-----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, V1+CeDTsLmG3q/3cGotWaL8wBPBzFr1t0oh+Jg3YfsrjdbzAaPos1inHzeAL+2zv Qo0XsVKYsZC4+vY4aZHKAA== 0000897069-96-000248.txt : 19960814 0000897069-96-000248.hdr.sgml : 19960814 ACCESSION NUMBER: 0000897069-96-000248 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960813 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: 96609683 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 FORM 10-Q 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: June 29, 1996 --------------------- 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 August 12, 1996: Issued 2,629,320 Treasury 2,957 --------- Outstanding 2,626,363 ========= PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - Unaudited ($000) June 29, December 31, 1996 1995 --------- ------------ ASSETS CURRENT ASSETS: Cash $ 0 $ 396 Customers' accounts receivable 20,379 25,019 Less allowance for losses 1,545 1,742 ------- ------- 18,834 23,277 Inventories 17,161 17,271 Prepaid expenses and other 860 316 Income tax benefit receivable 16 265 ------- ------- TOTAL CURRENT ASSETS 36,871 41,525 PROPERTY, PLANT AND EQUIPMENT, AT COST: Land 90 90 Buildings 3,032 3,023 Machinery and equipment 13,769 13,404 ------- ------- 16,891 16,517 Less accumulated depreciation 11,621 11,163 ------- ------- NET PROPERTY, PLANT AND EQUIPMENT 5,270 5,354 OTHER ASSETS: Patents, net of accumulated amortization of $526 for 1996 and $517 for 1995 23 32 Excess cost over net assets of acquired companies, net of accumulated amortization of $825 for 1996 and $807 for 1995 1,457 1,475 Receivables, net of allowances of $590 for 1996 and $727 for 1995 682 927 Other 330 344 ------- ------- TOTAL OTHER ASSETS 2,492 2,778 ------- ------- $ 44,633 $ 49,657 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 4,099 $ 4,209 Current installments of long-term debt 1,501 1,470 Accounts payable 3,487 9,231 Accrued payroll and related expenses 2,598 2,857 Accrued expenses related to a disposed business 121 182 Accrued expenses, other 3,118 2,800 -------- -------- TOTAL CURRENT LIABILITIES 14,924 20,749 Long-term debt, excluding current installments 11,192 10,902 Liabilities related to a disposed business 407 491 Other 1,192 1,370 -------- -------- TOTAL LIABILITIES 27,715 33,512 STOCKHOLDERS' EQUITY: Common stock of $1 par value per share Authorized: 20,000,000 shares; Issued: 2,629,320 shares at June 29, 1996 and 2,504,421 at December 31, 1995 2,629 2,504 Capital in excess of par value 11,995 11,558 Retained earnings 1,989 1,308 Cumulative translation adjustments 357 827 -------- -------- 16,970 16,197 Less cost of common shares in treasury - 2,957 shares at June 29, 1996 and December 31, 1995 52 52 -------- -------- TOTAL STOCKHOLDERS' EQUITY 16,918 16,145 --------- --------- $ 44,633 $ 49,657 ========= ========= See accompanying notes to consolidated financial statements. Consolidated Statements of Operations ($000) (except per share data) - Unaudited Three months ended Six months ended ------------------- ------------------ June 29, July 1, June 29, July 1, 1996 1995 1996 1995 -------- ------- ------- ------- Net sales $ 17,870 $ 17,555 $ 35,494 $ 36,067 Cost of sales 11,506 11,245 22,477 23,031 -------- ------- ------- ------- Gross profit 6,364 6,310 13,017 13,036 Selling, engineering and administrative expenses 5,384 5,504 10,857 11,307 -------- ------- ------- ------- Operating profit 980 806 2,160 1,729 Interest expense 415 456 835 940 Other (income) expense, net (21) 40 (58) 38 -------- ------- ------- ------- Income before income taxes 586 310 1,383 751 Income tax expense 104 18 121 37 -------- ------- ------- ------- NET INCOME $ 482 $ 292 $ 1,262 $ 714 ======== ======== ======== ======== Primary earnings per share $ 0.18 $ 0.11 $ 0.48 $ 0.27 ======== ======== ======== ======== Fully diluted earnings per share $ 0.17 $ 0.11 $ 0.43 $ 0.27 ======== ======== ======== ======== See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows - Unaudited ($000) Six months ended ---------------------- June 29, July 1, 1996 1995 -------- -------- CASH FROM OPERATING ACTIVITIES: Net income $ 1,262 $ 714 Adjustments to net income for expenses (gains) not affecting cash: Depreciation and amortization 799 635 Bad debt expenses 180 72 Gain on disposal of property, plant and equipment (22) (7) Increase (decrease) in cash due to changes in: Accounts receivable 4,263 (1,174) Inventories 110 (834) Prepaid expenses and other assets 18 17 Accounts payable (5,744) 145 Accrued expenses and other liabilities (264) (464) -------- -------- Cash provided by (used in) operating activities............................ 602 (896) CASH USED IN INVESTING ACTIVITIES: Capital expenditures..................... (739) (558) CASH FROM FINANCING ACTIVITIES: Increase (decrease) in notes payable (110) 535 Proceeds from long-term debt 321 100 Repayments of long-term debt -- (448) Proceeds from the issuance of common shares -- 94 -------- -------- Cash provided by (used in) financing activities................... 