UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-11288
ACTUANT CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-0168610
(State of incorporation) (I.R.S. Employer Id. No.)
|
6100 NORTH BAKER ROAD
MILWAUKEE, WISCONSIN 53209
Mailing address: P. O. Box 325, Milwaukee, Wisconsin 53201
(Address of principal executive offices)
(414) 352-4160
(Registrant's telephone number, including area code)
APPLIED POWER INC.
(Former name, former address and former fiscal year, if changed since last
report)
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.
The number of shares outstanding of the registrant's Class A Common Stock as of March 30, 2001 was 7,942,521.
TABLE OF CONTENTS
Page No.
-------
Part I - Financial Information
------------------------------
Item 1 - Financial Statements (Unaudited)
Actuant Corporation-
Condensed Consolidated Statements of Earnings..........................................3
Condensed Consolidated Balance Sheets..................................................4
Condensed Consolidated Statements of Cash Flows........................................5
Notes to Condensed Consolidated Financial Statements...................................6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................15
Item 3 - Quantitative and Qualitative Disclosures About Market Risk........................20
Part II - Other Information
---------------------------
Item 1 - Legal Proceedings.................................................................21
Item 2 - Changes in Securities..............................................................*
Item 3 - Defaults Upon Senior Securities....................................................*
Item 4 - Submission of Matters to a Vote of Security Holders...............................21
Item 5 - Other Information..................................................................*
Item 6 - Exhibits and Reports on Form 8-K..................................................22
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PART I - FINANCIAL INFORMATION
ACTUANT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
------------------------------ ------------------------------
February 28, February 29, February 28, February 29,
2001 2000 2001 2000
------------ ------------- ------------- --------------
Net Sales............................................ $ 113,335 $ 184,087 $ 230,855 $ 357,128
Cost of Products Sold................................ 72,359 118,396 148,049 229,319
------------ ----------- ----------- ------------
Gross Profit.................................... 40,976 65,691 82,806 127,809
Engineering, Selling and Administrative Expenses..... 21,698 34,930 43,268 68,568
Amortization of Intangible Assets.................... 1,369 1,977 2,868 3,956
Contract Termination Recovery........................ - - - (1,446)
Corporate Reorganization Expenses.................... - 3,487 - 3,487
------------ ----------- ----------- ------------
Operating Earnings.............................. 17,909 25,297 36,670 53,244
Other Expense(Income):
Net Financing Costs............................ 12,529 7,692 25,500 18,142
Other, net..................................... 165 (242) (1,297) (652)
------------ ----------- ----------- ------------
Earnings from Continuing Operations before Income Tax 5,215 17,847 12,467 35,754
Expense
Income Tax Expense................................... 2,116 5,953 5,084 12,869
------------ ----------- ----------- ------------
Earnings from Continuing Operations.................. 3,099 11,894 7,383 22,885
Discontinued Operations, net of Income Taxes........ - 8,648 - 21,339
------------ ----------- ----------- ------------
Net Earnings......................................... $ 3,099 $ 20,542 $ 7,383 $ 44,224
============ =========== =========== ============
Basic Earnings Per Share:
Continuing Operations.............................. $ 0.39 $ 1.52 $ 0.93 $ 2.93
Discontinued Operations............................ - 1.11 - 2.73
------------ ----------- ----------- ------------
Total.............................................. $ 0.39 $ 2.63 $ 0.93 $ 5.67
============ =========== =========== ============
Diluted Earnings Per Share:
Continuing Operations.............................. $ 0.37 $ 1.47 $ 0.89 $ 2.84
Discontinued Operations............................ - 1.07 - 2.64
------------ ----------- ----------- ------------
Total.............................................. $ 0.37 $ 2.54 $ 0.89 $ 5.48
============ =========== =========== ============
Weighted Average Common Shares Outstanding:
Basic.............................................. 7,934 7,810 7,931 7,805
Diluted............................................ 8,289 8,075 8,322 8,069
|
See accompanying Notes to Condensed Consolidated Financial Statements
ACTUANT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
February 28, August 31,
2001 2000
---------------- ---------------
(Unaudited)
ASSETS
------
Current Assets:
Cash and cash equivalents.............................................. $ 254 $ 9,896
Accounts receivable, net............................................... 87,276 83,553
Inventories, net....................................................... 62,458 67,599
Receivable from APW Ltd................................................ - 32,894
Prepaid expenses....................................................... 6,239 5,230
Deferred income taxes.................................................. 4,514 4,542
-------------- -------------
Total Current Assets........................................... 160,741 203,714
Property, Plant and Equipment, net.............................................. 47,045 49,168
Goodwill, net................................................................... 114,705 116,348
Other Intangibles, net.......................................................... 19,919 21,040
Other Long-term Assets.......................................................... 28,323 26,711
-------------- -------------
Total Assets.................................................................... $ 370,733 $ 416,981
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Short-term borrowings.................................................. $ 802 $ 1,259
Trade accounts payable................................................. 38,877 43,455
Accrued compensation and benefits...................................... 13,339 16,365
Income taxes payable................................................... 15,018 39,852
Other current liabilities.............................................. 26,697 25,312
-------------- -------------
Total Current Liabilities...................................... 94,733 126,243
Long-term Debt.................................................................. 412,110 431,215
Deferred Income Taxes........................................................... 4,338 4,486
Other Long-term Liabilities..................................................... 16,670 17,992
Shareholders' Equity:
Class A common stock, $0.20 par value, authorized 16,000,000 shares,
issued and outstanding 7,942,521 and 7,922,910 shares, respectively 1,589 7,923
Additional paid-in capital............................................. (625,376) (632,050)
Accumulated other comprehensive income................................. (18,877) (16,991)
Retained earnings...................................................... 485,546 478,163
-------------- -------------
Total Shareholders' Deficit..................................................... (157,118) (162,955)
-------------- -------------
Total Liabilities and Shareholders' Equity...................................... $ 370,733 $ 416,981
============== =============
|
See accompanying Notes to Condensed Consolidated Financial Statements
ACTUANT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Six Months
Ended Ended
February 28, February 29,
2001 2000
----------------- ------------------
Operating Activities
--------------------
Net earnings from continuing operations.................................... $ 7,383 $ 22,885
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization................................... 8,050 12,381
Other non-cash items............................................ (786) -
Changes in operating assets and liabilities, excluding
the effects of business acquisitions:
Accounts receivable.................................... (3,458) (27,838)
Inventories............................................ 5,129 (1,745)
Prepaid expenses and other assets...................... (558) 341
Trade accounts payable................................. (4,232) 2,542
Other accrued liabilities.............................. (3,241) (2,899)
Receivable from APW Ltd................................ 30,894 -
Income taxes payable................................... (24,726) -
------------- ---------------
Cash provided by continuing operations................................ 14,455 5,667
Cash provided by discontinued operations.............................. - 19,751
------------- ---------------
Net cash provided by operating activities............................. 14,455 25,418
Investing Activities
--------------------
Proceeds from the sale of property, plant and equipment.................... - 703
Additions to property, plant and equipment................................. (3,578) (5,744)
Product line dispositions and other........................................ 238 2,987
Net investing activities of discontinued operations........................ - (28,615)
------------- ---------------
Net cash used in investing activities................................. (3,340) (30,669)
Financing Activities
--------------------
Net (repayments) borrowings of debt........................................ (20,895) 376,573
Additions to receivables financing facility................................ - 1,420
Dividends paid on common stock............................................. - (1,171)
Proceeds from stock option exercises....................................... 340 1,604
Net financing activities of discontinued operations........................ - (386,228)
------------- ---------------
Net cash used in financing activities................................. (20,555) (7,802)
Effect of exchange rate changes on cash.................................... (202) (186)
------------- ---------------
Net decrease in cash and cash equivalents.................................. (9,642) (13,239)
Effect of change in cash of discontinued operations........................ - 14,752
Cash and cash equivalents - beginning of period............................ 9,896 7,256
------------- ---------------
Cash and cash equivalents - end of period.................................. $ 254 $ 8,769
============= ===============
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See accompanying Notes to Condensed Consolidated Financial Statements
ACTUANT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for the six months ended February 28, 2001 are not necessarily indicative of the results that may be expected for the entire fiscal year ending August 31, 2001.
