-----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, A9LrQujOwRfyX1SvUn+W2wA2O1bRxQColYvz0eCUw3V1oNI90A/D9QpLwslcyzkE 1CwwaReIlTML/nZ78OH1eA== 0000897069-97-000331.txt : 19970813 0000897069-97-000331.hdr.sgml : 19970813 ACCESSION NUMBER: 0000897069-97-000331 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970812 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: 97657262 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 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 28, 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 August 12, 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) June 28, December 31, 1997 1996 -------------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,861 $ 0 Accounts receivable 14,497 20,445 Less allowance for losses 1,569 1,651 --------- --------- 12,928 18,794 Inventories 9,727 17,415 Assets of discontinued business awaiting disposition 5,052 0 Prepaid expenses and other 2,361 881 -------- --------- TOTAL CURRENT ASSETS 38,929 37,090 PROPERTY, PLANT AND EQUIPMENT, AT COST: Land 0 90 Buildings 1,191 3,125 Machinery and equipment 6,312 14,361 --------- --------- 7,503 17,576 Less accumulated depreciation 4,726 12,125 --------- --------- NET PROPERTY, PLANT AND EQUIPMENT 2,777 5,451 OTHER ASSETS: Patents and trademarks 1,164 1,359 Goodwill 141 2,282 --------- --------- 1,305 3,641 Less accumulated amortization 682 1,467 --------- --------- Net intangibles 623 2,174 Noncurrent notes receivable 1,057 1,159 Less allowance for uncollectible notes 500 500 --------- --------- Net receivables 557 659 Other 419 224 --------- --------- TOTAL OTHER ASSETS 1,599 3,057 --------- --------- $ 43,305 $ 45,598 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Balance Sheets - Unaudited ($000) June 28, December 31, 1997 1996 -------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 2,404 $ 3,281 Current installments of long-term debt 170 1,856 Accounts payable 3,619 4,873 Accrued payroll and related expenses 1,453 2,199 Accrued commissions 796 1,055 Income tax payable 3,172 0 Other accrued expenses 6,539 2,933 --------- --------- TOTAL CURRENT LIABILITIES 18,153 16,197 Long-term debt, excluding current installments 328 10,161 Other long-term liabilities 1,573 1,304 --------- --------- TOTAL LIABILITIES 20,054 27,662 STOCKHOLDERS' EQUITY: Common stock of $1 par value per share Authorized: 20,000,000 shares; Issued: 2,760,489 shares at June 28, 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 8,367 2,921 Cumulative translation adjustments (556) 443 --------- --------- 23,303 17,988 Less cost of common shares in treasury - 3,259 shares at June 28, 1997 and 3,104 shares at December 31, 1996 52 52 --------- --------- TOTAL STOCKHOLDERS' EQUITY 23,251 17,936 --------- --------- $ 43,305 $ 45,598 ========= ========= See accompanying notes to interim consolidated financial statements. Consolidated Statements of Operations ($000) (except per share data) - Unaudited Three months ended Six months ended --------------------------------------- June 28, June 29, June 28, June 29, (Amounts in thousands, 1997 1996 1997 1996 except per share data) -------- -------- ------- -------- Net sales $10,040 $10,005 $19,639 $20,585 Cost of sales 5,405 5,299 10,570 10,858 -------- --------- -------- --------- Gross profit 4,635 4,706 9,069 9,727 Selling, general and administrative 4,114 4,021 8,044 8,208 expenses -------- --------- -------- --------- Operating profit 521 685 1,025 1,519 Interest expense-net 31 141 114 291 Other (income) expense-net 78 (21) 88 (58) -------- --------- -------- --------- Income from continuing operations, before income tax 412 565 823 1,286 Income tax expense 73 103 133 120 -------- --------- -------- --------- Net income from continuing operations 339 462 690 1,166 Discontinued businesses: Income (loss) from operations of discontinued businesses, net of related income tax (154) 20 (235) 96 Gain on the disposal of discontinued businesses, net of related income tax 5,844 0 5,844 0 -------- --------- -------- --------- Net income $ 6,029 $ 482 $ 6,299 $ 1,262 ======== ========= ======== ========= Earnings per share from continuing operations-primary $ 0.12 $ 0.16 $ 0.24 $ 0.42 Earnings per share from discontinued operations-primary 1.99 0.01 1.98 0.03 -------- -------- -------- --------- Earnings per share - primary $ 2.11 $ 0.17 $ 2.22 $ 0.45 ======== ======== ======== ========= Earnings per share from continuing operations-fully diluted $ 0.12 $ 0.15 $ 0.24 $ 0.38 Earnings per share from discontinued operations-fully diluted 1.99 0.01 1.98 0.03 -------- -------- -------- --------- Earnings per share- fully diluted $ 2.11 $ 0.16 $ 2.22 $ 0.41 ======== ======== ======== ========= See accompanying notes to interim consolidated financial statements. Consolidated Statements of Cash Flows - Unaudited ($000) Six months ended ------------------------- June 28, June 29, 1997 1996 --------- ---------- CASH FROM OPERATING ACTIVITIES: Net income $ 6,299 $ 1,262 Adjustments to net income for expenses (gains) not affecting cash: Depreciation and amortization 564 799 Bad debt expense 35 180 Gain on disposal of property, plant and equipment 0 (22) Gain on sale of discontinued businesses (8,005) 0 Increase (decrease) in cash, net of the effects of discontinued businesses, due to changes in: Accounts receivable 2,974 4,263 Inventories 994 110 Prepaid expenses and other assets (1,321) 18 Accounts payable (1,254) (5,744) Income tax payable 3,172 0 Accrued expenses and other liabilities (3,460) (264) -------- -------- Cash provided by (used in) operating activities . . . . . . . . . . . . . . (2) 602 CASH USED IN INVESTING ACTIVITIES: Capital expenditures . . . . . . . . . (629) (739) CASH FROM FINANCING ACTIVITIES: Decrease in notes payable (877) (110) Proceeds from long-term debt 0 321 Repayments of long-term debt (11,249) 0 Proceeds from sale of discontinued businesses 22,617 0 -------- -------- Cash provided by financing activities . . . . . . . . . . . . . . . 10,491 211 Cumulative translation adjustments . . . . (999) (470) -------- -------- TOTAL CASH PROVIDED (USED) 8,861 (396) CASH - BEGINNING OF THE PERIOD 0 396 -------- -------- CASH - END OF THE PERIOD $8,861 $ 0 ======== ======== 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) 6/28/97 12/31/96 ----------------------------------------------------------------- Raw Material $ 2,401 $ 5,574 Work-in-Process 241 1,172 Finished Goods 7,085 10,669 ----------------------------------------------------------------- $ 9,727 $ 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 June 28, 1997 was approximately $1,915,000. 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. DISCONTINUED OPERATIONS: Pursuant to an agreement entered into on April 9, 1997, on May 29, 1997, the Company sold for cash substantially all of the business and assets, and transferred certain of the liabilities, of its Great Bend Industries Division to Kaydon Acquisition VIII, Inc., a wholly-owned subsidiary of Kaydon Corporation. On June 25, 1997, the Company signed a letter of intent to sell for cash its Winona Van Norman Division. The sale is currently expected to be completed by August 28, 1997. An estimated loss, including expenses related to the disposition, has been accrued as of June 28, 1997. Selected unaudited financial information of these divisions is as follows: Three Months Ended Six Months Ended -------------------- ------------------ 6/28/97 6/29/96 6/28/97 6/29/96 ------- ------- ------- ------- Net sales $ 5,082 $ 7,865 $ 11,607 $ 14,908 Income tax (benefit) applicable to income (loss) from operations (21) 0 4 0 Income from measurement date to 6/28/97 100 100 Income tax applicable to gain on the disposal 2,052 2,052 Proceeds from disposal $ 22,617 $ 22,617 Assets awaiting disposal at 6/28/97: Inventory $ 3,384 Prepaid expenses 29 Fixed assets, net 532 Intangibles, net 1,192 Liabilities to be assumed (85) ------ $ 5,052 ====== ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales from continuing operations for the second quarter of 1997 were $10.0 million, approximately the same as the second quarter of 1996. Net sales originating in North America were $4.3 million for the second quarter of 1997 compared with $4.2 million for the prior year quarter. Net sales of the European operation for the second quarter of 1997 were $5.7 million, compared with $5.8 million for the 1996 quarter. Net sales from continuing operations for the six months ended June 28, 1997 were $19.6 million compared with $20.6 million for the 1996 period. North American net sales for the six months of 1997 were $8.9 million compared with $9.4 million for the six months of 1996, while European net sales were $10.7 million for the six months of 1997 compared with $11.2 million for the six months of 1996. Gross profit margins from continuing operations in North America were 46.7% for the second quarter of 1997 compared with 48.2% for the second quarter of 1996. European margins were 45.7% for the second quarter of 1997 versus 46.2% for the 1996 quarter. Consolidated margins were 46.2% for the 1997 quarter compared with 47.0% for the 1996 quarter. For the six months ended June 28, 1997, North American margins improved to 47.5% from 46.6% in the prior year period while European margins declined to 45.1% from 47.8% in the prior year period, due primarily to unfavorable currency translation. For continuing operations, consolidated operating expenses as a percent of net sales increased slightly to 41.0% for the second quarter of 1997 from 40.2% for the 1996 quarter, and to 41.0% for the six months ended June 28, 1997 from 39.9% for the 1996 period. The six month percentage increase was primarily due to the reduced level of net sales, as the dollar amount of operating expenses decreased for the six months of 