1
TWIN DISC, INCORPORATED
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2004 Commission File Number 1-7635
TWIN DISC, INCORPORATED
(Exact name of registrant as specified in its charter)
Wisconsin 39-0667110
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
1328 Racine Street, Racine, Wisconsin 53403
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (262) 638-4000
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 .
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X .
At October 31, 2004, the registrant had 2,883,783 shares of its common stock
outstanding.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TWIN DISC, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30 June 30
2004 2004
---- ----
Assets
Current assets:
Cash and cash equivalents $ 8,008 $ 9,127
Trade accounts receivable, net 33,292 37,091
Inventories, net 55,840 52,079
Deferred income taxes 4,216 4,216
Other 3,432 3,111
-------- --------
Total current assets 104,788 105,624
Property, plant and equipment, net 33,798 33,222
Goodwill 12,683 12,717
Deferred income taxes 15,673 15,668
Other assets 9,407 9,406
-------- --------
$176,349 $176,637
-------- --------
-------- --------
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 1,865 $ 1,607
Current maturities on long-term debt 2,857 3,018
Accounts payable 15,525 17,241
Accrued liabilities 27,161 27,262
-------- --------
Total current liabilities 47,408 49,128
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Long-term debt 20,151 16,813
Accrued retirement benefits 46,210 49,456
-------- --------
113,769 115,397
Minority Interest 441 509
Shareholders' Equity:
Common stock 11,653 11,653
Retained earnings 87,094 86,443
Unearned Compensation (262) (304)
Accumulated other comprehensive loss (20,072) (20,301)
-------- --------
78,413 77,491
Less treasury stock, at cost 16,274 16,760
-------- --------
Total shareholders' equity 62,139 60,731
-------- --------
$176,349 $176,637
-------- --------
-------- --------
The notes to consolidated financial statements are an integral part of this
statement. Amounts in thousands.
TWIN DISC, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30
2004 2003
---- ----
Net sales $45,382 $37,966
Cost of goods sold 33,607 29,070
------- -------
11,775 8,896
Marketing, engineering and
administrative expenses 9,509 8,358
Interest expense 219 280
Other income, net (44) (205)
------- -------
9,684 8,433
------- -------
Earnings before income taxes
and minority interest 2,091 463
Income taxes 914 281
------- -------
Earnings before minority interest 1,177 182
Minority interest (25) (11)
------- -------
Net earnings $ 1,152 $ 171
------- -------
------- -------
Dividends per share $ 0.175 $ 0.175
Earnings per share data:
Basic earnings per share $ 0.41 $ 0.06
Diluted earnings per share $ 0.40 $ 0.06
Shares outstanding data:
Average shares outstanding 2,836 2,803
Dilutive stock options 52 36
------- -------
Diluted shares outstanding 2,888 2,839
------- -------
------- -------
Comprehensive income :
Net earnings $ 1,152 $ 171
Other comprehensive income (loss):
Foreign currency translation adjustment 229 (609)
------- -------
Comprehensive income (loss): $ 1,381 ($438)
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------- -------
In thousands of dollars except per share statistics. Per share figures are
based on shares outstanding data.
The notes to consolidated financial statements are an integral part of this
statement.
TWIN DISC, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30
2004 2003
---- ----
Cash flows from operating activities:
Net earnings $1,152 $ 171
Adjustments to reconcile net earnings to
net cash (used) provided by operating activities:
Depreciation and amortization 1,237 1,356
Equity in earnings of affiliates - (122)
Dividends received from affiliate - 45
Net change in working capital,
excluding cash and debt, and other (5,174) 4,555
------ ------
(2,785) 6,005
------ ------
Cash flows from investing activities:
Acquisitions of fixed assets (1,740) (550)
------ ------
(1,740) (550)
------ ------
Cash flows from financing activities:
Decrease in notes payable, net (261) (1,213)
Proceeds (payment) for long-term debt 3,707 (1,270)
Proceeds from exercise of stock options 486 193
Dividends paid (500) (491)
------ ------
3,432 (2,781)
------ ------
Effect of exchange rate changes on cash (26) (58)
------ ------
Net change in cash and cash equivalents (1,119) 2,616
Cash and cash equivalents:
Beginning of period 9,127 5,908
------ ------
End of period $ 8,008 $ 8,524
------ ------
------ ------
The notes to consolidated financial statements are an integral part of
this statement. Amounts in thousands.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Basis of Presentation
The unaudited financial statements have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange Commission (SEC)
and, in the opinion of the Company, include all adjustments, consisting only
of normal recurring items, necessary for a fair statement of results for each
period. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules and
regulations. The Company believes that the disclosures made are adequate to
make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with financial statements and the
notes thereto included in the Company's latest Annual Report. The year-end
condensed balance sheet data was derived from audited financial statements but
does not include all disclosures required by generally accepted accounting
principles.
