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 March 31, 2000
( ) 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 0-2612
_____________________________
LUFKIN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of incorporation or organization)
75-0404410
(I.R.S. Employer Identification Number)
601 SOUTH RAGUET, LUFKIN, TEXAS
(Address of principal executive offices)
75904
(Zip Code)
(936) 634-2211
(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 twelve months (or for such shorter period as 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____
---
There were 6,294,601 shares of Common Stock, $1.00 par value per share,
outstanding as of March 31, 2000, not including 597,780 shares classified as
Treasury Stock.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
March 31, December 31,
2000 1999
-------- ---------
ASSETS (Unaudited)
Current assets:
Cash $ 354 $ 1,065
Invested funds 584 584
Receivables, net 30,434 34,526
Income taxes receivable 2,690 2,564
Inventories 35,980 32,761
Deferred income tax assets 1,228 1,228
-------- ---------
Total current assets 71,270 72,728
-------- ---------
Property, plant and equipment, at cost 256,287 254,827
Less accumulated depreciation 166,786 164,868
-------- ---------
89,501 89,959
-------- ---------
Prepaid pension costs 38,581 37,105
Invested funds 5,281 5,281
Goodwill, net 8,873 8,951
Other assets, net 7,614 7,342
-------- ---------
Total assets $221,120 $221,366
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 8,400 $ 5,200
Current portion of long-term notes payable 2,300 2,750
Accounts payable 10,267 9,895
Accrued payroll and benefits 4,512 4,731
Accrued warranty expenses 1,246 1,493
Taxes payable 2,953 3,189
Accrued commissions and other 4,509 4,685
-------- ---------
Total current liabilities 34,187 31,943
-------- ---------
Deferred income tax liabilities 16,795 16,795
Postretirement benefits liability 11,265 11,116
Long-term notes payable, net of current portion 8,376 9,103
Commitments and contingencies
Shareholders' equity:
Common stock, $1.00 par value per share;
60,000,000 shares authorized;
6,892,381 shares issued 6,892 6,892
Capital in excess of par 18,066 18,066
Retained earnings 140,556 141,491
Treasury stock, 597,780 and 571,880
shares, respectively, at cost (12,441) (12,019)
Accumulated other comprehensive income:
Cumulative translation adjustment (2,576) (2,021)
-------- ---------
Total shareholders' equity 150,497 152,409
-------- ---------
Total liabilities and shareholders' equity $221,120 $ 221,366
======== =========
See accompanying notes to consolidated financial statements.
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(In thousands of dollars, except share and per share data)
Three Months Ended March 31,
2000 1999
---------- ----------
(Unaudited)
Net sales $ 56,063 $ 57,947
Cost of sales 47,760 51,728
---------- ----------
Gross profit 8,303 6,219
Selling, general and administrative
expenses 8,104 10,077
---------- ----------
Operating income (loss) 199 (3,858)
Interest and other income (expense), net 133 (504)
---------- ----------
Earnings (loss) before income tax
provision (benefit) 332 (4,362)
Income tax provision (benefit) 126 (1,614)
---------- ----------
Net earnings (loss) 206 (2,748)
Change in foreign currency translation
adjustment (555) (109)
---------- ----------
Total comprehensive income (loss) $ (349) $ (2,857)
========== ==========
Earnings (loss) per share:
Basic $ 0.03 $ (0.42)
========== ==========
Diluted $ 0.03 $ (0.42)
========== ==========
Dividends per share $ 0.18 $ 0.18
========== ==========
Weighted average number of shares
outstanding:
Basic 6,298,584 6,510,115
Diluted 6,308,937 6,510,115
See accompanying notes to consolidated financial statements.
