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 21,
2009
Twin Disc,
Incorporated
(exact
name of registrant as specified in its charter)
|
WISCONSIN
|
001-7635
|
39-0667110
|
|
(State
or other jurisdiction
|
(Commission
|
(IRS
Employer
|
|
of
incorporation)
|
File
Number)
|
Identification
No.)
|
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:
|
[
]
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
[
]
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
[
]
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
[
]
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
|
Item 2.02
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Results
of Operations and Financial
Condition
|
The
Company has reported its 3rd quarter
2009 financial results. The Company's press release dated April 21, 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.
|
Item 7.01
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Regulation
FD Disclosure
|
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.
|
Item
9.01
|
Financial
Statements and Exhibits
|
(c)
Exhibits.
EXHIBIT
NUMBER DESCRIPTION
99.1
Press Release announcing 3rd 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.
|
Date:
April 21, 2009
|
Twin
Disc, Inc.
|
|
/s/
THOMAS E. VALENTYN
|
|
|
Thomas
E. Valentyn
|
|
|
General
Counsel & Secretary
|
FOR
IMMEDIATE RELEASE
Contact:
Christopher J. Eperjesy
(262)
638-4343
TWIN
DISC, INC. ANNOUNCES FISCAL 2009
THIRD
QUARTER FINANCIAL RESULTS
RACINE,
WISCONSIN—April 21, 2009—Twin
Disc, Inc. (NASDAQ: TWIN) today reported financial results for the fiscal
2009 third quarter and nine months ended March 27, 2009.
Sales for
the fiscal 2009 third quarter were $69,292,000, compared to $85,838,000 for the
fiscal 2008 third quarter. Year-to-date, sales were $223,562,000
compared to $241,345,000 for the fiscal 2008 nine months. The decline
in sales for the fiscal 2009 third quarter was primarily due to lower sales of
products to customers in the mega yacht, oil and gas, and industrial
markets. This was partially offset by higher sales to customers in
the commercial marine, land-based military and airport rescue fire fighting
(ARFF) markets. For the fiscal 2009 third quarter, foreign currency
translations negatively impacted sales by $2,906,000.
Gross
margin, as a percentage of fiscal 2009 third-quarter sales, was 27.6 percent,
compared to 31.0 percent in last year’s comparable
period. Year-to-date, gross profit, as a percentage of sales, was
27.8 percent down from 31.4 percent for the fiscal 2008 nine
months. Gross margin for fiscal 2009’s third quarter was negatively
impacted by lower sales volumes, unfavorable product mix, increased warranty and
pension expenses and the impact of foreign currency translations.
For the
2009 third quarter, marketing, engineering and administrative (ME&A)
expenses, as a percentage of sales, were 21.0 percent, compared to 17.4 percent
for the fiscal 2008 third quarter. For the fiscal 2009 third quarter,
stock based compensation expense increased $2,028,000 versus the third quarter
of fiscal 2008 as the prior year figure included a $2,238,000 benefit related to
the reversal of stock based compensation liabilities due to the decline in the
Company’s stock price in the third quarter of fiscal 2008. The
current period increase was partially offset by a reduction of $1,508,000 in
accrued bonus compensation and $824,000 for foreign currency
translations. Year-to-date, ME&A expenses, as a percentage of
sales, were 21.4 percent, compared to 19.5 percent for the fiscal 2008 first
nine months. Increased expenditures related to the implementation of
the Company’s new global ERP system and severance costs taken in the second
fiscal quarter, and higher pension expenses were partially offset by lower bonus
expense and favorable foreign currency translation.
Year-to-date,
the effective tax rate of 29.2 percent improved over the prior year rate of 33.3
percent due primarily to a 5.9 percent reduction in the Italian corporate tax
rate effective with the start of fiscal 2009, a shift in earnings to lower tax
subsidiaries, the impact of foreign tax credits on the domestic tax rate and
provision to return adjustments recorded in the third quarter based on changes
in estimates. The effective tax rate for the fiscal 2009 third
quarter of 11.8 percent also compares favorably to the prior year rate of 25.4
percent as the items noted above primarily impacted the third
quarter. The prior year rate benefited from an adjustment to the
Italian deferred tax balance related to the announced rate
reduction.