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B. Inventory
The major classes of inventories were as follows (in thousands):
September 30, June 30,
2004 2004
---------- ---------
Inventories:
Finished parts $40,781 $39,139
Work in process 9,687 8,187
Raw materials 5,372 4,753
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$55,840 $52,079
------- -------
------- -------
C. Warranty
Twin Disc engages in extensive product quality programs and processes,
including actively monitoring and evaluating the quality of its suppliers.
However, its warranty obligation is affected by product failure rates, the
extent of the market affected by the failure and the expense involved in
satisfactorily addressing the situation. The warranty reserve is established
based on our best estimate of the amounts necessary to settle future and
existing claims on products sold as of the balance sheet date. When
evaluating the adequacy of the reserve for warranty costs, management takes
into consideration the term of the warranty coverage, historical claim rates
and costs of repair, knowledge of the type and volume of new products and
economic trends. While we believe the warranty reserve is adequate and that
the judgment applied is appropriate, such amounts estimated to be due and
payable in the future could differ materially from what actually transpires.
The following is a listing of the activity in the warranty reserve during the
three months ended September 30.
Three Months Ended September 30,
--------------------------------
2004 2003
---- ----
Reserve balance, beginning of period $6,478,000 $6,070,000
Current period expense 1,217,000 884,000
Payments or credits to customers (1,037,000) (855,000)
--------- ---------
Reserve balance, end of period $6,658,000 $6,099,000
========= =========
D. Contingencies
The Company is involved in litigation of which the ulitmate outcome and
liability to the Company, if any, is not presently determinable. Management
believes that the final disposition of such litigation will not have a material
impact on the Company's results of operations or financial position.
E. BUSINESS SEGMENTS
Information about the Company's segments is summarized as follows (in
thousands):
Three months ended
------------------
September 30, September 30,
2004 2003
------------- -------------
Manufacturing segment sales $ 40,799 $ 33,147
Distribution segment sales 15,468 12,961
Inter/Intra segment sales (10,885) (8,142)
--------- ---------
Net sales $ 45,382 $ 37,966
--------- ---------
--------- ---------
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Manufacturing segment earnings (loss) $ 2,249 $ (33)
Distribution segment earnings 1,336 1,164
Inter/Intra segment loss (1,494) (668)
--------- ---------
Earnings before income taxes
and minority interest $ 2,091 $ 463
--------- ---------
--------- ---------
Assets September 30, June 30,
2004 2004
------------- ------------
Manufacturing segment assets $ 165,361 $ 166,049
Distribution segment assets 30,729 30,247
Corporate assets and elimination
of inter-company assets (19,741) (19,659)
-------- --------
$ 176,349 $ 176,637
-------- --------
-------- --------
F. STOCK OPTION PLANS
The Company accounts for its stock option plans under the guidelines of
Accounting Principles Board Opinion No. 25. Accordingly, no compensation cost
has been recognized in the condensed consolidated statements of operations.
No options were granted in the first quarter of fiscal 2004 or 2005. Had the
Company recognized compensation expense determined based on the fair value at
the grant date for awards under the plans, the net earnings and earnings per
share would have been as follows (in thousands, except per share amounts):
Three Months Ended
September 30,
------------------
2004 2003
---- ----
Net earnings
As reported $ 1,152 $ 171
Pro forma 1,152 171
Basic earnings per share
As reported $ 0.41 $ 0.06
Pro forma 0.41 0.06
Diluted earnings per share
As reported $ 0.40 $ 0.06
Pro forma 0.40 0.06
In fiscal 2004, the Company issued restricted stock grants for 25,000 shares,
12,500 of these grants vest 2 years from the date of grant and 12,500 vest 4
years from date of grant. The grants are valued at the market price at the date
of grant and are recorded as Unearned Compensation and amortized over 2 and 4
year periods. The amortization expense for the three months ended September 30,
2004, approximated $42,000.
