UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For The Quarterly Period Ended March 31, 1996
Commission File Nos. 0-9115 and 0-24494
MATTHEWS INTERNATIONAL CORPORATION
(Exact Name of registrant as specified in its charter)
PENNSYLVANIA 25-0644320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
TWO NORTHSHORE CENTER, PITTSBURGH, PA 15212-5851
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 442-8200
NOT APPLICABLE
(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 [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
Class of Common Stock Outstanding at April 30, 1996
Class A - $1.00 par value 5,875,716 shares
Class B - $1.00 par value 3,142,506 shares
PART I - FINANCIAL INFORMATION
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
March 31, 1996 September 30, 1995
-------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 14,237,869 $ 39,204,010
Short-term investments 3,020,128 -
Accounts and notes receivable, net 27,280,451 28,515,610
Inventories:
Materials and finished goods $10,818,376 $ 9,209,411
Labor and overhead in process 736,711 812,178
Supplies 700,322 618,907
Less LIFO reserve (298,673) (298,673)
---------- ----------
11,956,736 10,341,823
Other current assets 966,916 1,174,796
---------- ----------
Total current assets 57,462,100 79,236,239
Investments 33,797,171 -
Property, plant and equipment: Cost 63,072,483 62,429,586
Less accumulated depreciation (26,065,097) (24,407,809)
---------- ----------
37,007,386 38,021,777
Deferred income taxes and other assets 10,997,415 15,588,221
Goodwill 10,504,170 5,360,139
----------- -----------
Total assets $149,768,242 $138,206,376
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt, current maturities 439,697 433,465
Accounts payable 4,179,501 5,181,954
Accrued compensation 6,389,878 7,944,824
Accrued income taxes 3,241,119 1,165,805
Customer prepayments and other current liabilities 8,729,905 8,183,972
---------- ----------
Total current liabilities 22,980,100 22,910,020
Long-term debt 48,668 270,092
Estimated cemetery and finishing costs 3,009,327 4,991,476
Postretirement benefits 20,139,350 19,727,632
Deferred revenue and other liabilities 1,539,835 3,508,752
Shareholders' equity:
Common stock: Class A, par value $1.00 5,863,296 4,009,753
Class B, par value $1.00 3,200,916 4,840,597
Other shareholders' equity 92,986,750 77,948,054
---------- ----------
102,050,962 86,798,404
----------- -----------
Total liabilities and shareholders' equity $149,768,242 $138,206,376
=========== ===========
/TABLE
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended
March 31, March 31,
------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
Sales $ 42,791,474 $ 42,085,583 $ 83,976,824 $ 82,171,388
Cost of sales 23,819,715 23,180,292 46,421,717 44,902,530
Selling and
administrative expenses 12,125,473 12,555,911 24,256,568 24,555,784
---------- ---------- ---------- ----------
Operating profit 6,846,286 6,349,380 13,298,539 12,713,074
Other income
(deductions), net 6,415,350 356,083 6,819,975 526,413
Interest expense 46,337 21,824 67,696 40,365
---------- ---------- ---------- ----------
Income before income taxes 13,215,299 6,683,639 20,050,818 13,199,122
Income taxes 5,839,254 2,603,011 8,428,784 5,208,829
---------- ---------- ---------- ----------
Net income $ 7,376,045 $ 4,080,628 $ 11,622,034 $ 7,990,293
========== ========== ========== ==========
Earnings per share $ .83 $ .46 $ 1.31 $ .90
===== ===== ===== =====
Dividends per share $ .07 $ .06 $ .14 $ .12
===== ===== ===== =====
Weighted average number
of common shares
outstanding 8,880,821 8,850,350 8,867,762 8,850,350
========= ========= ========= =========
/TABLE
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six Months Ended
March 31,
--------------------------
1996 1995
---- ----
Cash flows from operating activities:
Net Income $11,622,034 $ 7,990,293
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,761,738 2,286,393
Deferred taxes 258,312 (344,600)
Net increase in certain working capital items (1,141,485) (3,400,848)
Decrease in other noncurrent assets (199,198) 8,499
Increase in estimated finishing and cemetery costs 211,312 139,992
Decrease in deferred revenue and expenses and
other liabilities (337,619) (39,270)
Increase in postretirement benefits 411,718 733,894
(Gain) loss on sale of property, plant and equipment (233,145) 20,659
(Gain) loss on sale of investments 38,802 -
Gain on sale of subsidiary (9,409,058) -
