Add
KEQU to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| KEQU > SEC Filings for KEQU > Form 10-Q on 11-Sep-2009 | All Recent SEC Filings |
11-Sep-2009
Quarterly Report
The Company's 2009 Annual Report to Stockholders contains management's discussion and analysis of financial condition and results of operations at and for the year ended April 30, 2009. The following discussion and analysis describes material changes in the Company's financial condition since April 30, 2009. The analysis of results of operations compares the three months ended July 31, 2009 with the comparable period of the prior fiscal year.
Results of Operations
Sales for the three months ended July 31, 2009 were $26,249,000, an increase of 3% from sales of $25,395,000 in the same period last year. Sales from Domestic Operations were $23,358,000, an increase of 11% from the prior year period. Sales from International Operations were $2,891,000, a decrease of 34% from the prior year period. The order backlog at July 31, 2009 was $60.7 million, as compared to a backlog of $62.7 million at April 30, 2009 and $60.4 million at July 31, 2008.
The gross profit margin for the three months ended July 31, 2009 was 22% of sales, as compared to 21.1% of sales in the comparable quarter of the prior year. The increase in gross profit margin percentage was due to increased manufacturing efficiencies, savings from alternative sources of raw materials and components, and other cost improvement initiatives.
Operating expenses for the three months ended July 31, 2009 were $3,966,000, or 15.1% of sales, as compared to $3,586,000, or 14.1% of sales, in the comparable period of the prior year. Increased pension expense of $215,000 accounted for the majority of the increase in the percentage of sales.
Operating earnings were $1,798,000 for the three months ended July 31, 2009. This compares to operating earnings of $1,765,000 for the comparable period of the prior year.
Interest expense was $41,000 for the three months ended July 31, 2009, as compared to $89,000 for the same period of the prior year. The decrease in interest expense for the current year period resulted from lower interest rates paid.
There was no other income and other expense in the three months ended July 31, 2009, as compared to other income of $38,000 for the comparable period of the prior year.
Income tax expense of $589,000 was recorded for the three months ended July 31, 2009, as compared to income tax expense of $541,000 recorded for the comparable period of the prior year. The effective tax rate was 35.0% for the three months ended July 31, 2009 and was 33.0% for the three months ended July 31, 2008. The effective tax rate for the three months ended July 31, 2009 differs from the statutory rate primarily due to the impact of varying income tax rates on income earned by the Company's foreign subsidiaries. In addition to this factor, the effective tax rate in the prior year period was favorably impacted by earned state and federal tax credits. The increase in the effective tax rate in the current year period as compared to the prior year period resulted primarily from a lower portion of earnings in the current year period from subsidiaries located in geographic locations with lower income tax rates.
Minority interests relate to minority shareholders' interest in the Company's two subsidiaries that are not 100% owned by the Company. Minority interests reduced net earnings by $97,000 for the three months ended July 31, 2009, as compared to a reduction of $116,000 for the comparable period of the prior year. The decrease in minority interests in the current period was directly related to decreased earnings of the two subsidiaries.
Net earnings were $1,071,000, or $0.42 per diluted share, for the three months ended July 31, 2009. This compares to net earnings of $981,000, or $0.38 per diluted share, for the comparable period of the prior year.
Liquidity and Capital Resources
Historically, the Company's principal sources of liquidity have been funds generated from operations, supplemented as needed by short-term borrowings under the Company's revolving credit facility. Additionally, certain machinery and equipment are financed by non-cancelable operating leases or capital leases. The Company believes that these sources will be sufficient to support ongoing business requirements, including capital expenditures through the current fiscal year.
The Company had working capital of $18.8 million at July 31, 2009, compared to $18.9 million at April 30, 2009. The ratio of current assets to current liabilities was 2-to-1 at July 31, 2009, unchanged from April 30, 2009. At July 31, 2009, advances of $6,229,000 were outstanding under the unsecured credit facility, as compared to advances of $5,720,000 outstanding as of April 30, 2009.
The Company's operations provided cash of $1,246,000 during the three months ended July 31, 2009. Cash was primarily provided from earnings and a decrease of $616,000 in accounts receivable, which were partially offset by cash used to fund an increase in inventory on hand. The Company's operations used cash of $726,000 during the three months ended July 31, 2008. Cash was primarily used to fund an increase in accounts receivable of $2,915,000, which was partially offset by cash provided from operating earnings.
During the three months ended July 31, 2009, net cash of $2,022,000 was used by investing activities, primarily for capital expenditures. This compares to the use of $744,000 for investing activities in the same period of the prior year, primarily for capital expenditures.
The Company's financing activities provided cash of $223,000 during the three months ended July 31, 2009. Cash provided included $509,000 received from short-term borrowings which was partially offset by cash dividends paid of $205,000 and payments on obligations under capital leases of $81,000. Financing activities provided cash of $862,000 in the same period of the prior year, which included $1,156,000 received from short-term borrowings, partially offset by $205,000 for cash dividends and $95,000 for payments on obligations of capital leases.
Outlook for Second Quarter of Fiscal Year 2010
While the Company's ability to predict future demand for its products continues to be limited given, among other general economic factors affecting the Company and its markets, the Company's role as subcontractor or supplier to dealers for subcontractors, the Company expects the second quarter of fiscal year 2010 to be profitable. In addition to general economic factors affecting the Company and its markets, demand for its products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain statements in this report constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors affecting the Company's operations, markets, products, services, and prices, as well as prices for certain raw materials and energy. The cautionary statements made pursuant to the Reform Act herein and elsewhere by the Company should not be construed as exhaustive. The Company cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. In addition, readers are urged to consider statements that include the terms "believes", "belief", "expects", "plans", "objectives", "anticipates", "intends" or the like to be uncertain and forward-looking. Over time, the Company's actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by the Company's forward-looking statements, and such difference might be significant and harmful to stockholders' interests. Many important factors that could cause such a difference are described under the caption "Risk Factors," in Item 1A of the Company's 2009 Annual Report on Form 10-K.
A review of the interim consolidated financial information included in this Quarterly Report on Form 10-Q for each of the three month periods ended July 31, 2009 and July 31, 2008 has been performed by Cherry, Bekaert & Holland, L.L.P., the Company's registered public accounting firm. Their report on the interim consolidated financial information follows.
|
|