Attached files
| file | filename |
|---|---|
| EX-32.2 - EX-32.2 - KMG CHEMICALS INC | kmg-ex322_8.htm |
| EX-31.1 - EX-31.1 - KMG CHEMICALS INC | kmg-ex311_6.htm |
| EX-32.1 - EX-32.1 - KMG CHEMICALS INC | kmg-ex321_7.htm |
| EX-31.2 - EX-31.2 - KMG CHEMICALS INC | kmg-ex312_9.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
|
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 31, 2015
|
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number: 001-35577
KMG CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
|
Texas |
|
75-2640529 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
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|
|
|
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9555 West Sam Houston Parkway South, Suite 600 Houston, Texas |
|
77099 |
|
(Address of principal executive offices) |
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(Zip Code) |
(713) 600-3800
(Registrant’s telephone number, including area code)
(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. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer |
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¨ |
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Accelerated filer |
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x |
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||||
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Non-accelerated filer |
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¨ |
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(Do not check if a smaller reporting company) |
|
Smaller reporting company |
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¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of December 8, 2015, there were 11,715,586 shares of the registrant’s common stock outstanding.
2
PART I — FINANCIAL INFORMATION
KMG CHEMICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share amounts)
|
|
|
October 31, |
|
|
July 31, |
|
||
|
|
|
2015 |
|
|
2015 |
|
||
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,398 |
|
|
$ |
7,517 |
|
|
Accounts receivable |
|
|
|
|
|
|
|
|
|
Trade, net of allowances of $156 at October 31, 2015 and $144 at July 31, 2015 |
|
|
35,573 |
|
|
|
36,887 |
|
|
Other |
|
|
3,515 |
|
|
|
3,668 |
|
|
Inventories, net |
|
|
39,592 |
|
|
|
42,082 |
|
|
Current deferred tax assets |
|
|
2,953 |
|
|
|
2,953 |
|
|
Prepaid expenses and other |
|
|
2,739 |
|
|
|
3,738 |
|
|
Total current assets |
|
|
94,770 |
|
|
|
96,845 |
|
|
Property, plant and equipment, net |
|
|
80,289 |
|
|
|
80,589 |
|
|
Deferred tax assets |
|
|
131 |
|
|
|
131 |
|
|
Goodwill |
|
|
22,374 |
|
|
|
22,408 |
|
|
Intangible assets, net |
|
|
35,959 |
|
|
|
36,560 |
|
|
Restricted cash |
|
|
1,000 |
|
|
|
1,000 |
|
|
Other assets, net |
|
|
4,850 |
|
|
|
4,826 |
|
|
Total assets |
|
$ |
239,373 |
|
|
$ |
242,359 |
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
27,279 |
|
|
$ |
35,980 |
|
|
Accrued liabilities |
|
|
10,120 |
|
|
|
9,602 |
|
|
Employee incentive accrual |
|
|
6,780 |
|
|
|
4,852 |
|
|
Total current liabilities |
|
|
44,179 |
|
|
|
50,434 |
|
|
Long-term debt, net of current maturities |
|
|
51,500 |
|
|
|
53,000 |
|
|
Deferred tax liabilities |
|
|
13,145 |
|
|
|
13,075 |
|
|
Other long-term liabilities |
|
|
2,422 |
|
|
|
2,429 |
|
|
Total liabilities |
|
|
111,246 |
|
|
|
118,938 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.01 par value, 40,000,000 shares authorized, 11,710,439 shares issued and outstanding at October 31, 2015 and 11,690,439 shares issued and outstanding at July 31, 2015 |
|
|
117 |
|
|
|
117 |
|
|
Additional paid-in capital |
|
|
32,625 |
|
|
|
31,676 |
|
|
Accumulated other comprehensive income (loss) |
|
|
(10,151 |
) |
|
|
(9,667 |
) |
|
Retained earnings |
|
|
105,536 |
|
|
|
101,295 |
|
|
Total stockholders’ equity |
|
|
128,127 |
|
|
|
123,421 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
239,373 |
|
|
$ |
242,359 |
|
See accompanying notes to condensed consolidated financial statements.