On January 9, 2001, our shareholders approved a reverse stock split whereby every five shares of common stock were converted into one share of common stock. In addition, our shareholders approved a reduction in our authorized class A common shares from 80 million to 16 million with a similar reduction for other capital stock. Where appropriate, these changes are reflected in these financial statements for all periods presented.
Accordingly, the Condensed Consolidated Statement of Earnings and the Condensed Consolidated Statement of Cash Flows for the six months ended February 29, 2000 have been reclassified to reflect the Company's former Electronics segment as a discontinued operation. Thus, the revenues, costs and expenses, and cash flows of the former Electronics segment have been excluded from the respective captions in the accompanying condensed consolidated financial statements. The net operating results of the former Electronics segment have been reported, net of applicable taxes, as "Discontinued Operations, net of Income Taxes." The net operating results of the discontinued operations include financing costs related to the debt allocated to the Electronics segment.
As a result of these factors, it is neither practical nor cost effective to segregate the amounts of raw materials, work-in-process or finished goods inventories at the respective balance sheet dates, as segregation would only be possible as the result of physical inventories which are taken at dates different from the balance sheet dates.
The reconciliations between basic and diluted earnings per share are as follows (in thousands, except per share amounts):
Three Months Ended Six Months Ended
-------------------------------- -------------------------------
February 28, February 29, February 28, February 29,
2001 2000 2001 2000
--------------- ---------------- -------------- ---------------
Numerator:
Earnings from continuing operations.................. $ 3,099 $ 11,894 $ $ 22,885
Earnings from discontinued operations................ - 8,648 - 21,339
---------- ---------- --------- ------------
Net earnings......................................... $ 3,099 $ 20,542 $ 7,383 $ 44,224
========== ========== ========= ============
Denominator:
Weighted average common shares outstanding for
basic earnings per share........................... 7,934 7,810 7,931 7,805
Net effect of dilutive stock options based on the
treasury stock method using average market price... 355 265 391 264
---------- ---------- --------- ------------
Weighted average common and equivalent
shares outstanding for diluted earnings per share.. 8,289 8,075 8,322 8,069
========== ========== ========= ============
Basic Earnings Per Share:
Earnings from continuing operations.................. $ 0.39 $ 1.52 $ 0.93 $ 2.93
Earnings from discontinued operations................ - 1.11 - 2.73
---------- ---------- --------- ------------
Basic earnings per share............................. $ 0.39 $ 2.63 $ 0.93 $ 5.67
========== ========== ========= ============
Diluted Earnings Per Share:
Earnings from continuing operations.................. $ 0.37 $ 1.47 $ 0.89 $ 2.84
Earnings from discontinued operations................ - 1.07 - 2.64
---------- ---------- --------- ------------
Diluted earnings per share........................... $ 0.37 $ 2.54 $ 0.89 $ 5.48
========== ========== ========= ============
|
The components of comprehensive income are as follows (in thousands):
Three Months Ended Six Months Ended
--------------------------------- --------------------------------
February 28, February 29, February 28, February 29,
2001 2000 2001 2000
--------------- ---------------- -------------- ----------------
Net earnings....................................... $ 3,099 $ 20,542 $ 7,383 $ 44,224
Foreign currency translation adjustments........... (370) (4,778) (1,886) (2,595)
------------- -------------- ------------ ------------
Comprehensive income............................... $ 2,729 $ 15,764 $ 5,497 $ 41,629
============= ============== ============ ============
|
The following table summarizes continuing operations financial information by reportable segment (in thousands).
Three Months Ended Six Months Ended
--------------------------------- --------------------------------------
February 28, February 29, February 28, February 29,
2001 2000 2001 2000
---------------- --------------- ------------------ -----------------
Net Sales:
Tools & Supplies......................... $ 68,911 $ 79,516 $ 138,684 $ 150,575
Engineered Solutions..................... 44,424 104,571 92,171 206,553
---------------- --------------- ------------------ -----------------
Total.................................... $ 113,335 $ 184,087 $ 230,855 $ 357,128
---------------- --------------- ------------------ -----------------
Earnings Before Income Tax Expense:
Tools & Supplies......................... $ 11,940 $ 15,370 $ 23,435 $ 26,272
Engineered Solutions..................... 7,310 17,114 15,724 37,620
General corporate and other.............. (14,035) (14,637) (26,692) (28,138)
---------------- --------------- ------------------ -----------------
Total.................................... $ 5,215 $ 17,847 $ 12,467 $ 35,754
---------------- --------------- ------------------ -----------------
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Results for the six months ended February 29, 2000 for the Engineered Solutions segment include a $1.4 million recovery related to the resolution of a contract termination originally recorded in fiscal 1999. In addition, results for the three and six months ended February 29, 2000 include corporate reorganization expenses of $3.5 million included in "General corporate and other." These corporate reorganization expenses relate to costs incurred as a result of the Distribution.
On March 21, 2001, the Company announced that it is in preliminary discussion with a number of parties regarding the possible sale of its Mox-Med business. Mox-Med provides molded and extruded silicone products for the medical and housewares industries, and has annual net sales of approximately $20 million.
CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
(Dollars in thousands)
Six Months Ended February 28, 2001
--------------------------------------------------------------------------
Actuant Non
Corporation Guarantors Guarantors Eliminations Consolidated
-------------- -------------- -------------- -------------- --------------
Net sales................................. $ 38,642 $ 112,902 $ 79,311 -- $ 230,855
Cost of products sold..................... 23,434 73,417 51,198 -- 148,049
------------ ----------- ----------- ------------ -----------
Gross profit......................... 15,208 39,485 28,113 -- 82,806
Operating expenses........................ 11,224 19,199 12,845 43,268
Amortization of intangible assets......... 5 2,731 132 -- 2,868
------------ ----------- ----------- ------------ -----------
Operating earnings................. 3,979 17,555 15,136 -- 36,670
Other expense (income):
Intercompany activity, net........ (2,288) 1,218 1,070 -- --
Net financing costs............... 25,031 -- 469 -- 25,500
Other, net........................ 182 14 (1,493) -- (1,297)
------------ ----------- ----------- ------------ -----------
Earnings (Loss) before income tax
(benefit) expense ........................ (18,946) 16,323 15,090 -- 12,467
Income tax (benefit) expense.............. (6,986) 6,249 5,821 -- 5,084
------------ ----------- ----------- ------------ -----------
Net (loss) earnings....................... $ (11,960) $ 10,074 $ 9,269 -- $ 7,383
============ =========== =========== ============ ===========
Six Months Ended February 29, 2000
---------------------------------------------------------------------------
Actuant Non
Corporation Guarantors Guarantors Eliminations Consolidated
-------------- -------------- -------------- -------------- --------------
Net sales.................................... $ 41,367 $ 103,698 $ 212,063 $ -- $ 357,128
Cost of products sold........................ 24,449 68,243 136,627 -- 229,319
------------ ----------- ----------- ------------ ------------
Gross profit............................ 16,918 35,455 75,436 -- 127,809
Operating expenses........................... 17,292 14,969 38,348 70,609
Amortization of intangible assets............ 5 2,045 1,906 -- 3,956
------------ ----------- ----------- ------------ ------------
Operating earnings.................... (379) 18,441 35,182 -- 53,244
Other expense (income):
Intercompany activity, net........... (155) 6,177 3,614 (9,636) --
Net financing costs.................. 13,962 3,361 819 -- 18,142
Other, net........................... (513) 139 (278) -- (652)
------------ ----------- ----------- ------------ -------------
Earnings (Loss) from continuing operations
before income tax (benefit) expense.......... (13,673) 8,764 31,027 9,636 35,754
Income tax (benefit) expense................. (5,927) 5,959 9,746 3,091 12,869
------------ ----------- ----------- ------------ ------------
Earnings (Loss) from continuing operations... (7,746) 2,805 21,281 6,545 22,885
Earnings from discontinued operations........ -- -- 21,339 -- 21,339
------------ ----------- ----------- ------------ ------------
Net (loss) earnings.......................... $ (7,746) $ 2,805 $ 42,620 $ 6,545 $ 44,224
============ =========== =========== ============ ============
|
CONDENSED CONSOLIDATING BALANCE SHEET
(Dollars in thousands)
February 28, 2001
----------------------------------------------------------------------------
Actuant Non
Corporation Guarantors Guarantors Eliminations Consolidated
-------------- -------------- -------------- -------------- --------------
ASSETS
Current assets
Cash and cash equivalents................... $ 853 $ (150) $ (449) -- $ 254
Accounts receivable, net.................... 11,808 39,674 35,794 -- 87,276
Inventories, net............................ 10,942 40,097 11,419 -- 62,458
Prepaid expenses............................ 1,164 740 4,335 -- 6,239
Deferred income taxes....................... 3,165 7 1,342 -- 4,514
----------- ----------- ----------- ----------- -----------
Total current assets.................. 27,932 80,368 52,441 -- 160,741
Property, plant and equipment, net................ 4,717 33,074 9,254 -- 47,045
Goodwill, net..................................... -- 109,607 5,098 -- 114,705
Other intangibles, net............................ 14 19,820 85 -- 19,919
Other long-term assets............................ 27,652 166 505 -- 28,323
----------- ----------- ----------- ----------- -----------
Total assets...................................... $ 60,315 $ 243,035 $ 67,383 -- $ 370,733
=========== =========== =========== =========== ===========
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings....................... $ -- $ -- $ 802 -- $ 802
Trade accounts payable...................... 6,440 18,700 13,737 -- 38,877
Accrued compensation and benefits........... 4,346 3,826 5,167 -- 13,339
Income taxes payable........................ 5,707 5,941 3,370 -- 15,018
Other current liabilities................... 13,156 6,316 7,225 -- 26,697
----------- ----------- ----------- ----------- -----------
Total current liabilities............ 29,649 34,783 30,301 -- 94,733
Long-term debt.................................... 397,723 540 13,847 -- 412,110
Deferred income taxes............................. 2,969 (860) 2,229 -- 4,338
Other long-term liabilities....................... 16,611 (262) 321 -- 16,670
Intercompany balances, net........................ 747,497 (24,765) (722,732) -- --
Total shareholders' (deficit) equity.............. (1,134,134) 233,599 743,417 -- (157,118)
----------- ----------- ----------- ----------- -----------
Total liabilities and shareholders' equity........ $ 60,315 $ 243,035 $ 67,383 -- $ 370,733
=========== =========== =========== =========== ===========
|
CONDENSED CONSOLIDATING BALANCE SHEET
(Dollars in thousands)
August 31, 2000
--------------------------------------------------------------------------
Actuant Non
Corporation Guarantors Guarantors Eliminations Consolidated
-------------- -------------- -------------- -------------- --------------
ASSETS
Current assets
Cash and cash equivalents.............. $ 5,076 $ 721 $ 4,099 -- $ 9,896
Accounts receivable, net............... 13,837 36,870 32,846 -- 83,553
Inventories, net....................... 10,528 45,317 11,754 -- 67,599
Receivable from APW Ltd................ 32,894 -- -- -- 32,894
Prepaid expenses....................... 699 567 3,964 -- 5,230
Deferred income taxes.................. 3,965 6 571 -- 4,542
----------- ----------- ----------- ----------- -----------
Total current assets............. 66,999 83,481 53,234 -- 203,714
Property, plant and equipment, net........... 5,010 35,473 8,685 -- 49,168
Goodwill, net................................ -- 111,246 5,102 -- 116,348
Other intangibles, net....................... 19 20,911 110 -- 21,040
Other long-term assets....................... 26,098 133 480 -- 26,711
----------- ----------- ----------- ----------- -----------
Total assets................................. $ 98,126 $ 251,244 67,611 -- $ 416,981
=========== =========== =========== =========== ===========
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings.................. $ -- $ -- $ 1,259 -- $ 1,259
Trade accounts payable................. 6,602 25,210 11,643 -- 43,455
Accrued compensation and benefits...... 7,405 4,164 4,796 -- 16,365
Income taxes payable................... (23,518) 30,660 32,710 -- 39,852
Other current liabilities.............. 7,671 8,534 9,107 -- 25,312
----------- ----------- ----------- ----------- -----------
Total current liabilities....... (1,840) 68,568 59,515 -- 126,243
Long-term debt............................... 430,675 540 -- -- 431,215
Deferred income taxes........................ 5,769 (741) (542) -- 4,486
Other long-term liabilities.................. 17,818 (462) 636 -- 17,992
Intercompany balances, net................... 687,060 (51,241) (635,819) -- --
Total shareholders' (deficit) equity......... (1,041,356) 234,580 643,821 -- (162,955)
----------- ----------- ----------- ----------- ----------
Total liabilities and shareholders' equity... $ 98,126 $ 251,244 67,611 -- $ 416,981
=========== =========== =========== =========== ===========
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(Dollars in thousands)
Six Months Ended February 28, 2001
--------------------------------------------------------------------------
Actuant
Corporation Guarantors Non Guarantors Eliminations Consolidated
----------- ---------- -------------- ------------ ------------
Operating activities
Net earnings(loss) ............................ $ (11,960) $ 10,074 $ 9,269 -- $ 7,383
Adjustments to reconcile net earnings(loss) to
cash provided by operating activities:
Depreciation and amortization............... 1,000 5,689 1,361 -- 8,050
Other non-cash items........................ (786) -- -- -- (786)
Changes in operating assets and 59,507 (31,756) (27,943) -- (192)
liabilities, net.......................... ----------- --------- ----------- ------------ -----------
Cash provided by (used in) operating activities .. 47,761 (15,993) (17,313) -- 14,455
Investing activities
Additions to property, plant and equipment.. (538) (1,380) (1,660) -- (3,578)
Product line dispositions and other......... -- 238 -- -- 238
----------- --------- ----------- ------------ -----------
Cash used in investing activities................. (538) (1,142) (1,660) (3,340)
Financing activities
