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) January 22, 2009
------------------
Twin
Disc, Incorporated
--------------------------------------
(exact
name of registrant as specified in its charter)
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WISCONSIN
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001-7635
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39-0667110
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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1328
Racine
Street Racine,
Wisconsin 53403
--------------------------------------------------------
(Address
of principal executive offices)
Registrant's
telephone number, including area
code: (262)
638-4000
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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[
]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[
]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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[
]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02 Results of Operations and Financial
Condition
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The
Company has reported its 2nd quarter
2009 financial results. The Company's press release dated January 22, 2009
announcing the results is attached hereto as Exhibit 99.1 and is incorporated
herein in its entirety by reference.
The
information set forth in this Item 2.02 of Form 8-K, including Exhibit 99.1, is
furnished pursuant to Item 2.02 and shall not be deemed "filed" for the purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liabilities of that section, nor shall such
information be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
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Item
7.01 Regulation FD Disclosure
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The
information set forth under Item 2.02 of this report is incorporated herein by
reference solely for the purposes of this Item 7.01.
The
information set forth in this Item 7.01 of Form 8-K is furnished pursuant to
Item 7.01 and shall not be deemed "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of that section, nor shall such information be deemed
incorporated by reference in any filing under the Securities Act of 1933 or the
Exchange Act, except as shall be expressly set forth by specific reference in
such a filing.
FORWARD
LOOKING STATEMENTS
The
disclosures in this report on Form 8-K and in the documents incorporated herein
by reference contain or may contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. The
words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,”
“likely,” “will,” and similar expressions identify such forward-looking
statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual
results, performance or achievements of the Company (or entities in which the
Company has interests), or industry results, to differ materially from future
results, performance or achievements expressed or implied by such
forward-looking statements. Certain factors that could cause the
Company’s actual future results to differ materially from those discussed are
noted in connection with such statements, but other unanticipated factors could
arise. Readers are cautioned not to place undue reliance on these
forward-looking statements which reflect management’s view only as of the date
of this Form 8-K. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events, conditions or circumstances.
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Item
9.01
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Financial
Statements and Exhibits
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(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
99.1 Press
Release announcing 2nd quarter
2009 financial results.
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.
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Date:
January 22, 2009
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Twin
Disc, Inc.
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/s/
THOMAS E. VALENTYN
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Thomas
E. Valentyn
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General
Counsel & Secretary
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21092029-1
FOR
IMMEDIATE RELEASE
Contact:
Christopher J. Eperjesy
(262)
638-4343
TWIN
DISC, INC., ANNOUNCES FISCAL 2009
SECOND-QUARTER
FINANCIAL RESULTS
•
Sales down slightly from prior fiscal year’s record level
•
Net earnings for the quarter were $0.31 per diluted share
•
Six month backlog stands at $106,349,000
RACINE,
WISCONSIN—January 22, 2009—Twin
Disc, Inc. (NASDAQ: TWIN), today reported financial results for the
fiscal 2009 second quarter and first half ended December 26, 2008.
Sales for
the fiscal 2009 second quarter were $81,598,000, compared to $81,894,000 for the
fiscal 2008 second quarter. Year-to-date, sales were $154,270,000,
compared to $155,507,000 for the fiscal 2008 first half. For the
fiscal 2009 second quarter, foreign currency translations negatively impacted
sales by $2,440,000. Adjusting for the impact of foreign currency
translation on the second fiscal quarter, sales would have been up just under
three percent versus the same period last year. The fiscal 2009
second quarter also benefited from delayed shipments in the first fiscal quarter
related to the Company’s implementation of a new ERP system at its domestic
manufacturing operation.
Gross
margin, as a percentage of fiscal 2009 second-quarter sales, was 28.1 percent,
compared to 30.9 percent in last year’s comparable
period. Year-to-date, gross profit, as a percentage of sales, was
27.9 percent from 31.6 percent for the fiscal 2008 first half. Gross
margin for fiscal 2009’s second quarter was negatively impacted by unfavorable
product mix, higher material costs and an increase in domestic pension
expenses.
For the
2009 second quarter, marketing, engineering and administrative (ME&A)
expenses, as a percentage of sales, were 20.8 percent, compared to 21.2 percent
for the fiscal 2008 second quarter. For the fiscal 2009 second
quarter, ME&A expenses benefited from a decrease in the Company’s stock
based compensation expense due to a decline in the Company’s stock price versus
the same period last fiscal year. Compared to fiscal 2008’s second
quarter, stock based compensation expense decreased $1,719,000 in the
quarter. In addition, expenses related to the Company’s corporate and
domestic incentive programs decreased $728,000 versus the second quarter of
fiscal 2008. These benefits were partially offset by severance costs
of $1,308,000, increased IT costs associated with the Company’s new ERP system
and higher pension expenses. Year-to-date, ME&A expenses, as a
percentage of sales, were 21.6 percent, compared to 20.6 percent for the fiscal
2008 first half.