Net
earnings for the fiscal 2009 third quarter were $2,850,000, or $0.26 per diluted
share, compared with $7,929,000, or $0.70 per diluted share, for the fiscal 2008
third quarter. Year-to-date, earnings were $8,748,000, or $0.78 per
diluted share, compared to $17,243,000, or $1.51 per diluted share for the
fiscal 2008 nine months.
Earnings
before interest, taxes, depreciation and amortization (EBITDA)* was $6,292,000
for the fiscal 2009 third quarter, compared to $13,271,000 for the fiscal 2008
third quarter. For the fiscal 2009 nine months, EBITDA was
$21,532,000, compared to $33,680,000 for the fiscal 2008 comparable
period.
Commenting
on the results, Michael E. Batten, Chairman and Chief Executive Officer, said:
“Going into the third quarter, we knew that Twin Disc was not immune from the
challenges facing the global economy and while we saw signs of softening in
certain markets as early as the first quarter, our overall business remained
firm. However, beginning in February and accelerating during the
remainder of the third quarter, we experienced significant slowdown in volumes
and orders throughout certain markets such as the mega yacht and industrial
markets that we had not experienced during the fiscal 2009 first
half. As the slowdown developed in these markets, we began the
process of aligning our global cost structure with perceived business levels,
which included slowing production primarily at our European operations, which
are closely tied to the mega yacht marine markets and adjusting our inventory
and employee levels at our subsidiaries. We will continue to take the
appropriate actions to manage our cost structure and maintain a level of
profitability that we feel the Company can achieve despite slowing
sales.
“Our
diverse and niche market focus has helped somewhat insulate Twin Disc from the
impacts of the global slowdown as certain of our markets experienced growth
during the third quarter. Sales to military and commercial marine
customers were up during the quarter, and while orders have slowed, they have
not experienced, nor do we anticipate them to experience, the accelerated level
of decline that we saw in the mega yacht marine markets. Demand for
ARFF vehicles has remained good and we continue to benefit from strong global
demand and market share gains our largest customer in the ARFF market is
making. Our military business, both for land-based transmissions and
marine propulsion systems, continues to perform to our expectations and we
expect this to carry on for the foreseeable future.
“Most
importantly, we continue to plan for the future. We are optimistic
that once the global economy stabilizes we will have many competitive and
financial advantages to offer both our existing customers and new
customers. Specifically, we have developed three new products that
will be introduced throughout fiscal 2010. These products include: a
hybrid-ready transmission that helps lower the environmental and noise pollution
boats emit when they are operating at low RPM as they enter and leave a port; a
joystick control system that will complement our existing QuickShift®
transmission technology; and a new 7500 series transmission specifically
designed for use in the oil and gas market for pressure pumping
applications. The 7500 series transmission, once available, will be
the first transmission ever designed specifically for pressure pumping and we
believe the market opportunity is significantly larger than the market for our
successful 8500 series transmission.”
Christopher
J. Eperjesy, Vice President - Finance, Chief Financial Officer and Treasurer,
stated: “Our balance sheet and overall liquidity remain
strong. Initiatives to improve working capital are still in their
infancy and we are optimistic that these initiatives will begin to take hold in
the coming quarters. Working capital at March 27, 2009 was
$108,620,000, compared to $106,107,000 at June 30, 2008 and $105,573,000 at
March 28, 2008. We expect inventory levels to stabilize and
eventually decline as we slow production at our European and domestic
operations. At March 27, 2009, the Company had cash of $12,303,000,
compared to $14,447,000 at fiscal year end. Total debt, at March 27,
2009, was $58,008,000, compared to $49,957,000 at June 30, 2008 and $57,353,000
at March 28, 2008. We continue to have availability under our $35
million revolver, which expires in October 2010. As of March 2009,
the interest rate on the Company’s revolver was 1.75 percent. Total
debt-to-total capital was 33.2 percent at March 27, 2009.”
