-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AsUc9nqaDoYQjJhgW1v7B3Emz9yMwxor+LEkgJznBpIc7i9FZ59FqvjVPfMqp/BM p818XmLu5p0l2nJseP2F3A== 0000950152-96-000092.txt : 19960116 0000950152-96-000092.hdr.sgml : 19960116 ACCESSION NUMBER: 0000950152-96-000092 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19960112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HMI INDUSTRIES INC CENTRAL INDEX KEY: 0000046445 STANDARD INDUSTRIAL CLASSIFICATION: STEEL PIPE & TUBES [3317] IRS NUMBER: 361202810 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 002-30905 FILM NUMBER: 96503296 BUSINESS ADDRESS: STREET 1: 3500 PAYNE AVE CITY: CLEVELAND STATE: OH ZIP: 44114 BUSINESS PHONE: 2164321990 MAIL ADDRESS: STREET 1: 3500 PAYNE AVENUE CITY: CLEVELAND STATE: OH ZIP: 44114 FORMER COMPANY: FORMER CONFORMED NAME: HEALTH MOR INC DATE OF NAME CHANGE: 19920703 10-Q/A 1 HMI INDUSTRIES 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 ------------------------------ OR / / 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 --------------------------------------------------------- HMI Industries Inc. ---------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-1202810 ---------------------------- --------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or Identification Number) organization) 3631 Perkins Avenue, Cleveland, Ohio 44114 ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (216) 432-1990 ---------------------------------------------------------------------- (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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock - $1 Par Value 5,295,556 Shares ---------------------------------------------------------------------- Outstanding as of May 12, 1995 ---------------------------------------------------------------------- 2 HMI INDUSTRIES INC. AMENDED CONSOLIDATED CONDENSED BALANCE SHEETS June 30, 1995 and September 30, 1994 (UNAUDITED)
Assets June 30 September 30 ------ 1995 1994 Current Assets: ----------- ----------- Cash and cash equivalents $ 450,718 $ 690,177 Trade accounts receivable, net 25,095,185 23,719,891 Finance contracts receivable 3,656,126 3,647,592 Notes receivable 387,203 430,461 Inventories 18,684,706 15,585,921 Deferred income taxes 793,911 1,125,186 Prepaid expenses 702,101 1,006,686 ----------- ----------- Total current assets 49,769,950 46,205,914 ----------- ----------- Property, Plant and Equipment, Net 14,129,258 13,217,261 ----------- ----------- Other Assets: Long-term notes receivable 334,123 334,123 Cost in excess of net assets acquired 13,142,770 13,362,786 Deferred income taxes 515,350 507,458 Trademarks 1,601,025 2,430,498 Finance contracts receivable 1,989,481 1,242,142 Other 117,636 131,630 ----------- ----------- Total other assets 17,700,385 18,008,637 ----------- ----------- Total Assets $81,599,593 $77,431,812 =========== =========== Liabilities and Stockholders' Equity ------------------------------------ Current Liabilities: Line of credit $ 5,756,393 $ 587,060 Trade accounts and dividends payable 12,206,408 10,912,167 Accrued expenses and other liabilities 5,538,105 7,239,226 Income taxes payable 2,696,983 2,501,300 Long-term debt due within one year 2,019,024 2,024,977 ----------- ----------- Total current liabilities 28,216,913 23,264,730 ----------- ----------- Long-Term Liabilities Long-term debt less current portion 12,812,283 13,942,768 Deferred income taxes 503,475 506,732 ----------- ----------- Long-term liabilities 13,315,758 14,449,500 ----------- ----------- Stockholders' Equity Common stock, $1 par value; authorized 10,000,000 shares; issued, 5,295,556 shares 5,295,556 5,295,556 Capital in excess of par value 7,310,588 7,223,367 Retained earnings 32,957,404 30,111,101 Cumulative translation adjustment (3,532,470) (869,016) ----------- ----------- 42,031,078 41,761,008 Less treasury stock 419,295 shares, at cost 1,964,156 2,043,426 ----------- ----------- 40,066,922 39,717,582 ----------- ----------- Total Liabilities & Stockholders' Equity $81,599,593 $77,431,812 =========== ===========
See accompanying notes to consolidated condensed financial statements 3 HMI INDUSTRIES INC. AMENDED CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1995 and 1994 (UNAUDITED)
