FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(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, 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 0-2612
LUFKIN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Texas 75-040-4410
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 Raguet, Lufkin, Texas 75902-0849
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 409-634-2211
Indicate by check mark whether the registrant (1) has filed all reports re-
quired 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 re-
gistrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
As of March 31, 1994, there were 6,792,381 shares of Common Stock, $1.00 par
value per share, issued and outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET--DECEMBER 31, 1993 AND MARCH 31, 1994
(Thousands of dollars)
ASSETS 12-31-93 3-31-94
------- --------- --------
(Unaudited)
CURRENT ASSETS:
Cash $ 816 $ 1,053
Temporary investments 19,539 26,639
Receivables (net) 37,603 28,795
Inventories (net) 32,332 32,337
--------- --------
Total current assets 90,290 88,824
--------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost 225,794 225,719
Less - Accumulated depreciation 161,538 162,471
--------- --------
64,256 63,248
--------- --------
PREPAID PENSION COST 14,156 15,000
ASSETS HELD FOR SALE 3,164 1,323
OTHER ASSETS 7,550 8,221
--------- --------
$179,416 $176,616
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 9,865 $ 8,314
Accrued payroll & benefits 4,683 4,572
Accrued warranty 2,941 2,941
Accrued property taxes 2,786 1,721
Other accrued liabilities 2,401 2,854
--------- --------
Total current liabilities 22,676 20,402
--------- --------
DEFERRED INCOME TAXES PAYABLE 1,622 1,622
POST RETIREMENT BENEFITS LIABILITY 11,627 11,687
SHAREHOLDERS' EQUITY:
Common stock, $1 par value per share;
20,000,000 shares authorized;
6,792,381 shares outstanding 6,792 6,792
Capital in excess of par 15,372 15,372
Retained earnings 121,327 120,741
--------- --------
143,491 142,905
--------- --------
$ 179,416 $176,616
========= ========
See accompanying notes to consolidated financial statements.
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (LOSSES)
FOR THE THREE MONTHS ENDED MARCH 31, 1993 AND 1994
(Thousands of dollars, except per share data)
For the Three Months
Ended March 31
----------------------------
(Unaudited)
1993 1994
----------- ------------
NET SALES $45,819 $49,144
COST OF SALES 41,427 43,416
------- -------
Gross profit 4,392 5,728
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 6,084 5,575
------- -------
Operating income (loss) (1,692) 153
OTHER INCOME, NET 515 515
------- -------
Earnings (loss) before income taxes (1,177) 668
PROVISION FOR INCOME TAXES - 227
------- -------
NET EARNINGS (LOSS) $(1,177) $ 441
======= =======
EARNINGS (LOSS) PER SHARE (Based on
weighted average number of shares
outstanding of 6,795,120 shares and
6,794,978 shares for the three months
ended March 31, 1993 and 1994,
respectively) $(.17) $.06
======= =======
DIVIDENDS PER SHARE $ .15 $ .15
======= =======
See accompanying notes to consolidated financial statements.
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1993 AND 1994
(Thousands of dollars)
For the Three Months
Ended March 31
-------------------------
(Unaudited)
1993 1994
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $(1,177) $ 441
Adjustments to reconcile earnings (loss)
to net cash provided by operating
activities:
Depreciation 2,194 2,004
Changes in assets and liabilities 3,535 6,589
------- -------
Net cash provided by operating activities 4,552 9,034
CASH FLOWS USED IN INVESTING ACTIVITIES:
Net additions to property, plant and
equipment (665) (1,026)
Proceeds from the sale of assets - 1,872
Increase (decrease) in prepaid pension
cost and other assets 608 (1,524)
------- -------
Net cash used by investing activities (57) (678)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Dividends paid (1,019) (1,019)
------- -------
Net increase in cash and temporary
investments 3,476 7,337
Cash and temporary investments, at
beginning of period 11,568 20,355
------- -------
Cash and temporary investments, at
end of period $15,044 $27,692
======= =======
See accompanying notes to consolidated financial statements.
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The consolidated financial statements included herein have been
prepared by the Company, without audit, except for the December 31, 1993 Balance
Sheet, pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished reflects all adjustments (consisting of
only normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the results of interim periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These condensed financial statements should be read
in conjunction with the financial statements and the notes thereto included in
the Company's latest annual report on Form 10-K, particularly with regard to
disclosures relating to major accounting policies, etc.
(2) Consolidated inventories consist of the following:
12-31-93 3-31-94
-------- -------
(Thousands of dollars)
Raw materials and purchased
parts $13,123 $11,246
Work in process 6,773 7,987
Finished goods 12,436 13,104
------- -------
$32,332 $32,337
======= ========
Item 2. Management's Discussion and Analysis
LUFKIN INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(1) Changes in Financial Condition
At March 31, 1994, the Company had working capital of $68,422,000 as
compared to $67,614,000, at December 31, 1993, an increase of $808,000.
(2) Changes in Results of Operations
Net sales for the first quarter of 1994 increased 7% from the first quarter
of 1993. Sales by product group for the first quarter of 1993 and 1994 are as
follows:
THREE MONTHS ENDED
March 31 %
------------------ Increase
1993 1994 (Decrease)
-------- --------
(In thousands)
Oilfield pumping
units $11,817 $10,118 (14)
Power transmission
products 11,494 13,713 19
Commercial products 5,764 6,594 14
Industrial supplies 1,801 1,709 (5)
Trailers 14,943 17,010 14
------- -------
$45,819 $49,144 7
======= =======
Gross profit for the first quarter of 1994 was 12% compared to 10% for the
first quarter of 1993. This improvement was the result of a significant
increase in trailer sales. These sales, however, were offset by softer margins
in the oilfield pumping unit and power transmission product lines due to changes
in product mix and reduced pumping unit sales. Pumping unit sales continue to
be affected by lower worldwide oil prices. The Company continues to monitor its
sales outlook and cost structure in an effort to maximize its opportunities.
Selling, General and Administrative expenses (S. G. & A.) decreased
$509,000 from $6,084,000. These expenses were reduced through the Company's
continuing cost reduction programs.
Other income as of March 31, 1994, included a gain of $93,000 on the sale
of machinery and equipment from the Company's Chanute, Kansas manufacturing
facility. Proceeds from the sale of these assets were $1,761,000. This
facility was closed in 1993 as part of the Company's strategy to improve its
manufacturing efficiencies and reduce costs.
The Company reported net earnings in the first quarter 1994 of $441,000
compared to a loss of $1,177,000 in the first quarter 1993. The increase in net
earnings resulted primarily from the increased volume of trailer sales and the
Company's cost-cutting measures.
Backlog at March 31, 1994, increased by approximately $28,383,000 over the
prior year backlog. New trailer orders were the primary reason for this
increase.
Backlog by product group at March 31, 1993 and 1994 is as follows:
(In thousands)
3/31/93 3/31/94
-------- --------
Oilfield pumping units $11,156 $ 6,587
Power transmission products 22,457 23,884
Commercial products 4,349 5,637
Trailers 25,232 55,469
-------- --------
$63,194 $91,577
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PART II - OTHER INFORMATION
None.
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.
LUFKIN INDUSTRIES, INC.
-------------------------------------
Date________________________ _____________________________________
C. James Haley, Jr.
Secretary-Treasurer
(Principal financial officer
and officer authorized to
sign on behalf of the registrant)