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 November 30, 1994
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 1-5034
CORE INDUSTRIES INC
(Exact name of registrant as specified in its charter)
Nevada 38-1052434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 2000, Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 642-3400
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Common Stock outstanding at December 31, 1994 - 9,808,992 shares.
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
First Quarter Ended November 30
1994 1993
Net sales $54,104,000 $54,008,000
Cost of sales, exclusive
of depreciation
and amortization $36,576,000 $38,288,000
Depreciation and amortization 1,292,000 1,266,000
Selling, general and
administrative expenses 12,202,000 10,224,000
Interest expense 1,072,000 1,142,000
Other income (Note D) (339,000) (1,530,000)
$50,803,000 $49,390,000
Earnings before taxes
on income $3,301,000 $4,618,000
Taxes on income 1,280,000 1,710,000
Net earnings $2,021,000 $2,908,000
Net earnings per share (Note D) $.21 $.30
Dividends per share $.06 $.06
Average shares of
stock outstanding 9,809,000 9,798,000
<FN>
See notes to financial statements
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
Nov. 30, 1994
(Unaudited) Aug. 31, 1994
CURRENT ASSETS:
Cash and cash equivalents $12,913,000 $14,643,000
Accounts receivable, less
collection allowances of
$1,100,000 in November
and $960,000 in August 46,434,000 47,444,000
Inventories 50,707,000 48,863,000
Prepaid expenses 498,000 808,000
Deferred taxes on income 1,987,000 2,027,000
TOTAL CURRENT ASSETS $112,539,000 $113,785,000
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements $1,278,000 $1,278,000
Buildings 18,483,000 18,161,000
Machinery and equipment 45,241,000 44,322,000
Total $65,002,000 $63,761,000
Less accumulated depreciation 37,339,000 36,377,000
TOTAL PROPERTY, PLANT
AND EQUIPMENT $27,663,000 $27,384,000
OTHER ASSETS:
Excess of cost over net
assets of companies acquired $6,988,000 $7,033,000
Investment in real estate
partnership 1,329,000 1,343,000
Note receivable 1,500,000 1,500,000
Prepaid pensions and other 5,389,000 5,342,000
TOTAL OTHER ASSETS $15,206,000 $15,218,000
$155,408,000 $156,387,000
<FN>
See notes to financial statements
LIABILITIES & STOCKHOLDERS' EQUITY
Nov. 30, 1994
(Unaudited) Aug. 31, 1994
CURRENT LIABILITIES:
Accounts payable $11,198,000 $11,485,000
Accrued payroll and other
expenses 10,641,000 12,817,000
Dividends payable 589,000 587,000
Taxes on income 1,591,000 1,585,000
Long-term debt due within
one year 4,610,000 4,610,000
TOTAL CURRENT LIABILITIES $28,629,000 $31,084,000
LONG-TERM DEBT,
less amount due within
one year 41,532,000 41,608,000
DEFERRED TAXES ON INCOME 1,820,000 1,770,000
ACCRUED EMPLOYEE BENEFITS 2,927,000 2,908,000
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1:
Authorized - 100,000 shares
Issued - none
Common stock, par value $1:
Authorized - 20,000,000 shares
Issued - 11,219,152 shares $11,219,000 $11,219,000
Additional paid-in capital 810,000 810,000
Retained earnings 74,458,000 73,025,000
Cumulative translation
adjustments 711,000 661,000
Treasury stock (1,410,160
shares) - at cost (6,698,000) (6,698,000)
TOTAL STOCKHOLDERS' EQUITY $80,500,000 $79,017,000
$155,408,000 $156,387,000
<FN>
See notes to financial statements
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
First Quarter Ended November 30
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $2,021,000 $2,908,000
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation $1,190,000 $1,196,000
Amortization 102,000 70,000
Net gain on sale of division -- (915,000)
(Increase) decrease in assets:
Accounts receivable 1,010,000 4,472,000
Inventories (1,844,000) 708,000
Prepaid expenses 310,000 515,000
Taxes on income 6,000 667,000
Deferred taxes on income 90,000 420,000
Increase (decrease) in
liabilities:
Accounts payable (287,000) (3,025,000)
Accrued payroll and
other expenses (2,176,000) (1,077,000)
TOTAL ADJUSTMENTS ($1,599,000) $3,031,000
NET CASH PROVIDED BY
OPERATING ACTIVITIES $422,000 $5,939,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($1,524,000) ($948,000)
Proceeds from sale of division -- 5,898,000
Other 37,000 99,000
NET CASH FROM (USED IN)
INVESTING ACTIVITIES ($1,487,000) $5,049,000
CASH FLOWS USED IN FINANCING ACTIVITIES:
Cash dividends paid ($589,000) ($587,000)
Reductions in long-term debt (76,000) --
Net payments on short-term
bank loans -- (900,000)
NET CASH USED IN FINANCING
ACTIVITIES ($665,000) ($1,487,000)
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (1,730,000) 9,501,000
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 14,643,000 651,000
CASH AND CASH EQUIVALENTS,
END OF PERIOD $12,913,000 $10,152,000
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $1,571,000 $1,588,000
Income taxes paid $1,162,000 $47,000
<FN>
See notes to financial statements
CORE INDUSTRIES INC AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A
The accompanying consolidated financial statements reflect
all adjustments which are, in the opinion of management,
necessary to a fair statement of the information presented
therein, and such adjustments are of a normal recurring nature.