211 281 Cumulative translation adjustments........... (470) 797 -------- -------- TOTAL CASH PROVIDED (USED) (396) (376) CASH - BEGINNING OF THE PERIOD 396 466 -------- -------- CASH - END OF THE PERIOD $ 0 $ 90 ======== ======== See accompanying notes to 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, other than adjustments to the accrual of expenses related to the discontinued business which is included as a current liability on the balance sheet, are normal and recurring. All items stated herein are subject to year-end audit. INVENTORY: ================================================================= (Amounts in thousands) 6/29/96 12/31/95 ----------------------------------------------------------------- Raw Material $ 5,546 $ 5,837 Work-in-Process 1,081 1,125 Finished Goods 10,534 10,309 ------------------------------------------------------------------ $17,161 $17,271 ================================================================== 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 June 29, 1996 was approximately $2,800,000. 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. ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the second quarter of 1996 were $17.9 million, up 1.8% over the same period in 1995. Sales originating in North America were up 8.0% from 1995 levels to $12.1 million for the quarter compared to $11.2 million in the same period a year earlier. European sales for the second quarter of 1996 were $5.8 million, a 7.9% decline from the $6.3 million recorded in the second quarter of 1995. Net sales for the six months ended June 29, 1996 were $35.5 million compared to $36.1 million for the 1995 period, a decrease of 1.6%. Net sales originating in North America rose 3.1% while European net sales declined 10.5%. Gross profit margins in North America were 30.5% for the second quarter of 1996 compared to 28.1% for the same period in 1995. Margins in Europe were 46.2% for the second quarter of 1996 compared to 49.8% for the same period in 1995. Consolidated gross profit margins were 35.6% for the second quarter of 1996 compared to 35.9% for the same period in 1995. The six month results showed an improvement in 1996 with 36.7% gross profit margins compared to 36.1% for the same period in 1995. Operating expenses as a percent of net sales decreased from 31.3% for the first six months of 1995 to 30.6% for the comparable period in 1996, and from 31.4% for the second quarter of 1995 to 30.1% for the second quarter of 1996. Actual expenses were lower in 1996 than in 1995, with the majority of the decrease in administrative and marketing expense due to cost controls. Interest expense declined 9.0% for the three months ended June 29, 1996 versus the comparable period in 1995 as a result of reduced interest rates. 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 4: Submission of Matters to a Vote of Security Holders The Company held its annual meeting of shareholders on April 25, 1996. The shareholders were asked to vote on the selection of one director and to ratify the selection of auditors. Mr. Friend was elected as director to serve until the annual meeting in 1999 and until his successor is duly elected and qualified pursuant to the following vote: 2,377,850 votes cast FOR, -0- votes AGAINST, and 17,677 ABSTENTIONS. With respect to the selection of auditors, KPMG Peat Marwick LLP was ratified as the Company's auditors for the 1996 fiscal year pursuant to the following vote: 2,374,582 FOR, 12,846 AGAINST, and 8,099 ABSTENTIONS. ITEM 6: (a) Exhibits (4) Letter dated June 25, 1996 by Firstar Bank Milwaukee, N.A., as administrator of the Revolving Loan and Security Agreement dated October 13, 1993 by and between the Company and Firstar Bank Milwaukee, N.A. amending and extending the agreement through June 30, 1999. (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 June 29, 1996. 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) August 13, 1996 --------------- Date Index of Exhibits Exhibit No. Description ----------- ---------------------------------------------------- (4) Letter dated June 25, 1996 by Firstar Bank Milwaukee, N.A., as administrator of the Revolving Loan and Security Agreement dated October 13, 1993 by and between the Company and Firstar Bank Milwaukee, N.A. amending and extending the agreement through June 30, 1999. (11) Computation of Earnings Per Share (27) Financial Data Schedule EX-4 2 EXHIBIT 4 Exhibit 4 FIRSTAR BANK MILWAUKEE, N.A. Firstar Financial Services Michael A. Hintz, Vice President June 25, 1996 Hein-Werner Corporation 2120 Pewaukee Road Waukesha, WI 53187 Attn: Mr. Joseph Dindorf, President Gentlemen: Please refer to the Revolving Loan and Security Agreement by and between Firstar Financial Services, a division of Firstar Bank Milwaukee, N.A. ("FFS") and Hein-Werner Corporation, dated October 13, 1993, with amendments thereto ("Agreement"). This letter shall serve to further amend the Agreement as follows: Effective July 1, 1996, the fourth sentence of subsection (a) of Section 1. LOANS AND SECURITY INTEREST shall be amended to read: "The interest rate hereunder shall be computed at an annual rate equal to .9 percent plus the rate