The
Company’s tax rate for the fiscal 2009 second quarter was 35.5 percent, compared
to 39.2 percent for fiscal 2008’s second fiscal
quarter. Year-to-date, the Company’s corporate tax rate was 34.9
percent, compared to 38.8 percent in the comparable period last fiscal
year. Favorably impacting the Company’s tax rate for both the fiscal
2009 second quarter and first half was a 5.9 percent reduction in the Italian
corporate tax rate for fiscal 2009 and a shift in earnings to subsidiaries in
countries with a lower effective tax rate.
Net
earnings for the fiscal 2009 second quarter were $3,433,000, or $0.31 per
diluted share, compared with $4,209,000, or $0.37 per diluted share, for the
fiscal 2008 second quarter. Year-to-date, earnings were $5,898,000,
or $0.52 per diluted share, compared to $9,314,000, or $0.81 per diluted share
for the fiscal 2008 first half.
Earnings
before interest, taxes, depreciation and amortization (EBITDA)* was $8,426,000
for the fiscal 2009 second quarter, compared to $9,568,000 for the fiscal 2008
second quarter. For the fiscal 2009 first half, EBITDA was
$15,240,000, compared to $20,409,000 for the fiscal 2008 comparable
period.
Commenting
on the results, Michael E. Batten, Chairman and Chief Executive Officer, said,
“We are pleased that the second quarter results improved upon our first quarter
performance, even though we were not able to match the record operating
performance of the second fiscal quarter of 2008. In addition to the
softness that continued to be experienced in our oil and gas markets, we are now
seeing softening in the mega yacht segment of the pleasure craft
market. However, commercial marine and industrial product markets
continued to be above year ago levels. Issues related to the
implementation of our ERP system at our domestic facility have been successfully
addressed and we are currently working on implementing the system throughout our
global operations.”
Christopher
J. Eperjesy, Vice President - Finance, Chief Financial Officer and Treasurer,
stated, “While our balance sheet and overall liquidity remain strong, we
continue to look for ways to improve our working capital levels, including
inventory, accounts receivable and accounts payable
management. Working capital at December 26, 2008 was $101,961,000,
compared to $106,107,000 at June 30, 2008 and $101,721,000 at December 28,
2007. At December 26, 2008, the Company had cash of $11,151,000,
compared to $14,447,000 at fiscal year end. Total debt, at December
26, 2008, was $51,924,000, compared to $49,957,000 at June 30, 2008 and
$55,546,000 at December 28, 2007. Total debt to total capital was 31.1% at
December 26, 2008.
“During
the quarter, we spent $1,812,500 to repurchase 250,000 shares of our outstanding
common stock at an average price of $7.25 per share. Since August
2007, we have repurchased 910,000 shares of our common stock and currently have
250,000 shares remaining under our Board authorized stock repurchase
program. As of the end of the second fiscal quarter, we had
approximately $11,000,000 available under our existing revolving credit
facility, which expires in October 2010. As of January 2009, the
interest rate on the Company’s revolver was 1.68 percent, down from 3.74 percent
at September 26, 2008. As a result of current external business
factors, we have revised our capital expenditure forecast for the year and are
now planning to spend between $10,000,000 and $12,000,000 on annual capital
expenditures for fiscal 2009, compared to our prior estimate of between
$15,000,000 and $17,000,000.”
Mr.
Batten continued, “Although we have experienced some cancellations and retiming
of orders, our six month backlog at December 26, 2008 was $106,349,000, compared
to $120,774,000 at June 30, 2008 and $121,281,000 at December 28,
2007. Approximately one-third of the decrease from the prior fiscal
year end, or $5,365,000, can be attributed to foreign exchange rate movements,
specifically a strengthening of the U.S. Dollar versus the Euro. We
are proactively working with our customers and managing our operations to align
our cost structure with business projections.
“Like
many industrial manufacturers, we are experiencing softness in certain of our
core markets, specifically the oil and gas and mega yacht markets. We
now expect demand from the mega yacht segment of the pleasure craft market to
continue to weaken for the balance of the year. This will impact the
Company’s propulsion and boat management system product lines. Given
the decline in the price of oil, future demand for land-based transmissions for
the oil and gas markets remains uncertain, while demand for vehicular
transmissions for the airport rescue and fire fighting and military markets
continues stable. Demand for the Company’s industrial product lines
has improved year-over-year and activity in the commercial marine market is
expected to remain steady,” concluded Mr. Batten.