3
KMG CHEMICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except for per share amounts)
|
|
|
Three Months Ended |
|
|||||
|
|
|
October 31, |
|
|||||
|
|
|
|
2015 |
|
|
|
2014 |
|
|
Net sales |
|
$ |
76,650 |
|
|
$ |
90,779 |
|
|
Cost of sales |
|
|
47,390 |
|
|
|
63,188 |
|
|
Gross profit |
|
|
29,260 |
|
|
|
27,591 |
|
|
Distribution expenses |
|
|
10,129 |
|
|
|
12,999 |
|
|
Selling, general and administrative expenses |
|
|
11,215 |
|
|
|
9,200 |
|
|
Restructuring charges |
|
|
466 |
|
|
|
577 |
|
|
Realignment charges |
|
|
130 |
|
|
|
1,996 |
|
|
Operating income |
|
|
7,320 |
|
|
|
2,819 |
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(152 |
) |
|
|
(803 |
) |
|
Other, net |
|
|
(17 |
) |
|
|
(28 |
) |
|
Total other expense, net |
|
|
(169 |
) |
|
|
(831 |
) |
|
Income before income taxes |
|
|
7,151 |
|
|
|
1,988 |
|
|
Provision for income taxes |
|
|
(2,560 |
) |
|
|
(803 |
) |
|
Net income |
|
$ |
4,591 |
|
|
$ |
1,185 |
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
Net income per common share basic |
|
$ |
0.39 |
|
|
$ |
0.10 |
|
|
Net income per common share diluted |
|
$ |
0.39 |
|
|
$ |
0.10 |
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
|
11,697 |
|
|
|
11,658 |
|
|
Diluted |
|
|
11,865 |
|
|
|
11,696 |
|
See accompanying notes to condensed consolidated financial statements.
4
KMG CHEMICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(In thousands)
|
|
|
Three Months Ended |
|
|||||
|
|
|
October 31, |
|
|||||
|
|
|
2015 |
|
|
2014 |
|
||
|
Net income |
|
$ |
4,591 |
|
|
$ |
1,185 |
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Foreign currency translation income (loss) |
|
|
(484 |
) |
|
|
(3,974 |
) |
|
Total other comprehensive income (loss) |
|
|
(484 |
) |
|
|
(3,974 |
) |
|
Total comprehensive income (loss) |
|
$ |
4,107 |
|
|
$ |
(2,789 |
) |
See accompanying notes to condensed consolidated financial statements.
5
KMG CHEMICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
|
|
|
Three Months Ended |
|
|||||
|
|
|
October 31, |
|
|||||
|
|
|
|
2015 |
|
|
|
2014 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
4,591 |
|
|
$ |
1,185 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,545 |
|
|
|
3,430 |
|
|
Non-cash restructuring and realignment charges |
|
|
105 |
|
|
|
2,589 |
|
|
Amortization of loan costs |
|
|
42 |
|
|
|
27 |
|
|
Stock-based compensation expense |
|
|
939 |
|
|
|
436 |
|
|
Bad debt expense |
|
|
12 |
|
|
|
— |
|
|
Allowance for excess and obsolete inventory |
|
|
57 |
|
|
|
221 |
|
|
Loss (gain) on disposal of property |
|
|
9 |
|
|
|
(2 |
) |
|
Deferred income taxes |
|
|
86 |
|
|
|
(1,141 |
) |
|
Tax benefit from stock-based awards |
|
|
(10 |
) |
|
|
(9 |
) |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Accounts receivable — trade |
|
|
1,099 |
|
|
|
(2,398 |
) |
|
Accounts receivable — other |
|
|
160 |
|
|
|
(373 |
) |
|
Inventories |
|
|
2,310 |
|
|
|
(826 |
) |
|
Other current and noncurrent assets |
|
|
420 |
|
|
|
(139 |
) |
|
Accounts payable |
|
|
(7,850 |
) |
|
|
4,486 |
|
|
Accrued liabilities and other |
|
|
2,450 |
|
|
|
2,099 |
|
|
Net cash provided by operating activities |
|
|
7,965 |
|
|
|
9,585 |
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(3,616 |
) |
|
|
(4,184 |
) |
|
Disposals of property, plant and equipment |
|
|
— |
|
|
|
10 |
|
|
Net cash used in investing activities |
|
|
(3,616 |
) |
|
|
(4,174 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Net payments under revolving credit agreement |
|
|
— |
|
|
|
(40,000 |
) |
|
Principal payments on term loan |
|
|
— |
|
|
|
(20,000 |
) |
|
Borrowings under New Credit Facility |
|
|
— |
|
|
|
59,100 |
|
|
Payments under New Credit Facility |
|
|
(1,500 |
) |
|
|
(3,100 |
) |
|
Tax benefit from stock-based awards |
|
|
10 |
|
|
|
9 |
|
|
Payment of dividends |
|
|
(351 |
) |
|
|
(349 |
) |
|
Net cash used in financing activities |
|
|
(1,841 |
) |
|
|
(4,340 |
) |
|
Effect of exchange rate changes on cash |
|
|
373 |
|
|
|
(592 |
) |
|
Net increase in cash and cash equivalents |
|
|
2,881 |
|
|
|
479 |
|
|
Cash and cash equivalents at beginning of period |
|
|
7,517 |
|
|
|
19,252 |
|
|
Cash and cash equivalents at end of period |
|
$ |
10,398 |
|
|
$ |
19,731 |
|
|
Supplemental disclosures of cash flow information |
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
151 |
|
|
$ |
757 |
|
|
Cash paid for income taxes |
|
$ |
1,371 |
|
|
$ |
1,149 |
|
|
Supplemental disclosure of non-cash investing activities |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment through accounts payable |
