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 Quarter Ended March 31, 1995
Commission File No. 04804
TENNANT COMPANY
Incorporated in Minnesota IRS Emp Id No. 410572550
701 North Lilac Drive
P.O. Box 1452
Minneapolis, Minnesota 55440
Telephone No. 612-540-1200
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
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The number of shares outstanding of Registrant's common stock, par value $.375,
on March 31, 1995, was 9,904,126 (after adjustment for two-for-one stock split
effective April 26, 1995).
Page 1 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
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TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS (Unaudited)
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(Dollars in thousands)
Three Months Ended March 31
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EARNINGS (note 1) 1995 1994
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Net sales $74,144 $58,441
Less:
Cost of sales (note 2) 42,761 33,557
Selling and administrative (note 2) 25,764 21,181
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Profit from operations 5,619 3,703
Other income and (expense)
Net foreign currency gain (loss) 144 (84)
Interest income 997 903
Interest expense (570) (157)
Miscellaneous income (expense), net (408) (319)
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Total other income (expense) 163 343
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Earnings before income taxes 5,782 4,046
Taxes on income 1,913 1,386
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Net earnings $ 3,869 $ 2,660
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PER SHARE (note 5)
Net earnings $ .39 $ .27
Dividends $ .17 $ .16
Average number of shares 9,892,200 9,833,000
Page 2 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
Item 1 - Financial Statements (continued)
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TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS
- ----------------------------------------------------------
(Dollars in thousands)
BALANCE SHEET
(Condensed from Audited
(Unaudited) Financial Statements)
ASSETS March 31, 1995 December 31, 1994
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Cash and cash equivalents $ 2,113 $ 1,851
Receivables 62,549 63,411
Less deferred income from sales finance charges (1,603) (1,592)
Less allowance for doubtful accounts (3,230) (2,609)
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Net receivables 57,716 59,210
Inventories (note 3) 36,132 30,985
Prepaid expenses 587 696
Deferred income taxes, current portion 6,535 6,068
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Total current assets 103,083 98,810
Property, plant, and equipment 124,916 122,384
Less allowance for depreciation (67,827) (65,832)
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Net property, plant, and equipment 57,089 56,552
Net noncurrent installment accounts receivable 6,405 6,353
Deferred income taxes, long-term portion 944 944
Intangible assets 18,999 19,287
Other assets 1,256 888
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Total assets $187,776 $182,834
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LIABILITIES & SHAREHOLDERS' EQUITY
(Condensed from Audited
(Unaudited) Financial Statements)
LIABILITIES March 31, 1995 December 31, 1994
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Current debt $ 21,299 $ 23,008
Accounts payable 17,068 17,925
Accrued expenses 22,294 25,132
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Total current liabilities 60,661 66,065
Long-term debt 12,654 6,300
Employee retirement-related benefits 13,759 13,460
Other long-term liabilities 570 760
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Total liabilities 87,644 86,585
SHAREHOLDERS' EQUITY
Common stock (note 5) 3,714 3,690
Additional paid-in capital (note 5) 1,955 396
Equity adjustment from foreign currency translation 3,088 2,743
Common stock subscribed -- 525
Unearned restricted shares (683) (424)
Retained earnings 105,471 103,281
Receivable from ESOP (13,413) (13,962)
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Total shareholders' equity 100,132 96,249
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Total liabilities and shareholders' equity $187,776 $182,834
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Page 3 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
Item 1 - Financial Statements (continued)
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TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS (UNAUDITED)
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(Dollars in thousands)
STATEMENTS OF CASH FLOWS (note 4) Three Months Ended March 31
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1995 1994
---- ----
Net cash flow related to operating activities $ 737 $ 5,907
Cash flow related to investing activities:
Acquisition of property, plant, and equipment (4,401) (2,003)
Acquisition of Castex and Eagle (925) (27,610)
Proceeds from disposals of property, plant, and equipment 1,825 206
Settlement of foreign currency hedging contracts (261) 14
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Net cash flow related to investing activities (3,762) (29,393)
Cash flow related to financing activities:
Net changes in current debt (772) 24,057
Issuance of long-term debt 5,000 --
Principal payment from ESOP 450 409
Proceeds from employee stock issues 409 379
Repurchase of common stock -- (1,118)
Dividends paid (1,679) (1,572)
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Net cash flow related to financing activities 3,408 22,155
Effect of exchange rate changes on cash (121) 5
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Net increase (decrease) in cash and cash equivalents 262 (1,326)
Cash and cash equivalents at beginning of year 1,851 2,675
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Cash and cash equivalents at end of first quarter $ 2,113 $ 1,349
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Page 4 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
Item 1 - FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The Company's Summary of Significant Accounting Policies and other Related
Data and Summary of Stock Plans, Bonuses, and Profit Sharing is included in
the Company's 1994 Annual Report filed as Exhibit 13.1 to the Company's
annual filing on Form 10-K and is incorporated in this Form 10-Q by
reference.