G. Net Periodic Benefit Cost
The Company has non-contributory, qualified defined benefit plans covering
substantially all domestic employees hired prior to October 1, 2003 and certain
foreign employees. Components of Net Periodic Benefit Cost (in thousands):
Three months ended
September 30
2004 2003
---- ----
Pension Benefits:
Service cost $ 287 $ 306
Interest cost 1,780 1,852
Expected return on plan assets (1,822) (1,580)
Amortization of prior service cost (149) (148)
Amortization of transition obligation 11 10
Unrecognized net loss 994 1,173
6 --- -----
Net periodic benefit cost $1,101 $1,613
------ ------
------ ------
Postretirement Benefits:
Service cost $ 13 $ 11
Interest cost 418 514
Recognized net actuarial loss 164 217
--- ---
Net periodic benefit cost $ 595 $ 742
------ ------
------ ------
The Company previously disclosed in its financial statements for the year ended
June 30, 2004, that it expected to contribute $7,476,000 to its pension plan in
fiscal 2005. As of September 30, 2004, $4,330,000 of contributions have been
made.
H. Debt
During the quarter the revolving loan agreement was amended increasing the
limit $20,000,000 to $35,000,000 and extending the term to October 31, 2007.
Additionally certain capital expenditure restrictions were increased. All other
terms and coveneants remained the same.
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS
In the financial review that follows, we discuss our results of operations,
financial condition and certain other information. This discussion should be
read in conjunction with our consolidated financial statements and related
notes.
RESULTS OF OPERATIONS
Comparison of the First Quarter of FY 2005 with the First Quarter of FY 2004
Net sales for the first quarter improved 19.5% to $45.4 million from $38.0
million in the same period a year ago. The results for the current fiscal
quarter were favorably impacted by the Company's recent acquisition of Rolla
SP Propellers SA (Rolla) as well as a previously announced military contract
to supply transmission systems for vehicles to be delivered to the Israeli
Defense Forces (IDF). The latter contributed nearly $2.4 million in sales
for the quarter. Compared to the first quarter of fiscal 2004, the Euro and
Asian currencies continued to strengthen against the US dollar. The impact of
this strengthening on foreign operations was to increase revenues by
approximately $1.0 million versus the prior year, before eliminations.
Sales at our manufacturing operations were up 23.1% versus the same period last
year. The Company experienced significant increased order activities and sales
at all of our manufacturing locations. Sales at our European and US domestic
manufacturing locations were up nearly 20%, before including the favorable
impact of the Rolla acquisition. The first quarter of fiscal 2005 represents
the first quarter that the Company has recognized sales from this acquisition.
For the first quarter, Rolla contributed just over $1.5 million in sales. The
sales growth in our domestic operations was primarily driven by increased sales
of military and 8500 series transmission products, while the growth in our
European operations was driven primarily by marine and propulsion product sales
increases.
Our distribution segment experienced an increase of 19.3% in sales compared to
the first quarter of fiscal 2004. The majority of this increase came from our
distribution operations in Asia-Pacific and Italy. Sales growth in our
commercial and pleasure craft marine transmission product lines primarily drove
the increase in Asia-Pacific. Just under a quarter of the sales growth
experienced by our distribution operations versus the same period last year can
be attributed to the effect of a weaker dollar among most Asian currencies and
the Euro.
The elimination for net inter/intra segment sales increased $2.7 million,
accounting for the remainder of the net change in sales versus the same period
last year. This increase was consistent with the overall increase in sales
experienced by the Company in the first quarter.
Gross income as a percentage of sales improved nearly 250 basis points to 25.9%
of sales, compared to 23.4% of sales for the same period last year. This
increase was driven primarily by higher volume while maintaining fixed costs at
fiscal year 2004 levels. Increased manufacturing productivity and absorption
were also continued drivers for the improvements. The benefits from cost
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reduction initiatives, prior restructuring programs, and lower pension expense
helped to offset higher steel and other costs.