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
Three Months Ended March 31,
2000 1999
------- -------
(Unaudited)
Cash flows from operating activities:
Net earnings (loss) $ 206 $(2,748)
Adjustments to reconcile net earnings (loss)
to cash provided by operating activities:
Depreciation and amortization 2,774 2,778
Pension income (1,476) (1,052)
Postretirement benefits 149 48
(Gain) loss on disposition of
property, plant and equipment (221) 257
Changes in:
Trade receivables 3,590 1,144
Income taxes receivable (126) (735)
Inventories (3,463) 2,452
Accounts payable 440 2,900
Accrued liabilities (810) (2,413)
------- -------
Net cash provided by operating activities 1,063 2,631
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (2,140) (2,061)
Proceeds from disposition of
property, plant and equipment 327 120
Acquisitions, net of cash received - (92)
Decrease in invested funds - 209
Increase in other assets (568) (55)
------- -------
Net cash used in investing activities (2,381) (1,879)
------- -------
Cash flows from financing activities:
Net proceeds from short-term debt 3,200 1,200
Payments on long-term debt (991) (897)
Dividends paid (1,141) (1,183)
Proceeds from exercise of stock options - 11
Purchases of treasury stock (422) (608)
------- -------
Net cash provided by (used in)
financing activities 646 (1,477)
------- -------
Effect of translation on cash and
cash equivalents (39) (109)
------- -------
Net decrease in cash and cash equivalents (711) (834)
Cash and cash equivalents at beginning
of period 1,065 1,617
------- -------
Cash and cash equivalents at end
of period $ 354 $ 783
======= =======
See accompanying notes to consolidated financial statements.
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Lufkin Industries, Inc. and its consolidated subsidiaries (the
"Company") and have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information in the notes to the
consolidated financial statements normally included in financial statements
prepared in accordance with generally accepted accounting principles has been
condensed or omitted pursuant to these rules and regulations. In the opinion of
management, all adjustments, consisting of normal recurring accruals unless
specified, necessary for a fair presentation of the Company's financial
position, results of operations and cash flows have been included. For further
information, refer to the consolidated financial statements and related
footnotes included in the Company's annual report on Form 10-K for the year
ended December 31, 1999. The results of operations for the three months ended
March 31, 2000, are not necessarily indicative of the results that may be
expected for the full fiscal year. Certain prior period amounts have been
reclassified to conform to the current presentation.
2. Inventories
Consolidated inventories consist of the following:
March 31, December 31,
2000 1999
------- -----------
(In thousands of dollars)
Finished goods $ 3,478 $ 3,193
Work in process 10,829 8,285
Raw materials 21,673 21,283
------- -------
$35,980 $32,761
======= =======
3. Earnings per Share
The Company reports earnings per share (EPS) in accordance with the provisions
of SFAS No. 128, "Earnings per Share". Basic EPS is computed by dividing net
earnings (loss) by the weighted average number of shares outstanding during the
period. Diluted EPS is computed considering the potentially dilutive effect of
outstanding stock options. A reconciliation of the numerator and denominators
of the basic and diluted per share computations follows ( in thousands, except
share and per share data):
Three Months Ended March 31,
2000 1999
---------- ----------
Numerator:
Net earnings (loss) $ 206 $ (2,748)
Denominator:
Weighted average shares (Basic) 6,298,584 6,510,115
Effect of outstanding options 10,353 -
---------- ----------
Weighted average shares including
assumed conversions (Diluted) 6,308,937 6,510,115
========== ==========
Basic earnings (loss) per share $ 0.03 $ (0.42)
========== ==========
Diluted earnings (loss) per share $ 0.03 $ (0.42)
========== ==========
Options to purchase a total of 749,293 and 779,593 shares of the Company's
common stock were excluded from the calculation of diluted earnings per share
for the three months ended March 31, 2000 and 1999, respectively, because their
effect on diluted earnings per share for the period was antidilutive.
4. Legal Proceedings
A class action complaint was filed in the United States District Court for
the Eastern District of Texas on March 7, 1997 by an employee and a former
employee which alleged race discrimination in employment. Certification
hearings were conducted in Beaumont, Texas in February of 1998 and in Lufkin,
Texas in August of 1998. The District Court in April of 1999 issued a decision
that certified a class for this case which includes all persons of a certain
minority employed by the Company from March 6, 1994 to the present. The Company
appealed this class certification decision by the District Court to the 5th
Circuit United States Courts of Appeals in New Orleans, Louisiana. This appeal
was denied on June 23, 1999.
