This report contains
13 pages.
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended January 28, 1995
Commission File Number 0-3947
HACH COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 42-0704420
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(State of other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
5600 Lindbergh Drive, Loveland, CO 80537
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (303) 669-3050
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N/A
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(Former name, former address, and former fiscal year, if changed since last
report)
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 such shorter period that the
registrant was required to file such reports) and (2) has been subject to the
filing requirements for the past 90 days.
YES X NO
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At March 10, 1995 the registrant had 11,374,028 shares of its common stock
outstanding.
Index of Exhibits - See Page 10 .
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PART I - FINANCIAL INFORMATION
Item I - SUMMARIZED FINANCIAL STATEMENTS
Companies for which report is filed: Hach Company and Subsidiaries
The accompanying Consolidated Balance Sheet as of January 28,
1995, and the Consolidated Statements of Income and Retained
Earnings for the quarter and nine months ended January 28, 1995
and January 29, 1994 and the Consolidated Statements of Cash Flows
for the nine months ended January 28, 1995 and January 29, 1994 are
unaudited; however, in the opinion of management all adjustments
(consisting only of normal recurring adjustments) considered
necessary for a fair presentation of the results of such periods
have been made. The results of operations for the quarter and
nine months ended January 28, 1995 and January 29, 1994 are not
necessarily indicative of the results of operations to be
expected for the full year.
The financial data included herein pursuant to Rule 10-01 of
Regulation S-X has been subjected to a review by Coopers &
Lybrand L.L.P., the Registrant's independent accountants.
-2-
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
(UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED
------------- ------------------
1/28/95 1/29/94 1/28/95 1/29/94
------------ ----------- ----------- -----------
Net sales $ 25,953 $ 23,290 $ 77,107 $ 72,910
Cost of sales 12,776 11,459 37,904 35,737
------------ ----------- ----------- -----------
Gross profit 13,177 11,831 39,203 37,173
Selling, general and administrative expense 8,157 7,599 23,899 22,932
Research and development expense 1,748 1,554 5,074 4,857
------------ ----------- ----------- -----------
Income from operations 3,272 2,678 10,230 9,384
Interest income 230 163 442 375
Interest expense 0 (2) (1) (7)
------------ ----------- ----------- -----------
Income before income taxes and cumulative
effect of accounting change 3,502 2,839 10,671 9,752
Income tax expense 1,217 1,014 3,711 3,487
------------ ----------- ----------- -----------
Income before cumulative effect
of accounting change 2,285 1,825 6,960 6,265
Cumulative effect of change in
accounting for income taxes -- -- -- 448
------------ ----------- ----------- -----------
Net income 2,285 1,825 6,960 6,713
Retained earnings, beginning of period 54,853 47,289 51,090 43,129
Cash dividends (454) (365) (1,366) (1,093)
------------ ----------- ----------- -----------
Retained earnings, end of period $ 56,684 $ 48,749 $ 56,684 $ 48,749
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Net income per common share before cumulative
effect of accounting change $ 0.20 $ 0.16 $ 0.61 $ 0.55
Cumulative effect of change in
accounting for income taxes $ -- $ -- $ -- $ 0.04
------------ ----------- ----------- -----------
Net income per common share $ 0.20 $ 0.16 $ 0.61 $ 0.59
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Dividends per common share $ 0.04 $ 0.032 $ 0.12 $ 0.096
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
Weighted average shares outstanding 11,375,159 11,389,119 11,388,707 11,381,714
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
The accompanying notes are an integral part of the financial statements.
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HACH COMPANY AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
January 28, 1995 April 30, 1994
---------------- ---------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 11,333 $ 9,037
Marketable securities, held-to-maturity 3,755 1,801
Accounts receivable, less reserves
of $224 and $167, respectively 15,626 15,943
Inventories 12,500 11,574
Prepaid expenses and other
current assets 3,588 2,357
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Total current assets 46,802 40,712
Property, plant and equipment at cost:
Buildings and improvements 22,723 21,513
Machinery and equipment 41,357 38,861
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64,080 60,374
Less allowance for depreciation
and amortization 36,174 32,478
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27,906 27,896
Land 1,013 1,007
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Net property, plant and equipment 28,919 28,903
Marketable securities, held-to-maturity 4,369 4,260
Other assets 518 483
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Total assets $ 80,608 $ 74,358
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The accompanying notes are an integral part of the financial statements.