Net (repayments)borrowings of debt.......... (31,729) -- 10,834 -- (20,895)
Stock option exercises and other............ 340 -- -- -- 340
Intercompany (receivables) payables......... (20,057) 16,264 3,793 -- --
----------- --------- ----------- ------------ -----------
Cash (used in) provided by financing activities... (51,446) 16,264 14,627 -- (20,555)
Effect of exchange rate changes on cash........... -- -- (202) -- (202)
----------- --------- ----------- ------------ -----------
Net decrease in cash and cash equivalents........ (4,223) (871) (4,548) -- (9,642)
Cash and cash equivalents--beginning of period..... 5,076 721 4,099 9,896
----------- --------- ----------- ------------ -----------
Cash and cash equivalents--end of period........... $ 853 $ (150) $ (449) -- $ 254
=========== ========= =========== ============ ===========
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(Dollars in thousands)
Six Months Ended February 29, 2000
--------------------------------------------------------------------------
Actuant Non
Corporation Guarantors Guarantors Eliminations Consolidated
------------ ---------- ---------- ------------ ------------
Operating activities
Net earnings(loss) from continuing operations.. $ (7,746) $ 2,805 $ 21,281 $ 6,545 $ 22,885
Adjustments to reconcile net earnings(loss)
from continuing operations to cash provided
by (used in) operating activities of
continuing operations:
Depreciation and amortization............... 1,351 4,262 6,768 -- 12,381
Changes in operating assets and
liabilities, net.......................... 6,250 (2,244) (27,060) (6,545) (29,599)
----------- --------- --------- ----------- -----------
Cash provided by (used in) operating activities
of continuing operations.......................... (145) 4,823 989 -- 5,667
Discontinued operations........................... -- -- 19,751 -- 19,751
----------- --------- --------- ----------- -----------
Total cash provided by (used in) operating
activities...................................... (145) 4,823 20,740 -- 25,418
Investing activities
Proceeds from the sale of property, plant
and equipment............................. 4 129 570 -- 703
Additions to property, plant and equipment.. (445) (2,971) (2,328) -- (5,744)
Product line dispositions and other......... -- -- 2,987 -- 2,987
Discontinued operations..................... -- -- (28,615) -- (28,615)
----------- --------- --------- ----------- -----------
Cash used in investing activities................. (441) (2,842) (27,386) (30,669)
Financing activities
Net repayments of debt...................... 376,573 -- -- -- 376,573
Additions to (decreases in) receivables
financing facility........................ (269) 2,375 (686) -- 1,420
Dividends paid on common stock.............. (1,171) -- -- -- (1,171)
Stock option exercises and other............ 1,604 -- -- -- 1,604
Intercompany (receivables) payables......... (376,402) (4,740) 381,142 -- --
Discontinued operations..................... -- -- (386,228) -- (386,228)
----------- --------- --------- ----------- -----------
Cash (used in) provided by financing activities... 335 (2,365) (5,772) -- (7,802)
Effect of exchange rate changes on cash........... -- -- (186) -- (186)
----------- --------- --------- ----------- -----------
Net (decrease) increase in cash and cash
equivalents..................................... (251) (384) (12,604) -- (13,239)
Effect of change in cash of discontinued
operations...................................... -- -- 14,752 -- 14,752
Cash and cash equivalents--beginning of period.... (721) (209) 8,186 7,256
----------- --------- --------- ----------- -----------
Cash and cash equivalents--end of period.......... $ (972) $ (593) $ 10,334 $ -- $ 8,769
=========== ========= ========= =========== ===========
|
On January 9, 2001 Applied Power Inc. changed its name to Actuant Corporation. Throughout this "Management's Discussion and Analysis of Financial Condition and Results of Operations" when we refer to "Actuant", "Applied Power", or the "Company", we mean Actuant Corporation and its subsidiaries. Also on January 9, 2001, our shareholders approved a reverse stock split whereby every five shares of common stock were converted into one share of common stock. Where appropriate, this change is reflected in this Form 10-Q for all periods presented.
As a result of the Distribution, the Company's Electronics segment is presented as "discontinued operations" in the accompanying financial statements.
Approximate
Divestitures Segment Date Annual Sales (1)
------------ ------- ---- ----------------
(in millions)
Norelem Tools & Supplies August 2000 $ 8
Barry Controls Engineered Solutions June 2000 120
Air Cargo Engineered Solutions May 2000 22
Samuel Groves Engineered Solutions October 1999 9
________
|
(1) At the time of the transactions.
The comparability of operating results from period to period is impacted by the non-continuing businesses. The tables included in "Results of Continuing Operations" below show the effect, by segment, of the non-continuing businesses on reported results.
Net Sales by Segment
(in thousands)
Three Months Ended Six Months Ended
--------------------------- -------------------------
February 28, February 29, February 28, February 29,
2001 2000 Change 2001 2000 Change
------------ ------------ --------- ------------ ------------ --------
Tools & Supplies ...................... $ 68,911 $ 79,516 (13.3)% $138,684 $150,575 (7.9)%
Less: non-continuing /(1)/ ............ - 3,559 - 7,955
-------- -------- -------- --------
Adjusted Tools & Supplies ............ $ 68,911 $ 75,957 (9.3)% $138,684 $142,620 (2.8)%
======== ======== ======== ========
Engineered Solutions .................. $ 44,424 $104,571 (57.5)% $ 92,171 $206,553 (55.4)%
Less: non-continuing /(2)/ ............ - 47,322 - 88,543
-------- -------- -------- --------
Adjusted Engineered Solutions......... 44,424 57,249 (22.4)% $ 92,171 $118,010 (21.9)%
======== ======== ======== ========
Total net sales ....................... $113,335 $184,087 (38.4)% $230,855 $357,128 (35.4)%
Less: Non-continuing /(1)(2)/ ......... - 50,881 - 96,498
-------- -------- -------- --------
Adjusted net sales .................... $113,335 $133,206 (14.9)% $230,855 $260,630 (11.4)%
======== ======== ======== ========
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Adjusted net sales declined $19.9 million, or 14.9%, in the second quarter and $29.8 million, or 11.4%, for the six months ended February 28, 2001, compared to the prior year periods. The $29.8 million decline in revenue from the first half of the fiscal 2000 resulted from a $14 million reduction in RV market sales, negative currency impact of $9 million due to the impact of foreign currency rate changes on translated results, and overall weaker economic conditions. Excluding foreign currency rate changes and the impact of our lower sales to North American RV manufacturers, sales declined 7.7% and 3.1% in the three and six-month periods ended February 28, 2001, respectively, compared to the prior year.
Tools & Supplies
Adjusted net sales for the Tools & Supplies segment declined from the comparable
prior year periods by $7.0 million and $3.9 million for the three and six-month
periods ended February 28, 2001, respectively. Excluding the effect of foreign
currency rate changes, which caused $1.1 million of the quarter over quarter
decline, Tools & Supplies sales decreased 8% compared to the fiscal 2000 second
quarter. This decline was driven primarily from Gardner Bender's 16% decrease,
offset by an increase of 2% in Enerpac sales. Approximately $4.0 million, or
half, of the sales decline in Gardner Bender was caused by the implementation of
a new computer system in the first quarter of fiscal 2000, which resulted in
shipments being delayed from the fiscal 2000 first quarter into the second
quarter. Additionally, Gardner Bender sales to OEM customers and the automotive
aftermarket were lower, reflecting the softening U.S. economy.
The net sales decline experienced during the six-months ended February 28, 2001 primarily resulted from the effects of the strengthening US dollar, which comprised $3.4 million of the $3.9 million decrease.
Engineered Solutions
Adjusted net sales for the Engineered Solutions segment decreased from the prior
year periods by $12.8 million, or 22.4%, for the quarter and $25.8 million, or
21.9%, for the first half of fiscal 2001. Approximately $8.6 million of the
fiscal second quarter decline is attributable to lower sales into the RV market,
while $1.4 million was due to the impact of foreign currency rate changes. The
North American RV market started slowing in the third quarter of fiscal 2000,
with the slowing continuing into the current quarter. Our Power Gear unit's
sales into this market were 50% lower in the second quarter of this year than
the record shipments made in the second quarter of the prior year. Excluding
foreign currency rate changes and the impact of our lower sales to RV
manufacturers, our Engineered Solutions second quarter sales declined $2.8
million, primarily reflecting the impact of the slowing economy in North
America.
The $25.8 million adjusted net sales decline experienced during the six months ended February 28, 2001 primarily resulted from a $14.1 million reduction in sales to the RV market and $5.5 million from foreign currency rate
changes. The remainder of the decline resulted from slower economic conditions.
