1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported) April 19, 2005 ------------------ Twin Disc, Incorporated -------------------------------------- (exact name of registrant as specified in its charter) WISCONSIN 39-0667110 ------------- --------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1328 Racine Street Racine, Wisconsin 53403 - -------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (262)638-4000 ------------- - -----------------------------------------------------------------------
2 Item 7 Financial Statements and Exhibits. (c) Exhibits. Exhibit 99.1 Press Release dated April 19, 2005. Item 9. Regulation FD Disclosure and Item 12. Results of Operation and Financial Condition Twin Disc, Inc. has reported its 3rd quarter 2005 financial results. The Company's press release dated April 19, 2005 announcing the results is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference. The information in this Current Report is being furnished pursuant to Items 9 and 12 of Form 8-K and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and Section 11 of the Securities Act of 1933, as amended, or otherwise subject to the liabilities of those sections. The Current Report will not be deemed an admission by the Company as to the materiality of any information in this report that is required to be disclosed solely by Items 9 or 12. The Company does not undertake a duty to update the information in this Current Report and cautions that the information included in this Current Report is current only as of April 19, 2005, and may change thereafter. - ------------------------------------------------------------------------------ SIGNATURE Pursuant to the requirements of section 13 or 15(d) 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. Twin Disc, Inc. /s/ Fred H. Timm ------------------------ Fred H. Timm Chief Accounting Officer
1 RACINE, WISCONSIN-April 19, 2005-Twin Disc, Inc. (NASDAQ: TWIN), today announced financial results for the fiscal 2005 third quarter and the nine months ended March 31, 2005. The third quarter of fiscal 2005 represents the fifth consecutive quarter sales improved year-over-year; however, gross profit margins were under pressure and restricted any earnings improvement primarily because of higher raw material and energy costs and the effect of unfavorable currency exchange rates. For the three months ended March 31, 2005, sales increased $7,830,000, or 16.1 percent to $56,436,000 compared with $48,606,000 in the same period last fiscal year. Year-to-date, sales have increased $27,606,000, or 21.4 percent to $156,549,000 from $128,943,000 in the fiscal 2004 nine-month period. Business has been solid across the board and this pattern is remaining firm into the fourth quarter. For the fiscal 2005 third quarter, gross margin as a percentage of sales, decreased to 25.0 percent from 26.6 percent in the fiscal 2004 third quarter. This decline results principally from the inability to offset higher prices for steel, shipping and energy; as well as, the unfavorable impact of producing pleasure craft marine transmissions in Euros at the Company's Belgium facility and selling them in US dollars to the North American market. Management has taken measures to offset the higher raw material costs through pricing actions to be effective in the fourth quarter. The year-to-date gross margin; however, improved to 25.5 percent from 25.2 percent in the same period a year ago, which is a result of the higher level of profitability recorded during the first two quarters of the 2005 fiscal year. The increases in marketing, engineering and administrative (ME&A) expenses both in the quarter and year-to-date are primarily attributable to accruals related to the reintroduction of the corporate incentive program after a two year freeze, costs associated with the inclusions of Rolla's ME&A expenses starting with this fiscal year, foreign currency translation effect on foreign operations and the roll-out of a new corporate website (www.twindisc.com). Net earnings for the fiscal 2005 third quarter declined to $1,218,000, or $0.42 per diluted share from $1,776,000, or $0.62 per diluted share in the fiscal 2004 third quarter. Year-to-date, net income has increased to $3,544,000, or $1.22 per diluted share from $2,455,000, or $0.86 per diluted share a year ago. The year-to-date results include the effect of the Company's acquisition of Rolla SP Propellers SA (Rolla), which was acquired at the end of the prior fiscal year. Michael E. Batten, Chairman and Chief Executive Officer said, "We are very impressed by the breadth and size of our incoming orders. Further, the backlog of orders to be shipped over the next six months, which does not include any business booked from Rolla, was $62,700,000 at March 31, 2005, up 27.0 percent since the year began and up 20.0 percent compared with the same period a year ago and is the highest six-month backlog since the third quarter of fiscal 1998. Thus, we see business expanding well into next year." Mr. Batten further stated, "Our challenge is taking this growth and bringing it to the bottom line. The benefits from a number of our programs that were controlling production expenses and improving productivity have been penalized due to the inflation from the costs for raw materials and the deflation of the dollar. We are acting quickly to resolve these inflationary pressures. Some of the improvement will be seen in the fourth quarter with the full effect realized in the new fiscal year. We are also analyzing various strategies that could reduce the impact of the weak dollar. And again, we are optimistic that our actions will produce noticeable results." Christopher J. Eperjesy, Vice President - Finance/Treasurer and Chief Financial Officer, stated, "Our asset management and our cash flow continued to strengthen our balance sheet. Inventories at March 31, 2005 were about even over the same period last year compared with the 16.1 percent increase in third-quarter sales. Our accounts receivable were up 3.5 percent since fiscal year end and shareholders' equity rose to $68,268,000 from $60,731,000 at June 30, 2004. The balance sheet remains strong with excellent liquidity and we are poised to take advantage of an accretive acquisition when the opportunity occurs, as well as, continuing to make investments that improve our manufacturing productivity and quality." Mr. Batten concluded, "For fiscal 2005, our net income will compare favorably with the prior year, while we will be challenged during the fourth quarter to beat last year's impressive fourth quarter earnings. Looking forward to fiscal 2006, we are expecting another good year."