announced from time to time by Lender as its 'prime rate,' which may or may not be the best rate available at said bank. The interest rate shall reduce by 1/4 percent in the event Debtor's North American operations show a $500,000.090 profit during 1996 (with said reduction effective the first day of the month following Lender's receipt of Debtor's December 31, 1996 financial statements showing an overall profit) and reduce by another 1/4 percent at such time as Massachusetts Mutual agrees in writing to defer the first debt installment due from Debtor until January, 1998 or the same is otherwise converted from debt to equity. The interest rate shall increase by 1/4 percent if Debtor's financial statements for the subsequent year show a consolidated loss, but shall not be increased above .9 percent plus the rate announced from time to time by Lender as its 'prime rate,' which may or may not be the best rate available at said bank." The second sentence of subsection (a) of Section 9, TERMINATION shall be amended to read: "While this Agreement is in effect, Debtor agrees to borrow funds and pay, at minimum, to Lender the Minimum Monthly Charge specified in Section 1. LOANS AND SECURITY INTEREST of this Agreement until June 30, 1999, and from year to year thereafter, unless Debtor notifies Lender that it does not intend to extend the Agreement for another year by giving Lender written notice at least ninety (90) days prior to the expiration of the then existing term of this Agreement." In all other respects, the Agreement shall remain unchanged and in full force and effect. The foregoing amendments are contingent upon the approval of the participant in this loan: Mercantile Business Credit, Inc. If the above agrees with your understanding and approval, please indicate same by signing the original of this letter and returning it to the undersigned. (NOTE: If you return executed documents via facsimile, you must also return the original executed documents. You agree FFS may rely on facsimile signatures for all purposes and without any liability to you.) If the preconditions (if any) to this amendment are not satisfied or if this amendment letter is not executed and returned to FFS on or before July 8, 1996, then the proposed amendments herein may be withdrawn by FFS by written notice to you. The amendments set forth herein and any accompanying documents will be deemed effective and accepted in Milwaukee, Wisconsin, upon our receipt of the executed documents. Sincerely, Michael A. Hintz Division Vice President mkf Enclosure cc: Nolan H. Zadra Agreed to this 28 day of June, 1996. HEIN-WERNER CORPORATION By: J. L. Dindorf Title President and C.E.O. The undersigned guarantors of the indebtedness of Hein-Werner Corporation hereby consent to the foregoing amendments and confirm that their guaranties remain in full force and effect. BLACKHAWK COLLISION REPAIR, INC. By: J. L. Dindorf Title President and C.E.O. HEIN-WERNER OF CANADA, LTD. By: J. L. Dindorf Title President and C.E.O. HEIN-WERNER EXPORT CORP. By: J. L. Dindorf Title President and C.E.O. EX-11 3 EXHIBIT 11 Exhibit 11 Computation of Earnings per Share ($000 except per share data) Three months ended Six months ended --------------------- ---------------- June 29, July 1, June 29, July 1, 1996 1995 1996 1995 --------------------- ---------------- PRIMARY: Wtd avg common shares outstanding 2,626 2,621 2,626 2,613 Common equivalent shares 41 10 29 3 --------------------- ---------------- Wtd avg common shares and common equivalent shares outstanding 2,667 2,631 2,655 2,616 ===================== ================ Net income applicable to common shares $ 482 292 $ 1,262 714 ===================== ================ Primary earnings per share $ 0.18 0.11 $ 0.48 0.27 ===================== ================ FULLY DILUTED: Wtd avg common shares outstanding 2,626 2,621 2,626 2,613 Common equivalent shares 45 11 45 11 Additional shares assuming conversion of subordinated debentures 717 717 717 717 --------------------- ---------------- Fully diluted wtd avg common shares and common equivalent shares outstanding 3,388 3,349 3,388 3,341 ===================== ================ Net income for diluted common shares $ 572 382 $ 1,442 894 ===================== ================ Fully diluted earnings per share $ 0.17 0.11 $ 0.43 0.27 ===================== ================ ---------------------------------------------- Common shares have been adjusted to give effect to the 5% stock dividend paid January 26, 1996. The $4,500,0000 8% Convertible Subordinated Notes are convertible to common shares at a price of $6.28 per share after giving effect to the stock dividend paid January 26, 1996. 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 4 HEIN-WERNER CORPORATION FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF HEIN-WERNER CORPORATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-29-1996 0 0 20,379 1,545 17,161 36,871 16,891 11,621 44,633 14,924 0 0 0 2,629 14,341 44,633 35,494 35,494 22,477 33,334 0 0 835 1,383 121 1,262 0 0 0 1,262 0.48 0.43
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