The Company is defending this action vigorously. Furthermore, the Company
believes that the facts and the law in this action support its position and is
confident that it will prevail if this case is tried on the merits.
5. Segment Data
The Company operates with four business segments - oil field, power
transmission, foundry and trailer. In keeping with the Company's strategic
objective of vertical integration, the Company's foundry segment also provides
its oil field and power transmission segments with commercial castings. The
four operating segments are supported by a corporate group. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies in the footnotes to the consolidated financial
statements included in the Company's annual report on Form 10-K for the year
ended December 31, 1999. Corporate expenses and assets are allocated to the
operating segments based primarily upon third party revenues. Following is a
summary of key segment and product group information (in thousands of
dollars):
Three Months Ended March 31, 2000
---------------------------------
Power
Oil Field Transmission Foundry Trailer Corporate Total
---------- ------------ -------- -------- --------- ---------
Gross sales $16,542 $13,935 $ 6,894 $21,611 $ -- $58,982
Intercompany sales (1,192) (26) (1,701) -- -- (2,919)
------- ------- ------- ------- ------- -------
Net sales $15,350 $13,909 $ 5,193 $21,611 $ -- $56,063
======= ======= ======= ======= ======= =======
Operating income
(loss) $ 499 $ (876) $ (135) $ 711 $ -- $ 199
Other income (expense) 18 66 1 112 (64) 133
------- ------- ------ ------- ------- -------
Income (loss) before
tax provision (benefit) $ 517 $ (810) $ (134) $ 823 $ (64) $ 332
======= ======= ====== ======= ======= =======
Three Months Ended March 31, 1999
---------------------------------
Power
Oil Field Transmission Foundry Trailer Corporate Total
---------- ------------ ------- -------- --------- ---------
Gross sales $10,288 $18,026 $ 5,207 $25,250 $ -- $58,771
Intercompany sales (799) (25) -- -- -- (824)
------- ------- ------- ------- ------ -------
Net sales $ 9,489 $18,001 $ 5,207 $25,250 $ -- $57,947
======= ======= ======= ======= ======= =======
Operating income
(loss) $(2,141) $(1,425) $ (962) $ 670 $ -- $(3,858)
Other income (expense) (335) (31) (4) 12 (146) (504)
------- ------- ------- ------- ------- -------
Income (loss) before
tax provision (benefit) $(2,476) $(1,456) $ (966) $ 682 $ (146) $(4,362)
======= ======= ======= ======= ======= =======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company designs, manufactures, sells and services various types of oil field
pumping units, power transmission products, foundry castings and highway
trailers. The Company's oil field division manufactures numerous sizes and
configurations of oil field pumping units and provides various types of oil
field services. The Company's power transmission products (speed increasers and
reducers) are designed, manufactured and sold primarily for use in industrial
applications such as power generation, petrochemical, refining, rubber, plastics
and steel and also for use in marine propulsion applications. The Company's
foundry castings are primarily customer designed components manufactured by the
Company for use in customer products. The Company also produces various types
and styles of highway trailers, including vans, platforms and dumps.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000, COMPARED TO THREE MONTHS ENDED MARCH 31,
1999:
Net revenues for the three months ended March 31, 2000, decreased 3.3% or
$1,884,000 to $56,063,000 from $57,947,000 for the three months ended March 31,
1999. The decrease in revenues reflects continuing weakness in the power
transmission and trailer markets, offset in part by a substantial improvement in
oil field activity.
The Company reported net earnings of $206,000 or $0.03 per share (diluted) for
the three months ended March 31, 2000 compared to a net loss of $2,748,000 or
0.42 per share (diluted) for the prior year first quarter. The net loss for the
three months ended March 31, 1999 includes non-recurring charges totaling
approximately $1,395,000, after taxes, or $0.21 per share, related to the
relocation of facilities, staffing level reductions and legal and warranty
expenses.