(2) Expenses
Engineering, research and development, and bad debt expenses were charged
to operations for the three months ended March 31, 1995 and 1994, as
follows:
1995 1994
---- ----
(In Thousands)
Engineering, research and development $3,015 $2,695
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Bad debts $ 494 $ 117
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The Company also makes accrual adjustments on a regular monthly basis for
bonus and profit sharing expenses which are settled at year-end. This
allows for a fair statement of the results for the interim periods
presented.
(3) Inventories
Inventories are valued at the lower of cost (principally on a last-in,
first-out basis) or market. The composition of inventories at March 31,
1995, and December 31, 1994, is as follows:
March 31 December 31
1995 1994
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(In Thousands)
FIFO Inventories:
Finished Goods $25,605 $21,491
All Other 28,679 26,174
LIFO Adjustment (18,152) (16,680)
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LIFO Inventories $36,132 $30,985
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The category "All Other" includes production-related raw materials, parts
and supplies, and work-in-process. The Company's accounting system does
not permit a further breakdown of this category of inventories.
(4) Cash Flow
Income taxes paid during the three months ended March 31, 1995 and 1994,
were $1,323,000 and $301,000, respectively. Interest costs paid during the
three months ended March 31, 1995, and 1994, were $696,000 and $159,000,
respectively.
Page 5 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
Item 1 - FINANCIAL STATEMENTS (continued)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Stock Split
On February 16, 1995, the Board of Directors declared a two-for-one stock
split effective April 26, 1995, for shareholders of record on April 12,
1995. For each share to be issued in connection with the stock split, an
amount equal to the par value of $.375 was transferred to the common stock
amount from additional paid-in capital retroactive to December 31, 1994.
All share and per share data in this report have been retroactively
adjusted to reflect this stock split.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Management's discussion and analysis of financial condition and results of
operations is included in Exhibit 13.1, attached, text portion of Report to
Shareholders for the Three Months Ended March 31, 1995, and is incorporated in
this Form 10-Q by reference.
Page 6 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
PART II - OTHER INFORMATION
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Item # Description Method of Filing
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3i Articles of Incorporation Incorporated by reference to
Exhibit 4.1 to the Company's
Registration Statement No. 33-
59054, Form S-8, dated March 2,
1993.
3ii By-Laws Incorporated by reference to
Exhibit 4.2 to the Company's
Registration Statement No. 33-
59054, Form S-8, dated March 2,
1993.
13.1 Text Portion of Report Filed herewith electronically.
to Shareholders for the
Three Months Ended
March 31, 1995.
27.1 Financial Data Schedule. Filed herewith electronically.
(b) Reports on Form 8-K
There were no reports filed on Form 8K filed for the quarter ended
March 31, 1995.
Page 7 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
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.
TENNANT COMPANY
Date: April 26,1995 /s/ Richard A. Snyder
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Richard A. Snyder
Vice President, Treasurer and
Chief Financial Officer
Date: April 26,1995 /s/ Mahedi A. Jiwani
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Mahedi A. Jiwani
Corporate Controller and
Principal Accounting Officer