-----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, EzDRw0EAwVq/J7csRBCLiKZi999GKl4RCRIu1dJI2leSdlK3BLDEnAjBjpeFJKWD TJAcHySQI1LaNe3SZfVC0A== 0000897069-96-000370.txt : 19961113 0000897069-96-000370.hdr.sgml : 19961113 ACCESSION NUMBER: 0000897069-96-000370 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 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: 96659248 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: September 28, 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 November 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) September 28, December 31, 1996 1995 -------------- ------------ ASSETS CURRENT ASSETS: Cash $ 0 $ 396 Customers' accounts receivable 18,050 25,019 Less allowance for losses 1,643 1,742 --------- --------- 16,407 23,277 Inventories 17,522 17,271 Prepaid expenses and other 739 316 Income tax benefit receivable 108 265 -------- --------- TOTAL CURRENT ASSETS 34,776 41,525 PROPERTY, PLANT AND EQUIPMENT, AT COST: Land 90 90 Buildings 3,035 3,023 Machinery and equipment 13,855 13,404 --------- --------- 16,980 16,517 Less accumulated depreciation 11,882 11,163 --------- --------- NET PROPERTY, PLANT AND EQUIPMENT 5,098 5,354 OTHER ASSETS: Patents and trademarks, net of accumulated amortization of $547 for 1996 and $517 for 1995 737 32 Excess cost over net assets of acquired companies, net of accumulated amortization of $840 for 1996 and $807 for 1995 1,442 1,475 Receivables, net of allowances of $580 for 1996 and $727 for 1995 588 927 Other 202 344 --------- --------- TOTAL OTHER ASSETS 2,969 2,778 --------- --------- $ 42,843 $ 49,657 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Balance Sheets - Unaudited ($000) September 28, December 31, 1996 1995 -------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 3,562 $ 4,209 Current installments of long-term debt 1,671 1,470 Accounts payable 3,119 9,231 Accrued payroll and related expenses 2,670 2,857 Accrued expenses related to a disposed business 143 182 Accrued expenses, other 3,079 2,800 --------- --------- TOTAL CURRENT LIABILITIES 14,244 20,749 Long-term debt, excluding current installments 10,011 10,902 Liabilities related to a disposed business 319 491 Other 1,122 1,370 --------- --------- TOTAL LIABILITIES 25,696 33,512 STOCKHOLDERS' EQUITY: Common stock of $1 par value per share Authorized: 20,000,000 shares; Issued: 2,629,320 shares at September 28, 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 2,190 1,308 Cumulative translation adjustments 385 827 --------- --------- 17,199 16,197 Less cost of common shares in treasury - 2,957 shares at September 28, 1996 and December 31, 1995 52 52 --------- --------- TOTAL STOCKHOLDERS' EQUITY 17,147 16,145 --------- --------- $ 42,843 $ 49,657 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Statements of Operations ($000) (except per share data) - Unaudited Three months ended Nine months ended ----------------------- ----------------------- Sept. 28, Sept. 30, Sept. 28, Sept. 30, 1996 1995 1996 1995 --------- --------- --------- --------- Net sales $ 14,998 $ 16,377 $ 50,492 $ 52,444 Cost of sales 9,427 10,550 31,904 33,581 --------- --------- --------- --------- Gross profit 5,571 5,827 18,588 18,863 Selling, engineering and administrative expenses 5,042 5,768 15,899 17,075 --------- --------- --------- --------- Operating profit 529 59 2,689 1,788 Interest expense 388 443 1,223 1,383 Other (income) expense, net (34) 77 (92) 115 --------- ---------- --------- --------- Income before income taxes 175 (461) 1,558 290 Income tax expense (27) (79) 94 (42) --------- ---------- --------- --------- NET INCOME $ 202 $ (382) $ 1,464 $ 332 ========= ========= ========= ========= Primary earnings per share $ 0.08 $ (0.14) $ 0.55 $ 0.13 ========= ========= ========= ========= Fully diluted earnings per share $ 0.08 $ (0.14) $ 0.54 $ 0.13 ========= ========= ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Statements of Cash Flows - Unaudited ($000) Nine months ended ----------------------- Sept. 28, Sept. 30, 1996 1995 --------- --------- CASH FROM OPERATING ACTIVITIES: Net income $ 1,464 $ 332 Adjustments to net income for expenses (gains) not affecting cash: Depreciation and amortization 912 983 Bad debt expenses 292 340 Gain on disposal of property, plant and equipment (22) (4) Increase (decrease) in cash due to changes in: Accounts receivable 6,578 101 Inventories (251) (1,817) Prepaid expenses and other assets 263 470 Accounts payable (6,112) (70) Accrued expenses and other liabilities (395) (119) --------- -------- Cash provided by operating activities 2,729 216 CASH USED IN INVESTING ACTIVITIES: Capital expenditures (634) (774) Patents and Trademarks (720) -- --------- -------- Cash used in investing activities (1,354) (774) CASH FROM FINANCING ACTIVITIES: Increase (decrease) in notes payable (647) 600 Proceeds from long-term debt 720 262 Repayments of long-term debt (1,410) (994) Proceeds from the issuance of common shares -- 94 --------- -------- Cash provided