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 1, 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 0 -19703
Farrel Corporation
(Exact name of registrant as specified in its charter)
Delaware 22-2689245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 Main Street, Ansonia, Connecticut, 06401
(Address of principal executive offices) (Zip Code)
(203) 736-5500
(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 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT AUGUST 10, 2001
Common Stock (Voting), $.01 par value 5,228,461
Farrel Corporation
Index
Page
Part I. Financial Information
Consolidated Balance Sheets -
July 1, 2001 and December 31, 2000 3
Consolidated Statements of Operations -
Three and six months ended July 1, 2001
and July 2, 2000 4
Consolidated Statements of Cash Flows -
Six months ended July 1, 2001
and July 2, 2000 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information 12
Exhibit 11 - Computation of Earnings Per Share 13
Page 2 of 14
Part I - Financial Information
FARREL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
July 1, December 31,
2001 2000
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents ...................................................... $ 4,559 $ 2,486
Accounts receivable, net of allowance for
doubtful accounts of $98 and $139, respectively ............................ 6,262 13,607
Inventory ...................................................................... 14,187 12,411
Deferred income taxes .......................................................... 793 793
Other current assets ........................................................... 1,635 1,284
-------- --------
Total current assets ............................................. 27,436 30,581
Property, plant and equipment - net of accumulated
depreciation of $14,510 and $14,037, respectively .......................... 8,578 9,538
Prepaid pension costs .......................................................... 3,589 3,514
Other assets ................................................................... 212 299
-------- --------
Total Assets ................................................................... $ 39,815 $ 43,932
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ............................................................... $ 5,606 $ 6,400
Accrued expenses & taxes payable ............................................... 870 1,660
Advances from customers ........................................................ 5,746 5,948
Accrued warranty costs ......................................................... 834 1,075
Short — term debt .............................................................. 661 1,194
-------- --------
Total current liabilities ....................................... 13,717 16,277
Long — term debt ..................................................................... 1,320 1,194
Postretirement benefit obligation .................................................... 1,097 1,118
Deferred income taxes ................................................................ 1,391 1,380
Commitments and contingencies ........................................................ -- --
-------- --------
Total Liabilities ............................................... 17,525 19,969
-------- --------
Stockholders' Equity:
Preferred stock, par value $100, 1,000,000
shares authorized, no shares issued
Common stock, par value $.01,
10,000,000 shares authorized,
6,142,106 shares issued ................................................... 61 61
Paid in capital ................................................................ 19,295 19,295
Treasury stock, 913,645 shares at
July 1, 2001 and 912,045 shares at December 31, 2000 ........................ (2,534) (2,529)
Retained earnings .............................................................. 7,150 8,330
Accumulated other comprehensive expense ........................................ (1,682) (1,194)
-------- --------
Total Stockholders' Equity ...................................... 22,290 23,963
-------- --------
Total Liabilities and Stockholders’ Equity ........................................... $ 39,815 $ 43,932
======== ========
See Accompanying Notes to Consolidated Financial Statements
Page 3 of 14
FARREL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and share data)
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
2001 2000 2001 2000
(Unaudited) (Unaudited)
Net sales ............................... $ 12,355 $ 15,270 $ 23,435 $ 26,825
Cost of sales ........................... 9,937 11,273 18,545 20,751
----------- ----------- ----------- -----------
Gross margin ............................ 2,418 3,997 4,890 6,074
Operating expenses:
Selling ............................. 1,260 1,912 2,562 3,499
General & administrative ............ 1,611 1,939 3,322 4,071
Research & development .............. 376 412 820 849
----------- ----------- ----------- -----------
Total operating expenses ................ 3,247 4,263 6,704 8,419
----------- ----------- ----------- -----------
Operating loss ......................... (829) (266) (1,814) (2,345)
Interest income ......................... 36 63 88 148
Interest expense ........................ (36) (72) (78) (144)
Other income (expense), net ............. (68) 44 (49) (56)
----------- ----------- ----------- -----------
Loss before income taxes ................ (897) (231) (1,853) (2,397)
Benefit for income taxes ................ (324) (99) (673) (785)
----------- ----------- ----------- -----------
Net loss ................................ $ (573) $ (132) $ (1,180) $ (1,612)