Mr.
Batten continued, “Our six-month backlog at March 27, 2009 was $81,529,000
compared to $120,774,000 at June 30, 2008, and $125,685,000 at March 28,
2008. While expected to be down, the acceleration of the decline in
our backlog during the last two months of the third quarter was
disappointing. Although it is difficult to predict the extent of the
downturn’s impact on our business, we remain committed to servicing our niche
and global markets with exceptional products and services and we are confident
in Twin Disc’s long-term business opportunities,” concluded Mr.
Batten.
Twin Disc
will be hosting a conference call today (April 21, 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.
April 21, 2009 until midnight April 28, 2009. The number to hear the
teleconference replay is 800-406-7325. The access code for the replay
is 4055769.
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--
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per-share data, unaudited)
|
|||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||
|
March
27,
2009
|
March
28,
2008
|
March
27,
2009
|
March
28,
2008
|
||||||||
|
Net
sales
|
$ | 69,292 | $ | 85,838 | $ | 223,562 | $ | 241,345 | |||
|
Cost
of goods sold
|
50,141 | 59,211 | 161,386 | 165,522 | |||||||
|
Gross
profit
|
19,151 | 26,627 | 62,176 | 75,823 | |||||||
|
Marketing,
engineering and administrative expenses
|
14,517 | 14,969 | 47,843 | 47,041 | |||||||
|
Interest
expense
|
526 | 757 | 1,837 | 2,325 | |||||||
|
Other
expense, net
|
1,049 | 194 | 37 | 368 | |||||||
|
Earnings
before income taxes and minority interest
|
3,059 | 10,707 | 12,459 | 26,089 | |||||||
|
Income
taxes
|
362 | 2,719 | 3,639 | 8,686 | |||||||
|
Minority
interest
|
153 | (59 | (72 | (160 | |||||||
|
Net
earnings
|
$ | 2,850 | $ | 7,929 | $ | 8,748 | $ | 17,243 | |||
|
Earnings
per share:
|
|||||||||||
|
Basic
|
$ | 0.26 | $ | 0.71 | $ | 0.79 | $ | 1.52 | |||
|
Diluted
|
$ | 0.26 | $ | 0.70 | $ | 0.78 | $ | 1.51 | |||
|
Average
shares outstanding:
|
|||||||||||
|
Basic
|
11,006 | 11,198 | 11,127 | 11,318 | |||||||
|
Diluted
|
11,041 | 11,310 | 11,197 | 11,447 | |||||||
|
Dividends
per share
|
$ | 0.070 | $ | 0.070 | $ | 0.210 | $ | 0.195 | |||
|
RECONCILIATION
OF CONSOLIDATED NET EARNINGS TO EBITDA
(In
thousands, unaudited)
|
|||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||
|
March
27,
2009
|
March
28,
2008
|
March
27,
2009
|
March
28,
2008
|
||||||||
|
Net
earnings
|
$ | 2,850 | $ | 7,929 | $ | 8,748 | $ | 17,243 | |||
|
Income
taxes
|
362 | 2,719 | 3,639 | 8,686 | |||||||
|
Interest
expense
|
526 | 757 | 1,837 | 2,325 | |||||||
|
Depreciation
and amortization
|
2,554 | 1,866 | 7,308 | 5,426 | |||||||
|
Earnings
before interest, taxes, depreciation and amortization
|
$ | 6,292 | $ | 13,271 | $ | 21,532 | $ | 33,680 | |||
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|||||
|
(In
thousands, unaudited)
|
|||||
|
March
27,
|
June
30,
|
||||
|
2009
|
2008
|
||||
|
ASSETS
|
|||||
|
