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, 1996
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
----- -----
The number of shares outstanding of Registrant's common stock, par value $.375,
on March 31, 1996, was 10,021,292.
Page 1 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31
---------------------------
1996 1995
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EARNINGS (note 1)
Net sales $76,823 $74,144
Less:
Cost of sales (note 2) 44,056 42,646
Selling and administrative (note 2) 27,120 25,879
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Profit from operations 5,647 5,619
Other income and (expense)
Net foreign currency gain (loss) 188 144
Interest income 1,034 997
Interest expense (712) (570)
Miscellaneous income (expense), net (114) (408)
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Total other income (expense) 396 163
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Earnings before income taxes 6,043 5,782
Taxes on income 2,059 1,913
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Net earnings $ 3,984 $ 3,869
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PER SHARE (note 5)
Net earnings $ .40 $ .39
Dividends $ .17 $ .17
Average number of shares 10,008,300 9,892,200
Page 2 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS
(Dollars in thousands)
BALANCE SHEET
(Condensed from Audited
(Unaudited) Financial Statements)
ASSETS March 31, 1996 December 31, 1995
-------------- -----------------------
Cash and cash equivalents $ 2,676 $ 4,247
Receivables 68,909 76,961
Less deferred income from sales finance charges (1,811) (1,840)
Less allowance for doubtful accounts (2,554) (2,610)
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Net receivables 64,544 72,511
Inventories (note 3) 45,014 40,702
Prepaid expenses 854 944
Deferred income taxes, current portion 5,281 5,104
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Total current assets 118,369 123,508
Property, plant, and equipment 139,096 137,213
Less allowance for depreciation (76,279) (73,489)
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Net property, plant, and equipment 62,817 63,724
Net noncurrent installment accounts receivable 7,398 7,510
Deferred income taxes, long-term portion 1,545 1,545
Intangible assets 18,744 18,859
Other assets 681 604
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Total assets $209,554 $215,750
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LIABILITIES & SHAREHOLDERS' EQUITY
(Condensed from Audited
(Unaudited) Financial Statements)
LIABILITIES March 31, 1996 December 31, 1995
-------------- -----------------------
Current debt $ 16,113 $ 17,349
Accounts payable 16,126 21,436
Accrued expenses 19,567 22,938
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Total current liabilities 51,806 61,723
Long-term debt 23,118 23,149
Employee retirement-related benefits 16,592 16,177
Other long-term liabilities 380 570
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Total liabilities 91,896 101,619
SHAREHOLDERS' EQUITY
Common stock (note 5) 3,758 3,732
Additional paid-in capital (note 5) 4,822 3,166
Equity adjustment from foreign currency translation 3,316 3,532
Common stock subscribed -- 694
Unearned restricted shares (390) (276)
Retained earnings 118,682 116,396
Receivable from ESOP (12,530) (13,113)
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Total shareholders' equity 117,658 114,131
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Total liabilities and shareholders' equity $209,554 $215,750
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Page 3 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
TENNANT COMPANY AND SUBSIDIARIES - CONSOLIDATED STATEMENTS (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31
---------------------------
STATEMENTS OF CASH FLOWS (Note 4) 1996 1995
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Net cash flow related to operating activities $ 3,072 $ 737
Cash flow related to investing activities:
Acquisition of property, plant, and equipment (3,882) (4,401)
Acquisition of intangible assets (164)
Acquisition of Castex and Eagle (925)
Proceeds from disposals of property, plant, and
equipment 1,043 1,825
Settlement of foreign currency hedging contracts 210 (261)
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Net cash flow related to investing activities (2,793) (3,762)
Cash flow related to financing activities:
Net changes in current debt (1,127) (772)
Issuance of long-term debt -- 5,000
Principal payment from ESOP 495 450
Proceeds from employee stock issues 450 409
Repurchase of common stock -- --
Dividends paid (1,698) (1,679)
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Net cash flow related to financing activities (1,880) 3,408
Effect of exchange rate changes on cash 30 (121)
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Net increase (decrease) in cash and cash equivalents (1,571) 262
Cash and cash equivalents at beginning of year 4,247 1,851
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Cash and cash equivalents at end of first quarter $ 2,676 $ 2,113
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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 1995 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, 1996 and 1995, as
follows:
1996 1995
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(In Thousands)
Engineering, research and development $3,112 $2,900
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------ ------
Bad debts $ 199 $ 494
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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.
Amounts differ from 1995 10-Q report due to the reclassification of
expenses.
(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,
1996, and December 31, 1995, is as follows:
March 31 December 31
1996 1995
-------- -----------
(In Thousands)
FIFO Inventories:
Finished Goods $ 31,695 $ 28,146
All Other 31,824 30,406
LIFO Adjustment (18,505) (17,850)
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LIFO Inventories $ 45,014 $ 40,702
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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, 1996 and 1995,
were $443,000 and $1,323,000, respectively. Interest costs paid during the
three months ended March 31, 1996, and 1995, were $694,000 and $696,000,
respectively.
Page 5 of 7
TENNANT COMPANY
Quarterly Report - Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS (continued)
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, 1996, 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. 33-62003, Form S-8, dated
August 22, 1995.
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 to Filed herewith electronically.
Shareholders for the Three
Months Ended March 31, 1996.
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, 1996.
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: 5/14/96 /s/ Richard A. Snyder
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Richard A. Snyder
Vice President, Treasurer and
Chief Financial Officer
Date: 5/14/96 /s/ Mahedi A. Jiwani
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Mahedi A. Jiwani
Corporate Controller and
Principal Accounting Officer