Effect of exchange rate changes on operations (329,898) 196,861
---------- ---------
Net cash provided by operating activities 5,653,513 7,591,873
---------- ---------
Cash flows from investing activities:
Acquisitions of property, plant and equipment (2,327,439) (2,329,309)
Acquisition of subsidiary, net of cash acquired (3,482,330) -
Purchases of investments (42,099,157) -
Proceeds from disposals of property,
plant and equipment 428,867 19,264
Proceeds from sale or maturity of investments 5,176,200 -
Proceeds from sale of subsidiary 13,070,853 -
Collections on loans to officers and employees 951,931 692,636
---------- ---------
Net cash used in investing activities (28,281,075) (1,617,409)
---------- ---------
Cash flows from financing activities:
Payments on long-term debt (215,192) (207,909)
Proceeds from the sale of treasury stock 108,250 -
Purchases of treasury stock (1,075,000) -
Dividends paid (1,250,731) (1,061,647)
---------- ---------
Net cash used in financing activities (2,432,673) (1,269,556)
---------- ---------
Effect of exchange rate changes on
cash and cash equivalents 94,094 (44,205)
---------- ---------
Net increase (decrease) in cash and cash equivalents $(24,966,141) $ 4,660,703
========== =========
Supplemental Cash Flow Information:
Cash paid during the period for:
Interest $ 67,696 $ 40,365
Income Taxes 5,269,205 5,640,294
/TABLE
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
Note 1. Nature of Operations
Matthews International Corporation, founded in 1850 and incorporated in
Pennsylvania in 1902, is a designer, manufacturer and marketer of custom-made
products which are used to identify people, places, products and events. The
Company's products and operations are comprised of three business segments:
Bronze, Graphic Systems and Marking Products. The Bronze segment is a leading
manufacturer of cast bronze memorial products used primarily in cemeteries.
The Graphic Systems segment manufactures and provides custom identification-
related products and services used by the corrugated packaging industry and the
flexible packaging industry. The Marking Products segment designs,
manufactures and distributes a wide range of equipment and consumables used by
customers to mark or identify various consumer and industrial products,
components and packaging containers. The Company has manufacturing facilities
in the United States, Canada, Australia and Sweden as well as sales and
distribution facilities in France and Germany.
Note 2. Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information for commercial and industrial companies and the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for fair presentation have been included. Operating results for the
three-month and six-month periods ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the fiscal year ending
September 30, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1995.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 3. Income Taxes
The income tax provision for the period is based on the effective tax rate
expected to be applicable for the full year. The difference between the
estimated effective tax rate of 42.0% and the Federal statutory rate of 35%
primarily reflects the impact of state and foreign income taxes.
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
MARCH 31, 1996
Note 4. Investments
On February 19, 1996, the Company acquired 40% of the common stock of Applied
Technology Developments, Ltd., a British manufacturer of impulse ink-jet
printing equipment, at a cost of $1,596,688. The investment has been recorded
under the equity method of accounting.
All other investment securities are classified as available-for-sale and are
recorded at market value at the consolidated balance sheet date. Short-term
investments consist of securities with purchased maturities of over three
months but less than one year. Accrued interest on all investment securities,
including purchased interest, is also classified with short-term investments.
Investments classified as non-current consist of securities with purchased
maturities intended to range from one to five years.
Unrealized gains and losses on investment securities are included as a separate
component of shareholders' equity. Realized gains and losses are based on the
specific identification method and are recorded in other income. Bond premiums
and discounts are amortized on the straight-line method which does not
significantly differ from the interest method.
