-----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, PfWTctbnrTrZrk9Vipd7A0H34ODgVGJvCTeYrnMOnNpANogVYvCbGiE9tbQkcOQh F4iCwxcFsn6DxaxGxL7ykg== 0000897069-97-000213.txt : 19970514 0000897069-97-000213.hdr.sgml : 19970514 ACCESSION NUMBER: 0000897069-97-000213 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970513 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEIN WERNER CORP CENTRAL INDEX KEY: 0000046613 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 390340430 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02725 FILM NUMBER: 97602319 BUSINESS ADDRESS: STREET 1: 2120 N PEWAUKEE RD STREET 2: PO BOX 1606 CITY: WAUKESHA STATE: WI ZIP: 53188-2404 BUSINESS PHONE: 4145426611 MAIL ADDRESS: STREET 1: 2120 N PEWWAUKEE ROAD STREET 2: PO BOX 1606 CITY: WAUKESHA STATE: WI ZIP: 53188-2404 10-Q 1 HEIN-WERNER CORPORATION SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. 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: March 29, 1997 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 1-2725 HEIN-WERNER CORPORATION ------------------------------------------------ (Exact name of registrant as specified in its charter) WISCONSIN 39-0340430 ------------------------------- ---------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 2120 Pewaukee Road, Waukesha, Wisconsin 53188-2404 --------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) (414) 542-6611 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 [ ] Number of shares of $1 par value common stock issued and outstanding at May 13, 1997: Issued 2,760,489 Treasury 3,259 ---------- Outstanding 2,757,230 ========== PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - Unaudited ($000) March 29, December 31, 1997 1996 -------------- ------------ ASSETS CURRENT ASSETS: Cash $ 0 $ 0 Accounts receivable 18,996 20,445 Less allowance for losses 1,627 1,651 --------- -------- 17,369 18,794 Inventories 16,397 17,415 Prepaid expenses and other 638 881 --------- --------- TOTAL CURRENT ASSETS 34,404 37,090 PROPERTY, PLANT AND EQUIPMENT, AT COST: Land 90 90 Buildings 3,187 3,125 Machinery and equipment 14,800 14,361 --------- --------- 18,077 17,576 Less accumulated depreciation 12,522 12,125 --------- --------- NET PROPERTY, PLANT AND EQUIPMENT 5,555 5,451 OTHER ASSETS: Patents and trademarks 1,229 1,359 Goodwill 2,282 2,282 --------- --------- 3,511 3,641 Less accumulated amortization 1,491 1,467 --------- --------- Net intangibles 2,020 2,174 Noncurrent notes receivable 1,088 1,159 Less allowance for uncollectible notes 500 500 --------- --------- Net receivables 588 659 Other 215 224 --------- --------- TOTAL OTHER ASSETS 2,823 3,057 --------- --------- $ 42,782 $ 45,598 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Balance Sheets - Unaudited ($000) March 29, December 31, 1997 1996 -------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 2,618 $ 3,281 Current installments of long-term debt 1,780 1,856 Accounts payable 3,763 4,873 Accrued payroll and related expenses 1,678 2,199 Accrued commissions 897 1,055 Other accrued expenses 2,595 2,933 --------- --------- TOTAL CURRENT LIABILITIES 13,331 16,197 Long-term debt, excluding current installments 10,549 10,161 Other long-term liabilities 1,545 1,304 --------- --------- TOTAL LIABILITIES 25,425 27,662 STOCKHOLDERS' EQUITY: Common stock of $1 par value per share Authorized: 20,000,000 shares; Issued: 2,760,489 shares at March 29, 1997 and 2,629,320 at December 31, 1996 2,760 2,629 Capital in excess of par value 12,732 11,995 Retained earnings 2,337 2,921 Cumulative translation adjustments (420) 443 --------- --------- 17,409 17,988 Less cost of common shares in treasury - 3,259 shares at March 29, 1997 and 3,104 shares at December 31, 1996 52 52 --------- --------- TOTAL STOCKHOLDERS' EQUITY 17,357 17,936 --------- --------- $ 42,782 $ 45,598 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Statements of Operations ($000) (except per share data) - Unaudited Three months ended March 29, March 30, 1997 1996 --------- --------- Net sales $ 16,124 $ 17,623 Cost of goods sold 10,250 10,970 -------- -------- Gross profit 5,874 6,653 Selling, general and administrative expenses 5,121 5,473 -------- -------- Operating profit 753 1,180 Interest expense - net 319 420 Other (income) expense - net 10 (37) -------- -------- Income before income taxes 424 797 Income tax expense 154 17 NET INCOME $ 270 $ 780 ========== ========= Earnings per share - primary $ 0.10 $ 0.28 ========== ========= Earnings per share - fully diluted $ 0.10 $ 0.25 ========== ========= See accompanying notes to interim consolidated financial statements. Consolidated Statements of Cash Flows - Unaudited ($000) Three months ended ----------------------- March 29, March 30, 1997 1996 --------- --------- CASH FROM OPERATING ACTIVITIES: Net income $ 270 $ 780 Adjustments to net income for expenses (gains) not affecting cash: Depreciation and amortization 310 205 Bad debt expenses 14 106 Increase (decrease) in cash due to changes in: Accounts receivable 1,411 3,906 Inventories 1,018 (1,498) Prepaid expenses and other assets 452 110 Accounts payable (1,110) (3,482) Accrued expenses and other liabilities (776) (378) --------- --------- Cash provided by (used in) operating activities................ 