Three Months Ended June 30, Nine Months Ended June 30, 1995 1994 1995 1994 ----------- ----------- ------------ ----------- Income: Net sales $34,029,079 $36,831,408 $103,010,492 $98,946,564 Financing Revenue 211,787 382,101 799,645 965,867 ----------- ----------- ------------ ----------- 34,240,866 37,213,509 103,810,137 99,912,431 Operating Costs and Expenses: Cost of products sold 23,833,388 25,651,181 70,540,964 68,672,631 Selling, general and administrative expenses 8,366,224 8,094,584 24,900,227 21,898,093 ----------- ----------- ------------ ----------- 32,199,612 33,745,765 95,441,191 90,570,724 ----------- ----------- ------------ ----------- Operating Income 2,041,254 3,467,744 8,368,946 9,341,707 Other Income (Expense) Interest and other income 1,000 0 36,849 71,032 Interest expense (368,729) (334,915) (1,097,671) (1,021,044) Trademark amortization (230,903) (289,062) (789,758) (674,479) Acquisition related costs (100,000) (100,000) (300,000) (300,000) ----------- ----------- ------------ ----------- (698,632) (723,977) (2,150,580) (1,924,491) ----------- ----------- ------------ ----------- Income Before Income Taxes 1,342,622 2,743,767 6,218,366 7,417,216 Provision for Income Taxes 549,892 1,042,631 2,093,276 2,805,049 ----------- ----------- ------------ ----------- Net Income Before Cumulative Effect of Change in Accounting Principle for Income Taxes 792,730 1,701,136 4,125,090 4,612,167 Cumulative Effect of Change in Accounting Principle for Income Taxes 0 0 0 719,016 ----------- ----------- ------------ ----------- Net Income $ 792,730 $ 1,701,136 $ 4,125,090 $ 5,331,183 =========== =========== ============ =========== Weighted Average Number of Shares Outstanding 4,998,330 4,882,721 4,991,361 4,879,335 =========== =========== ============ =========== Earnings Per Common Share: Net Income Before Cumulative Effect of Change in Accounting Principle for Income Taxes $0.16 $0.35 $0.83 $0.95 Cumulative Effect of Change in Accounting Principle for Income Taxes $0.00 $0.00 $0.00 $0.15 ----------- ----------- ------------ ----------- Net income $0.16 $0.35 $0.83 $1.10 =========== =========== ============ =========== Cash Dividends Per Common Share $0.088 $0.083 $0.263 $0.249 =========== =========== ============ ===========
See accompanying notes to consolidated condensed financial statements 4 HMI INDUSTRIES INC. AMENDED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
1995 1994 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 4,125,090 $ 5,331,183 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,772,765 2,483,845 Provision for losses on receivables 483,933 530,463 Amortization of deferred non-compete agreements 300,000 300,000 Deferred income taxes 320,126 (1,006,695) Changes in operating assets and liabilities net of acquisitions: Increase in receivables (2,571,842) (7,304,278) Increase in inventories (3,098,785) (415,044) (Increase) decrease in prepaid expenses 4,588 (132,051) Increase in accounts payable 1,294,241 2,381,538 Decrease in accrued expenses and other liabilities (1,701,121) (442,361) Increase in income taxes payable 195,682 223,229 Other, net 13,991 (45,130) ----------- ----------- Net cash provided by operating activities 2,138,668 1,904,699 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (2,635,273) (1,854,775) Acquisition of businesses 0 (4,875,000) Payment of long term note receivable 0 300,000 ----------- ----------- Net cash used in investing activities (2,635,273) (6,429,775) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Debt transactions: Proceeds from line of credit 5,169,333 7,381,538 Payment of long term debt (1,136,438) (1,238,412) ----------- ----------- Cash provided by debt transactions 4,032,895 6,143,126 ----------- ----------- Equity transactions: Dividends paid (1,278,786) (1,175,658) Sale of treasury shares 166,491 61,507 ----------- ----------- Cash used in equity transactions (1,112,295) (1,114,151) ----------- ----------- Net cash provided by financing activities 2,920,600 5,028,975 ----------- ----------- Effect of exchange rate changes on cash (2,663,454) (411,816) ----------- ----------- Net increase in cash and cash equivalents (239,459) 92,083 Cash and cash equivalents, beginning of period 690,177 211,261 ----------- ----------- Cash and cash equivalents, end of period $ 450,718 $ 303,344 =========== ===========
See accompanying notes to consolidated condensed financial statements 5 HMI INDUSTRIES INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 30, 1995 (1) Certain prior year amounts have been reclassified to conform to the 1995 classifications. (2) The consolidated financial statements included in this report have been prepared by the Company from the consolidated statements of HMI Industries Inc. and its subsidiaries. In the opinion of the Company, these consolidated financial statements contain all of the adjustments necessary to present fairly the financial position as of June 30, 1995 and September 30, 1994, the results of operations and cash flows for the three and nine months ended June 30, 1995 and 1994. Independent public accountants have not examined these statements. These consolidated financial statements should be read in conjunction with the financial statements and the notes included in the Company's latest annual report on Form 10-K. (3) The Company is contingently liable under a Conditional Purchase Agreement to a Netherlands bank in the amount of $1,260,000. If the contingent liability were called upon by the bank, the Company would take possession of certain finished goods and work in process inventories and sell them into existing markets. (4) Inventories at June 30, 1995 and September 30, 1994 consist of the following:
(unaudited) June 30 September 30 ------- ------------ Finished Goods $ 4,779,396 $ 5,985,143 Work in process, raw materials and supplies 13,905,310 9,600,778 ----------- ----------- $18,684,706 $15,585,921 =========== ===========
(5) Effective October 1, 1993, the Company adopted Financial Accounting Standard (FAS) No. 109, "Accounting for Income Taxes". The adoption of this accounting principle resulted in the recognition of a ONE TIME CUMULATIVE TAX BENEFIT of $719,016 or $0.15 per share during the quarter ended December 31, 1993. The statement has been applied prospectively and prior year financial statements were not restated. (6) Inventory analysis revealed that costs in the Tubular operations were understated by some items previously sold under contract and due to erroneous accounting entries. Accordingly, cost of goods sold as reported of $22,576,850 has been restated to reflect these items. These adjustments totaled $1,256,538 for the third quarter resulting in cost of goods sold of $23,833,388 for the quarter. 6 HMI INDUSTRIES INC MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES - MATERIAL CHANGES IN FINANCIAL POSITION The working capital balance at June 30, 1995 was $21,553,000 a decrease of 6% from the September 30, 1994 balance of $22,941,000. The effect of foreign exchange is primarily limited to the Canadian and Mexican operations. The Consolidated Statements of Cash Flows incorporates the effects of foreign exchange in each of the categories presented. There was little change in the US dollar as compared to the Mexico peso during the quarter. The adjustments of $2,575,000 during the first six months rising from the devaluation of the Mexican peso have been reflected as a component of equity based on the nature of the Company's investment and intended timing of repayment of the amounts due. The value of the Mexican Peso versus the US dollar continues to fluctuate. In managements' opinion, the amount of additional adjustments, if any, would not have a material effect on consolidated shareholders' equity. The Company's cash decreased by $239,000 for the nine months ended June 30, 1995. Trade receivables increased by $1,375,000, inventories increased by $3,099,000, trade payables increased by $1,294,000 and accrued expenses and other liabilities decreased by $1,701,000. The increase in inventories since September 30, 1994 reflects the increase in Consumer Goods finished goods inventories from previous low levels, the addition of raw materials for the new products and the slightly slower than projected shipping in June. Inventory levels are anticipated to decrease over the next quarter. The Company acquired all of the assets and business of the HRS Division of Reckitt & Colman Canada, Inc. in December 1993 for $4,875,000. The acquisition was financed by the Company's line of credit. The purchase price included $3,375,000 which was assigned to certain license agreements related to use of trade marks in the US and Canada. The amount is being amortized over 18 months to 4 years. Unamortized balances are reflected in the accompanying balance sheets. The acquisition agreement also provides for a contingent Earn Out of $1,875,000 to be paid out over a 10 year period dependent upon business expansion and revenue generation. At June 30, 1995, $5,000,000 of the unsecured, 9.86%, seven year private placement notes were outstanding. This debt was obtained in 1990 to finance the acquisition of Bliss Manufacturing Company. A portion of the Company's line of credit ($5,000,000) has been classified as long term based on the agreement with the bank dated July 1994. 7 Capital expenditures during the nine months ended June 30, 1995 were $2,635,000 as compared to $1,855,000 in the previous year. The largest outlay in June 1995 was $665,000 to acquire a production and office facility for the Consumer Goods operations in Cleveland, Ohio. The Company is planning to spend an additional $3,000,000 during the next three quarters to renovate the facility. Outlays in the Consumer Goods Division include $446,000 for tooling additions and improvements, $156,000 for computer software and $297,000 for new steam cleaning equipment for the HRS operations. Additions in the Manufactured Products Division include $77,000 for tubular fabrication machinery and equipment and $738,000 for machinery and equipment for the industrial and commercial stamping operations. These latter additions at Bliss Manufacturing