Twin Disc
will be hosting a conference call today (January 22, 2009) to discuss these
results and to answer questions at 2:00 p.m. ET. To participate in
the conference call, please dial 800-762-8779 five to 10 minutes before the call
is scheduled to begin. A replay will be available from 5:00 p.m.
January 22, 2009 until midnight January 29, 2009. The number to hear
the teleconference replay is 800-406-7325. The access code for the
replay is 3961116.
The
conference call will also be broadcast live over the Internet. To
listen to the call via the Internet, access Twin Disc's website at http://www.twindisc.com/companyinvestor.aspx
and follow the instructions at the web cast link. The archived web
cast will be available shortly after the call on the Company's
website.
About Twin Disc,
Inc.
Twin
Disc, Inc. designs, manufactures and sells marine and heavy-duty off-highway
power transmission equipment. Products offered include: marine
transmissions, surface drives, propellers and boat management systems, as well
as power-shift transmissions, hydraulic torque converters, power take-offs,
industrial clutches and control systems. The Company sells its
products to customers primarily in the pleasure craft, commercial and military
marine markets, as well as in the energy and natural resources, government and
industrial markets. The Company’s worldwide sales to both domestic
and foreign customers are transacted through a direct sales force and a
distributor network.
Forward-Looking
Statements
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.
*Non-GAAP Financial
Disclosures
Financial
information excluding the impact of foreign currency exchange rate changes and
the impact of acquisitions in this press release are not measures that are
defined in U.S. Generally Accepted Accounting Principles
(“GAAP”). These items are measures that management believes are
important to adjust for in order to have a meaningful comparison to prior and
future periods and to provide a basis for future projections and for estimating
our earnings growth prospects. Non-GAAP measures are used by
management as a performance measure to judge profitability of our business
absent the impact of
foreign
currency exchange rate changes and acquisitions. Management analyzes
the company’s business performance and trends excluding these amounts.
These measures, as well as EBITDA, provide a more consistent view of performance
than the closest GAAP equivalent for management and
investors. Management compensates for this by using these measures in
combination with the GAAP measures. The presentation of the non-GAAP
measures in this press release are made alongside the most directly comparable
GAAP measures.
Definition – Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)
The sum
of, net earnings and adding back provision for income taxes, interest expense,
depreciation and amortization expenses: this is a financial measure of the
profit generated excluding the above mentioned items.
--Financial
Results Follow--
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CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per-share data, unaudited)
|
||||||||||||||||
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Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
December
26,
2008
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December
28,
2007
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December
26,
2008
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December
28,
2007
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|||||||||||||
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Net
sales
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$ | 81,598 | $ | 81,894 | $ | 154,270 | $ | 155,507 | ||||||||
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Cost
of goods sold
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58,645 | 56,548 | 111,245 | 106,311 | ||||||||||||
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Gross
profit
|
22,953 | 25,346 | 43,025 | 49,196 | ||||||||||||
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Marketing,
engineering and administrative expenses
|
17,008 | 17,378 | 33,326 | 32,072 | ||||||||||||
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Interest
expense
|
714 | 825 | 1,311 | 1,568 | ||||||||||||
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Other
(income) expense, net
|
(192 | ) | 179 | (1,012 | ) | 174 | ||||||||||
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Earnings
before income taxes and minority interest
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5,423 | 6,964 | 9,400 | 15,382 | ||||||||||||
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Income
taxes
|
1,924 | 2,729 | 3,277 | 5,967 | ||||||||||||
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Minority
interest
|
(66 | ) | (26 | ) | (225 | ) | (101 | ) | ||||||||
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Net
earnings
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$ | 3,433 | $ | 4,209 | $ | 5,898 | $ | 9,314 | ||||||||
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Earnings
per share:
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||||||||||||||||
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Basic
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$ | 0.31 | $ | 0.37 | $ | 0.53 | $ | 0.82 | ||||||||
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Diluted
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$ | 0.31 | $ | 0.37 | $ | 0.52 | $ | 0.81 | ||||||||
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Average
shares outstanding:
|
||||||||||||||||