Marketing, engineering, and administrative (ME&A) expenses were 13.8% higher
compared to last year's first fiscal quarter. As a percentage of sales, ME&A
expenses were down slightly to 21.0% of sales versus 22.0% of sales in the
first quarter of fiscal 2004. In fiscal 2005's first quarter, ME&A expenses for
Rolla are included for the first time. As part of a temporary corporate-wide
wage cost reduction program in fiscal 2004, the corporate bonus program was
suspended in 2004. For fiscal 2005, a new bonus program has been implemented
that emphasizes the achievement of earning returns in excess of the Company's
cost of capital as well as other financial and non-financial objectives. The
current quarter includes the impact of the re-introduction of the corporate
bonus program. Lastly, there was a net unfavorable impact on the ME&A expenses
of our overseas operations of approximately $0.2 million related to the
continued weakening of the US dollar versus most Asian currencies and the Euro.
Interest expense for the quarter was 21.8% below the same quarter last year.
While the average total borrowings for the quarter were up nearly $1.3 million
versus the first fiscal quarter of last year, the mix of the Company's
borrowings were at a lower weighted interest rate, as the Company continues to
pay off its 7.37% ten-year unsecured notes.
The consolidated income tax rate was lower than a year ago primarily due to
increased domestic earnings, which were taxed at a lower rate and changes in
the mix of foreign versus domestic earnings.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Comparison between September 30, 2004 and June 30, 2004
- -------------------------------------------------------
As of September 30, 2004, the Company had net working capital of $57.4 million,
which represents a slight increase from the net working capital of $56.5
million as of June 30, 2003.
Cash and cash equivalents decreased $1.1 million, or approximately 12%, to $8.0
million as of September 30, 2004. The majority of the cash and cash
equivalents as of September 30, 3004 are at our overseas operations in Europe
and Asia-Pacific.
Trade receivables of $33.3 million were down $3.8 million versus last fiscal
year-end. Historically, the Company has experienced a large decrease in
receivables in the first quarter of the fiscal year. However, in fiscal 2005's
first quarter, sales were up nearly 20% over the prior year first quarter, and
as a result, receivables were higher than would normally be expected. In
addition, the change in foreign exchange rates since fiscal year-end results in
an increase in foreign-denominated receivables of approximately $1.0 million.
Net inventory increased by $3.8 million versus June 30, 2004. The majority of
the increase came at our domestic manufacturing location. This increase is
primarily due to higher inventory levels in our off-highway and marine
transmission businesses as we experience increased order activity and the
Company ramps up production to meet this demand for the balance of this fiscal
year. The IDF military transmission systems contract, previously mentioned
above, and demand for our 8500 series transmission for the oil field market are
two key drivers of the increase in our domestic inventory levels.
Net property, plant and equipment (PP&E) increased $0.6 million versus June 30,
2004. In the current fiscal quarter, the Company's capital expenditures for
PP&E totaled $1.7 million, an over 200% increase versus the prior fiscal year's
first quarter. The year-over-year increase is primarily driven by the
construction of a new facility at our Rolla manufacturing operation. In total,
the Company expects to more than double its investments in capital assets in
fiscal 2005 compared to fiscal 2004. In addition to the new facility at Rolla,
the Company is focusing on modernizing key core manufacturing, assembly and
testing processes.
Accounts payable of $15.5 million were down 10.0% from June 30, 2004. The
decrease came primarily at our domestic U.S. and Italian manufacturing
operations and is consistent with the net impact of lower sales in the first
fiscal quarter versus the fourth fiscal quarter of the prior year offset by
the increase in inventories noted above.
Total borrowings, notes payable and long-term debt, as of September 30, 2004
increased by $3.4 million, or 16%, to $24.9 million versus June 30, 2004. This
increase is primarily attributable to increased funding in the quarter of the
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Company's pension plan as well as the increased capital investment noted above.
In fiscal 2005's first quarter, the Company made pension contributions of just
over $4.3 million. For the year ended June 30, 2005, the Company expects to
contribute a total of $7.5 million to its pension plans.