Continued
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HACH COMPANY AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
January 28, 1995 April 30, 1994
---------------- --------------
(Unaudited)
LIABILITIES
Current liabilities:
Accounts payable $ 2,236 $ 2,450
Accrued liabilities:
Compensation 910 347
Compensated absenses 3,158 3,303
Profit sharing 1,954 2,547
Other 1,856 1,133
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Total current liabilities 10,114 9,780
Deferred income taxes 2,101 2,081
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Total liablities 12,215 11,861
STOCKHOLDERS' EQUITY
Common stock, $1 par value; authorized
40,000,000 shares; issued 11,622,953 shares 11,623 11,623
Capital contributed in excess of par value 125 31
Retained earnings 56,684 51,090
Cumulative currency translation adjustment 1,211 497
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69,643 63,241
Less: Shares held in treasury at cost:
(248,925 at January 28,1995 and
227,687 at April 30, 1994) (1,250) (744)
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Total Liabilities and Stockholders' Equity $ 80,608 $ 74,358
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The accompanying notes are an integral part of the financial statements.
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HACH COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
NINE MONTHS ENDED NINE MONTHS ENDED
JANUARY 28, 1995 JANUARY 29, 1994
----------------- ------------------
Cash flows from operating activities:
Net income $ 6,960 $ 6,713
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation & amortization 4,352 4,249
Increase in deferred income taxes 20 22
Loss on disposal of equipment 7 108
Decrease in accounts receivable 317 998
(Increase) in inventories (926) (2,287)
(Increase) decrease in prepaid expenses & other assets (1,231) 275
(Decrease) in accounts payable (214) (1,286)
Increase in accrued liabilities 548 585
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Net cash provided by operating activities 9,833 9,377
Cash flows from investing activities:
Proceeds from sale of equipment 53 45
Capital expenditures (4,288) (3,910)
Purchases of short-term investments (3,777) (3,382)
Proceeds from maturities of short-term investments 1,714 1,409
(Increase) in long-term assets (35) (133)
--------- ---------
Net cash used by investing activities (6,333) (5,971)
Cash flows from financing activities:
Payments on long term debt -- (100)
Payments on capital lease obligations (4) (12)
Dividends paid (1,366) (1,093)
Exercise of stock options 33 147
Purchases of treasury stock (445) --
--------- ---------
Net cash used by financing activities (1,782) (1,058)
Effects of exchange rate changes 578 (540)
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Net increase in cash & cash equivalents 2,296 1,808
Cash & cash equivalents at the beginning of the period 9,037 5,534
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Cash & cash equivalents at the end of the period $ 11,333 $ 7,342
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Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 1 $ 5
Income taxes $ 4,689 $ 3,228
The accompanying notes are an integral part of the financial statements.
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HACH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated balance sheet of Hach Company and Subsidiaries
(collectively, the "Company") at April 30, 1994, has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at January 28, 1995, and the consolidated statements
of income and retained earnings, cash flows, and stockholders' equity for the
interim periods ended January 28, 1995 and January 29, 1994, have been prepared
by the Company, without audit. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
consolidated financial position, results of operations and cash flows have been
made. The results of operations for the interim periods are not necessarily
indicative of the operating results for a full year or of future operations.
The weighted average shares outstanding and per share data have been restated
for the 1994 quarterly information based upon a five for four stock split in
April 1994.
2. INVENTORIES
The components of inventories are:
(Thousands of Dollars)
January 28, 1995 April 30, 1994
---------------- --------------
Raw materials and purchased parts $ 3,045 $ 2,846
Work-in-process 1,968 1,492
Manufactured finished goods 7,003 6,851
Purchased for resale 484 385
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$12,500 $11,574
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3. INCOME TAXES
For both periods presented, the provision for income taxes is based upon an
expected annual effective income tax rate. The rates utilized for the quarter
ended January 28, 1995 and January 29, 1994 were 34.8% and 35.8% respectively.
