This report contains
12 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 July 27, 1996
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 (970) 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 10, 1996 the registrant had 11,363,058 shares of its common stock
outstanding.
Index of Exhibits - See Page 9 .
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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 July 27, 1996, and
the Consolidated Statements of Income and Retained Earnings for the
quarters ended July 27, 1996 and July 29, 1995 and the Consolidated
Statements of Cash Flows for the quarters ended July 27, 1996 and July
29, 1995 are unaudited; however, in the opinion of management all
adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation of the results of such periods have
been made. The results of operations for the quarters ended July 27,
1996 and July 29, 1995 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
LLP, 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
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July 27, 1996 July 29, 1995
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Net sales $ 28,910 $ 27,188
Cost of sales 14,747 13,438
Gross profit 14,163 13,750
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Selling, general and administrative expense 8,009 8,168
Research and development expense 1,954 1,800
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Income from operations 4,200 3,782
Interest income 350 234
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Income before income taxes 4,550 4,016
Income tax expense 1,590 1,406
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Net income 2,960 2,610
Retained earnings, beginning of period 67,177 58,425
Cash dividends (682) (568)
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Retained earnings, end of period $ 69,455 $ 60,467
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Net income per common share $ 0.26 $ 0.23
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Dividends per common share $ 0.06 $ 0.05
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Weighted average shares outstanding 11,356,140 11,369,170
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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)
(UNAUDITED)
JULY 27, 1996 APRIL 30,1996
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ASSETS
Current assets:
Cash and cash equivalents $ 11,104 $ 8,487
Marketable securities, held to maturity 12,276 12,804
Accounts receivable, less reserves
of $250 and $248, respectively 17,027 15,846
Inventories 12,496 12,769
Deferred taxes and other current assets 1,194 3,277
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Total current assets 54,097 53,183
Property, plant and equipment at cost:
Buildings and improvements 23,239 23,557
Machinery and equipment 43,861 43,129
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67,100 66,686
Less allowance for depreciation
and amortization 39,198 38,571
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27,902 28,115
Land 994 997
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Net property, plant and equipment 28,896 29,112
Marketable securities, held to maturity 8,900 9,316
Other assets 1,697 1,684
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Total Assets $ 93,590 $ 93,295
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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)
(UNAUDITED)
JULY 27, 1996 APRIL 30,1996
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LIABILITIES
Current liabilities:
Accounts payable $ 2,539 $ 2,826
Accrued liabilities:
Compensation 1,186 731
Compensated absenses 3,572 3,500
Profit sharing 859 3,069
Other 1,502 1,188
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Total current liabilities 9,658 11,314
Long term liabilities 1,448 1,347
Deferred income taxes 1,812 1,814
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Total liabilities 12,918 14,475
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 382 316
Retained earnings 69,455 67,177
Cumulative currency translation adjustment 1,259 1,636
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82,719 80,752
Less: Shares held in treasury at cost:
(259,895 at July 27, 1996 and
258,881 at April 30, 1996) (2,047) (1,932)
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Total Liabilities and Stockholders' Equity $ 93,590 $ 93,295
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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 27, 1996 JULY 29,1996
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Cash flows from operating activities:
Net income $ 2,960 $ 2,610
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation & amortization 1,462 1,488
Provision for deferred income taxes 30 26
Loss on disposal of property, plant &
equipment 4 27
(Increase) in accounts receivable (1,181) (712)
(Increase) decrease in inventories 273 (344)
Decrease in prepaid expenses & other assets 2,052 2,224
Increase (decrease) in accounts payable (287) 181
(Decrease) in accrued liabilities (1,269) (940)
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Net cash provided by operating activities 4,044 4,560
Cash flows from investing activities:
Proceeds from sale of property,
plant & equipment 5 254
Capital expenditures (1,315) (2,374)
Purchases of investments held-to-maturity (2,496) (6,349)
Proceeds from the maturity of short-term
investments 3,440 927
(Increase) in long-term assets (13) (54)
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Net cash used by investing activities (379) (7,596)
Cash flows from financing activities:
Dividends paid (682) (568)
Purchases of treasury stock (206) (191)
Exercise of stock options 156 3
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Net cash used by financing activities (732) (756)
Effects of exchange rate changes (316) (10)
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Net increase (decrease) in cash & cash
equivalents 2,617 (3,802)
Cash & cash equivalents at the beginning
of the period 8,487 13,050
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Cash & cash equivalents at the end
of the period $ 11,104 $ 9,248
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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 at July 27, 1996, and the consolidated
statements of income and retained earnings, cash flows, and stockholders' equity
for the interim periods ended July 27, 1996 and July 29, 1995, have been
prepared by the Company, without audit. In the opinion of management, all
adjustments, consisting only of normal recurring accruals, 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 year end balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
Certain amounts in the financial statements for April 30, 1996 have been
reclassified to conform with the current periods presentation.