Total shareholders' equity increased by $1.4 million to a total of $62.1
million. Retained earnings increased by $0.7 million. The net increase in
retained earnings included $1.2 million in net earnings reported year-to-date,
offset by $0.5 million in dividend payments. Net favorable foreign currency
translation of $0.2 million was reported as the U.S. Dollar weakened against
the Euro and Asian currencies during the first three months.
The Company's balance sheet remains very strong, there are no off-balance-sheet
arrangements, and we continue to have sufficient liquidity for near-term needs.
During the first fiscal quarter, the Company amended its revolving loan
agreement, increasing the limit to $35,000,000, from $20,000,000, and
extending the term by two years to October 31, 2007. Furthermore, it is the
Company's intention to repatriate foreign cash, as needed, in the coming
quarters. Management believes that available cash, our revolver facility, cash
generated from operations, existing lines of credit and access to debt markets
will be adequate to fund our capital requirements for the foreseeable future.
The Company has obligations under non-cancelable operating lease contracts and
a senior note agreement for certain future payments. A summary of those
commitments follows (in thousands):
Contractual Obligations Total Less than 1-3 4-5 After 5
1 year Years Years Years
Short-term debt $ 1,865 $ 1,865
Revolver borrowing $16,000 $16,000
Long-term debt $ 7,008 $ 2,857 $ 4,151
Operating leases $10,285 $ 2,700 $ 3,711 $2,404 $1,470
Total obligations $35,158 $ 7,422 $23,862 $2,404 $1,470
Critical Accounting Policies
The preparation of this Quarterly Report requires management's judgment to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the dates of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. There can be no assurance that actual results
will not differ from those estimates.
Twin Disc's significant accounting policies are described in Note A in the
Notes to Consolidated Financial Statements in the Annual Report for June 30,
2004. There have been no significant changes to those accounting policies
subsequent to June 30, 2004.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
The Company is exposed to market risks from changes in interest rates,
commodities and foreign exchange. To reduce such risks, the Company selectively
uses financial instruments and other pro-active management techniques. All
hedging transactions are authorized and executed pursuant to clearly defined
policies and procedures, which prohibit the use of financial instruments for
trading or speculative purposes.
Interest rate risk - The Company's earnings exposure related to adverse
movements of interest rates is primarily derived from outstanding floating rate
debt instruments that are indexed to the prime and LIBOR interest rates. Those
debt facilities bear interest predominantly at the prime interest rate minus
..5% or LIBOR plus 1%. Due to the relative stability of interest rates, the
Company did not utilize any financial instruments at September 30, 2004 to
manage interest rate risk exposure. A 10 percent increase or decrease in the
applicable interest rate would result in a change in pretax interest expense
of approximately $38,000.
Commodity price risk - The Company is exposed to fluctuation in market prices
for such commodities as steel and aluminum. The Company does not utilize
commodity price hedges to manage commodity price risk exposure.
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Currency risk - The Company has exposure to foreign currency exchange
fluctuations. Approximately one-third of the Company's revenues in the three
months ended September 30, 2004 and 2003 were denominated in currencies other
than the U.S. dollar. Of that total, approximately two-thirds was denominated
in euros with the balance composed of Japanese yen and the Australian and
Singapore dollars. The Company does not hedge the translation exposure
represented by the net assets of its foreign subsidiaries. Foreign currency
translation adjustments are recorded as a component of shareholders' equity.
Forward foreign exchange contracts are used to hedge the currency fluctuations
on significant transactions denominated in foreign currencies.
Derivative Financial Instruments - The Company has written policies and
procedures that place all financial instruments under the direction of the
company corporate treasury and restrict derivative transactions to those
intended for hedging purposes. The use of financial instruments for trading
purposes is prohibited. The Company uses financial instruments to manage the
market risk from changes in foreign exchange rates.