The amortized cost and market values of investment securities at March 31, 1996
were as follows:
Book Value Gross Gross
(Amortized Unrealized Unrealized Market
Cost) Gains Losses Value
---------- ---------- ---------- ------
Short-term investments:
U.S. government and
its agencies $ 1,499,835 $ 780 $ - $ 1,500,615
Corporate obligations 1,018,000 - - 1,018,000
Other 501,513 - - 501,513
---------- ------ ------- ----------
Total $ 3,019,348 $ 780 $ - $ 3,020,128
========== ====== ======= ==========
Investments:
U.S. government and
its agencies $14,003,340 $ - $295,504 $13,707,836
Corporate obligations 18,668,773 - 241,953 18,426,820
Other 65,827 - - 65,827
---------- ------ ------- ----------
Total $32,737,940 $ - $537,457 $32,200,483
========== ====== ======= ==========
MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
MARCH 31, 1996
Note 5. Acquisition
On March 25, 1996, Matthews International Corporation acquired the stock of
Industrial Equipment and Engineering Company ("IEEC"), for 213,862 shares of
Matthews Class A common stock (valued at $5,400,000) and $3,600,000 cash. The
acquisition was consummated through a statutory merger between a wholly-owned
subsidiary of Matthews and IEEC (including a real estate holding corporation
related to IEEC), with the Matthews subsidiary as the surviving corporation.
In addition, Matthews' wholly-owned subsidiary executed employment agreements
with the two shareholders of IEEC pursuant to which performance-based incentive
compensation would be payable to such shareholders if the cumulative pre-tax
earnings of the merged business for the five-year period beginning April 1,
1996 exceeds $8 million, which amount is significantly greater than recent
years profit levels. Matthews has accounted for this acquisition using the
purchase method and, accordingly, has recorded the acquired assets and
liabilities at their estimated fair values at the date of acquisition. The
excess of the purchase price over the fair value of the net assets was recorded
as goodwill to be amortized on a straight-line basis over 20 years.
Note 6. Disposition
On January 5, 1996, Matthews International Corporation sold for $13,100,000
cash its cemetery and mortuary facility (Sunland Memorial Park, Inc.) in Sun
City, Arizona to Service Corporation International. Matthews recorded a pre-
tax gain of $9.4 million on the sale which was recorded in other income.
Sunland Memorial Park, Inc., which was purchased in 1982, was the only such
facility owned by the Company. The facility had sales in fiscal year 1995 of
approximately $5 million, representing about 3 percent the consolidated sales
of the Company.
Note 7. Supplemental Cash Flow Information
On March 25, 1996, the Company issued 213,862 shares of authorized Class A
common stock, with a value of $5.4 million, in connection with the acquisition
of IEEC (See Note 5).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth certain income statement data of the Company
expressed as a percentage of net sales for the periods indicated.
Six months ended Years ended
March 31, September 30,
------------------ --------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Sales 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit 44.7 45.4 44.8 45.1 42.4
Operating profit 15.8 15.5 14.7 15.1 11.6
Income before income taxes 23.9 16.1 15.0 14.9 11.0(1)
Net income 13.8 9.7 9.3 8.8 6.6(1)
(1) Excludes the cumulative effect of changes in accounting principles for
the adoptions of SFAS No. 106 and SFAS No. 109.
Sales for the six months ended March 31, 1996 were $84.0 million and were
$1.8 million, or 2.2%, higher than sales of $82.2 million for the first six
months of fiscal 1995. The increase for the first six months of fiscal 1996
reflected higher sales in all three of the Company's business segments. Bronze
segment sales for the period were up 2% over fiscal 1995 despite the sale of
Sunland Memorial Park, Inc. in January 1996 (see "Liquidity and Capital
Resources") reflecting increases in both price and unit volume. Marking
Products sales for the first six months of fiscal 1996 were up 3% over the same
period a year ago reflecting higher demand in Europe and Australia. The
segment's international sales increased 20% over the same period a year ago
which more than offset a decline in North American sales volume. Graphic
Systems sales for the first six months of fiscal 1996 were slightly higher than
the first six months of fiscal 1995. However, sales for the second quarter of
fiscal 1996 improved significantly from the 1996 first quarter. Sales for this
segment have been adversely impacted, beginning in the third quarter of fiscal
1995, from the postponement by many customers of printing plates purchases in
an attempt to offset increased costs for linerboard.