=========== =========== =========== ===========
Per share data:
Basic and Diluted loss per
common share .......................... $ (0.11) $ (0.03) $ (0.23) $ (0.31)
=========== =========== =========== ===========
Average shares outstanding:
Basic ................................. 5,228,563 5,250,061 5,229,251 5,250,061
=========== =========== =========== ===========
Diluted ............................... 5,228,563 5,250,061 5,229,251 5,250,061
=========== =========== =========== ===========
Dividends per share ................... $ 0.00 $ 0.04 $ 0.00 $ 0.08
=========== =========== =========== ===========
See Accompanying Notes to Consolidated Financial Statements
Page 4 of 14
FARREL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
July 1, July 2,
2001 2000
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss ................................................................ $(1,180) $(1,612)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Gain on disposal of fixed assets ...................................... (152) --
Depreciation and amortization ......................................... 859 1,037
Decrease in accounts receivable ...................................... 7,099 4,003
(Increase) in inventory ............................................... (2,088) (6,078)
(Increase) in prepaid pension costs ................................... (227) (621)
(Decrease) in accounts payable ........................................ (625) (934)
(Decrease) increase in customer advances ............................. (2) 3,793
(Decrease) in accrued expenses & taxes ................................ (913) (1,036)
Increase (decrease) in accrued warranty costs ......................... (221) 20
Increase (decrease) in deferred income taxes .......................... 71 (49)
(Increase) decrease in other .......................................... (264) 245
------- -------
Total adjustments ..................................................... 3,537 380
------- -------
Net cash (used in) provided by operating activities ................... 2,357 (1,232)
------- -------
Cash flows from investing activities:
Proceeds from disposal of fixed assets ................................ 374 --
Purchases of property, plant and equipment ............................ (290) (306)
------- -------
Net cash (used in) provided by investing activities ................... 84 (306)
Cash flows from financing activities:
Repayment of long-term borrowings ..................................... (2,264) (629)
Bank borrowings ....................................................... 1,981 --
Purchase of treasury stock ............................................ (5) --
Dividends paid ........................................................ -- (420)
------- -------
Net cash (used in) financing activities ............................... (288) (1,049)
Effect of foreign currency exchange rate changes on cash .................. (80) (199)
------- -------
Net increase (decrease) in cash and cash equivalents ...................... 2,073 (2,786)
Cash and cash equivalents — Beginning of period ....................... 2,486 6,069
------- -------
Cash and cash equivalents — End of period ............................. $ 4,559 $ 3,283
======= =======
Income taxes paid ......................................................... $ 32 $ 82
======= =======
Interest paid ............................................................. $ 77 $ 139
======= =======
See Accompanying Notes to Consolidated Financial Statements
Page 5 of 14
Farrel Corporation
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying unaudited consolidated financial statements contain
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly in accordance with generally accepted accounting principles, the
consolidated financial position of Farrel Corporation ("Farrel" or "the
Company") as of July 1, 2001, and the consolidated results of its operations and
its cash flows for the three and/or six month periods ended July 1, 2001 and
July 2, 2000. These results are not necessarily indicative of results to be
expected for the full fiscal year. The statements should be read in conjunction
with the financial statements and notes thereto, included in the Company’s
Annual Report and Form 10-K for the year ended December 31, 2000.
Note 2 - Inventory
Inventory is comprised of the following:
July 1, December 31,
2001 2000
(In thousands)
Stock and raw materials................. $ 7,776 $ 7,997
Work-in process......................... 6,411 4,414
------- -------
Total................................... $14,187 $12,411
======= =======
Note 3 - Comprehensive Income (Expense)
The components of other comprehensive income (expense) are as follows:
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
2001 2000 2001 2000
(In thousands)
Net loss ............................... $ (573) $ (132) $(1,180) $(1,612)
Foreign currency translation adjustments (1) (538) (488) (709)
------ ------ ------- -------
Other comprehensive expense ............ $ (574) $ (670) $(1,668) $(2,321)
====== ====== ======= =======
Accumulated other comprehensive expense consists of foreign currency
translation adjustments at July 1, 2001 and December 31, 2000.
Note 4 - Segment Information
The Company's operations are considered one operating segment. The
Company’s products consist of new machines, aftermarket and spare parts and
repair related services. The Company’s products and services are sold to
commercial manufacturers in the plastic and rubber industries. The
manufacturing, assembly and distribution of the Company’s products are
essentially the same.
