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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 March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-3295
--
MINERALS TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-1190717
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
405 Lexington Avenue, New York, New York 10174-1901
(Address of principal executive offices, including zip code)
(212) 878-1800
(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 registrant was required to file
such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
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 April 26, 1996
Common Stock, $.10 par value 22,631,427
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MINERALS TECHNOLOGIES INC.
INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements:
Condensed Consolidated Statement of Income for
the three-month periods ended March 31, 1996 and
April 2, 1995 3
Condensed Consolidated Balance Sheet as of
March 31, 1996 and December 31, 1995 4
Condensed Consolidated Statement of Cash Flows
for the three-month periods ended March 31, 1996
and April 2, 1995 5
Notes to Condensed Consolidated Financial Statements 6
Independent Auditors' Report 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings 9
Item 6.
Exhibits and Reports on Form 8-K 9
Signature 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended
---------------------
March 31, April 2,
(thousands of dollars, 1996 1995
except per share data) ---- ----
Net sales $128,109 $120,205
Operating costs and expenses:
Cost of goods sold 93,077 85,686
Marketing, distribution and
administrative expenses 17,100 16,353
Research and development expenses 4,831 4,755
------ ------
Income from operations 13,101 13,411
Non-operating items:
Other income 77 1,889
Other deductions (865) (1,548)
------ ------
Non-operating (deductions) income, net (788) 341
------ ------
Income before provision for taxes
on income and minority interests 12,313 13,752
Provision for taxes on income 4,000 4,642
Minority interests (234) 96
------ ------
Net income $ 8,547 $ 9,014
======= =======
Earnings per common share $ 0.38 $ 0.40
======= =======
Cash dividends declared per common share $ 0.025 $ 0.025
======= =======
Weighted average number of common shares
outstanding 22,637 22,615
====== ======
See accompanying Notes to Condensed Consolidated Financial
Statements.
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MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(thousands of dollars) March 31, December 31,
1996* 1995**
----- ------
Current assets:
Cash and cash equivalents $ 12,860 $ 11,318
Accounts receivable, net 98,734 100,473
Inventories 65,163 64,637
Other current assets 11,683 5,997
------ -------
Total current assets 188,440 182,425
Property, plant and equipment, less
accumulated depreciation and depletion
- March 31, 1996 - $284,348;
Dec. 31, 1995 - $275,665 476,357 455,809
Other assets and deferred charges 12,509 10,910
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Total assets $677,306 $649,144
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 44,675 $ 14,890
Current maturities of long-term debt 13,000 13,000
Accounts payable 30,381 30,405
Other current liabilities 31,011 37,384
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Total current liabilities 119,067 95,679
Long-term debt 67,900 67,927
Accrued postretirement benefits 20,230 20,230
Deferred taxes on income 38,290 37,064
Other noncurrent liabilities 11,724 12,091
------- -------
Total liabilities 257,211 232,991
Shareholders' equity:
Preferred stock -- --
Common stock 2,517 2,515
Additional paid-in capital 133,566 133,221
Retained earnings 331,356 323,375
Currency translation adjustment 13,811 16,931
Unrealized holding gains 138 111
------- -------
481,388 476,153
Less common stock held in treasury,
at cost 61,293 60,000
Total shareholders' equity 420,095 416,153
------- -------
Total liabilities and shareholders'
equity $677,306 $649,144
======== ========
* Unaudited
** Condensed from audited financial statements.
See accompanying Notes to Condensed Consolidated Financial
Statements.
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MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
-------------------
(thousands of dollars) March 31, April 2,
1996 1995
---- ----
Operating Activities
Net income $ 8,547 $ 9,014
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and depletion 10,702 9,184
Deferred income taxes 1,200 1,644
Other non-cash items 77 (298)
Net changes in operating assets
and liabilities (12,758) (6,317)
------- ------
Net cash provided by operating activities 7,768 13,227
------- ------
Investing Activities
Purchases of property, plant and equipment (33,851) (22,162)
Other investing activities, net 31 --
------- -------
Net cash used in investing activities (33,820) (22,162)
------- -------
Financing Activities
Increase in short-term debt 29,785 --
Purchase of common shares for treasury (1,293) --
Dividends paid (566) (566)
Other financing activities, net 347 795
------ -----
Net cash provided by financing activities 28,273 229
------ -----
Effect of exchange rate changes on cash
and cash equivalents (679) 474
------ -----
Net increase (decrease) in cash and
cash equivalents 1,542 (8,232)
Cash and cash equivalents at beginning
of period 11,318 56,240
------ ------
Cash and cash equivalents at end of period $ 12,860 $ 48,008
======== ========
Interest paid $ 818 $ 582
======== ========
Income taxes paid $ 1,526 $ 1,367
======== ========
See accompanying Notes to Condensed Consolidated Financial
Statements.
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MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 -- Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared by management in accordance with
the rules and regulations of the United States Securities and
Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Therefore, these
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995. In the opinion of management, all
adjustments, consisting solely of normal recurring adjustments
necessary for a fair presentation of the financial information
for the periods indicated, have been included. The results for
the three-month period ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1996.