Gross profit for the six months ended March 31, 1996 was $37.6 million, or
44.7% of sales, compared to $37.3 million, or 45.4%, for the first six months
of fiscal 1995. The increase in gross profit of $286,000, or 0.8%, was
attributable principally to the Marking Products segment. International gross
profit improved with higher sales volume and the current period also benefitted
from a reduction in lower margin sales in Italy. Although sales for the Bronze
segment increased during the current period, higher material costs (principally
bronze ingot) resulted in a relatively consistent gross profit amount for the
segment compared to the same period a year ago. Graphic Systems gross profit
and gross profit as a percent of sales for the first six months of fiscal 1996
were comparable to the first six months of fiscal 1995.
Selling and administrative expenses for the six months ended March 31, 1996
were $24.3 million, representing a decrease of $300,000, or 1.1%, from
$24.6 million for the first six months of fiscal 1995. The reduction in
selling and administrative costs for the first six months of fiscal 1996
reflects the absence of Sunland Memorial Park, Inc., which was sold in January
1996. In addition, selling costs declined in the Marking Products segment
mainly due to the discontinuance of the Company's Italian operations effective
November 1, 1995.
Operating profit for the six months ended March 31, 1996 was $13.3 million and
was $585,000, or 4.6%, higher than operating profit of $12.7 million for the
first six months of fiscal 1995. The operating profit for the first six months
of fiscal 1996 principally reflected improvements in the Marking Products
segment, related to increased sales and related gross profit of its
international operations. Operating profit for the Bronze segment was slightly
ahead of last year as a result of an increase in sales combined with reductions
in selling and administrative costs from the sale of Sunland. Graphic Systems
operating profit was slightly below the prior year level primarily reflecting
a constant level of sales combined with higher operating expenses.
Interest expense for the six months ended March 31, 1996 was $68,000, compared
to $40,000 for the first six months of fiscal 1995. Interest expense
principally relates to the Company's capital lease obligations.
Other income (deductions), net for the six months ended March 31, 1996 was
$6.8 million compared to $526,000 for the first six months of fiscal 1995.
Other income for the first six months of fiscal 1996 reflected a $9.4 million
pre-tax gain on the sale of Sunland Memorial Park, Inc. This gain was
partially offset by the write-off of the remaining goodwill ($2.3 million) with
respect to the Company's investment in its Swedish subsidiary which
manufactures drop-on-demand ink-jet printing equipment and a charge for certain
other non-operating expenses during the current period. Investment income for
the first six months of fiscal 1996 was $1.1 million compared to $606,000 for
the same period a year ago.
The Company's effective tax rate for the six months ended March 31, 1996 was
42.0%, compared to 38.4% for the year ended September 30, 1995. The higher
effective tax rate for fiscal 1996 is primarily the result of a increase in the
estimated impact of foreign income taxes, mainly in Sweden and Germany, on the
Company's consolidated tax position. The difference between the Company's
effective tax rate and the Federal statutory rate of 35% primarily reflects the
impact of state and foreign income taxes.
Liquidity and Capital Resources
Net cash provided by operating activities was $5.7 million for the six months
ended March 31, 1996, compared to $7.6 million for the first six months of
fiscal 1995. Operating cash flow for the first six months of fiscal 1996
reflected the Company's net income for the period of $11.6 million adjusted to
exclude the gain on the sale of Sunland and non-cash depreciation and
amortization (including the write-off of goodwill related to the Company's
Swedish subsidiary). Cash flow from operations for the first six months of
fiscal 1995 principally reflected the Company's net income for the period.
Cash used in investing activities was $28.3 million for the six months ended
March 31, 1996 compared to $1.6 million for the same period a year ago.
Investing activities for the first six months of fiscal 1996 included net
investments of $35.3 million in short-term and intermediate-term securities of
the U.S. government and its agencies and corporate obligations. These
investments are designed to improve the investment rate of return on the
Company's excess cash position while maintaining a sufficient degree of
liquidity for future cash needs. Investing activities also included the
acquisition for $1.6 million of 40% of the common stock of Applied Technology
Developments, Ltd., a British manufacturer of impulse ink-jet printing
equipment.
