certain accounts
receivable denominated in local currencies and certain foreign revenue
transactions. There havehas been no material changes related to the quantitative or
qualitative aspects of market risk since December 31, 1999.2000.
FORWARD LOOKING STATEMENTS
ThisCertain statements contained in this Form 10-Q contains certain10Q are "forward-looking" statements
within the meaning of the federal securities laws and are made in reliance upon
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995.
No
assurances can be givenThese forward-looking statements reflect our current views about future events
and financial performance. Words such as "will," "should," "believe," "expect,"
"anticipate," "confident" and other similar expressions that predict or indicate
future events or trends, or that are not statements of historical matters,
identify forward-looking statements. Investors should not rely on
forward-looking statements because they are subject to a variety of risks,
uncertainties, and other factors that could cause actual results will notto differ
materially from those projected in theour expectations, and we expressly do not undertake any duty to
update forward-looking statements, contained inwhich speak only as of the date of this
Form 10-Q
Report.
Certainrelease. These risks, uncertainties, and factors that might cause such a difference include: theinclude, but are not limited
to: (1) fluctuations in interest rates; (2) the stability of financial markets;
(3) the level of bookings worldwide for Instron and IST, particularly for Asia;IST; (4) our ability to
timely ship backlog (in this regard, our expectations are based on historical as
well as anticipated production levels); (5) the success of the automobile
industry which is the major purchaser of IST products; (6) the impact of
fluctuations in exchange rates and the uncertainties of operating in a global
economy, including fluctuations in the economic conditions of the foreign and
domestic markets served by the Company which can effect demand for its products
and services; the Company's(7) our ability to identify and successfully consummate strategic
acquisitions; the Company'sacquisitions and our anticipated funding requirements in connection therewith;
(8) our ability to meet the covenants and repayment schedules of itsthe new loan
and debt facilities.
14facilities undertaken as a result of the Merger and Recapitalization
and the amendments to certain covenants contained in such facilities effected in
the third quarter of 2000; (9) the effect of changes in accounting and/or tax
policies and practices; and (10) other factors detailed from time to time in our
filings with the Securities and Exchange Commission.
19
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FORM 10-Q
PART I
ITEM III
INSTRON CORPORATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Registrant nor any of its subsidiaries is a party to, nor
is any of their property the subject of, any material pending legal
proceedings.
ITEM 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
1520
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSTRON CORPORATION
Date: November 14,May 16, 2000 By /s/ James M. McConnell
--------------------------------------------------------------
James M. McConnell
President and Chief Executive Officer
Date: November 14,May 16, 2000 By /s/ Linton A. Moulding
--------------------------------------------------------------
Linton A. Moulding
Chief Financial Officer
1621