Note 2 -- Inventories
The following is a summary of inventories by major category:
March 31, December 31,
(thousands of dollars) 1996 1995
---- ----
Raw material $ 20,255 $ 17,919
Work in process 9,510 9,757
Finished goods 19,223 20,575
Packaging and supplies 16,175 16,386
-------- --------
Total inventories $ 65,163 $ 64,637
======== ========
Note 3 -- Stock-Based Compensation
The Company has adopted Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," which requires expanded disclosures of stock-based
compensation arrangements with employees. SFAS No. 123
establishes an alternative method of accounting for stock-based
compensation awarded to employees which provides for the
recognition of compensation cost to be measured based on the fair
value of the equity instrument awarded. The Company, however,
has elected to continue to recognize compensation cost based on
the intrinsic value of the equity instrument awarded as
promulgated in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." The Company will
disclose the required proforma effect of the fair value method on
net income and earnings per share in the 1996 annual financial
statements.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Minerals Technologies Inc.:
We have reviewed the condensed consolidated balance sheet of
Minerals Technologies Inc. and subsidiary companies as of March
31, 1996 and the related condensed consolidated statements of
income and cash flows for the three-month periods ended March 31,
1996 and April 2, 1995. These financial statements are the
responsibility of the company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
Minerals Technologies Inc. and subsidiary companies as of
December 31, 1995, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated January 31,
1996, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of
December 31, 1995 is fairly presented, in all material respects,
in relation to the consolidated balance sheet from which it has
been derived.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
May 6, 1996
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ITEM 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Income and Expense Items
As a Percentage of Net Sales
----------------------------
Three Months Ended
------------------
March 31, April 2,
1996 1995
---- ----
Net sales 100.0% 100.0%
Cost of goods sold 72.7 71.3
Marketing, distribution and
administrative expenses 13.3 13.6
Research and development expenses 3.8 3.9
----- -----
Income from operations 10.2 11.2
Net income 6.7% 7.5%
===== =====
Results of Operations
Three Months Ended March 31, 1996 as Compared with Three Months
Ended April 2, 1995
Net sales in the first quarter of 1996 increased 6.6% to
$128.1 million from $120.2 million in the first quarter of 1995.
Precipitated Calcium Carbonate (PCC) sales grew 7.9% to $58.5
million from $54.2 million in the first quarter of 1995. This
increase was primarily attributable to the commencement of
operations at four new satellite PCC plants since the first
quarter of 1995 and significant sales growth from one satellite
PCC plant which began operations late in the first quarter of
1995. Net sales of other mineral products grew 3.1% in the first
quarter of 1996 to $20.2 million from $19.6 million in the
comparable quarter of 1995. Net sales of refractory products
increased 6.5% to $49.4 million in the first quarter of 1996 from
$46.4 million in the first quarter of the prior year. This
increase was primarily due to substantial growth in the calcium
and metallurgical wire product group.
Net sales in the United States were 4.0% higher than in the
prior year's first quarter. Foreign sales were 12.6% higher than
in the prior year, due primarily to the growth in the satellite
PCC product line.
Income from operations declined 2.3% in the first quarter of
1996 to $13.1 million. Operating income was negatively affected
by a paper industry slowdown created by lower demand and excess
inventory, severe weather conditions in the other mineral product
line and higher cost of sales in the refractory product line as a
result of significant increases in the price of magnesia. In
addition, the Company absorbed higher expenses from PCC satellite
plant start-ups in the first quarter.
Other income decreased by $1.8 million in 1996. In the first
quarter of 1995, the Company recorded a significant non-recurring
foreign exchange gain while a small foreign exchange loss was
recorded in the current year. In addition, interest income was
significantly higher in the prior year due to higher levels of
cash-on-hand. Other deductions decreased due to higher
capitalized interest costs associated with the growth in capital
spending in the current year.
Net income declined 5.2% to $8.5 million from $9.0 million in
the prior year. Earnings per share were $0.38 in the first
quarter of 1996 as compared to $0.40 in the prior year.
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Liquidity and Capital Resources
The Company's financial position remained strong in the first
quarter of 1996. Cash flows in the first quarter were provided
from operations and short-term financing and were applied
principally to fund capital expenditures. Cash provided from
operating activities amounted to $7.8 million in the first
quarter of 1996 as compared to $13.2 million in the prior year.
The Company has available approximately $120 million in
uncommitted, short-term bank credit lines, of which $44.5 million
were in use at March 31, 1996. The interest rate on these
borrowings was approximately 5.75%. The Company anticipates
that capital expenditures for all of 1996 will be approximately
$100 million, principally related to the construction of
satellite PCC plants, expansion projects at existing satellite
PCC plants and at other mineral plants, and other opportunities
which meet the strategic growth objectives of the Company. In
addition, payments of principal under the Company's Guarantied
Senior Notes due June 11, 2000 will commence during 1996 with a
required payment of $13 million. The Company expects to meet
such requirements from internally generated funds, the
aforementioned uncommitted bank credit lines and, where
appropriate, project financing of certain satellite plants.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are not party to any material
pending legal proceedings, other than ordinary routine litigation
incidental to their businesses.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
11 - Schedule re: Computation of earnings per common share
(Part I Data).
15 - Accountants' Acknowledgement (Part I Data).
27 - Financial Data Schedule (submitted electronically to,
but not filed with, the Securities and Exchange
Commission pursuant to Rule 402 of Regulation S-T).
b) No reports on Form 8-K were filed during the first quarter
of 1996.
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SIGNATURE
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.
Minerals Technologies Inc.
By: /s/ John R. Stack
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John R. Stack
Vice President-Finance and
Chief Financial Officer
May 6, 1996
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