Gross Profit Margins By Segment Three Months Ended Six Months Ended
----------------------------------- -----------------------------------------
February 28, February 29, February 28, February 29,
2001 2000 2001 2000
----------------- --------------- ----------------- --------------------
Tools & Supplies............................ 41.6% 40.7% 41.0% 40.1%
Adjusted Tools & Supplies................... 41.6% 40.7% 41.0% 40.3%
Engineered Solutions........................ 27.7% 31.9% 28.2% 32.6%
Adjusted Engineered Solutions............... 27.7% 29.6% 28.2% 29.7%
Total gross profit margin................... 36.2% 35.7% 35.9% 35.8%
Total adjusted gross profit margin.......... 36.2% 35.9% 35.9% 35.5%
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Second quarter and year-to-date adjusted gross profit margins improved compared to the prior fiscal year periods, driven by strong Tools & Supplies performance offset by weaker Engineered Solutions performance.
Tools & Supplies
Adjusted gross profit margins in our Tools & Supplies segment improved in the
quarter, and year-to-date, as compared to the prior fiscal year periods. The
improvement results from the elimination of lower margin SKUs within the Tools &
Supplies product portfolio, and cost reductions generated from direct labor
improvements, Asian sourcing of components and finished goods, as well as lower
fixed costs resulting from closing the NECON manufacturing plant.
Engineered Solutions
Engineered Solutions adjusted gross profit margins decreased in the quarter and
year-to-date as compared to the prior fiscal year periods. The significant
sales reductions to the RV industry negatively impacted margins as we
experienced lower production volumes over which we could spread the fixed
manufacturing costs of our RV plants. We are reducing employment costs at these
plants to minimize the impact of the sales slowdown.
Engineering, Selling, and Administrative by Segment
(in thousands)
Three Months Ended Six Months Ended
--------------------------------- --------------------------------
February 28, February 29, February 28, February 29,
2001 2000 Change 2001 2000 Change
--------------- --------------- -------- -------------- -------------- ---------
Tools & Supplies ............. $ 15,915 $ 16,061 (0.9)% $ 31,720 $ 32,319 (1.9)%
Less: non-continuing /(1)/ ... - 933 - 2,050
-------- -------- -------- --------
Adjusted Tools & Supplies ... $ 15,915 $ 15,128 5.2 % $ 31,720 $ 30,269 4.8 %
======== ======== ======== ========
Engineered Solutions ......... $ 4,441 $ 15,170 (70.7)% $ 9,058 $ 27,642 (67.2)%
Less: non-continuing /(2)/ ... - 9,876 - 18,053
-------- -------- -------- --------
Adjusted Engineered Solutions $ 4,441 $ 5,294 (16.1)% $ 9,058 $ 9,589 (5.5)%
======== ======== ======== ========
General Corporate ............ $ 1,342 3,699 (63.7)% $ 2,490 $ 8,607 (71.1)%
======== ======== ======== ========
Total ESA .................... $ 21,698 $ 34,930 (37.9)% $ 43,268 $ 68,568 (36.9)%
Less: Non-continuing ......... - 10,809 - 21,549
-------- -------- -------- --------
Adjusted ESA ................. $ 21,698 $ 24,121 (10.0)% $ 43,268 $ 47,019 (8.0)%
======== ======== ======== ========
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Total engineering, selling and administrative ("ESA") expenses decreased $3.7 million, from $47.0 million to $43.3 million for the six months ended February 29, 2000 and February 28, 2001, respectively. Fiscal 2001 second quarter adjusted ESA expenses were 10% percent lower than those reported in the second quarter of fiscal 2000, resulting from lower corporate expenses. In the prior year periods, corporate expenses included costs related to both the former Industrial and Electronics business segments of Applied Power. None of these expenses have been allocated to the discontinued operation's financial results. Management believes general corporate expenses will approximate $5.0 million for fiscal year 2001.
Tools & Supplies
Tools & Supplies adjusted ESA expenses increased over the prior period amounts
by 5.2% and 4.8% for the quarter and six months ended February 28, 2001,
respectively. This increase in adjusted Tools & Supplies ESA expenses is
primarily caused by increased sales, marketing, and information technology
("IT") expenses in Enerpac and increased engineering and IT expenses at Gardner
Bender.
Engineered Solutions
Compared to the prior year periods, Engineered Solutions adjusted ESA expenses
decreased by 16.1% for the fiscal 2001 second quarter and 5.5% for the six
months ended February 28, 2001. These reductions resulted from lower expenses
attributable to the sales decline, as well as cost reduction program benefits.
Amortization Expense
Amortization expense was lower in the current year periods compared to the prior
year primarily due to the non-continuing businesses.
Contract Termination Recovery
During the first quarter of fiscal 2000, the Company recovered approximately
$1.4 million of a contract termination charge originally expensed in fiscal 1999
by the Engineered Solutions segment.
Other Expense(Income)
Net financing costs for the three and six-month periods ended February 28, 2001
increased $4.8 million and $7.4 million, respectively, compared to the prior
fiscal year periods. The increased costs are the result of the realignment of
debt in the Distribution. The current credit facilities have higher interest
rates than that which had been previously
incurred by the Company. Current borrowings consist of those under a senior secured credit agreement (the "Senior Credit Agreement") and new Senior Subordinated Notes, which carry a 13% interest rate.
Other, net is primarily comprised of foreign currency gains and losses.
Cash and cash equivalents totaled $0.3 million at February 28, 2001 and $9.9 million at August 31, 2000. In order to minimize net financing costs, the Company intentionally maintains low cash balances by using available cash to reduce borrowings.
Net cash generated by operating activities of continuing operations totaled $14.5 million and $5.7 million for the six-month periods ended February 28, 2001 and February 29, 2000, respectively. Discontinued operations generated $19.8 million of cash from operating activities in the six months ended February 29, 2000. Net cash used in investing and financing activities for the six months ended February 28, 2001 totaled $3.3 million and $20.6 million, respectively. Cash used for investing activities primarily consisted of capital expenditures. Cash used for financing activities primarily consisted of debt repayments.
Debt February 28, 2001 August 31, 2000
-------------------- -------------------
(in thousands)
Senior secured debt........................................ $ 200,049 $ 233,300
Senior subordinated notes, net of discount................. 197,527 197,375
Euro term loan............................................. 13,847 -
Other...................................................... 1,489 1,799
------------------ ---------------
Total Debt................................................. $ 412,912 $ 432,474
================== ===============
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During the first quarter of fiscal 2001, a European subsidiary of the Company completed a bank term loan financing of 15.0 million EURO. Amortization of the loan begins on January 31, 2003 with semi-annual repayments thereafter and a final maturity of July 31, 2007. The loan interest rate is based on three month EURIBOR with a spread of 1.10%. Proceeds from the borrowing were used to prepay 15.0 million EURO of the Euro denominated term borrowings under the Company's Senior Credit Agreement, which carried a higher rate of interest.
The Company is focused on debt reduction. In the seven months since the Distribution, debt has been reduced by $37.6 million. During the first six months of fiscal 2001 debt was reduced $19.6 million. The Company expects total debt reduction (excluding proceeds or repayments from business divestitures or acquisitions) of $35.0 million in fiscal 2001. The Company plans to use all cash provided from operations to fund capital expenditures and debt reduction. In addition to cash from operations, the Company is exploring alternative sources of financing, which could reduce total financing costs. For example, we are in the process of implementing an accounts receivable securitization program from which we hope to generate at least $25 million of proceeds at lower financing costs. No dividend payments were made in fiscal 2001, nor do we expect to pay dividends in the near future, so that cash flow from operations can be used to reduce debt. At February 28, 2001, the Company had approximately $41.5 million of availability under its credit facilities, and was in compliance with all covenants under its debt agreements. The Company believes that availability under its credit facilities, plus funds generated from operations, will be adequate to meet operating, debt service and capital expenditure requirements for the foreseeable future.
Effective September 1, 2000, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities". This statement requires all derivative instruments
to be recorded in the balance sheet at fair value. The initial adoption of this statement did not have a material effect on the Company's earnings or financial position.