by (used in) financing activities (1,337) (38) Cumulative translation adjustments (434) 541 --------- -------- TOTAL CASH PROVIDED (USED) (396) (55) CASH - BEGINNING OF THE PERIOD 396 466 --------- -------- CASH - END OF THE PERIOD $ 0 $ 411 ========= ======== 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, 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) 9/28/96 12/31/95 ----------------------------------------------------------------- Raw Material $ 5,440 $ 5,837 Work-in-Process 886 1,125 Finished Goods 11,196 10,309 ----------------------------------------------------------------- $ 17,522 $ 17,271 ================================================================= LONG-TERM DEBT: In accordance with the terms of the Company's 8.0% convertible subordinated notes, a $1,125,000 repayment was made as of September 1, 1996. Concurrent with this repayment, and also in accordance with the terms of the notes, the Company issued the holders of the notes an option to purchase 179,140 shares of the Company's common stock from the Company at a purchase price of $6.28 per share. This option expires on September 1, 1999. 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 September 28, 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 third quarter of 1996 were $15.0 million, compared with $16.4 million for the same period in 1995. Sales originating in North America were $9.8 million for the third quarter of 1996 compared to $10.8 million in the same period a year earlier. European sales for the third quarter of 1996 were $5.2 million versus the $5.6 million recorded in the third quarter of 1995. Net sales for the nine months ended September 28, 1996 were $50.5 million compared to $52.4 million for the 1995 period. Net sales originating in North America declined 0.7% while European net sales declined 9.6%. Gross profit margins in North America were 33.0% for the third quarter of 1996 compared to 27.6% for the same period in 1995. Margins in Europe were 45.0% for the third quarter of 1996 compared to 50.8% for the same period in 1995. Consolidated gross profit margins improved to 37.1% for the third quarter of 1996 compared with 35.6% for the same period in 1995. The nine month results also showed an improvement in 1996 with 36.8% gross profit margins compared to 36.0% for the same period in 1995. Operating expenses as a percent of net sales decreased from 35.2% for the first nine months of 1995 to 33.6% for the comparable period in 1996, and from 32.6% for the third quarter of 1995 to 31.5% for the third 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 12.4% for the three months ended September 28, 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 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 September 28, 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) November 12, 1996 Date Index of Exhibits Exhibit No. Description ----------- ------------------------------------------- (11) Computation of Earnings Per Share (27) Financial Data Schedule EX-11 2 HEIN-WERNER CORPORATION EXHIBIT 11 Exhibit 11 Computation of Earnings per Share ($000 except per share data) Three months ended Nine months ended --------------------- ------------------- Sept. 28, Sept. 30, Sept. 28 Sept. 30 1996 1995 1996 1995 ---------------------- ------------------- PRIMARY: Wtd avg common shares outstanding 2,626 2,626 2,626 2,618 Common equivalent shares 52 9 37 3 ----------------------- ------------------- Wtd avg common shares and common equivalent shares outstanding 2,678 2,635 2,663 2,621 ======================= =================== Net income applicable to common shares $ 202 (382) $ 1,464 332 ======================= =================== Primary earnings per share $ 0.08 (0.14) $ 0.55 0.13 ======================= =================== FULLY DILUTED: Wtd avg common shares outstanding 2,626 2,621 2,626 2,613 Common equivalent shares 52 11 42 11 Additional shares assuming conversion of subordinated debentures 537 717 537 717 ---------------------- ------------------- Fully diluted wtd avg common shares and common equivalent shares outstanding 3,215 3,349 3,205 3,341 ======================= =================== Net income for diluted common shares $ 285 (292) $ 1,726 602 ======================= =================== Fully diluted earnings per share $ 0.08 (0.14) $ 0.54 0.13 ======================= =================== ---------------------------- Common shares have been adjusted to give effect to the 5% stock dividend paid January 26, 1996. The 8% Convertible Subordinated Notes of $3,375,000 at September 28, 1996 and $4,500,000 at September 30, 1995, 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 3 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 NINE MONTHS ENDED SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-28-1996 0 0 18,050 1,643 17,522 34,776 16,980 11,882 42,843 14,244 0 0 0 2,629 14,570 42,843 50,492 50,492 31,904 47,803 0 0 1,223 1,558 94 1,464 0 0 0 1,464 0.55 0.54
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