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) July 30, 2004 ------------------ 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 July 30, 2004. Item 9. Regulation FD Disclosure and Item 2.02 Results of Operation and Financial Condition Twin Disc, Inc. has reported its 4th quarter 2004 financial results. The Company's press release dated July 30, 2004 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 July 30, 2004, 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 TWIN DISC, INC., ANNOUNCES SIGNIFICANTLY HIGHER FISCAL 2004 FOURTH-QUARTER AND AND FULL-YEAR EARNINGS VERSUS PRIOR YEAR Third-Quarter EPS $0.62 versus $0.18 Nine-Months EPS $0.86 versus Loss of $1.54 Trailing 12 Months EPS $1.56 versus Loss of $1.05 Management Sees Improving Earnings Trend Continuing RACINE, WISCONSIN-JULY 30, 2004-Twin Disc, Inc. (NYSE: TDI), today announced improved financial results for the fiscal 2004 fourth quarter and full year ended June 30, 2004. The fiscal 2004 quarter was the sixth-consecutive period earnings improved year-over-year, and the sales level was the highest in over 20 years. Net sales for the fourth quarter of fiscal 2004 increased 7.6 percent to $57,146,000 from $53,100,000 for the same period last year. Sales were positively impacted by net favorable currency exhcange rates, primarily the Euro and Australian Dollar in relation to the U.S. Dollar, of approximately $1.7 million compared with the same quarter last year. The Company's joint venture agreement governing it's subsidiary in Japan was amended effective in the fiscal 2004 first quarter. The effect of this change had no impact on net earnings during this quarter. Last year's fiscal fourth-quarter results, however, included $3.6 million in sales for certain territories that are no longer recognized by the joint venture. If these were excluded, sales in the fiscal 2004 fourth quarter would have been 15.4 percent highter than the same period last year. Profitability in the quarter continued to improve from the implementation of cost reduction programs, a restructuring program undertaken last year, a better product mix and the absence of manufacturing inefficiencies which absorbed higher steel, energy and shipping costs. The gross margin in the fiscal 2004 fiscal 2004 quarter improved 385 basis points over the same period last year. For the fiscal 2004 fourth quarter, net income was $2,788,000, or $0.97 per diluted share, compared with last year's net income of $1,941,000, or $0.70 per diluted share. Net sales for the 2004 full year were up 3.6 percent to $1,86,089,000 compared with last year's $179,591,000. Included in the 2004 sales were net favorable currency exchange rate benefits of approximately $10.0 milllion compared with the same period last year. The prior year included $13.0 million in sales from the Japenese distribution subsidiary that are no longer recognized in accordance with the amended agreement discussed previously. This change had no impact on net earnings. The sequence of the manufacturing effcienciesthat began in the prior fiscal year contributed strongly to the 610 basis point improvement in the gross margin for fiscal 2004 compared with last year. Net income for 2004 was $5,243,000, or $1.84 per diluted share compared with last year's net loss of $2,368,000, or $0.84 per share.
2 Michael E. Batten, Chairman and Chief Executive Officer, said, "We were very pleased that the sales and earnings improvements that began in fiscal 2003 gained momentum throughout this year. Our people were consistently challenged in fiscal 2004 especially during the second half, to maintain manufacturing quality at high production rates. Our shipments were up, on a sequential basis, nearly 18.0 percent in the fourth quarter and 15.0 percent in the third quarter. "In the fourth quarter we acquired a wonderful company, Rolla SP Propellers. Based in Switzerland, Rolla is a leading international designer and manufacturer of high-performance propulsion products. The acquisition will have no impact on this year's operating results because it closed on June 30, 2004, but will be accretive to fiscal 2005's financial results. Our Arneson operation has worked closely with Rolla over the years and having its hydrodynamic technology in house will further enhance its quality and service. "In addition, our balance sheet stregthened at year end because of our strong asset management and the financial imporvements. Shareholders' equity increased nearly 21.0 percent to $60.7 million, or $21.37 per share, while long-term debt was up modestly, and the accrued retirement liability declined by almost 13.0 percent. "Our backlog of orders may have a greater variance over comparable periods because our selling cycle is narrowing. Orders to be shipped over the next six months were $49,400,000 which was an increase of more than 60.0 percent from the start of the fiscal year, but down modestly from the prior quarter's $52,300,000. Our marketing activity and production schedules are higher than normal for this time of year, seasonally a softer period, which bodes well for our fiscal 2005 outlook" 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--
3 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per-share data; unaudited) Three Months Ended Nine Months Ended March 31, March 31, 2004 2003 2004 2003 ---- ---- ---- ---- Net sales $57,146 $53,100 $186,089 $179,591 Cost of goods sold 42,050 41,118 138,459 144,575 ------ ------ ------- ------- Gross profit 15,096 11,982 47,630 35,016 Marketing, engineering and administrative expenses 10,012 8,460 37,168 34,790 Restructuring of operations 0 0 0 2,042 ------ ------ ------ ------- Operating income 5,084 3,522 10,462 (1,816) Interest expense 243 340 1,078 1,323 Other (income) expense, net (366) (262) (593) (500) ------ ------ ------ ------- Earnings (loss) before income taxes and minority interest 5,207 1,498 4,709 (283) Income taxes 2,411 1,946 5,268 (2,356) ------ ------ ------ ------- Earnings (loss) before minority Interest 2,796 1,946 5,268 (2,356) Minority interest, net of income Taxes (8) (5) (25) (12) ------ ------ ------ ------- Net earnings (loss) $ 2,788 $ 1,941 $ 5,243 $ (2,368) Earnings (loss) per share: Basic $ 0.99 $ 0.70 $ 1.86 $ (0.84) Diluted $ 0.97 $ 0.70 $ 1.84 $ (0.84) Average shares outstanding: Basic 2,822 2,798 2,814 2,805 Diluted 2,868 2,798 2,843 2,805 Dividends per share $ 0.175 $ 0.175 $ 0.70 $ 0.70 Contact: Twin Disc, Inc. Christopher J. Eperjesy (262-638-4343)
4 CONDENESED CONSOLIDATE BALANCE SHEETS (In thousands, except per-share date;unaudited) JUNE 30, JUNE 30, 2004 2003 -------- -------- ASSETS Current assets: Cash and cash equivelents $ 9,127 $ 5,908 Trade accounts receivable,net 37,091 35,367 Inventories, net 52,079 47,247 Deferred Income taxes 4,216 4,469 Other 3,111 4,104 -------- -------- Total current assets 105,624 97,095 Property,plant and equipment,net 33,222 30,210 Investments in affiliates 0 2,550 Goodwill 12,717 12,876 Deferred income taxes 15,668 20,164 Intangible pension asset 0 24 Other assets 9,406 7,439 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 1,607 $ 2,429 Current maturities on long-term debt 3,018 2,857 Accounts payable 17,241 16,115 Accrued liabilites 27,262 24,885 ------- ------- Total current liabilities 49,128 46,286 Long-term debt 16,813 16,584 Accrued retirement benefits 49,456 56,732 ------ ------- 115,397 119,602 Minority interest 509 485 Shareholders'equity: Common stock 11,653 11,653 Retained earnings 88,443 83,191 Unearned Compensation (304) - (20,301) (26,978) -------- -------- 77,941 67,866 Less treasury stock, at cost 16,760 17,595 -------- -------- Total shareholders' equity 60,731 50,271 $176,637 $170,358 -------- --------- -------- ---------