Capital expenditures for the six months ended March 31, 1996 amounted to
$2.3 million, representing approximately the same level of capital expenditures
for the first six months of fiscal 1995. Capital spending for property, plant
and equipment has averaged approximately $4.9 million for the last three fiscal
years. The capital budget of the Company for fiscal 1996 is $12.7 million.
The Company expects to generate sufficient cash from operations to fund all
anticipated capital spending projects.
On January 5, 1996, the Company sold for $13.1 million cash its cemetery and
mortuary facility (Sunland Memorial Park, Inc.) in Sun City, Arizona to Service
Corporation International. The transaction resulted in a pre-tax gain of
$9.4 million. Sunland Memorial Park, Inc., which was purchased in 1982, was
the only such facility owned by Matthews. The facility had sales in fiscal
year 1995 of approximately $5 million, representing about 3 percent the
consolidated sales of the Company. The sale of Sunland Memorial Park, Inc.
will permit Matthews International Corporation to concentrate on growing its
core business profitability. The proceeds from this transaction will provide
additional resources to fund internal and acquisition growth in the Company's
related businesses.
On March 25, 1996, the Company acquired the stock of Industrial Equipment and
Engineering Company, Inc. ("IEEC"), for 213,862 newly-issued shares of
authorized Matthews Class A common stock (approximately $5.4 million) and
$3.6 million cash. IEEC, headquartered in Orlando, Florida, is the leading
North American manufacturer of cremation equipment and also a supplier of
related cremation products. IEEC sales were approximately $7.5 million for the
year ended December 31, 1995 and consisted of about 70% in equipment, 15% in
field repairs, and the remainder in cremation supply products. The merger with
IEEC is expected to provide Matthews with the opportunity to further
participate in the increasing cremation trend and expand its range of products
and services to the death care industry.
Cash used in financing activities for the six months ended March 31, 1996 was
$2.4 million principally reflecting the Company's quarterly dividends of $.07
per share, the purchase of treasury stock and capital lease payments. Cash
used in financing activities in the first six months of fiscal 1995 was
$1.3 million consisting of dividends and capital lease payments. Dividends for
each of the first two quarters of fiscal 1995 were $.06 per share. The Company
currently has available lines of credit of approximately $11 million. There
were no outstanding borrowings on any of the Company's lines of credit at
March 31, 1996. As of such date, the Company's outstanding long-term debt,
which consisted of capital lease obligations, was approximately $500,000.
At March 31, 1996 and September 30, 1995 and 1994, the Company's current ratio
was 2.5, 3.5 and 2.9, respectively. The Company had cash and cash equivalents
at March 31, 1996 and September 30, 1995 of $14.2 million and $39.2 million,
respectively. Net working capital at March 31, 1996 was $34.5 million. The
reduction in the current ratio and cash and cash equivalents balance from
September 30, 1995 reflects investments in securities with longer maturities.
The Company believes that its current liquidity sources, combined with its
operating cash flow and additional borrowing capacity, will be sufficient to
meet its capital needs for the next 12 months.
Other
On March 15, 1996, the Board of Directors elected David M. Kelly, the Company's
President and Chief Executive Officer, as Board Chairman. William M. Hauber,
the Company's previous Chairman who retired from active service as Chief
Executive Officer on October 1, 1995, resigned from the Board of Directors
following a distinguished 45-year career with Matthews concurrent with
Mr. Kelly's election as Chairman.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the Shareholders of Matthews International Corporation
was held on February 16, 1996. Total shares eligible for vote at such meeting
were:
Class A Common Stock (one vote per share) 5,020,250 shares
Class B Common Stock (ten votes per share) 3,830,100 shares
The matters voted upon at such meeting were as follows:
1. Election of Directors:
The following individuals were nominated for election to the Board of
Directors for terms expiring at the Annual Meeting of Shareholders in the
year as set forth below. The nominations were made by the Board of
Directors and no other nominations were made by any shareholder. The
nominees had currently been members of the Board of Directors at the date
of the Annual Meeting.