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Basic
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11,126 | 11,261 | 11,188 | 11,378 | ||||||||||||
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Diluted
|
11,173 | 11,399 | 11,275 | 11,515 | ||||||||||||
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Dividends
per share
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$ | 0.070 | $ | 0.070 | $ | 0.140 | $ | 0.125 | ||||||||
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RECONCILIATION
OF CONSOLIDATED NET EARNINGS TO EBITDA
(In
thousands, unaudited)
|
||||||||||||||||
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
December
26,
2008
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December
28,
2007
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December
26,
2008
|
December
28,
2007
|
|||||||||||||
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Net
earnings
|
$ | 3,433 | $ | 4,209 | $ | 5,898 | $ | 9,314 | ||||||||
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Income taxes
|
1,924 | 2,729 | 3,277 | 5,967 | ||||||||||||
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Interest expense
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714 | 825 | 1,311 | 1,568 | ||||||||||||
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Depreciation and
amortization
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2,355 | 1,805 | 4,754 | 3,560 | ||||||||||||
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Earnings
before interest, taxes, depreciation and amortization
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$ | 8,426 | $ | 9,568 | $ | 15,240 | $ | 20,409 | ||||||||
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CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
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(In
thousands, unaudited)
|
||||||||
|
December
26,
|
June
30,
|
|||||||
|
2008
|
2008
|
|||||||
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ASSETS
|
||||||||
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Current
assets:
|
||||||||
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Cash
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$ | 11,151 | $ | 14,447 | ||||
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Trade
accounts receivable, net
|
58,117 | 67,611 | ||||||
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Inventories,
net
|
98,017 | 97,691 | ||||||
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Deferred
income taxes
|
6,450 | 6,297 | ||||||
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Other
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9,581 | 9,649 | ||||||
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Total
current assets
|
183,316 | 195,695 | ||||||
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Property,
plant and equipment, net
|
64,217 | 67,855 | ||||||
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Goodwill
|
16,622 | 18,479 | ||||||
|
Deferred
income taxes
|
4,875 | 5,733 | ||||||
|
Intangible
assets, net
|
7,597 | 9,589 | ||||||
|
Other
assets
|
6,013 | 7,277 | ||||||
| $ | 282,640 | $ | 304,628 | |||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Short-term
borrowings and current maturities on long-term debt
|
$ | 672 | $ | 1,730 | ||||
|
Accounts
payable
|
35,902 | 37,919 | ||||||
|
Accrued
liabilities
|
44,781 | 49,939 | ||||||
|
Total
current liabilities
|
81,355 | 89,588 | ||||||
|
Long-term
debt
|
51,252 | 48,227 | ||||||
|
Accrued
retirement benefits
|
33,194 | 34,325 | ||||||
|
Other
long-term liabilities
|
973 | 2,163 | ||||||
| 166,774 | 174,303 | |||||||
|
Minority
interest
|
715 | 679 | ||||||
|
Shareholders'
equity:
|
||||||||
|
Common
stock
|
13,862 | 14,693 | ||||||
|
Retained
earnings
|
146,681 | 142,361 | ||||||
|
Accumulated
other comprehensive (loss) income
|
(15,136 | ) | 2,446 | |||||
| 145,407 | 159,500 | |||||||
|
Less
treasury stock, at cost
|
30,256 | 29,854 | ||||||
|
Total
shareholders' equity
|
115,151 | 129,646 | ||||||
| $ | 282,640 | $ | 304,628 | |||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands, unaudited)
|
||||||||
|
Six
Months Ended
|
||||||||
|
December
26,
2008
|
December
28,
2007
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
earnings
|
$ | 5,898 | $ | 9,314 | ||||
|
Adjustments
to reconcile net earnings to cash
|
||||||||
|
provided
by operating activities:
|
||||||||
|
Depreciation
and amortization
|
4,754 | 3,560 | ||||||
|
Other
non-cash changes
|
520 | 1,982 | ||||||
|
Net
change in working capital,
excluding
cash and debt, and other
|
(8,441 | ) | (3,507 | ) | ||||
|
Net
cash provided by operating activities
|
2,731 | 11,349 | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Acquisitions
of fixed assets
|
(4,651 | ) | (6,820 | ) | ||||
|
Proceeds
from sale of fixed assets
|
15 | 200 | ||||||
|
Other,
net
|
1,111 | (337 | ) | |||||
|
Net
cash used by investing activities
|
(3,525 | ) | (6,957 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
(Decrease)
increase in notes payable, net
|
(951 | ) | 29 | |||||
|
Proceeds
from long-term debt
|
3,584 | 11,393 | ||||||
|
Proceeds
from exercise of stock options
|
110 | 100 | ||||||
|
Purchase
of treasury stock
|
(1,813 | ) | (13,367 | ) | ||||
|
Dividends
paid
|
(1,578 | ) | (1,437 | ) | ||||
|
Other
|
- | 19 | ||||||
|
Net
cash used by financing activities
|
(648 | ) | (3,263 | ) | ||||
|
Effect
of exchange rate changes on cash
|
(1,854 | ) | 1,480 | |||||
|
Net
change in cash
|
(3,296 | ) | 2,609 | |||||
|
Cash
Balance:
|
||||||||
|
Beginning
of period
|
14,447 | 19,508 | ||||||
|
End
of period
|
$ | 11,151 | $ | 22,117 | ||||
###