Page 6 of 14
Note 5 - Impact of Recently Issued Accounting Standards
In June 1998, the FASB issued Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities, which the Company was required to
adopt on January 1, 2001. The Statement provides a new method of accounting for
derivatives and hedges. The adoption of this Statement did not have a
significant effect on the Company’s results of operations or financial position.
The Company has entered into foreign exchange forward contracts which
are designated as fair value hedges of accounts receivable and future
receivables related to customer orders in backlog. The Company, from time to
time, enters into foreign exchange forward contracts to hedge certain firm
commitments which are denominated in currencies other than the Company’s
operating currencies.
As of July 1, 2001, all of the Company’s foreign exchange forward
contracts were designated as fair value hedges. There were no ineffective
portions, as defined under FAS133, during the six months ended July 1, 2001. As
such, there were no charges to the statement of operations during the three or
six months ended July 1, 2001, related to these contracts. At July 1, 2001, the
difference between the spot rate and the contract rate for the foreign exchange
forwards was a net unrealized gain of $114,000.
Note 6 - Restatement of Prior Year Balances
Prior year balances have been restated to reflect the adoption of SEC
Staff Accounting Bulletin 101 (“Revenue Recognition”) and EITF00-10 (“Accounting
for Shipping and Handling Costs”). The Company was required to adopt these
accounting guidelines in the fourth quarter of 2000. The adoption required
restatement of prior periods.
Note 7 - Bank Credit Arrangements
In June 2001, the Company entered into a new worldwide multi-currency
credit facility with a major US bank. This facility includes a $10 million
revolving credit facility for direct borrowings and letters of credit. The
facility contains a sub-limit that caps the amount of direct borrowings the
Company can make at $5 million. The revolving credit facility expires on June
15, 2003. The facility contains limits on direct borrowings and issuance's of
letters of credit based upon stipulated percentages of accounts receivable and
inventory. The facility also contains covenants specifying minimum and/or
maximum thresholds for operating results, selected financial ratios and backlog.
The agreement contains certain restrictions on investments, borrowings and the
sale of assets. The Company's old credit facility was terminated except in
relation to approximately $2.2 million of letters of credit which had previously
been posted under that facility and continue to be outstanding on July 1, 2001.
The Company has approximately $900,000 of letters of credit posted under its new
facility on July 1, 2001.
The Company also entered into a term loan for £1.4 million
(approximately $2 million) as part of this credit facility. The proceeds of this
loan were used to repay an existing term loan of the same amount. The new term
loan is repayable in monthly installments of £38,888 through June 2004.
The term loan has an intent rate of LIBOR plus 2.7%.
Page 7 of 14
PART I - ITEM 2 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION & RESULTS OF OPERATIONS
Safe Harbor Statements Under Private Securities Litigation Reform Act of 1995
Certain statements contained in the Company’s public documents,
including this report and in particular, in this “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” may be forward
looking and may be subject to a variety of risks and uncertainties. Various
factors could cause actual results to differ materially from these statements.
These factors include, but are not limited to, pricing pressures from
competitors and/or customers; continued economic and political uncertainty in
certain of the Company’s markets; the Company’s ability to maintain and increase
gross margin levels; the Company’s ability to generate positive cash flow;
changes in business conditions, in general, and, in particular, in the
businesses of the Company’s customers and competitors; and other factors which
might be described from time to time in the Company’s filings with the
Securities and Exchange Commission.
Results of Operations
Six Months Ended July 1, 2001 Compared To The Six Months Ended July 2, 2000
Net sales for the six month period ended July 1, 2001, were $23.4
million compared to $26.8 million for the six month period ended July 2, 2000, a
decrease of $3.4 million. The decrease is primarily a result of lower sales in
North America of $6.8 million partially offset by an increase in new machine
sales in Europe. The timing of the Company’s sales, particularly new machines
sales, is highly dependent on when an order is received, the amount of lead time
from receipt of order to delivery and specific customer requirements. The
Company operates in markets which are extremely competitive with cyclical
demand. Many of the Company’s customers and markets operate at less than full
capacity and certain remain particularly competitive and are subject to local
economic events.
Orders received for the six month period ended July 1, 2001, were $23.0
million compared to $33.7 million for the six month period ended July 2, 2000.