1,589 (251) CASH USED IN INVESTING ACTIVITIES: Capital expenditures.................. (501) (210) CASH FROM FINANCING ACTIVITIES: Increase (decrease) in notes payable (663) (620) Proceeds from long-term debt 312 816 --------- -------- Cash provided by (used in) financing activities.................. (351) 196 Cumulative translation adjustments...... (737) (209) --------- -------- TOTAL CASH PROVIDED (USED) 0 (474) CASH - BEGINNING OF THE PERIOD 0 396 --------- -------- CASH - END OF THE PERIOD $ 0 $ (78) ========== ========= See accompanying notes to interim consolidated financial statements. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS ACCOUNTING POLICIES: The financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. All adjustments are normal and recurring. All items stated herein are subject to year-end audit. INVENTORY: ========================================================================= (Amounts in thousands) 3/29/97 12/31/96 ------------------------------------------------------------------------- Raw Material $ 5,423 $ 5,574 Work-in-Process 1,141 1,172 Finished Goods 9,833 10,669 ------------------------------------------------------------------------- $ 16,397 $ 17,415 ========================================================================== MATERIAL CONTINGENCIES: A) Financial Instruments with Off-Balance-Sheet Risk. To meet the financing needs of consumers of its collision repair and engine rebuilding products, the Company is, in the normal course of business, a party to financial instruments with off-balance-sheet risk. The instruments are guarantees of notes payable to financing institutions arranged by the Company. The Company performs credit reviews on all such guarantees. These guarantees extend for periods of up to six years and expire in decreasing amounts through 2000. The amount guaranteed to each institution is contractually limited to a portion of the amount financed in a given year. The notes are collateralized by the equipment financed. Proceeds from the resale of recovered equipment have generally been 80% to 90% of repurchased notes. The maximum credit risk to the Company at March 29, 1997 was approximately $2,199,000. B) Litigation The Company is involved in legal proceedings, claims and administrative actions arising in the normal course of business. In the opinion of management, the Company's liability, if any, under any pending litigation or administrative proceeding would not materially affect its financial condition or operations. C) Environmental Claims From time to time the Company is identified as a potentially responsible party in environmental matters, primarily related to waste disposal sites, which contain residuals from the manufacturing process that were previously disposed of by the Company in accordance with applicable regulations in effect at the time of disposal. Materials generated by the Company at these sites have been small and claims against the Company have been handled on a de minimis basis. In addition, the Company has indemnified purchasers of property previously sold by the Company against any environmental damage which may have existed at the time of the sale. In the opinion of management, the Company's liability, if any, under any pending administrative proceeding, claim, or investigation, would not materially affect its financial condition or operations. SUBSEQUENT EVENT: On April 9, 1997, the Company entered into an agreement for the sale of substantially all of the business and assets, and the transfer of certain of the liabilities, of its Great Bend Industries Division to Kaydon Acquisition VIII, Inc., a wholly-owned subsidiary of Kaydon Corporation. Under the terms of the agreement, the purchase price is $22 million payable in cash at closing (with $2 million thereof being paid into an escrow), plus or minus any change in the net asset value of the division between December 31, 1996 and the closing. Consummation of the transaction, which is expected to occur in May 1997, is subject to customary closing conditions, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Selected unaudited financial information of the Great Bend Industries Division is as follows: March 29, March 30, 1997 1996 ----------- ----------- Net sales $ 4,305 $ 5,885 Gross profit 848 1,315 Net income 195 610 