On March 1, 2001, the Company acquired substantially all of the net operating assets of Dewald Manufacturing ("Dewald") for approximately $12.8 million. Dewald is engaged in the design and manufacture of leveling and slide out systems for the North American recreational vehicle market. Dewald operates a manufacturing facility near South Bend, Indiana, and employs approximately 130 employees. Its annual revenues are approximately $20 million.
On March 21, 2001, the Company announced that it is in preliminary discussion with a number of parties regarding the possible sale of its Mox-Med business. Mox-Med provides molded and extruded silicone products for the medical and housewares industries, and has annual net sales of approximately $20 million.
The Company is exposed to market risk from changes in foreign exchange and interest rates and, to a lesser extent, commodities. To reduce such risks, the Company selectively uses financial instruments. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which strictly prohibit the use of financial instruments for trading purposes.
A discussion of the Company's accounting policies for derivative financial instruments is included in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2000 within Note A - "Summary of Significant Accounting Policies" in Notes to Consolidated Financial Statements.
The Company has adopted the following guidelines to manage its foreign exchange exposures:
(i) increase the predictability of costs associated with goods whose purchase price is not denominated in the functional currency of the buyer;
(ii) minimize the cost of hedging through the use of naturally offsetting positions (borrowing in local currency), netting, pooling; and
(iii) where possible, sell product in the functional currency of the producing operation.
The Company's identifiable foreign exchange exposures result primarily from the anticipated purchase of product from affiliates and third-party suppliers along with the repayment of intercompany loans with foreign subsidiaries denominated in foreign currencies. The Company periodically identifies areas where we do not have naturally occurring offsetting positions and then purchases hedging instruments to protect against anticipated exposures. There are no such hedging instruments in place at February 28, 2001 or through the date of this filing. The Company's financial position is not materially sensitive to fluctuations in exchange rates as any gains or losses on foreign currency exposures are generally offset by gains and losses on underlying payables, receivables and net investments in foreign subsidiaries.
rate risk. We had no such agreements in place at February 28, 2001 or through the date of this filing. Our Senior Credit Agreement stipulates that the lower of 50% of our total debt or $200.0 million be fixed interest rate obligations. We are in compliance with this requirement.
PART II - OTHER INFORMATION
In connection with the disposition of Barry Wright Corporation in June 2000, Actuant indemnified the buyer for certain matters. The buyer made an indemnification claim for damages of approximately $6 million involving a specific contract. Actuant is investigating the claim and investigating the purchaser's compliance with the purchase agreement, but believes that it has viable defenses to the claim. The Company intends to vigorously defend the claim. Based on the information presently available, management believes the claim will not have a material impact on its financial position or results of operations.
The Annual Meeting of Shareholders was held on January 9, 2001 to elect a board of seven directors and to vote on a number of proposals. Each director nominee was elected. The number of votes for each nominee is set forth below:
Share Votes For Share Votes Withheld
----------------------- ------------------------
H. Richard Crowther 35,073,306 413,687
Richard A. Kashow 35,076,677 410,316
Richard G. Sim 35,037,148 449,845
Gustav H.P. Boel 35,053,218 433,775
Bruce S. Chelberg 35,066,742 420,251
William P. Sovey 35,063,901 423,092
Robert C. Arzbaecher 35,072,315 414,678
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In addition, the following proposals were voted on at the January 9, 2001 annual meeting:
(a) Proposal to approve the Actuant Corporation 2001 Stock Plan.
FOR AGAINST ABSTAIN
20,252,025 8,787,896 113,335
(b) Proposal to approve the Actuant Corporation 2001 Outside Directors' Stock Option Plan.
FOR AGAINST ABSTAIN
24,514,377 4,382,099 256,780
(c) Proposal to approve the Articles of Amendment to change the name of the Company.
FOR AGAINST ABSTAIN
35,119,127 162,485 205,381
(d) Proposal to approve the Articles of Amendment to effect a five-for-one reverse split.
FOR AGAINST ABSTAIN
34,052,083 1,194,260 240,650
(e) Proposal to approve the Articles of Amendment to reduce the number of shares of common stock .
FOR AGAINST ABSTAIN
34,691,648 521,433 273,912
(f) Proposal to approve a shareholder's proposal concerning shareholder rights plan.
FOR AGAINST ABSTAIN
14,444,291 14,215,231 493,734
(g) The following verbal proposals presented at the annual meeting of shareholders were voted 0 shares FOR each proposal and 35,486,993 shares AGAINST each proposal:
1. That shareholders should have the opportunity to vote on auditors at the 2001 and subsequent annual meetings.
2. That the Board be required to have at least 9 directors.
3. That the 2001 and subsequent proxy statements list all the outside directorships, including non-profit organizations, held by each director.
4. That confidential voting be allowed at the 2001 and subsequent annual meetings.
5. That the annual meeting start between the hours of 10:00 a.m. and 3:00 p.m. and not at 8:00 a.m.
(a) See Index to Exhibits on page 24, which is incorporated herein by reference.
SIGNATURE
Pursuant to the requirements 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.
ACTUANT CORPORATION
(Registrant)
Date: April 13, 2001 By: /s/ Andrew G. Lampereur
------------------------
Andrew G. Lampereur
Chief Financial Officer
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(Principal Financial and Accounting Officer and duly authorized to sign on behalf of the registrant)
ACTUANT CORPORATION
(the "Registrant")
(Commission File No. 1-11288)
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED FEBRUARY 28, 2001
INDEX TO EXHIBITS
Incorporated Herein Filed
Exhibit Description By Reference To Herewith
------------ -------------------------------------------- ----------------------------------------- ------------
4.7 Amendment to Articles of Incorporation X
effecting the name change
4.8 Amendment to Articles of Incorporation X
effecting the reverse stock split
4.9 Amended and restated Articles of X
Incorporation
10.23 Actuant Corporation 2001 Stock Plan Exhibit B to the Registrant's Proxy
Statement, dated December 1, 2000 for
the 2001 Annual Meeting of Shareholders
10.24 Actuant Corporation 2001 Outside Exhibit C to the Registrant's Proxy
Directors' Stock Option Plan Statement, dated December 1, 2000 for
the 2001 Annual Meeting of Shareholders
|
Sec. 180.1006 State of Wisconsin Wis. Stats. Department of Financial Institutions
ARTICLES OF AMENDMENT - STOCK, FOR-PROFIT CORPORATION
A. The present corporate name (prior to any change effected by this amendment) is:
Text of Amendment (Refer to the existing articles of incorporation and the instructions on the reverse of this form. Determine those items to be changed and set forth the number identifying the paragraph in the articles of incorporation being changed and how the amended paragraph is to read.)
RESOLVED, THAT the articles of incorporation be amended as follows:
ARTICLE I IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
ARTICLE I
Name
The name of the corporation is Actuant Corporation.
(Indicate the method of adoption by checking (X) the appropriate choice below.)
( ) In accordance with sec. 180.1002, Wis. Stats. (By the Board of
Directors)
OR
( X ) In accordance with sec. 180.1003, Wis. Stats. (By the Board of
Directors and Shareholders)
OR
( ) In accordance with sec. 180.1005, Wis. Stats. (By Incorporators or
Board of Directors, before issuance of shares)
C. Executed on JANUARY 9, 2001 /s/ Robert C. Arzbaecher
--------------- --------------------------------
(Signature)
Title: ( X ) President ( ) Secretary
or other officer title ____________________ Robert C. Arzbaecher
---------------------------
(Printed Name)
This document was drafted by WALTER J. SKIPPER
-----------------
(Name the individual who drafted the document)
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Sec. 180.1006 State of Wisconsin Wis. Stats. Department of Financial Institutions
ARTICLES OF AMENDMENT - STOCK, FOR-PROFIT CORPORATION
A. The present corporate name (prior to any change effected by this amendment) is:
Text of Amendment (Refer to the existing articles of incorporation and the instructions on the reverse of this form. Determine those items to be changed and set forth the number identifying the paragraph in the articles of incorporation being changed and how the amended paragraph is to read.)