|
$ |
137 |
|
|
$ |
960 |
|
See accompanying notes to condensed consolidated financial statements.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The consolidated balance sheet as of July 31, 2015, which has been derived from audited consolidated financial statements, and the unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting. As permitted under those requirements, certain footnotes or other financial information that are normally required by generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted. The Company believes that the disclosures made are adequate to make the information not misleading and in the opinion of management reflect all adjustments, including those of a normal recurring nature, that are necessary for a fair presentation of financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of results of operations to be expected for the full year. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2015.
These condensed consolidated financial statements are prepared using certain estimates by management and include the accounts of KMG Chemicals, Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
2. Acquisitions
On May 1, 2015, the Company completed the acquisition of Valves Incorporated of Texas, a privately held Texas corporation, pursuant to the terms of a previously announced Agreement and Plan of Merger. The acquired company manufactures and distributes industrial sealants and lubricants, primarily to the oil and gas, storage, pipeline and gas distribution markets, as well as related products, such as lubrication equipment and fittings. As of October 31, 2015, the valuation of the assets acquired and the liabilities assumed is not final. The pro forma impact on consolidated results is immaterial.
3. Earnings Per Share
Basic earnings per share have been computed by dividing net income by the weighted average shares outstanding. Diluted earnings per share have been computed by dividing net income by the weighted average shares outstanding plus potentially dilutive common shares. There were approximately 168,000 and 38,000 dilutive shares related to stock-based awards for the three months ended October 31, 2015 and 2014, respectively.
Outstanding stock-based awards are not included in the computation of diluted earnings per share under the treasury stock method if including them would be anti-dilutive. There were 14,783 potentially dilutive securities that were not included for the three months ended October 31, 2015. There were no shares of potentially dilutive securities not included in the computation of diluted earnings per share for the three months ended October 31, 2014.
4. Inventories
Inventories are summarized in the following table (in thousands):
|
|
|
October 31, |
|
|
July 31, |
|
||
|
|
|
2015 |
|
|
2015 |
|
||
|
Raw materials |
|
$ |
7,646 |
|
|
$ |
8,723 |
|
|
Work in process |
|
|
1,053 |
|
|
|
780 |
|
|
Supplies |
|
|
1,016 |
|
|
|
525 |
|
|
Finished products |
|
|
30,395 |
|
|
|
32,535 |
|
|
Less: reserve for inventory obsolescence |
|
|
(518 |
) |
|
|
(481 |
) |
|
Inventories, net |
|
$ |
39,592 |
|
|
$ |
42,082 |
|
7
5. Property, Plant and Equipment
Property, plant and equipment and related accumulated depreciation and amortization are summarized as follows (in thousands):
|
|
|
October 31, |
|
|
July 31, |
|
||
|
|
|
2015 |
|
|
2015 |
|
||
|
Land |
|
$ |
13,306 |
|
|
$ |
13,257 |
|
|
Buildings and improvements |
|
|
37,903 |
|
|
|
38,036 |
|
|
Equipment |
|
|
84,387 |
|
|
|
84,273 |
|
|
Leasehold improvements |
|
|
193 |
|
|
|
193 |
|
|
|
|
|
135,789 |
|
|
|
135,759 |
|
|
Less: accumulated depreciation and amortization |
|
|
(64,328 |
) |
|
|
(61,936 |
) |
|
|
|
|
71,461 |
|
|
|
73,823 |
|
|
Construction-in-progress |
|
|
8,828 |
|
|
|
6,766 |
|
|
Property, plant and equipment, net |
|
$ |
80,289 |
|
|
$ |
80,589 |
|
6. Stock-Based Compensation
The Company has stock-based incentive plans which are described in more detail in the consolidated financial statements in the Company’s Annual Report on Form 10-K for fiscal year 2015. The Company recognized stock-based compensation costs of approximately $939,000 and $436,000 for the three months ended October 31, 2015 and 2014, respectively. The Company also recognized the related tax benefits of $333,000 and $161,000 for the three months ended October 31, 2015 and 2014, respectively. Stock-based compensation costs are recorded under selling, general and administrative expenses in the condensed consolidated statements of income.