March 29, December 31, 1997 1996 ----------- ----------- Current assets $ 6,851 $ 5,752 Noncurrent assets 2,275 1,990 Current liabilities 1,393 1,277 Noncurrent liabilities 727 605 ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the first quarter of 1997 were $16.1 million, compared with $17.6 million for the same period in 1996. Sales originating in North America were $11.1 million for the first quarter of 1997 compared to $12.3 million in the same period a year earlier. European sales for the first quarter of 1997 were $5.0 million versus the $5.3 million recorded in the first quarter of 1996. Gross profit margins in North America were 32.8% for the first quarter of 1997 compared to 32.6% for the same period in 1996. Margins in Europe were 44.4% for the first quarter of 1997 compared to 49.7% for the same period in 1996. Consolidated gross profit margins were 36.4% for the first quarter of 1997 compared with 37.8% for the same period in 1996. Operating expenses as a percent of net sales were 31.8% for the first quarter of 1997 compared to 31.1% for the same period in 1996. Interest expense declined 24.0% for the three months ended March 29, 1997 versus the comparable period in 1996 as a result of reduced interest rates and debt levels. Financial Condition Continued improvements in cost control and balance sheet management are expected. The Company expects its liquidity requirements will be met by cash generated from operations and from its credit facilities. Short-term credit facilities in Europe are considered sufficient to supplement cash from operating activities to satisfy liquidity requirements there. Changes in short-term borrowing are primarily due to seasonal cash usage patterns. PART II - OTHER INFORMATION ITEM 6: (a) Exhibits (11) Computation of Earnings Per Share (27) Financial Data Schedule (b) Form 8-K There were no reports on Form 8-K filed for the three months ended March 29, 1997. 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. HEIN-WERNER CORPORATION ("Registrant") /s/Mary L. Kielich -------------------------------- Corporate Controller Assistant Treasurer (Principal Financial Officer) May 13, 1997 ----------------- Date Index of Exhibits Exhibit No. Description ----------- ---------------------------------------------- (11) Computation of Earnings Per Share (27) Financial Data Schedule EX-11 2 COMPUTATION OF EARNINGS PER SHARE Exhibit 11 Computation of Earnings per Share ($000 except per share data) Three months ended March 29, March 30, 1997 1996 PRIMARY: Weighted average common shares outstanding 2,760 2,757 Common equivalent shares 59 7 ------- ------- Weighted average common shares and common equivalent shares outstanding 2,819 2,764 ------- ------- Net income applicable to common shares $ 270 $ 780 ------- ------- Primary earnings per share $ 0.10 $ 0.28 ------- ------- FULLY DILUTED: Weighted average common shares outstanding 2,760 2,757 Common equivalent shares 59 19 Additional shares assuming conversion of subordinated debentures 564 753 ------- ------- Fully diluted weighted average common shares and common equivalent shares outstanding 3,383 3,529 ------- ------- Net income for diluted common shares $ 322 $ 869 ------- ------- Fully diluted earnings per share $ 0.10 $ 0.25 ------- ------- --------------------------------- Common shares have been adjusted to give effect to the 5% stock dividend paid January 24, 1997. The 8% Convertible Subordinated Notes of $3,375,000 at March 29, 1997 and $4,500,000 at March 30, 1996, are convertible to common shares at a price of $5.98 per share after giving effect to the stock dividend paid January 24, 1997. Earnings per common share and common equivalent share were computed by dividing the net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Earnings per common share, assuming full dilution, is determined by assuming that at the beginning of the period convertible notes were converted at the price per share in effect at that time and common share options were exercised. As to the options, incremental shares would be calculated using the treasury stock method, assuming common share purchases at the greater of the average market price of the common shares for the period or the ending price of the common shares. EX-27 3 FINANCIAL DATA SHEDULE - ARTICLE 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF HEIN-WERNER CORPORATION AND THE COMPUTATION OF EARNINGS PER SHARE (EXHIBIT 11) AS OF AND FOR THE THREE MONTHS ENDED MARCH 29, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND COMPUTATION. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-29-1997 0 0 18,996 1,627 16,397 34,404 18,077 12,522 42,782 13,331 0 0 0 2,760 14,597 42,782 16,124 16,124 10,250 15,371 0 0 319 424 154 270 0 0 0 270 0.10 0.10
-----END PRIVACY-ENHANCED MESSAGE-----