Co. were added to specifically meet the customer demand and increase both capacity and efficiencies. Future capital expenditure commitments include $125,000 for the 1995 completion of a new filter cone manufacturing machine. The outstanding balance on the Company's line of credit was $10,756,393 at June 30, 1995. The increase in the outstanding balance is principally due to the debt reductions, inventory increases and the addition of the above-mentioned capital expenditures. Management believes the Company's long term liquidity needs will continue to be met by cash flow from operations, its access to the line of credit and its potential to borrow from existing debt sources. RESULTS OF CONTINUING OPERATIONS: Net Sales - Net product sales decreased from $36,831,000 for the three months ended June 30, 1994 to $34,029,000 for the current quarter. Net product sales for the nine months ended June 30, 1995 were $103,010,000 compared to $98,947,000 for the same period ending June 30, 1994. Sales during the current quarter were down due to the Mexican market and the inability to simultaneously introduce the new Optima and Captiva product lines. After a successful introduction of the Optima product during the last quarter, production difficulties and the introduction problems caused production to be halted resulting in lower sales during April, May and June. Production difficulties are corrected and the Captiva filtration products will be available and introduced during the next two quarters. In Mexico, the peso dollar relationship has increased real prices and lowered consumer confidence. Due to uncertainty of any short term turnaround in the Mexican economy and consumer market, management will emphasize cost reduction and resource allocation to develop our South American markets. The Commercial and Industrial Stamping operations continue to accommodate customer requirements on short-term notice and add sales opportunities. Gross Profit - Gross profit for the quarter ended June 30, 1995 was $10,196,000 or 29.9% as compared to $11,180,000 or 30.4% in the 1994 period. Gross profit for the nine months ended June 30, 1995 was $32,470,000 or 31.5% as compared to $30,274,000 or 30.6% in the period ended June 30, 1994. The Company's Tube Form operations has experienced a decline in profitability due to the erosion of its efficiency of operations and corresponding cost increases. The Company remains 8 focused on utilizing available capacity in the Tubular Products Group and to increase sales and profitability. Selling, General and Administrative Expenses - Selling, general and administrative expenses as a percent of total revenues were 24.4% as compared to 21.8% for the three months ended June 30, 1995 and 1994, respectively. For the nine months ended June 30, 1995, these expenses were 24.0% compared to 21.9% for the prior comparable period. The Company-owned Mexican operation and the HRS operations while contributing higher gross margins, also have higher selling costs, which when combined with the expenditure on new products and their introductions account for the percentage increase over the previous quarter. Financing Revenue - Financing revenue represents the interest and fees generated by the Company's Health-Mor Acceptance Corporation, Australian and Mexican subsidiaries generated on the contracts financed. Interest expense - The 9.86%, seven year, unsecured Term Notes, comprise $129,000 and $152,000 of the three month interest expense for the quarters ended June 30, 1995 and 1994, respectively. The balance of the interest expense was comprised principally of short term borrowing interest of $221,000 (compared to $144,000 in 1994). Trademark amortization - These expenses represent the allocation of the amounts paid for the rights to use specific trademarks arising from the acquisition of HRS over periods ranging from eighteen months to four years. Acquisition related costs - These costs represent amortization of non-compete Agreements arising in the course of the Company's acquisitions. Accounting change for Income Taxes - The Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 109 - Accounting for Income Taxes which became effective for the Company in the current fiscal year. The cumulative effect of the change in accounting principle was $719,016 and is included in the results for the nine months ended June 30, 1994. This item should not be considered a continuing item. 9 HMI INDUSTRIES INC. PART II - OTHER INFORMATION AND SIGNATURE JUNE 30, 1995 PART II - OTHER INFORMATION NONE 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 there to duly authorized. HMI Industries Inc. ------------------------ Registrant Date: January 12, 1996 \s\Kevin Dow ------------------------ KEVIN DOW Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----