As of October 31, 2015, the unrecognized compensation costs related to stock-based awards was approximately $5.4 million, which is expected to be recognized over a weighted-average period of 2.2 years.
Performance Shares
On August 1, 2015, there were 244,790 non-vested performance shares outstanding which reflected the maximum number of shares under the awards. No performance share awards vested during the three months ended October 31, 2015. As of October 31, 2015, the non-vested performance-based stock awards consisted of Series 1 awards granted to certain executives and employees in fiscal years 2015 and 2014 as summarized below reflecting the target number of shares under the awards.
8
|
|
|
|
|
Target |
|
|
|
|
|
|
|
|
Expected |
|
|
|
|
|
||
|
|
|
Series |
|
Award |
|
|
Grant Date |
|
|
Measurement |
|
Percentage of |
|
|
Shares Expected |
|
||||
|
Date of Grant |
|
Award |
|
Shares |
|
|
Fair Value |
|
|
Period Ending |
|
Vesting(1) |
|
|
to Vest |
|
||||
|
Fiscal Year 2015 Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/26/2015 |
|
Series 1 |
|
|
21,173 |
|
|
$ |
25.85 |
|
|
7/31/2017 |
|
|
|
|
|
|
|
|
|
12/9/2014 |
|
Series 1 |
|
|
103,499 |
|
|
$ |
17.81 |
|
|
7/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
Forfeitures(2) |
|
|
(1,124 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
123,548 |
|
|
|
|
|
|
|
|
|
134 |
% |
|
|
165,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2014 Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2014 |
|
Series 1 |
|
|
127,315 |
|
|
$ |
14.88 |
|
|
7/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
Forfeitures(2) |
|
|
(7,372 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
119,943 |
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
119,943 |
|
|
|
|
(1) |
The percentage vesting for performance share awards is currently estimated at 134% and 100% of the target award for the fiscal year 2015 and 2014 awards, respectively. |
|
(2) |
Forfeitures include Series 1 awards that were granted in fiscal years 2015 and 2014 to certain employees that were forfeited at the termination of their employment. |
Series 1: For the fiscal year 2015 and 2014 awards, vesting is subject to performance requirements composed of certain objectives including average annual return on invested capital and annual compound growth rate in the Company’s diluted earnings per share. These objectives are assessed quarterly using the Company’s budget, actual results and long-term projections. For each of the Series 1 awards, the expected percentage of vesting is evaluated through October 31, 2015, and reflects the percentage of shares projected to vest for the respective awards at the end of their measurement periods. For the fiscal year 2015 and 2014 awards, shares vested may increase to a maximum of 167% and 150%, respectively, of the target award on achievement of maximum performance objectives.
Series 2: None outstanding.
Series 3: The table does not include certain performance-based awards that are granted to Christopher T. Fraser according to his employment agreement. Awards to Mr. Fraser for fiscal year 2015 included (i) a performance-based Series 3 award for 10,000 shares of common stock (at maximum) having a performance requirement related to debt payments during the fiscal year, and (ii) a performance-based Series 3 award for 4,000 shares of common stock having certain organizational objectives as a performance requirement, and in each case such awards vest and are measured over a one year period beginning August 1 and ending July 31. The award for fiscal year 2015 was fully vested and 14,000 shares were issued on October 1, 2015. As of October 31, 2015, the 2016 Series 3 awards to Mr. Fraser have not been granted, but when granted they are expected to vest at 100%.
