| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
__________
FORM 10-Q
__________
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended September 30, 2000 | ||
| OR | ||
| [_] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from ___________ to __________ | ||
| 1-6112 | ||
| (Commission File Number) | ||
| __________ | ||
| NORTEK, INC. | ||
| (Exact name of registrant as specified in its charter) | ||
| __________ | ||
| Delaware | 05-0314991 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| 50 Kennedy Plaza, Providence, RI | 02903-2360 | |
| (Address of principal executive offices) | (Zip Code) | |
| (401) 751-1600 | ||
| (Registrant's telephone number, including area code) | ||
| __________ | ||
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. |
| Yes |X| No |_| |
| The total number of shares of the registrant's Common Stock: |
| Class | Shares Outstanding November 3, 2000 | |
|---|---|---|
|
| ||
| Common stock, $1.00 par value | 10,372,763 |
|
| Special common stock, $1.00 par value | 539,524 | |
|
| ||
| NORTEK, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEET |
| (Dollar amounts in thousands) |
| September 30, 2000 |
December 31, 1999 | |||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Unrestricted | ||||||||
| Cash and cash equivalents | $ | 91,618 | $ | 80,893 | ||||
| Marketable securities available for sale | -- | 34,219 | ||||||
| Restricted | ||||||||
| Investments and marketable securities at cost, which | ||||||||
| approximates market | 9,997 | 11,240 | ||||||
| Accounts receivable, less allowances of $12,312 and $13,019 | 299,113 | 243,763 | ||||||
| Inventories: | ||||||||
| Raw materials | 102,619 | 89,581 | ||||||
| Work in process | 24,428 | 20,844 | ||||||
| Finished goods | 126,235 | 102,253 | ||||||
| 253,282 | 212,678 | |||||||
| Prepaid expenses | 13,935 | 11,864 | ||||||
| Other current assets | 13,553 | 16,787 | ||||||
| Prepaid income taxes | 62,000 | 66,824 | ||||||
| Total current assets | 743,498 | 678,268 | ||||||
| Property and Equipment, at Cost: | ||||||||
| Land | 17,035 | 16,270 | ||||||
| Buildings and improvements | 126,103 | 127,736 | ||||||
| Machinery and equipment | 366,635 | 348,445 | ||||||
| 509,773 | 492,451 | |||||||
| Less accumulated depreciation | 187,806 | 163,834 | ||||||
| Total property and equipment, net | 321,967 | 328,617 | ||||||
| Other Assets: | ||||||||
| Goodwill, less accumulated amortization of $69,098 and $56,942 | 587,338 | 589,532 | ||||||
| Intangible assets, less accumulated amortization of | ||||||||
| $20,505 and $15,956 | 126,727 | 133,040 | ||||||
| Deferred debt expense | 19,628 | 22,068 | ||||||
| Restricted investments and marketable securities | ||||||||
| held by a pension trust | 23,465 | 15,677 | ||||||
| Other | 43,755 | 42,482 | ||||||
| 800,913 | 802,799 | |||||||
| $ | 1,866,378 | $ | 1,809,684 | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| NORTEK, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEET |
| (Dollar amounts in thousands) |
| (Continued) |
| September 30, 2000 |
December 31, 1999 | |||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| Liabilities and Stockholders' Investment | ||||||||
| Current Liabilities: | ||||||||
| Notes payable and other short-term obligations | $ | 12,021 | $ | 8,476 | ||||
| Current maturities of long-term debt | 5,321 | 5,564 | ||||||
| Accounts payable | 173,599 | 149,772 | ||||||
| Accrued expenses and taxes, net | 186,236 | 174,662 | ||||||
| Total current liabilities | 377,177 | 338,474 | ||||||
| Other Liabilities: | ||||||||
| Deferred income taxes | 69,079 | 73,499 | ||||||
| Other | 121,315 | 114,278 | ||||||
| 190,394 | 187,777 | |||||||
| Notes, Mortgage Notes and Obligations | ||||||||
| Payable, Less Current Maturities | 1,017,062 | 1,023,616 | ||||||
| Stockholders' Investment: | ||||||||
| Preference stock, $1 par value; authorized 7,000,000 | ||||||||
| shares, none issued | -- | -- | ||||||
| Common stock, $1 par value; authorized 40,000,000 | ||||||||
| shares; 18,749,951 and 18,738,292 shares issued | 18,749 | 18,738 | ||||||
| Special common stock, $1 par value; authorized 5,000,000 | ||||||||
| shares; 830,277 and 840,436 shares issued | 831 | 841 | ||||||
| Additional paid-in capital | 208,808 | 208,755 | ||||||
| Retained earnings | 182,066 | 143,266 | ||||||
| Accumulated other comprehensive loss | (17,027 | ) | (11,822 | ) | ||||
| Less --treasury common stock at cost, | ||||||||
| 8,377,830 and 7,793,217 shares | (109,613 | ) | (97,894 | ) | ||||
| --treasury special common stock | ||||||||
| at cost, 290,106 and 290,054 shares | (2,069 | ) | (2,067 | ) | ||||
| Total stockholders' investment | 281,745 | 259,817 | ||||||