2 Twin Disc, Inc., designs, manufactures and internationally distributes heavy-duty off-highway power transmission equipment for the construction, industrial, government, marine, agricultural, and energy and natural resources markets. This press release may contain statements that are forward looking as defined by the Securities and Exchange Commission in its rules, regulations and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectations regarding important risk factors including those identified in the Company's most recent periodic report and other filings with the Securities and Exchange Commission. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that the results expressed therein will be achieved. --Financial Results Follow-- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per-share data; unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2005 2004 2005 2004 ---- ---- ---- ---- Net sales $56,436 $48,606 $156,549 $128,943 Cost of goods sold 42,352 35,689 116,652 96,409 ------ ------ ------- ------ Gross profit 14,084 12,917 39,897 32,534 Marketing, engineering and administrative expenses 11,227 9,520 31,997 27,156 Interest expense 304 272 814 835 Other expense (Income), net 181 (42) 322 (227) ----- ----- ----- ----- Earnings before income taxes and minority interest 2,372 3,167 6,764 4,770 Income taxes 1,158 1,393 3,156 2,298 Minority interest (4) (2) 64 17 ----- ----- ----- ----- Net earnings $ 1,218 $ 1,776 $ 3,544 $ 2,455 ------- ------- ------- ------- ------- ------- ------- ------- Earnings per share: Basic $ 0.42 $ 0.63 $ 1.24 $ 0.87 Diluted $ 0.42 $ 0.62 $ 1.22 $ 0.86 Average shares outstanding: Basic 2,877 2,819 2,858 2,811 Diluted 2,928 2,848 2,906 2,832 Dividends per share $ 0.175 $ 0.175 $ 0.525 $ 0.525 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per-share data; unaudited) March 31, June 30, ASSETS 2005 2004 ---- ---- Current assets: Cash and cash equivalents $8,579 $9,127 Trade accounts receivable, net 38,383 37,091 Inventories, net 56,137 52,079 Deferred income taxes 4,557 4,216 Other 3,415 3,111 ----- ----- Total current assets 111,071 105,624
3 Property, plant and equipment, net 36,616 33,222 Goodwill 13,065 12,717 Deferred income taxes 15,454 15,668 Other assets 8,973 9,406 ------ ------ $185,179 $176,637 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $3,575 $1,607 Current maturities on long-term debt 2,857 3,018 Accounts payable 17,849 17,241 Accrued liabilities 28,283 27,262 ------ ------ Total current liabilities 52,564 49,128 Long-term debt 17,618 16,813 Accrued retirement benefits 46,249 49,456 ------ ------ 116,431 115,397 Minority interest 480 509 Shareholders' equity: Common stock 11,653 11,653 Retained earnings 88,472 86,443 Unearned Compensation (255) (304) Accumulated other comprehensive loss (16,057) (20,301) -------- -------- 83,813 77,491 Less treasury stock, at cost 15,545 16,760 ------ ------ Total shareholders' equity 68,268 60,731 ------ ------ $185,179 $176,637 -------- -------- -------- --------