The decline in incoming orders is due to weak market conditions faced by the
Company.
The Company’s products are primarily supplied to manufacturers and
represent capital commitments for new plants, expansion or modernization. In the
case of major equipment orders, up to 12 months are required to complete the
manufacturing process. Accordingly, revenues reported in the statement of
operations may represent orders received in the current or previous periods
during which time economic conditions in various geographic markets of the world
impact the Company’s level of order intake. Many of the Company’s traditional
customers and markets are operating with excess capacity thereby reducing the
number of projects for plant expansion and modernization. The Company is
experiencing increased pricing pressures from competitors in an overall smaller
market. In addition, since its inception, the decline in the value of the Euro
versus the U.S. dollar and British pound sterling has increased pricing
pressures. Over the longer term, these conditions are resulting in customer
orders with lower margins and lost business. Further, the cyclical nature of
industry demand and, therefore, the timing of order intake may effect the
Company’s quarterly results of operations. The Company’s ability to maintain and
increase net sales depends upon a strengthening and stability in the Company’s
traditional markets and its ability to control costs to effectively compete in
its current markets. There can be no assurance that the current level of orders
will continue, that market conditions will not worsen, or that improvements in
the Company’s traditional markets will lead to increased orders for the
Company’s products.
The level of backlog considered firm by management at July 1, 2001, was
$27.4 million compared to $27.7 million at December 31, 2000, and $35.1 million
at July 2, 2000.
Page 8 of 14
Gross margin for the six month period ended July 1, 2001, was $4.9
million compared to $6.1 million for the six month period ended July 2, 2000, a
decrease of $1.2 million. The decrease in gross margin is a result of lower
sales. The gross margin as a percent of sales for the six month period ended
July 1, 2001, was 20.9% compared to 22.6% for the six month period ended July 2,
2000. The decrease in gross margin as a percent of sales is primarily due to a
change in sales mix resulting from increased new machine sales in Europe and
decreased sales in North America. The European new machine sales generated lower
gross profits primarily due to pricing pressures resulting from competitive
market conditions and the relative weakness of the Euro versus the British pound
sterling.
Operating expenses for the six month period ended July 1, 2001, were
$6.7 million compared to $8.4 million for the six month period ended July 2,
2000, a decrease of $1.7 million primarily due to lower employee compensation
and related expenses of approximately $1.1 million, travel expenses of $0.3
million and advertising cost of $0.3 million.
Interest income for the six month period ended July 1, 2001, was
$88,000 compared to $148,000 for the six month period ended July 2, 2000, a
decrease of $60,000. The decrease is primarily due to lower average cash
balances available for investing and lower interest rates.
Interest expense for the six month period ended July 1, 2001, was
$78,000 compared to $144,000 for the six month period ended July 2, 2000, a
decrease of $66,000. The decrease is primarily due to lower borrowings.
The Company provides for income taxes at the statutory rates in effect
in each tax jurisdictions in which income is earned or losses generated,
adjusted for permanent differences in determining income for financial reporting
and income tax purposes. The effective income tax rate was 36% for the six month
period ended July 2, 2001, compared to 33% for the six month period ended July
2, 2000. The effective tax rate varies among periods due to the change in the
proportion and amount of income and losses generated in different taxing
jurisdictions.
Three Months Ended July 1, 2001 Compared to The Three Months Ended July 2, 2000
Net sales for the three months ended July 2, 2001, were $12.4 million
compared to $15.3 million for the three month period ended July 2, 2000, a
decrease of $2.9 million. The decrease is primarily a result of lower sales in
North America of $6.6 million partially offset by an increase in new machine
sales in Europe.
Orders received for the three month period ended July 1, 2001, were
$13.4 million compared to $22.7 million for the three month period ended July 2,
2000.
The Company’s sales, orders and backlog levels varied when comparing
the two quarters due to market conditions and the nature of the industry in
which the Company operates as more fully discussed in the results of operations
for the six month period on page 8.
Gross margin for the three month period ended July 1, 2001, was $2.4
million compared to $4.0 million for the three month period ended July 2, 2000,
a decrease of $1.6 million. The decrease in gross margin is a result of lower
sales. The gross margin as a percent of sales for the three month period ended
July 1, 2001, was 19.6% compared to 26.2% for the three month period ended July
2, 2000. The decrease in the gross margin as a percent of sales is primarily due
to a change in sales mix resulting from increased new machine sales in Europe
and decreased sales in North America. The European new machine sales generated
lower gross profits primarily due to pricing pressures resulting from
competitive market conditions and the relative weakness of the Euro versus the
British pound sterling.
