This report contains
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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 July 29, 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 Identification Number)
incorporation or organization)
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 September 8, 1995 the registrant had 11,363,818 shares of its common stock
outstanding.
Index of Exhibits - See Page 9 .
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-1-
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 July 29, 1995, and the
Consolidated Statements of Income and Retained Earnings for the quarters ended
July 29, 1995 and July 30, 1994 and the Consolidated Statements of Cash Flows
for the quarters ended July 29, 1995 and July 30, 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
quarters ended July 29, 1995 and July 30, 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.
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HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Thousands of Dollars Except Share Data)
(Unaudited)
QUARTER ENDED QUARTER ENDED
JULY 29, 1995 JULY 30, 1994
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Net sales $ 27,188 $ 25,072
Cost of sales 13,438 12,311
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Gross profit 13,750 12,761
Selling, general and administrative expense 8,168 7,769
Research and development expense 1,800 1,649
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Income from operations 3,782 3,343
Interest income 234 107
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Income before income taxes 4,016 3,450
Income tax expense 1,406 1,200
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Net income 2,610 2,250
Retained earnings, beginning of period 58,425 51,090
Cash dividends (568) (456)
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Retained earnings, end of period $ 60,467 $ 52,884
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Net income per common share $ 0.23 $ 0.20
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Dividends per common share $ 0.05 $ 0.04
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Weighted average shares outstanding 11,369,170 11,396,947
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The accompanying notes are an integral part of the
consolidated financial statements.
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HACH COMPANY AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
JULY 29, 1995 APRIL 30, 1995
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(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 9,248 $ 13,050
Marketable securities, held to maturity 8,092 3,925
Accounts receivable, less reserves
of $262 and $247, respectively 17,048 16,336
Inventories 12,075 11,731
Prepaid expenses and other
current assets 2,190 4,414
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Total current assets 48,653 49,456
Property, plant and equipment at cost:
Buildings and improvements 23,065 23,387
Machinery and equipment 42,274 42,305
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65,339 65,692
Less allowance for depreciation
and amortization 36,612 37,586
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28,727 28,106
Land 1,002 1,022
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Net property, plant and equipment 29,729 29,128
Marketable securities, held to maturity 5,641 4,385
Other assets 1,343 1,289
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Total Assets $ 85,366 $ 84,258
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The accompanying notes are an integral part of the
consolidated financial statements.
Continued
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HACH COMPANY AND SUBSIDARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
JULY 29, 1995 APRIL 30, 1995
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(Unaudited)
LIABILITIES
Current liabilities:
Accounts payable $ 2,766 $ 2,835
Accrued liabilities:
Compensation 1,025 381
Compensated absenses 3,456 3,487
Profit sharing 741 2,435
Other 2,114 1,722
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Total current liabilities 10,102 10,860
Deferred income taxes 2,096 2,070
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Total liabilities 12,198 12,930
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 151 148
Retained earnings 60,467 58,425
Cumulative currency translation adjustment 2,391 2,405
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74,632 72,601
Less: Shares held in treasury at cost:
(259,135 at July 29, 1995 and
246,479 at April 30, 1995) (1,464) (1,273)
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Total Liabilities and Stockholders' Equity $ 85,366 $ 84,258
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The accompanying notes are an integral part of the
consolidated financial statements.
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HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
QUARTER ENDED QUARTER ENDED
JULY 29, 1995 JULY 30, 1994
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Cash flows from operating activities:
Net income $ 2,610 $ 2,250
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation & amortization 1,488 1,395
Provision for deferred income taxes 26 10
(Gain) loss on disposal of property, plant & equipment 27 (18)
(Increase) decrease in accounts receivable (712) 900
(Increase) in inventories (344) (1,115)
Decrease in prepaid expenses & other assets 2,224 959
Increase in accounts payable 181 9
(Decrease) in accrued liabilities (939) (1,050)
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Net cash provided by operating activities 4,561 3,340
Cash flows from investing activities:
Proceeds from sale of property, plant & equipment 254 52
Capital expenditures (2,374) (1,554)
Purchases of investments held-to-maturity (6,349) (882)
Proceeds from the maturity of short-term investments 927 376
(Increase) in long-term assets (54) (36)
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Net cash used by investing activities (7,596) (2,044)
Cash flows from financing activities:
Payments on capital lease obligations (1) (1)
Dividends paid (568) (456)
Purchases of treasury stock (191) -
Exercise of stock options 3 14
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Net cash used by financing activities (757) (443)
Effects of exchange rate changes (10) 313
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Net increase (decrease) in cash & cash equivalents (3,802) 1,166
Cash & cash equivalents at the beginning of the period 13,050 9,037
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Cash & cash equivalents at the end of the period $ 9,248 $ 10,203
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The accompanying notes are an integral part of the
consolidated 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, 1995, has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at July 29, 1995, and the consolidated statements of
income and retained earnings, cash flows, and stockholders' equity for the
interim periods ended July 29, 1995 and July 30, 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.
2. INVENTORIES
The components of inventories are:
(Thousands of Dollars)
JULY 29, 1995 APRIL 30, 1995
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Raw materials and purchased parts $ 2,711 $ 2,832
Work-in-process 2,137 1,785
Manufactured finished goods 6,655 6,635
Purchased for resale 572 479
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$12,075 $11,731
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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 July 29, 1995 and July 30, 1994 were 35.0% and 34.8% respectively.
4. SUBSEQUENT EVENT
On August 30, 1995, the Company received an unsolicited proposal from
Lawter International to purchase all Hach Company shares not owned by Lawter for
$21.00 per share. The Company announced that its Board of Directors will review
the proposal and respond.
5. NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of
common shares outstanding during the period. Common stock equivalents do not
have a dilutive effect on net income per common share.
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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 July 29, 1995. Cash and short-term investments increased $365,000 during
the quarter to $17,340,000.
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.
In September, 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 July 29, 1995 compared to quarter ended
July 30, 1994.
Net sales increased 8% to $27,188,000 from $25,072,000. The Company's domestic
net sales increased 7% while its international net sales increased 12%. 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 to $13,438,000 from $12,311,000. This item, composed of
material, labor and product overhead, increased primarily because of unit volume
increases. The gross profit percent decreased to 50.6% from 50.9% due primarily
to the mix of products sold during the quarter.
Selling, general and administrative expense increased 5% to $8,168,000 from
$7,769,000. The increase was primarily due to normal wage and salary increases,
costs associated with the increased sales volume, and increased advertising
costs.
Research and development expense increased 9% to $1,800,000 from $1,649,000.
The increase was due to higher expenditures for external research and
development contract labor.
Interest income increased to $236,000 from $107,000. The increase was due to
higher average investment balances and higher interest rates in the current
quarter.
The effective income tax rate was 35.0% in the current period compared to 34.8%
in the prior year's first quarter.
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INDEX OF EXHIBITS
Page
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Report of Independent Accountants 11
Awareness Letter of Independent Accountants 12
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PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Report of Independent Accountants
Awareness Letter of Independent Accountants
(b) Reports on Form 8-K
During the quarter ended July 29, 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: September 8, 1995 BY: Bruce J. Hach /s/
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Bruce J. Hach
President and Chief Operating Officer
DATED: September 8, 1995 BY: Gary R. Dreher /s/
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Gary R. Dreher
Vice President and Chief Financial
Officer
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