RESOLVED, THAT the articles of incorporation be amended as follows:
SECTION 3.1 IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS SET FORTH ON EXHIBIT A ATTACHED HERETO.
THE EFFECTIVE TIME OF THESE ARTICLES OF AMENDMENT SHALL BE AT 8:00 A.M. CENTRAL TIME ON JANUARY 25, 2001.
(Indicate the method of adoption by checking (X) the appropriate choice below.)
( ) In accordance with sec. 180.1002, Wis. Stats. (By the Board of
Directors)
OR
( X ) In accordance with sec. 180.1003, Wis. Stats. (By the Board of
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Directors and Shareholders)
OR
( ) In accordance with sec. 180.1005, Wis. Stats. (By Incorporators
or Board of Directors, before issuance of shares)
C. Executed on JANUARY 9, 2001 /s/ Robert C. Arzbaecher
------------------------ ---------------------------------
(Signature)
Title: ( X ) President ( ) Secretary
or other officer title Robert C. Arzbaecher
--------------------- ---------------------------------
(Printed Name)
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EXHIBIT A TO
ARTICLES OF AMENDMENT OF
ACTUANT CORPORATION
"3.1 Number of Shares and Classes. The aggregate number of shares which the Corporation shall have authority to issue is as follows:
(a) Class A Common Stock. 16,000,000 shares of Class A Common Stock,
having a par value of $.20 per share.
(b) Class B Common Stock. 1,500,000 shares of Class B Common Stock,
having a par value of $.20 per share.
(c) Cumulative Preferred Stock. 160,000 shares of Cumulative
Preferred Stock, having a par value of $1.00 per share."
Upon the amendment of this Section 3.1, every five (5) issued and outstanding shares of Class A Common Stock, $.20 par value per share (the "Old Common Stock") shall automatically and without action on the part of the shareholders, be converted into and reconstituted as one (1) share of Class A Common Stock, $.20 par value per share (the "New Common Stock"), subject to the treatment of the fractional share interests as described below and every five shares of Class B Common Stock and Cumulative Preferred Stock authorized shall automatically and without action on the part of the shareholders, be converted into and reconstituted as one (1) share of Class B Common Stock or Cumulative Preferred Stock, respectively. Each holder of a certificate or certificates that, immediately prior to this Amendment becoming effective pursuant to the Wisconsin Business Corporation Law, represented outstanding shares of the Old Common Stock (the "Old Certificates") shall be entitled to receive a certificate or certificates for the number of shares of New Common Stock they own by presenting their Old Certificates to the Corporation's transfer agent for cancellation and exchange. No scrip or fractional certificates shall be issued. The Corporation shall aggregate and sell any fractional interests of a shareholder and remit the proceeds from such sale to shareholders that would
otherwise receive fractional shares.
ACTUANT CORPORATION
ARTICLES OF RESTATEMENT
The undersigned officer of Actuant Corporation (the "Corporation"), a Wisconsin corporation, hereby certifies that:
Stat. (S) 180.1007.
2. The Restated Articles do not contain an amendment to the articles of
incorporation of the Corporation requiring shareholder approval.
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3. The Restated Articles supersede the original articles of incorporation, any restated articles of incorporation previously adopted and all amendments to the original and any restated articles of incorporation of the Corporation.
Executed this 30th day of January, 2001.
/s/ Robert C. Arzbaecher
------------------------------------------
Robert C. Arzbaecher, President and
Chief Executive Officer
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This document was drafted by:
Walter J. Skipper
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, WI 53202-4497
RESTATED ARTICLES OF INCORPORATION
OF
ACTUANT CORPORATION
These Restated Articles of Incorporation supersede and take the place of the heretofore existing Restated Articles of Incorporation and any amendments thereto.
ARTICLE I.
Name
The name of the Corporation is Actuant Corporation.
ARTICLE II.
Purposes
The purposes for which this Corporation is organized are to engage in any lawful activity within the purposes for which corporations may be organized under the Wisconsin Business Corporation Law.
ARTICLE III.
Capital Stock
3.1 Number of Shares and Classes. The aggregate number of shares which the Corporation shall have authority to issue is as follows:
(a) Class A Common Stock. 16,000,000 shares of Class A Common Stock, having a par value of $.20 per share.
(b) Class B Common Stock. 1,500,000 shares of Class B Common Stock, having a par value of $.20 per share.
(c) Cumulative Preferred Stock. 160,000 shares of Cumulative Preferred Stock, having a par value of $1.00 per share.
3.2 Relative Rights of Class A and Class B Common Stock. The relative rights and preferences of shares of Class A Common Stock and Class B Common Stock are as follows:
(a) Voting. On all matters other than the election of the Board of Directors, the holders of Class A Common Stock and Class B Common Stock (no class voting as a separate class unless otherwise required by the Wisconsin Business Corporation Law) shall possess full and equal voting power of one vote per share. On the election of the Board of Directors,
and except as otherwise provided below, the holders of the Class A Common Stock, together with the holders of Cumulative Preferred Stock of all series having voting power (no class voting as a separate class) shall elect a maximum minority of the number of directors to be elected and the holders of the Class B Common Stock shall elect a minimum majority of the number of directors to be elected. Although the maximum minority of the number of directors to be elected by the holders of the Class A Common Stock, together with the holders of the Cumulative Preferred Stock having voting power, shall at no time be less than one, the determination of the maximum minority of the number of directors shall at all times be made without regard to fractions, the holders of Class B Common Stock to elect a minimum majority of one if an odd number directors are to be elected or two if an even number of directors are to be elected. In the event that there are no shares of Class B Common Stock outstanding, the holders of Class A Common Stock, together with the holders of Cumulative Preferred Stock of all series having voting power (no class voting as a separate class), shall elect all of the directors to be elected. A director, once elected and duly qualified, may be removed only by the requisite affirmative vote of the holders of that class of stock by which such director was elected.
(b) Stock Dividends. Stock dividends on Class A Common Stock shall be paid only in Class A Common Stock and stock dividends on Class B Common Stock shall be paid only in Class B Common Stock.
(c) Conversion of Class B Common Stock:
(i) Optional Conversion. Any holder of shares of Class B Common Stock may convert any or all such shares into shares of Class A Common Stock on a share-for-share basis, at any time or from time to time, by surrender to the Corporation of the certificate(s) representing such shares of Class B Common Stock to be converted by the holder and by giving written notice to the Corporation of the holder's election to convert in the form prescribed by the Corporation. The Corporation shall, as soon as practicable after receipt of such written notice and the proper surrender to the Corporation of the certificate(s) representing the shares of Class B Common Stock to be so converted, issue and deliver to, or in accordance with the instructions of, the holder certificates for the number of shares of Class A Common Stock to which the holder shall be entitled and for the number, if any, of shares of Class B Common Stock represented by the certificate(s) surrendered which are not being so converted. Such conversion shall be deemed to have been effective immediately prior to the close of business on the date on which the Corporation shall have received both such written notice and the properly surrendered certificate(s) for shares of Class B Common Stock to be converted (the "Conversion Date"), and at such time the rights of the holder as to the converted shares shall cease and the person or persons entitled to receive the shares of Class A Common Stock issuable upon the conversion shall be deemed to be, and shall be treated for all purposes as, the record holder or holders of such Class A Common Stock on the Conversion Date.