Votes
-----------------------------
Term Withhold
Nominee Expiration For Authority
------- ---------- ----------- -----------
D.M. Kelly 1999 35,708,244 106,365
J.L. Parker 1999 35,717,644 96,965
The terms of the following additional directors continued after the
meeting: W.A. Coates, G.D. Barefoot, D.J. DeCarlo, W.M. Hauber,
T.N. Kennedy, J.P. O'Leary, Jr. and W.J. Stallkamp. On March 15, 1996,
Mr. Hauber resigned as a director.
2. Selection of Auditors:
The shareholders voted to ratify the appointment by the Board of Directors
of Coopers & Lybrand as independent certified public accountants to audit
the records of the Company for the year ending September 30, 1996.
Votes For: 35,353,474
Votes Against: 400,255
Abstaining: 60,880
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following Exhibits to this report are filed herewith or incorporated
by reference:
Exhibit
No. Description
------- -----------
10.1 Capital Stock Purchase Agreement, Sunland Memorial Park, Inc.,
incorporated by reference to Exhibit No. 10.1 to Form 10-Q for
the quarter ended December 31, 1995
10.2 Agreement and Plan of Merger, Industrial Equipment and
Engineering Company, Inc., filed herewith
11 Computation of Earnings Per Share, filed herewith
Item 6. Exhibits and Reports on Form 8-K, continued
(b) Reports on Form 8-K
A Form 8-K current report was filed by the Company on January 17, 1996
reporting the following under "Item 5 - Other Events:"
Matthews International Corporation (the "Company") announced on
January 5, 1996 that it has sold for cash its cemetery and mortuary
facility (Sunland Memorial Park, Inc.) in Sun City, Arizona to Service
Corporation International (SCI). Sunland Memorial Park, Inc., which was
purchased in 1982, was the only such facility owned by the Company. The
facility had sales in fiscal year 1995 of approximately $5 million,
representing about 3 percent the consolidated sales of the Company.
Matthews International Corporation will realize a pre-tax gain of
approximately $10 million on this sale, which will be recorded in the
Company's second quarter (March 31, 1996) financial statements.
The sale of Sunland Memorial Park, Inc. will permit Matthews
International Corporation to concentrate on growing its core business
profitability. The proceeds from this transaction will provide
additional resources to fund internal and acquisition growth in the
Company's related businesses.
A Form 8-K current report was filed by the Company on March 11, 1996
reporting the following under "Item 5 - Other Events:"
On March 5, 1996, Matthews International Corporation ("Matthews") signed
an agreement and plan of merger to acquire the stock of Industrial
Equipment and Engineering Company ("IEEC"), for 213,862 shares of
Matthews Class A common stock and $3,600,000 cash. The agreement
provides that a wholly-owned subsidiary of Matthews will, on the closing
date, merge with IEEC and its related real estate holding corporation.
The Matthews subsidiary will be the surviving corporation. In addition,
on the closing date, Matthews' wholly-owned subsidiary will execute
employment agreements with the two shareholders of IEEC pursuant to
which performance-based incentive compensation would be payable to such
shareholders if the cumulative pre-tax earnings of the merged business
for the five-year period beginning April 1, 1996 exceeds $8 million,
which amount is significantly greater than recent years profit levels.
A closing of the transaction, subject to normal due diligence review,
is expected to occur prior to March 31, 1996.
IEEC, headquartered in Orlando, Florida, is the leading North American
manufacturer of cremation equipment and also a supplier of related
cremation products. The business was started in 1946 and was purchased
by the current shareowners, P. Rahill and K. Robinson, in 1984. IEEC
sales were approximately $7.5 million for the year ended December 31,
1995 and consisted of about 70% in equipment, 15% in field repairs, and
the remainder in cremation supply products. IEEC serves over 2,000
accounts worldwide.
The merger with IEEC is expected to provide Matthews with the
opportunity to further participate in the increasing cremation trend and
expand its range of products and services to the death care industry.
SIGNATURES
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.
MATTHEWS INTERNATIONAL CORPORATION
(Registrant)
Date 5/10/96 E.J. Boyle
------------- -------------------------------------
E.J. Boyle, Vice President,
Accounting & Finance
Date 5/10/96 J.L. Parker
------------- -------------------------------------
J. L. Parker, Senior Vice President,
General Counsel and Secretary