The following table summarizes the Company's net revenues and gross profit by
operating segment (in thousands of dollars):
Three Months Ended
March 31,
------------------ Increase %
2000 1999 (Decrease) Change
------ ------- ------- --------
Net Revenues
- -------------
Oil Field $15,350 $ 9,489 $ 5,861 61.8
Power Transmission 13,909 18,001 (4,092) (22.7)
Foundry Castings 5,193 5,207 (14) (0.3)
Trailers 21,611 25,250 (3,639) (14.4)
------- ------ -------
Total $56,063 $57,947 $(1,884) (3.3)
======= ======= =======
Gross Profit
- ------------
Oil Field $ 2,952 $ 962 $ 1,990 206.9
Power Transmission 2,927 3,312 (385) (11.6)
Foundry Castings 382 (228) 610 267.5
Trailers 2,042 2,173 (131) (6.0)
------ ------ -------
Total $ 8,303 $ 6,219 $ 2,084 33.5
======= ======= =======
Oil Field revenues increased 61.8% to $15,350,000 from $9,489,000 in the first
quarter of 1999. Revenues from the service portion of the Company's Oil Field
Division accounted for most of the increase, although new pumping unit sales
have also improved as the increase in oil prices has resulted in increases in
capital spending among oil producers. Oil Field backlog reflects this increase
in activity, increasing to $8,100,000 at March 31, 2000 from $1,850,000 for the
same period last year and from $4,000,000 at December 31, 1999.
Gross profit for the Oil Field Division increased to $2,952,000 for the three
months ended March 31, 2000 compared to $962,000 for the prior year quarter due
primarily to the increase in volumes noted above. Gross profit margin for the
comparable periods improved to 19.2% in 2000 compared to 10.1% in 1999 due
primarily to improvements in purchasing and manufacturing efficiencies and the
ability to spread fixed operating costs over a larger revenue base.
Revenues for the Company's Power Transmission segment decreased to $13,909,000
for the first quarter of 2000 compared to $18,001,000 for the 1999 first quarter
as uncertain economic conditions in many of the Company's domestic and
international industrial markets have contributed to the continued decline in
capital spending. The Company has noted recent increases in activity in this
segment, however, as reflected in increased bookings in the first quarter of
2000. The Company's Power Transmission backlog at March 31, 2000 declined to
$26,200,000 from $36,194,000 at March 31, 1999, but has shown improvement over
the December 31, 1999 backlog of $21,400,000.
Power Transmission gross profit reflects this decrease in revenues, declining to
$2,927,000 for the three months ended March 31, 2000 compared to $3,312,000 for
the comparable prior year quarter. Gross profit margin, however, increased to
21.0% for the first quarter of 2000 compared to 18.4% for the same period in
1999. This improvement was due primarily to non-recurring severance and warranty
expenses totaling approximately $514,000 recorded in the 1999 first quarter
along with the effect of management initiatives begun in 1999 to increase
manufacturing and operational efficiencies which largely offset the impact on
absorption of fixed overhead costs due to the volume declines noted above.
Foundry castings revenues for the 2000 first quarter totaled $5,193,000 compared
to $5,207,000 for the same period last year as increases in oil field activity
noted above offset continuing pricing pressure from foreign competition in the
counterweight markets. Foundry's commercial backlog at March 31, 2000 declined
to $7,300,000 from $8,798,000 at March 31, 1999, but has also improved from
$6,000,000 at December 31, 1999.
Foundry gross profit increased to $382,000 for the first quarter of 2000 from a
loss of $228,000 for the 1999 first quarter due primarily to decreases in labor
and overhead costs as a result of staffing reductions in the first quarter of
1999.
Trailer revenues for the first quarter of 2000 decreased to $21,611,000 from
$25,250,000 for the three months ended March 31, 1999 as higher fuel costs
continue to adversely affect demand in the Company's trailer markets. Backlog
for the Trailer segment totaled $34,500,000 compared to $43,700,000 at March 31,
1999 and $42,200,000 at December 31, 1999.
