CROMPTON & KNOWLES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
Quarter ended July 1, 1995 (Unaudited)
(In thousands)
PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The information included in the foregoing consolidated financial
statements is unaudited but reflects all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair statement of the results for
the interim periods presented.
Included in accounts receivable are allowances for doubtful
accounts of $2,941 in 1995 and $3,829 at December 31, 1994.
Accumulated depreciation amounted to $93,658 in 1995 and $85,691
at December 31, 1994.
Accumulated amortization of cost in excess of acquired net assets
amounted to $7,444 in 1995 and $6,622 at December 31, 1994.
Other current liabilities consist primarily of customer deposits.
It is suggested that the interim consolidated financial
statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1994
Annual Report on Form 10-K.
CAPITAL STOCK
There are 53,361,072 common shares issued at $.10 par value, of
which 5,314,463 shares and 4,703,891 shares were held in the
treasury at July 1, 1995 and December 31, 1994, respectively.
INVENTORIES
Components of inventories are as follows:
July 1, Dec. 31,
1995 1994
Finished goods $98,450 $ 90,386
Work in process 33,228 32,640
Raw materials and supplies 37,185 34,330
$168,863 $157,356
EARNINGS PER COMMON SHARE
The computation of earnings per common share is based on the
weighted average number of common and common equivalent shares
outstanding. A dual presentation of earnings per common share
has not been made since there is no significant difference in
earnings per share calculated on a primary or fully diluted
basis.
ACQUISITIONS
In January 1995, the Company acquired the business and certain
assets of McNeil Akron Repiquet S.a.r.l. in France at a cost of
$4,638. In March 1995, the Company acquired Killion Extruders,
Inc. at an estimated cost of $3,995. The acquisitions have been
accounted for using the purchase method and, accordingly, the
acquired assets and liabilities have been recorded at their fair
values at the dates of acquisition. The excess cost of purchase
price over fair value of net assets acquired in the amount of
$6,896 is being amortized over forty years. The operating
results of each acquisition are included in the Consolidated
Statements of Earnings since the dates of acquisition.
DEBT
In June 1995, the Company amended its credit agreement with a
group of five banks whereby the revolving credit loans available
to the Company were increased from $70,000 to $125,000 through
September 28, 1998. Borrowings under the revolving credit
agreement amounted to $50,000 at July 1, 1995.
STOCK INCENTIVE PLANS
In December 1994, the Company transferred 448,000 shares to an
independent trustee to administer long-term performance awards
for the 1995 to 1997 incentive period under the 1988 Long Term
Incentive Plan. In June 1995, such shares were returned to the
Company and, in the future, will be issued to the trustee at the
end of each incentive period, as earned. Compensation expense is
being accrued annually based upon the expected level of incentive
achievement.
BUSINESS SEGMENT DATA
Quarter ended
July 1, June 25,
1995 1994
SALES
Specialty chemicals $101,229 $105,380
Specialty process equipment
and controls 74,388 49,072
$175,617 $154,452
OPERATING PROFIT
Specialty chemicals $ 13,133 $ 19,554
Specialty process equipment
and controls 11,043 8,460
General corporate expense ( 2,863) ( 2,597)
21,313 25,417
Interest expense ( 2,034) ( 202)
Other income 13 91
Earnings before income taxes $ 19,292 $ 25,306
Six months ended
July 1, June 25,
1995 1994
SALES
Specialty chemicals $203,771 $200,966
Specialty process equipment
and controls 140,039 87,080
$343,810 $288,046
OPERATING PROFIT
Specialty chemicals $ 28,724 $ 35,632
Specialty process equipment
and controls 21,100 15,318
General corporate expense ( 6,024) ( 5,879)
43,800 45,071
Interest expense ( 3,602) ( 384)
Other income 241 635
Earnings before income taxes $ 40,439 $ 45,322