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Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
ANALYSIS OF FINANCIAL CONDITION:
There was no material change in the liquidity of the Company during the quarter
ended January 28, 1995. Cash and short-term investments increased $2,982,000
during the quarter to $15,088,000.
The Company monitors cash flow and capital expenditures in great detail as part
of its total budgeting process. Capital needs in the near future will be for
production equipment and computer and peripheral equipment to support
production, research and development, and administration.
On September 12, 1994 the Company's Board of Directors authorized the
Company to repurchase up to $2,000,000 in value of the Company's
common stock.
The Company intends to finance its capital projects, dividend payments, and
stock buy back through existing cash and cash equivalents, short-term
investments and projected cash flow from operations.
Results of Operations: Quarter ended January 28, 1995 compared to quarter
ended January 29, 1994.
Net sales increased 11% to $25,953,000 from $23,290,000. The Company's
domestic net sales increased 7% while its international net sales increased 20%.
Both the domestic and international net sales increases were due primarily to
unit volume increases in most of the Company's major product lines.
Cost of sales increased 11% to $12,776,000 from $11,459,000. This
item, composed of material, labor and product overhead, increased
primarily because of unit volume increases. The gross profit percent was
approximately 50.8% for both quarters.
Selling, general and administrative expense increased 7% to $8,157,000
from $7,599,000. The increase was primarily due to normal wage and salary
increases and cost associated with the increased sales volume.
Research and development expense increased 12% to $1,748,000 from $1,554,000.
The increase was due to higher expenditures for external research and
development contract labor.
Interest income increased to $230,000 from $163,000. The increase was due to
interest received on federal income tax refunds resulting from amended tax
returns.
The effective income tax rate was 34.8% in the current period compared to 35.7%
in the prior year's third quarter. The decrease in the rate was primarily due
to higher projected research and development tax credits in the current period.
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Results of Operations: Nine months ended January 28, 1995 compared to nine
months ended January 29, 1994.
Net sales increased 6% to $77,107,000 from $72,910,000. The Company's
domestic net sales decreased 0.3% while its international net sales increased
19%. The international net sales increase was due primarily to unit volume
increases in most of the Company's major product lines.
Cost of sales increased 6% to $37,904,000 from $35,737,000. This item, composed
of material, labor and product overhead, increased primarily because of unit
volume increases. The gross profit percent decreased to 50.8% from 51.0% due
primarily to the mix of products sold during the period.
Selling, general and administrative expense increased 4% to $23,899,000 from
$22,932,000. Selling, general and administrative expense for the nine months
ended January 29, 1994 included a one time charge of approximately $500,000 for
costs associated with the terminated merger with Lawter International. Without
these costs selling, general and administrative expense increased 7% from the
prior year. The increase was primarily due to normal wage and salary increases,
costs associated with the increased sales volume, and foreign exchange losses of
$223,000 in the current period versus foreign exchange gains of $90,000 in the
prior year's first nine months.
Research and development expense increased 4% to $5,074,000 from $4,857,000.
The increase was primarily due to normal wage and salary increases.
Interest income increased to $442,000 from $375,000. The increase was due to
interest received on federal income tax refunds resulting from amended tax
returns.
The effective income tax rate was 34.8% in the current period compared to 35.8%
in the prior year's first nine months. The decrease in the rate was primarily
due to higher projected research and development tax credits in the current
period.
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INDEX OF EXHIBITS
PAGE
Report of Independent Accountants 12
Awareness Letter of Independent Accountants 13
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PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Report of Independent Accountants
(b) Reports on Form 8-K
During the quarter ended January 28, 1995 the Registrant filed no
report on Form 8-K.
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 thereunder duly authorized.
HACH COMPANY
Registrant
DATED: MARCH 10, 1995 BY: BRUCE J. HACH /S/
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Bruce J. Hach
President
and Chief Operating Officer
DATED: MARCH 10, 1995 BY: GARY R. DREHER /S/
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Gary R. Dreher
Vice President and Chief Financial
Officer
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