| $ | 1,866,378 | $ | 1,809,684 | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| NORTEK, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
| (In thousands except per share amounts) |
| For The Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, 2000 |
October 2, 1999 | |||||||
| (Unaudited) | ||||||||
| Net Sales | $ | 590,790 | $ | 553,493 | ||||
| Costs and Expenses: | ||||||||
| Cost of products sold | 433,269 | 396,014 | ||||||
| Selling, general and administrative expense | 99,064 | 93,323 | ||||||
| Amortization of goodwill and intangible assets | 5,809 | 5,074 | ||||||
| 538,142 | 494,411 | |||||||
| Operating earnings | 52,648 | 59,082 | ||||||
| Interest expense | (24,400 | ) | (24,225 | ) | ||||
| Investment income | 1,752 | 1,643 | ||||||
| Earnings before provision for income taxes | 30,000 | 36,500 | ||||||
| Provision for income taxes | 14,300 | 15,900 | ||||||
| Net Earnings | $ | 15,700 | $ | 20,600 | ||||
| Net Earnings Per Share of Common Stock: | ||||||||
| Basic | $ | 1.42 | $ | 1.74 | ||||
| Diluted | $ | 1.42 | $ | 1.70 | ||||
| Weighted Average Number of Shares: | ||||||||
| Basic | 11,025 | 11,808 | ||||||
| Diluted | 11,057 | 12,104 | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| NORTEK, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
| (In thousands except per share amounts) |
| For The Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, 2000 |
October 2, 1999 | |||||||
| (Unaudited) | ||||||||
| Net Sales | $ | 1,686,240 | $ | 1,504,281 | ||||
| Costs and Expenses: | ||||||||
| Cost of products sold | 1,229,408 | 1,077,901 | ||||||
| Selling, general and administrative expense | 299,853 | 266,548 | ||||||
| Amortization of goodwill and intangible assets | 17,214 | 14,913 | ||||||
| 1,546,475 | 1,359,362 | |||||||
| Operating earnings | 139,765 | 144,919 | ||||||
| Interest expense | (72,994 | ) | (72,564 | ) | ||||
| Investment income | 5,129 | 6,145 | ||||||
| Earnings before provision for income taxes | 71,900 | 78,500 | ||||||
| Provision for income taxes | 33,100 | 34,600 | ||||||
| Net Earnings | $ | 38,800 | $ | 43,900 | ||||
| Net Earnings Per Share of Common Stock: | ||||||||
| Basic | $ | 3.43 | $ | 3.72 | ||||
| Diluted | $ | 3.42 | $ | 3.65 | ||||
| Weighted Average Number of Shares: | ||||||||
| Basic | 11,299 | 11,802 | ||||||
| Diluted | 11,344 | 12,027 | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| NORTEK, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
| (Amounts in thousands) |
| For the Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, 2000 |
October 2, 1999 | |||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | 38,800 | $ | 43,900 | ||||
| Adjustments to reconcile net earnings to cash: | ||||||||
| Depreciation and amortization expense | 45,222 | 40,133 | ||||||
| Non-cash interest expense | 2,981 | 2,828 | ||||||
| Gain on sale of land | (1,704 | ) | -- | |||||
| Deferred federal income tax provision | 5,000 | 18,000 | ||||||
| Changes in certain assets and liabilities, net | ||||||||
| of effects from acquisitions and dispositions: | ||||||||
| Accounts receivable, net | (50,656 | ) | (54,968 | ) | ||||
| Prepaid and other current assets | (1,122 | ) | 2,276 | |||||
| Inventories | (35,968 | ) | (23,480 | ) | ||||
| Accounts payable | 18,194 | 35,385 | ||||||
| Accrued expenses and taxes | 6,357 | (13,092 | ) | |||||
| Long-term assets, liabilities and other, net | 1,476 | (453 | ) | |||||
| Total adjustments to net earnings | (10,220 | ) | 6,629 | |||||
| Net cash provided by operating activities | 28,580 | 50,529 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (20,759 | ) | (34,400 | ) | ||||
| Net cash paid for businesses acquired | (10,053 | ) | (113,018 | ) | ||||
| Purchase of investments and marketable securities | (4,004 | ) | (79,295 | ) | ||||
| Proceeds from the sale of investments and marketable securities | 38,439 | 176,339 | ||||||
| Proceeds from the sale of fixed assets | 5,766 | -- | ||||||
| Change in restricted cash and investments | (6,418 | ) | (3,968 | ) | ||||
| Other, net | (3,328 | ) | (6,863 | ) | ||||
| Net cash used in investing activities | $ | (357 | ) | $ | (61,205 | ) | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| NORTEK, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
| (Amounts in thousands) |
| (Continued) |
| For the Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30, 2000 |
October 2, 1999 | |||||||
| (Unaudited) | ||||||||
| Cash flows from financing activities: | ||||||||
| Net (decrease) increase in borrowings | $ | (5,694 | ) | $ | 1,395 | |||
| Purchase of Nortek common and special common stock | (11,776 | |||||||