Trailer gross profit decreased to $2,042,000 for the three months ended March
31, 2000 from $2,173,000 for the comparable prior year quarter due to the
revenue decline noted above. Gross profit margin for the 2000 first quarter,
however, improved to 9.4% from 8.6% for the first quarter of 1999 as increased
operational efficiencies offset the negative impact of volume declines on labor
and overhead absorption.
Selling, general and administrative ("S. G. & A.") expenses for the first
quarter of 2000 decreased to $8,104,000 from $10,077,000 for the same period in
1999. S. G. & A. expenses for the 1999 first quarter include $1,434,000 of non-
recurring severance, relocation and legal expenses. Excluding the effect of
these non-recurring expenses from 1999 results, S. G. & A. expenses decreased to
14.5% of consolidated net revenues compared to 14.9% for the prior year first
quarter due primarily to the effect of management's cost-cutting initiatives
implemented in the first quarter of 1999.
Interest and other income (expense) for the three months ended March 31, 2000
improved to $133,000 of income compared to expense of $504,000 for the prior
year quarter. This improvement was due primarily to a non-recurring charge of
$228,000 recorded in the first quarter of 1999 related to the consolidation and
relocation of the Company's primary Oil Field manufacturing facilities to the
Company's Lufkin, Texas Buck Creek facility along with a reduction of interest
expense due to reductions in the Company's average outstanding debt balances
over the comparable periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically relied on cash flows from operations and third-
party borrowings to finance its operations, including acquisition activity,
dividend payments and stock purchases.
The Company's cash balance totaled $0.4 million at March 31, 2000, compared to
$1.1 million at December 31, 1999. For the three months ended March 31, 2000,
net cash flows provided by operating activities were $1.1 million, cash used in
investing activities totaled $2.4 million and cash provided by financing
activities amounted to $0.6 million. Significant components of cash provided by
operating activities include net earnings adjusted for non-cash items along with
a $3.6 million reduction in trade receivables from the prior year end, due
primarily to a $5.9 million decrease in revenues from the fourth quarter of
1999. This increase was offset in part by a $3.5 million increase in inventories
as a result of anticipated increases in second quarter 2000 operating activity.
Cash used in investing activities includes capital expenditures totaling
approximately $2.1 million for, among other things, ongoing additions and
modifications to certain of the Company's production facilities along with
purchases and replacements of production equipment and operating vehicles.
Significant components of cash provided by financing activities include (i) a
net increase of approximately $3.2 million in short-term debt; (ii) dividend
payments totaling approximately $1.1 million or $0.18 per share; and (iii)
purchases of treasury stock totaling approximately $0.4 million.
Total debt balances, including current maturities of long-term debt, at March
31, 2000 include $3.4 million outstanding under the Company's discretionary
short-term demand facility (the "Credit Facility"), $5.0 million outstanding
under the Bank Facility discussed below and $10.7 million of notes payable to
various banks and individuals. Total debt increased to $19.1 million at March
31, 2000 compared to $17.1 million at December 31, 1999. This increase was
attributable to net borrowings totaling approximately $5.0 million under the
Bank Facility, offset in part by a net reduction of $1.8 million of amounts
outstanding under the Credit Facility discussed below and principal payments on
long-term notes payable totaling $1.0 million during the first quarter of 2000.
The Company recently completed an agreement with a domestic bank (the "Bank
Facility") for a revolving line of credit that provides for up to $20.0 million
of borrowings outstanding at any one time expiring September 2, 2002 along with
an additional $5.0 million demand facility. Borrowings under the Bank Facility
bear interest, at the Company's option, at either (i) the prime rate or (ii) the
London Interbank Offered Rate plus an applicable margin, depending on certain
ratios as defined in the agreement. The interest rate on amounts outstanding
under the Bank Facility was 7.2% at March 31, 2000. As of March 31, 2000, the
entire $20.0 million of the revolving line of credit was available for
borrowings under the terms of the Bank Facility.
The Company's Credit Facility, as amended, provides for up to $5.0 million of
borrowings outstanding at any one time, at the bank's discretion, and is
unsecured. Borrowings under this facility bear interest at the bank's borrowing
rate plus an applicable margin. Interest rates on amounts outstanding under this
facility were 7.6% and 5.9% at March 31, 2000 and December 31, 1999,
respectively. As of March 31, 2000, $1.6 million remained available for
borrowings, at the bank's discretion, under the terms of the facility.