The weighted-average per share grant-date fair value of the target award shares for performance-based awards outstanding was $17.51 and $17.36 at October 31, 2015 and August 1, 2015, respectively.
The weighted-average per share grant-date fair value of the target award shares for performance-based awards granted during the three months ended October 31, 2015 and 2014 was $21.04 and $16.65, respectively.
The weighted-average per share grant-date fair value of awards forfeited during the three months ended October 31, 2015 and 2014 was $19.63 and $14.88, respectively.
9
A summary of activity for time-based stock awards for the three months ended October 31, 2015 is presented below:
|
|
|
Shares |
|
|
Weighted-Average Grant-Date Fair Value |
|
||
|
Non-vested on August 1, 2015 |
|
|
82,688 |
|
|
$ |
19.66 |
|
|
Granted (1) |
|
|
85,147 |
|
|
|
21.83 |
|
|
Vested(2) |
|
|
(11,147 |
) |
|
|
21.59 |
|
|
Forfeited(3) |
|
|
(188 |
) |
|
|
25.85 |
|
|
Non-vested on October 31, 2015 |
|
|
156,500 |
|
|
|
20.70 |
|
|
|
|
(1) |
Includes 5,147 shares granted to non-employee directors for service during the three month period ended October 31, 2015. Also includes 80,000 shares granted to Mr. Fraser which vest over a service period of five years beginning on August 1, 2015. The shares are to vest one third (1/3) at the end of years three, four and five of the service period. |
|
(2) |
Includes 5,147 shares granted to non-employee directors for service for the three months ended October 31, 2015. The shares vest on the date of grant, and the Company recognizes compensation expense related to the awards over the respective service periods in accordance with GAAP. The vested amount includes 6,000 shares granted to Mr. Fraser. |
|
(3) |
Forfeitures include Series 1 awards that were granted in fiscal year 2015 to certain employees that were forfeited at the termination of their employment. |
The total fair value of shares vested during the three months ended October 31, 2015 and 2014 was approximately $474,000 and $237,000, respectively.
7. Intangible Assets
Intangible assets are summarized as follows (in thousands):
|
|
|
Number of Years |
|
|
October 31, 2015 |
|
||||||||||||||
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Foreign |
|
|
|
|
|
||
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
|
|
|
||
|
|
|
Amortization |
|
|
Original |
|
|
Accumulated |
|
|
Translation |
|
|
Carrying |
|
|||||
|
|
|
Period |
|
|
Cost |
|
|
Amortization |
|
|
Adjustment |
|
|
Amount |
|
|||||
|
Intangible assets subject to amortization: (range of useful life): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic chemicals-related contracts (5-8 years) |
|
|
6.6 |
|
|
$ |
2,204 |
|
|
$ |
(905 |
) |
|
$ |
(99 |
) |
|
$ |
1,200 |
|
|
Electronic chemicals-related trademarks and patents (10-15 years) |
|
|
12.0 |
|
|
|
117 |
|
|
|
(81 |
) |
|
|
— |
|
|
|
36 |
|
|
Electronic chemicals-value of product qualifications (5-15 years) |
|
|
14.1 |
|
|
|
14,100 |
|
|
|
(3,900 |
) |
|
|
(20 |
) |
|
|
10,180 |
|
|
Other chemicals-customer relationships (15 years) |
|
|
15.0 |
|
|
|
10,291 |
|
|
|
(343 |
) |
|
|
— |
|
|
|
9,948 |
|
|
Other chemicals-Other related contracts (5 years) |
|
|
5.0 |
|
|
|
152 |
|
|
|
(15 |
) |
|
|
— |
|
|
|
137 |
|
|
Total intangible assets subject to amortization |
|
|
13.8 |
|
|
$ |
26,864 |
|
|
$ |
(5,244 |
) |
|
$ |
(119 |
) |
|
$ |
21,501 |
|
|
Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other chemicals-penta product registrations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,765 |
|
|
Other chemicals-related trade name and trademark |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,885 |
|
|
Other chemicals-proprietary manufacturing process |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,808 |
|
|