Operating expenses for the three month period ended July 2, 2001, were
$3.2 million compared to $4.3 million for the three month period ended July 2,
2000, a decrease of $1.0 primarily due to lower employee compensation and
benefit costs of approximately $0.6 million, and lower travel expenses and
advertising costs.
Page 9 of 14
Interest income for the three month period ended July 2, 2001, was
$36,000 compared to $63,000 for the three month period ended July 1, 2000, a
decrease of $27,000. The decrease is primarily due to lower interest rates.
Interest expense for the three month periods ended July 1, 2001, and
July 2, 2000, was $36,000 and $72,000, respectively. The decrease is primarily
due to lower borrowings.
The Company provides for income taxes at the statutory rates in effect
in each tax jurisdiction in which income is earned or losses are generated,
adjusted for permanent differences in determining income for financial reporting
and income tax purposes. The effective income tax rate was 36% for the three
month periods ended July 1, 2001, compared to 43% for the three months ended
July 2, 2000. The effective tax rate varies among periods due to the change in
the proportion and amount of income and losses generated in different tax
jurisdictions.
Material Contingencies
In February 1995, the Company and Black & Decker Corporation (“Black
and Decker”) entered into a Settlement Agreement pursuant to which Black &
Decker agreed to assume full responsibility for the investigation and
remediation of any pre-May 12, 1986 environmental contamination at the Company’s
Ansonia and Derby, Connecticut facilities, as required by the Connecticut
Department of Environmental Protection (“DEP”). A preliminary environmental
assessment of the Company’s properties in Ansonia and Derby, Connecticut has
been conducted by Black & Decker. Although the assessment is still being
evaluated by the DEP, on the basis of the preliminary data now available there
is no reason to believe that any remediation activities which might be required
as a result of the findings of the assessment will have a material effect upon
the capital expenditures, results of operations or the competitive position of
the Company.
Liquidity and Capital Resources; Capital Expenditures
Working capital and the working capital ratio at July 1, 2001 were
$13.7 million and 2.0 to 1, respectively, compared to $14.3 million and 1.9 to 1
at December 31, 2000, respectively. During the six months ended July 1, 2001,
the Company paid no dividends.
Due to the nature of the Company's business, many sales are of a large
dollar amount. Consequently, the timing of recording such sales may cause the
balances in accounts receivable and/or inventory to fluctuate dramatically
between quarters and may result in significant fluctuations in cash provided by
operations. Historically, the Company has not experienced significant problems
regarding the collection of accounts receivable. The Company has also generally
financed its operations with cash generated by operations, progress payments
from customers and borrowings under its bank credit facilities. Management
anticipates that its cash balances, operating cash flows and available credit
line will be adequate to fund anticipated capital commitments and working
capital requirements for at least the next twelve months. The Company made
capital expenditures of $290,000 and $306,000 during the six month periods ended
July 1, 2001 and July 2, 2000, respectively.
In June 2001, the Company entered into a new worldwide multi-currency
credit facility with a major US bank. This facility includes a $10 million
revolving credit facility for direct borrowings and letters of credit. The
facility contains a sub-limit that caps the amount of direct borrowings the
Company can make at $5 million. The revolving credit facility expires on June
15, 2003. The facility contains limits on direct borrowings and issuance's of
letters of credit based upon stipulated percentages of accounts receivable and
inventory. The facility also contains covenants specifying minimum and/or
maximum thresholds for operating results, selected financial ratios and backlog.
The agreement contains certain restrictions on investments, borrowings and the
sale of assets. Dividend declarations or payments are allowed under this credit
facility as long as there exists under the credit facility no Event of Default
(as defined in the credit facility) or no condition which, upon giving of notice
or lapse of time or both, would become an Event of Default. The Company's old
credit facility was terminated except in relation to approximately $2.2 million
of letters of credit which had previously been posted under that facility and
continue to be
Page 10 of 14
outstanding on July 1, 2001. The Company has approximately $900,000 of letters
of credit posted under its new facility on July 1, 2001.