The Company has a stock purchase plan under which the Company is authorized to
spend up to $17.1 million for purchases of its common stock. Pursuant to this
plan, the Company purchased
25,900 shares of its common stock at an aggregate cost of approximately $0.4
million during the first quarter of 2000. Purchased shares are added to treasury
stock and are available for general corporate purposes including the funding of
the Company's stock option plans. As of March 31, 2000, the Company held 597,780
shares of treasury stock at an aggregate cost of approximately $12.4 million.
Authorizations to purchase additional shares totaling approximately $1.7 million
remained at March 31, 2000.
The Company believes that its cash flows from operations and its available
borrowing capacity under its credit agreements should be sufficient to fund its
operations, including planned capital expenditures, dividend payments and stock
purchases, through December 31, 2000.
MARKET RISK
The Company does not utilize financial instruments for trading purposes and
holds no derivative financial instruments that could expose the Company to
significant market risk. The Company's financial instruments include cash,
accounts receivable, accounts payable and debt obligations. The book value of
accounts receivable, short-term debt and accounts payable are considered to be
representative of their fair market value because of the short maturity of these
instruments. The Company believes the carrying values of its long-term debt
obligations approximate fair values because the interest rates on these
obligations are comparable to what the Company believes it could currently
obtain for debt with similar terms and maturities. The Company's accounts
receivable are not concentrated in one customer or industry and are not viewed
as an unusual credit risk.
IMPACT OF THE YEAR 2000
Prior to 1998, the Company completed a comprehensive evaluation of its
information technology systems to determine which systems would be affected by
the Year 2000 ("Y2K") issue. Following this evaluation, the Company determined
that the purchase of new Y2K compliant software applications would provide
increased commercial and financial functionality when compared to its existing
mature software. Installation of this new information system was completed in
the third quarter of 1998 and the Company did not experience any adverse effects
on its operations as a result of the Y2K issue.
FORWARD-LOOKING STATEMENTS AND ASSUMPTIONS
This Quarterly Report contains forward-looking statements and information that
are based on management's beliefs as well as assumptions made by and information
currently available to management. When used in this report, the words
"anticipate", "believe", "estimate", "expect" and similar expressions are
intended to identify forward-looking statements. Such statements reflect the
Company's current views with respect to certain events and are subject to
certain assumptions, risks and uncertainties, many of which are outside the
control of the Company. These risks and uncertainties include, but are not
limited to, (i) significant fluctuations in oil prices, (ii) capital spending
levels of oil producers, (iii) availability and prices for raw materials and
(iv) general industry and economic conditions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, believed, estimated
or expected. The Company does not intend to update these forward-looking
statements and information.
PART II - OTHER INFORMATION
Item 3. Legal Proceedings
A class action complaint was filed in the United States District Court for the
Eastern District of Texas on March 7, 1997 by an employee and a former employee
that alleged race discrimination in employment. Certification hearings were
conducted in Beaumont, Texas in February of 1998 and in Lufkin, Texas in August
of 1998. The District Court in April of 1999 issued a decision that certified a
class for this case which includes all persons of a certain minority employed by
the Company from March 6, 1994 to the present. The Company appealed this class
certification decision by the District Court to the 5th Circuit United States
Courts of Appeals in New Orleans, Louisiana. This appeal was denied on June 23,
1999.
The Company is defending this action vigorously. Furthermore, the Company
believes that the facts and the law in this action support its position and is
confident that it will prevail if this case is tried on the merits.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10.1) Credit Agreement, dated February 28, 2000, among the Company, the
Lenders named therein and Bank of America, N. A., as Agent for the
Lenders.
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURE
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 duly authorized.
Date: May 3, 2000
LUFKIN INDUSTRIES, INC.
By /s/ R. D. Leslie
------------------------
Treasurer / Director of Financial Operations
Principal Financial and Accounting Officer