The Company primarily enters into forward exchange contracts to reduce the
earnings and cash flow impact of non-functional currency denominated
receivables and payables. These contracts are highly effective in hedging
the cash flows attributable to changes in currency exchange rates. Gains and
losses resulting from these contracts offset the foreign exchange gains or
losses on the underlying assets and liabilities being hedged. The maturities
of the forward exchange contracts generally coincide with the settlement dates
of the related transactions. Gains and losses on these contracts are recorded
in Other income (expense), net in the Consolidated Statement of Operations as
the changes in the fair value of the contracts are recognized and generally
offset the gains and losses on the hedged items in the same period. The
primary currency to which the Company was exposed in 2004 and 2003 was the
Euro. At September 30, 2004 the Company had net outstanding forward exchange
contracts to purchase Euros in the value of $3,330,000 with a weighted average
maturity of 48 days. The fair value of the Company's contracts was a loss of
approximately $11,000 at September 30, 2004. At June 30, 2004 the Company had
net outstanding forward exchange contracts to purchase Euros in the value of
$2,901,000 with a weighted average maturity of 45 days. The fair value of the
Company's contracts was a loss of approximately $58,000 at June 30, 2004.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
As required by new Rules 13a-15 and 15d-15 of the Securities Exchange Act of
1934, within the 90-day period prior to the filing of this report and under the
supervision and with the participation of management, including the Chief
Executive Officer and the Chief Financial Officer, the Company has evaluated
the effectiveness of the design and operation of its disclosure controls and
procedures. Based on such evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that such disclosure controls and procedures
are effective in ensuring that material information relating to the Company,
including its consolidated subsidiaries, is made known to the certifying
officers by others within the Company and its consolidated subsidiaries during
the period covered by this report.
(b) Changes in Internal Controls.
There were no significant changes in the Company's internal controls for
financial reporting or in other factors that could significantly affect such
internal controls subsequent to the date of such evaluation. However, in
connection with the new rules, the Company has been engaged in the process
of further reviewing and documenting its disclosure controls and procedures,
including its internal accounting controls. The Company may from time to time
make changes aimed at enhancing the effectiveness of its disclosure controls
and procedures, including its internal controls, to ensure that the Company's
systems evolve with its business.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
Twin Disc is a defendant in several product liability or related claims
considered either adequately covered by appropriate liability insurance or
involving amounts not deemed material to the business or financial condition
of the Company.
Item 2. Changes in Securities and Use of Proceeds.
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There were no securities of the Company sold by the Company during the three
months ended September 30, 2004, which were not registered under the Securities
Act of 1933, in reliance upon an exemption from registration provided by
Section 4 (2) of the Act.
During the period covered by this report, the Company offered participants in
the Twin Disc, Incorporated B The Accelerator 401(k) Savings Plan (the "Plan")
the option to invest their Plan accounts in a fund comprised of Company stock.
Participation interests of Plan participants in the Plan, which may be
considered securities, were not registered with the SEC. During the fiscal
year ended June 30, 2003, 68 Plan participants allocated an aggregate of
$81,000 toward this investment option. Participant accounts in the Plan
consist of a combination of employee deferrals, Company matching contributions,
and, in some cases, additional Company profit-sharing contributions. No
underwriters were involved in these transactions. On September 6, 2002, the
Company filed a Form S-8 to register 100,000 shares of Company common stock
offered through the Plan, as well as an indeterminate amount of Plan
participation interests.
Item 5. Other Information.
The discussions in this report on Form 10-Q and in the documents incorporated
herein by reference, and oral presentations made by or on behalf of the Company
contain or may contain various forward-looking statements (particularly those
referring to the expectations as to possible strategic alternatives, future
business and/or operations, in the future tense, or using terms such as
"believe", "anticipate", "expect" or "intend") that involve risks and
uncertainties. The Company's actual future results could differ materially
from those discussed, due to the factors which are noted in connection with
the statements and other factors. The factors that could cause or contribute
to such differences include, but are not limited to, those further described
in the "Management's Discussion and Analysis".
Item 6. Exhibits and Reports on Form 8-K.
A Form 8-K was filed on September 15, 2004 for a press release announcing
financial results for fiscal 2004 fourth quarter.
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.
TWIN DISC, INCORPORATED
(Registrant)
November 12, 2004 /S/ FRED H. TIMM
----------------------- ---------------------------
(Date) Fred H. Timm
Vice President - Administration and
Secretary