Total intangible assets not subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,458 |
|
|
Total intangible assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
35,959 |
|
10
|
|
Number of Years |
|
|
July 31, 2015 |
|
|||||||||||||||
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Foreign |
|
|
|
|
|
||
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Currency |
|
|
|
|
|
||
|
|
|
Amortization |
|
|
Original |
|
|
Accumulated |
|
|
Translation |
|
|
Carrying |
|
|||||
|
|
|
Period |
|
|
Cost |
|
|
Amortization |
|
|
Adjustment |
|
|
Amount |
|
|||||
|
Intangible assets subject to amortization: (range of useful life): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic chemicals-related contracts (5-8 years) |
|
|
6.6 |
|
|
$ |
2,204 |
|
|
$ |
(839 |
) |
|
$ |
(87 |
) |
|
$ |
1,278 |
|
|
Electronic chemicals-related trademarks and patents (10-15 years) |
|
|
12.0 |
|
|
|
117 |
|
|
|
(77 |
) |
|
|
— |
|
|
|
40 |
|
|
Electronic chemicals-value of product qualifications (5-15 years) |
|
|
14.1 |
|
|
|
14,100 |
|
|
|
(3,649 |
) |
|
|
70 |
|
|
|
10,521 |
|
|
Other chemicals-customer relationships (15 years) |
|
|
15.0 |
|
|
|
10,291 |
|
|
|
(172 |
) |
|
|
— |
|
|
|
10,119 |
|
|
Other chemicals-Other related contracts (5 years) |
|
|
5.0 |
|
|
|
152 |
|
|
|
(8 |
) |
|
|
— |
|
|
|
144 |
|
|
Total intangible assets subject to amortization |
|
|
13.8 |
|
|
$ |
26,864 |
|
|
$ |
(4,745 |
) |
|
$ |
(17 |
) |
|
|
22,102 |
|
|
Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other chemicals-penta product registrations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,765 |
|
|
Other chemicals-related trade name and trademark |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,885 |
|
|
Other chemicals-proprietary manufacturing process |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,808 |
|
|
Total intangible assets not subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,458 |
|
|
Total intangible assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
36,560 |
|
Intangible assets subject to amortization are amortized over their estimated useful lives. Amortization expense was approximately $499,000 and $414,000 for the three month periods ended October 31, 2015 and 2014, respectively.
8. Dividends
Dividends of approximately $351,000 ($0.03 per share) and $349,000 ($0.03 per share) were declared and paid in the first quarter of fiscal years 2016 and 2015, respectively.
9. Segment Information
The Company has two reportable segments — electronic chemicals and other chemicals.
|
|
|
Three Months Ended |
|
|||||
|
|
|
October 31, |
|
|||||
|
|
|
2015 |
|
|
2014 |
|
||
|
|
|
(Amounts in thousands) |
|
|||||
|
Sales |
|
|
|
|
|
|
|
|
|
Electronic chemicals |
|
$ |
66,082 |
|
|
$ |
66,323 |
|
|
Other chemicals |
|
|
10,568 |
|
|
|
24,427 |
|
|
Total sales for reportable segments |
|
$ |
76,650 |
|
|
$ |
90,750 |
|
|
Depreciation and amortization (1) |
|
|
|
|
|
|
|
|
|
Electronic chemicals |
|
$ |
2,915 |
|
|
$ |
3,202 |
|
|
Other chemicals |
|
|
297 |
|
|
|
96 |
|
|
Other |
|
|
333 |
|
|
|
132 |
|
|
Total consolidated depreciation and amortization |
|
$ |
3,545 |
|
|
$ |
3,430 |
|
|
Segment income from operations (2) |
|
|
|
|
|
|
|
|
|
Electronic chemicals |
|
$ |
7,274 |
|
|
$ |
4,121 |
|
|
Other chemicals |
|
|
3,764 |
|
|
|
2,585 |
|
|
Total segment income from operations |
|
$ |
11,038 |
|
|
$ |
6,706 |
|
|
|
|
(1) |
Depreciation and amortization excludes restructuring related depreciation. |
|
(2) |
Segment income from operations includes allocated corporate overhead expenses. |
11
Corporate overhead expenses allocated to segment income from operations for the three months ended October 31, 2015 and 2014 were as follows:
|
|
|
Three Months Ended |
|
|||||
|
|
|
October 31, |
|
|||||
|
|
|
2015 |
|
|
2014 |
|
||
|
|
|
(Amounts in thousands) |
|
|||||
|
Electronic chemicals |
|
|||||||