NOTE B
Reference is made to the Company's Annual Report on Form
10-K for the year ended August 31, 1994, for a description of
accounting policies and other detailed footnote information.
NOTE C - Inventories
November 30 August 31,
1994 1994
Raw materials and supplies $27,692,000 $25,976,000
Work in process 9,619,000 8,940,000
Finished goods 13,396,000 13,947,000
$50,707,000 $48,863,000
NOTE D - Sale of Division
In last year's first quarter, the Company sold one of its
farm equipment divisions, Du-Al Manufacturing Company, for a
pretax gain of $1,475,000 (total of $.09 per share, after tax).
This gain is included in other income on the Statement of
Earnings in the quarter ended November 30, 1993.
NOTE E - Product Segment Information
The Company classifies its products and services into three
general segments. Financial information by segment is summarized
below.
Earnings (Loss)
Before
Net Sales Income Taxes
First quarter ended Nov. 30, 1994:
Electronics $ 24,535,000 $ 1,136,000
Farm equipment 10,356,000 1,510,000
Fluid controls and
construction products 19,213,000 2,709,000
Corporate unallocated - (982,000)
Interest expense - (1,072,000)
Total $ 54,104,000 $ 3,301,000
First quarter ended Nov. 30, 1993:
Electronics $ 25,469,000 $ 1,674,000
Farm equipment 8,811,000 2,635,000 (A)
Fluid controls and
construction products 19,728,000 2,361,000
Corporate unallocated - (910,000)
Interest expense - (1,142,000)
Total $54,008,000 $4,618,000
<F1>
Note A: Includes pretax gain of $1,475,000 (total of $.09 per
share) related to the sale of Core's Du-Al division.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net earnings for the first quarter of fiscal 1995 were
$2,021,000, or $.21 per share on sales of $54,104,000. Last
year's net earnings, excluding $915,000 ($.09 per share) net gain
on sale of the Du-Al division, were $1,993,000 or $.21 per share
on sales of $54,008,000.
In the first quarter of fiscal 1995, the Company's
Electronics Group provided 45% of total sales; the Farm Equipment
Group, 19% of total sales; and the Fluid Controls and
Construction Products Group, 36% of sales. The performance of
the Electronics Group was adversely affected by the Group's
Cherokee subsidiary which had sales and earnings lower than prior
year's first quarter because a large customer significantly
reduced its inventory and cut back on orders. Excluding
Cherokee, the Group's sales were up 26% with a 32% earnings
improvement. The Farm Equipment Group had an 18% increase in
sales and a 30% increase in earnings (excluding prior year's gain
on sale of Du-Al) benefitting from a strong farm economy. The
sales and earnings of the Fluid Controls and Construction
Products Group increased 13% and 8%, respectively, compared with
the prior year's first quarter (excluding the sold Pioneer
division) primarily due to the improved performance of its valve
and strainer products.
Overall gross profit margins on net sales for the first
quarter of fiscal 1995 improved to 32.4% from 29.1% from last
year's first quarter. This improvement was offset by an increase
in selling, general and administrative expenses from 18.9% of
sales to 22.6% in this year's first quarter. Several of the
units had a mix of sales requiring higher sales commissions and
expenses but were able to increase gross profit margins through
higher selling prices or lower product costs.
Interest expense declined 6% in this year's first quarter
compared with last year due to reduced borrowings. Other income
for last year's quarter ended November 30, 1993 includes a
$1,475,000 gain related to the sale of the Company's Du-Al
division.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1994, the Company had $12.9 million in cash
and cash equivalents and uncommitted bank credit facilities of
$15 million. Management believes its current cash position, cash
flows from operations, along with its borrowing capacity, are
adequate to fund its strategies for future growth, including
working capital, expenditures for manufacturing expansion and
efficiencies, and acquisition activities.
At November 30, 1994, the Company had working capital of
$83.9 million with a current ratio of 3.9 to 1, and the Company's
capital employed (total debt and equity) amounted to $127
million. Capital consisted of 36% debt and 64% equity, an
improvement from 40% debt of total capital employed a year ago.
At the Company's current dividend rate of $.06 per share,
annual dividend payments would approximate $2.4 million. Under
the Company's debt agreements with insurance companies, retained
earnings of approximately $21 million are available for
dividends, subject to future earnings levels.
Beginning this fiscal year the Company began using a new and
integrated financial measurement system called "Economic Value
Added" (EVA). EVA measures profit after a charge for the capital
employed. Extensive market research has shown this measure to
have a high correlation with long-term stock market valuation.
Thus, a framework is provided for resource allocation decisions
that focus more directly on creation of shareholder value.
PART II - OTHER INFORMATION
Items 1 through 5 of Part II are omitted because they are
not applicable or because they are not required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed for the
three months ended November 30, 1994.
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.
CORE INDUSTRIES INC
(Registrant)
/s/ RAYMOND H. STEBEN, JR.
Date: January 6, 1995 ----------------------------
Raymond H. Steben, Jr.
Vice President-Finance
and Chief Financial
Officer
/s/ THOMAS G. HOOPER
Date: January 6, 1995 ----------------------------
Thomas G. Hooper
Treasurer and Controller
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
*27 Financial Data Schedule
*Filed herewith