2. INVENTORIES
The components of inventories are:
(Thousands of Dollars)
July 27, 1996 April 30, 1996
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Raw materials and purchased parts $ 2,714 $ 2,977
Work-in-process 1,994 2,030
Finished goods 7,788 7,762
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$12,496 $12,769
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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 27, 1996 and July 29, 1995 were 34.9% and 35.0% respectively.
4. 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.
5. CAPITAL STOCK
At the annual stockholders meeting on August 27, 1996, the stockholders
approved a reduction in the number of authorized shares from 40,000,000 to
25,000,000.
6. RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" in
October of 1995. This statement, which is required to be adopted in fiscal year
1997, introduces a fair-value based method of accounting for stock-based
compensation. The Company has not yet adopted the statement, and has not yet
determined the impact it may have on the Company's financial statements or on
the financial statement disclosures.
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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 27, 1996. Cash and short-term investments increased $2,089,000 during
the quarter to $23,380,000.
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.
The Company's Board of Directors has 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 27, 1996 compared to quarter ended
July 29, 1995.
The quarter ended July 27, 1996 contained two fewer business days then the
quarter ended July 29, 1995.
Net sales increased 6.3% to $28,910,000 from $27,188,000. The Company's
domestic net sales increased 2% while its international net sales increased 14%.
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 9.7% to $14,747,000 from $13,438,000. This item,
composed of material, labor and product overhead, increased primarily because of
unit volume increases. The gross profit percent decreased to 49.0% from 50.6%
due to the mix of products sold.
Selling, general and administrative expense decreased 2% to $8,009,000 from
$8,168,000. The decrease was primarily due to lower payroll and related expenses
due to fewer business days in the current quarter and a reduction in the number
of employees.
Research and development expense increased 8.6% to $1,954,000 from $1,800,000.
The increase was due to a planned expansion of the Company's research and
development efforts.
Interest income increased to $350,000 from $234,000. The increase was due to
higher average investment balances and higher interest rates in the current
quarter.
The effective income tax rate was 34.9% in the current period compared to 35.0%
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 4: Submission of Matters to a Vote of Security Holders
On August 27, 1996, Hach Company held its annual meeting of
stockholders. At this meeting, the stockholders were asked to
consider and vote upon a proposal to amend the Certificate of
Incorporation of the Company to reduce the number of authorized shares
of Common Stock from 40,000,000 to 25,000,000. A total of 10,644,026
votes were cast of which 10,593,163 were affirmative, 15,650 were
negative and 35,213 abstained. The stockholders were also asked to
consider and vote upon a proposal to approve the Company's Non-
Employee Director Stock Plan. A total of 10,644,026 votes were cast
of which 10,544,625 were affirmative, 61,179 were negative and 38,222
abstained.
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 27, 1996 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 10, 1996 BY: Bruce J. Hach /s/
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Bruce J. Hach
President and Chief Operating Officer
DATED: September 10, 1996 BY: Gary R. Dreher /s/
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Gary R. Dreher
Vice President and Chief Financial Officer
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