Current
assets:
|
|||||
|
Cash
|
$ | 12,303 | $ | 14,447 | |
|
Trade
accounts receivable, net
|
55,102 | 67,611 | |||
|
Inventories,
net
|
97,906 | 97,691 | |||
|
Deferred
income taxes
|
6,265 | 6,297 | |||
|
Other
|
8,780 | 9,649 | |||
|
Total
current assets
|
180,356 | 195,695 | |||
|
Property,
plant and equipment, net
|
63,548 | 67,855 | |||
|
Goodwill,
net
|
16,651 | 18,479 | |||
|
Deferred
income taxes
|
5,045 | 5,733 | |||
|
Intangible
assets, net
|
7,366 | 9,589 | |||
|
Other
assets
|
6,039 | 7,277 | |||
| $ | 279,005 | $ | 304,628 | ||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||
|
Current
liabilities:
|
|||||
|
Short-term
borrowings and current maturities on long-term debt
|
$ | 2,313 | $ | 1,730 | |
|
Accounts
payable
|
31,808 | 37,919 | |||
|
Accrued
liabilities
|
37,615 | 49,939 | |||
|
Total
current liabilities
|
71,736 | 89,588 | |||
|
Long-term
debt
|
55,695 | 48,227 | |||
|
Accrued
retirement benefits
|
32,713 | 34,325 | |||
|
Other
long-term liabilities
|
1,224 | 2,163 | |||
| 161,368 | 174,303 | ||||
|
Minority
interest
|
677 | 679 | |||
|
Shareholders'
equity:
|
|||||
|
Common
stock
|
14,225 | 14,693 | |||
|
Retained
earnings
|
148,776 | 142,361 | |||
|
Accumulated
other comprehensive (loss) income
|
(15,785 | 2,446 | |||
| 147,216 | 159,500 | ||||
|
Less
treasury stock, at cost
|
30,256 | 29,854 | |||
|
Total
shareholders' equity
|
116,960 | 129,646 | |||
| $ | 279,005 | $ | 304,628 | ||
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands, unaudited)
|
|||||
|
Nine
Months Ended
|
|||||
|
March
27,
2009
|
March
28,
2008
|
||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||
|
Net
earnings
|
$ | 8,748 | $ | 17,243 | |
|
Adjustments
to reconcile net earnings to cash
|
|||||
|
provided
by operating activities:
|
|||||
|
Depreciation
and amortization
|
7,308 | 5,426 | |||
|
Other
non-cash changes, net
|
417 | 2,391 | |||
|
Net
change in working capital, excluding cash and debt, and
other
|
(16,225 | (13,908 | |||
|
Net
cash provided by operating activities
|
248 | 11,152 | |||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||
|
Acquisitions
of fixed assets
|
(6,631 | (10,605 | |||
|
Proceeds
from sale of fixed assets
|
56 | 263 | |||
|
Other,
net
|
1,111 | (337 | |||
|
Net
cash used by investing activities
|
(5,464 | (10,679 | |||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||
|
Increase
(decrease) in notes payable, net
|
898 | (98 | |||
|
Proceeds
from long-term debt
|
7,939 | 12,880 | |||
|
Proceeds
from exercise of stock options
|
110 | 133 | |||
|
Purchase
of treasury stock
|
(1,813 | (15,643 | |||
|
Dividends
paid
|
(2,333 | (2,220 | |||
|
Other,
net
|
- | 19 | |||
|
Net
cash provided (used) by financing activities
|
4,801 | (4,929 | |||
|
Effect
of exchange rate changes on cash
|
(1,729 | 1,888 | |||
|
Net
change in cash
|
(2,144 | (2,568 | |||
|
Cash
Balance:
|
|||||
|
Beginning
of period
|
14,447 | 19,508 | |||
|
End
of period
|
$ | 12,303 | $ | 16,940 | |
###