(ii) Automatic Conversion. When the number of outstanding shares of Class B Common Stock is reduced to less than 500,000 (which number shall be appropriately adjusted to reflect capital adjustments resulting from a stock split, stock dividend, reverse stock split, recapitalization, reorganization, merger, consolidation, combination or exchange of shares, and the like), all of the then outstanding shares of Class B Common Stock shall be deemed without further action on the part of any person (including, without limitation, the Corporation and its shareholders) to be immediately and automatically converted into shares of Class A Common Stock on a share-for-share basis, and stock certificates formerly representing outstanding shares of Class B Common Stock shall thereupon and thereafter be deemed to represent a like number of shares of Class A Common Stock possessing all the rights and privileges incident thereto.
(d) Other. Except as set forth in subsections (a), (b) and (c), each share of Class A Common Stock and Class B Common Stock shall be equal in every respect and entitled to the same rights and privileges, and shall be treated in the same manner with respect to any stock splits or stock dividends; such shares are collectively referred to herein as "Common Stock ".
3.3 Directors' Authority to Establish Series of Cumulative Preferred Stock. The Board of Directors is authorized to divide the Cumulative Preferred Stock into series and to fix and determine the relative rights and preferences of each series. Each series shall be so designated by the Board of Directors as to distinguish the shares thereof from the shares of all other series. All shares of Cumulative Preferred Stock shall be identical except as to the following relative rights and preferences, as to which the Board of Directors may establish variations between different series not inconsistent with the provisions of these Articles:
(a) The rate of dividend;
(b) The price at and the terms and conditions on which shares may be redeemed;
(c) The amount payable upon shares in the event of voluntary or involuntary liquidation;
(d) Sinking fund provisions for the redemption or purchase of shares;
(e) The terms and conditions on which shares may be converted into Common Stock, if the shares of any series are issued with the privilege of conversion;
(f) Voting rights, if any, subject to the provisions of Section 3.2 hereof.
3.4 Dividends and Distributions. The holders of Cumulative Preferred Stock of all series shall be entitled to receive dividends at such rates upon such conditions and at such times as shall be stated in the resolution or resolutions of the Board of Directors providing for the issuance thereof. All dividends on Cumulative Preferred Stock shall be without priority as between series, shall be
paid out of net earnings or any surplus properly applicable to the payment of dividends, and shall be paid or set apart before any dividends or other distributions shall be paid or set apart for Common Stock; provided, however, that dividends may be declared and paid on Common Stock in Common Stock prior to dividends on the Cumulative Preferred Stock being paid or set apart. Any dividends paid upon the Cumulative Preferred Stock in an amount less than full cumulative dividends accrued and in arrears upon all Cumulative Preferred Stock outstanding shall, if more than one series be outstanding, be distributed among the different series in proportion to the aggregate amounts which would be distributable to the Cumulative Preferred Stock of each series if full cumulative dividends were declared and paid thereon. The dividends on the Cumulative Preferred Stock shall be cumulative, so that if at any time the full amount of dividends accrued and in arrears on the Cumulative Preferred Stock shall not be paid, the deficiency shall be payable before any dividends or other distributions shall be paid or set apart on Common Stock (other than a distribution payable in shares of Common Stock), and before any sums shall be paid or set apart for the redemption of less than all of the Cumulative Preferred Stock then outstanding. Dividends on Cumulative Preferred Stock shall accrue from date of issue. Whenever all dividends accrued and in arrears on Cumulative Preferred Stock shall have been declared and shall have been paid or set apart, the Board of Directors may declare dividends on Common Stock out of the remaining net profits of the Corporation, or out of surplus applicable to the payment of such dividends.
3.5 Liquidation Rights. In the event of the voluntary liquidation or winding up of the Corporation, the holders of Cumulative Preferred Stock shall be entitled to receive out of the assets of the Corporation in full the fixed voluntary liquidation amount thereof, plus accrued dividends thereon, all as provided in the resolution or resolutions providing for the issuance thereof, before any amount shall be paid to the holders of Common Stock. In the event of the involuntary liquidation of the Corporation, the holders of the Cumulative Preferred Stock shall be entitled to receive out of the assets of the Corporation in full the fixed involuntary liquidation amount thereof, plus accrued dividends thereon, all as provided in the resolution or resolutions providing for the issuance thereof, before any amount shall be paid to the holders of Common Stock. If, upon the voluntary or involuntary liquidation or winding up of the Corporation, the assets of the Corporation shall be insufficient to pay the holders of all of the Cumulative Preferred Stock the entire amounts to which they may be entitled, the assets of the Corporation shall, if more than one series be outstanding, be distributed among the different series in proportion to the aggregate amounts which would be distributable to the Cumulative Preferred Stock of each series if sufficient assets were available. The holders of Cumulative Preferred Stock shall not otherwise be entitled to participate in any distribution of assets of the Corporation, which shall be divided or distributed among the holders of Common Stock. No consolidation or merger of the Corporation with or into another corporation or corporations and no sale by the Corporation of all or substantially all of its assets shall be deemed a liquidation or winding up of the Corporation.
3.6 Voting Rights of Cumulative Preferred Stock. The holders of Cumulative Preferred Stock shall have only such voting rights as shall be stated in the resolution or resolutions of the Board of Directors providing for the issuance thereof, except to the extent that such limitation may be inconsistent with the provisions of the Wisconsin Business Corporation Law.
3.7 Repurchase, etc. of Shares. The Corporation, acting through its Board of Directors, shall have the right to purchase, take, receive, or otherwise dispose of its own shares, to the fullest extent provided by law at the time of any such transaction.
ARTICLE IV.
Pre-emptive Rights
No holder of any stock of the Corporation shall have any pre-emptive or other subscription rights nor be entitled, as of right, to purchase or subscribe for any part of the unissued stock of this Corporation or any additional stock issued by reason of any increase of authorized capital stock of this Corporation or other securities whether or not convertible into stock of the Corporation.
ARTICLE V.
Voting
The affirmative vote of two-thirds of all shares entitled to vote thereon (and/or of each class which shall be entitled to vote thereon as a class) shall be required in order to constitute shareholder approval or adoption of any of the following:
(a) Merger or consolidation of the Corporation.
(b) Liquidation of the Corporation.
(c) Sale, lease, exchange or other disposition of all or substantially all assets of the Corporation.
(d) Amendment of the Articles of Incorporation or the By-laws.
(e) Removal of any director of the Corporation.
ARTICLE VI.
Registered Office and Agent
The address of the registered office of the Corporation is c/o Quarles & Brady LLP, 411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, and the name of the registered agent at such office is Anthony W. Asmuth III.
ARTICLE VII.
Directors
The number of directors constituting the Board of Directors shall be such
number, not less than three (3), as shall be fixed from time to time by the By-
laws of the Corporation, subject to the provisions of this Article VII. The By-
laws may provide for the division of the Board of Directors into two or three
classes of directors and for the terms and manner of election thereof not
inconsistent with the applicable provisions of the Wisconsin Business
Corporation Law. In the event of such classification and provided that shares
of Class B Common Stock are then outstanding, each class of directors so created
shall contain as nearly as possible an equal number of directors elected by the
holders of Class A Common Stock and Cumulative Preferred Stock having voting
power, as a group, and shall also contain as nearly as possible an equal number
of directors elected by the holders of Class B Common Stock. In the event there
should be two classes of directors specified by the By-laws, then from the next
succeeding annual meeting of shareholders and for so long as there are two
classes of directors the total number of directors shall not be less than five
(5). In the event there should be three classes of directors specified by the
By-laws, then from the next succeeding annual meeting of shareholders and for so
long as there are three classes of directors the total number of directors shall
not be less than seven (7). Each director shall serve for the term for which
such director was elected, regardless of any subsequent change in the By-laws
relating to the length of directors' terms.
ARTICLE VIII.
Amendments
These Articles may be amended in the manner authorized by law at the time of amendment, provided that the provisions of Article V hereof have been satisfied.
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