The Company also entered into a term loan for £1.4 million
(approximately $2 million) as part of this credit facility. The proceeds of this
loan were used to repay an existing term loan of the same amount. The new term
loan is repayable in monthly installments of £38,888 through July 2004.
The term loan has an interest rate of LIBOR plus 2.7%. At July 1, 2001 and
December 31, 2000, there were $2.0 million and $2.4 million, respectively,
outstanding under a term loan.
Impact of Recently Issued Accounting Standards
In June 1998, the FASB issued Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities, which the Company was required to
adopt on January 1, 2001. The Statement provides a new method of accounting for
derivatives and hedges. The adoption of this Statement did not have a
significant effect on the Company’s results of operations or financial position.
Item 2 - Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in foreign currency
and interest rates. The Company manufactures many of its products and components
in the United Kingdom and purchases many components in foreign markets.
Approximately 50% of the Company's revenue is generated from foreign markets.
The Company manages its risk to foreign currency rate changes by maintaining
foreign currency bank accounts in currencies in which it regularly transacts
business and the use of foreign exchange forward contracts. The Company does not
enter into derivative contracts for trading or speculative purposes.
The Company's cash equivalents and short-term investments and its
outstanding debt bear variable interest rates. The rates are adjusted to market
conditions. Changes in the market rate affect interest earned and paid by the
Company. The Company does not use derivative instruments to offset the exposure
to changes in interest rates. Changes in the interest rates related to these
items are not expected to have a material impact on the Company's results of
operations.
Page 11 of 14
PART II - OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS None
ITEM 2 – CHANGES IN SECURITIES N/A
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES N/A
ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) Election of Directors:
Glenn J. Angiolillo: votes for 4,997,132, votes withheld 135,325
Charles S. Jones: votes for 4,864,937, votes withheld 267,520
Albert Shaio: votes for 4,994,965, votes withheld 137,492
b) Ratification of the selection of Ernst & Young LLP as independent
accountants for the Company for the fiscal year ending December 31, 2001:
votes for 5,041,478, votes against 80,727, votes abstained 10,252
ITEM 5 – OTHER INFORMATION N/A
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 4-A Amendment to Credit Agreement and Waiver for the Amended and
Restated Credit Agreement between Farrel Corporation and Chase
Manhattan Bank Dated January 23, 1998. Attached
Exhibit 4-B Revolving and Term Loan Credit Agreement dated June 15, 2001,
Between Farrel Corporation, Farrel Limited and First Union
National Bank. Attached
Exhibit 4-C Revolving Promissory Note dated June 18, 2001, between Farrel
Corporation, Farrel Limited and First Union National Bank. Attached
Exhibit 4-D Term Promissory Noted dated June 18, 2001, between Farrel
Limited and First Union National Bank. Attached
Exhibit 11 (Regulation S-K) Computation of Earnings Per Share. Attached
Reports on Form 8-K
No Reports on Form 8-K were filed by the registrant during the periods
covered by this report.
Page 12 of 14
Exhibit 11
FARREL CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share and share data)
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
2001 2000 2001 2000
Net loss applicable to common stock ........... $ (573) $ (132) $ (1,180) $ (1,612)
========== ========== ========== ==========
Weighted average number of common
shares outstanding - Basic earnings per share 5,228,563 5,250,061 5,229,251 5,250,061
Effect of dilutive stock and purchase options -- -- -- --
---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding - Diluted earnings per share 5,228,563 5,250,061 5,229,251 5,250,061
========== ========== ========== ==========
Net loss per common
share — Basic ............................... $ (0.11) $ (0.03) $ (0.23) $ (0.31)
========== ========== ========== ==========
share — Fully diluted ....................... $ (0.11) $ (0.03) $ (0.23) $ (0.31)
========== ========== ========== ==========
Page 13 of 14
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
FARREL CORPORATION
REGISTRANT
DATE: 8/13/01 /s/Rolf K. Liebergesell
ROLF K. LIEBERGESELL
CHIEF EXECUTIVE OFFICER,
PRESIDENT AND CHAIRMAN OF THE BOARD
DATE: 8/13/01 /s/Walter C. Lazarcheck
WALTER C. LAZARCHECK
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(CHIEF ACCOUNTING OFFICER)
Page 14 of 14