1997 compared to the six months of 1996. Interest expense allocable to continuing operations declined 78% for the three months ended June 28, 1997 versus the comparable period in 1996, due primarily to the application of proceeds from the sale of the Great Bend Industries Division to reduce debt. Financial Condition The Company plans to use the cash generated from the divestitures of its Great Bend Industries and Winona Van Norman Divisions to expand into markets which are counter-cyclical to the automotive industry, thus providing the Company with the ability to maintain long-term stability and growth over the course of future business cycles and fluctuating economic conditions. The Company expects that its liquidity requirements will be met by cash generated from operations, although it does have credit facilities in place should the need arise. 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. For the six months ended June 28, 1997, the Company experienced a net increase in cash of $8.9 million, compared with a net decrease in cash for the 1996 six month period of $400,000. The 1997 increase was primarily due to cash provided by financing activities which, as a result of the sale of the discontinued businesses and the subsequent repayment of debt, generated $10.5 million of cash. Financing activities for the 1996 period reflected a $200,000 source of cash due to an increase in debt. Investing activities showed uses of cash due to capital expenditures of $600,000 for the 1997 six month period and of $700,000 for the 1996 six month period. Operating activities were basically breakeven from a cash standpoint for the six months of 1997 while they generated $600,000 for the 1996 period. 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 24, 1997. At such meeting, the shareholders were asked to vote on the selection of two directors, to ratify the selection of auditors and to consider a shareholder proposal. Messrs. Dindorf and Schuetz were elected as directors to serve until the annual meeting in 2000 and until their successors are duly elected and qualified pursuant to the following votes: Mr. Dindorf-2,604,628 votes cast for, 60,531 votes withholding authority, 0 abstentions and 0 broker non-votes; Mr. Schuetz-2,604,556 votes cast for, 60,603 votes withholding authority, 0 abstentions and 0 broker non- votes. With respect to the selection of auditors, KPMG Peat Marwick LLP was ratified as the Company's auditors for the 1997 fiscal year pursuant to the following vote: 2,596,035 votes for, 56,681 votes against, 12,443 abstentions and 0 broker non-votes. Finally, the shareholder proposal was defeated pursuant to the following vote: 301,898 votes for, 1,471,486 votes against, 55,436 abstentions and 836,339 broker non-votes. ITEM 6: (a) Exhibits (11) Computation of Earnings Per Share (27) Financial Data Schedule (b) Form 8-K On April 18, 1997, the Company filed a Current Report on Form 8-K dated April 9, 1997 to reflect (under Item 5 of Form 8-K) that the Company had entered into an Asset Purchase Agreement, dated as of April 9, 1997 (the "Agreement"), providing for the sale of substantially all the business and assets, and the transfer of certain of the liabilities, of its Great Bend Industries Division (the "Division") to Kaydon Acquisition VIII, Inc. ("Buyer"), a wholly-owned subsidiary of Kaydon Corporation. On June 13, 1997, the Company filed another Current Report on Form 8-K dated May 29, 1997 to reflect (under Item 2 of Form 8-K) the Company's sale of all the business and assets, and the transfer of certain of the liabilities, of the Division to Buyer pursuant to the Agreement. This second Current Report included (under Item 7 of Form 8-K) the following financial statements: Pro Forma Condensed Consolidated Balance Sheet at March 29, 1997 and Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 1996 and 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) August 12, 1997 ----------------- Date Index of Exhibits Exhibit No. Description ----------- ------------------------------------------------- (11) Computation of Earnings Per Share (27) Financial Data Schedule EX-11 2 Exhibit 11 Computation of Earnings per Share ($000 except per share data)
Three months ended Six months ended ------------------------ ------------------------ June 28, June 29, June 28, June 29, 1997 1996 1997 1996 ---------- ---------- ---------- ---------- PRIMARY: Weighted average common shares outstanding 2,760 2,757 2,760 2,757 Common equivalent shares 100 43 78 31 ------- ------- ------- ------- Weighted average common shares and common equivalent shares outstanding 2,860 2,800 2,838 2,788 ======= ======= ======= ======= Net income from continuing operations $ 339 $ 462 $ 690 $1,166 Earnings from discontinued operations 5,690 20 5,609 96 ------- ------ ------- ------- Net income applicable to common shares $6,029 $ 482 $6,299 $1,262 ======= ====== ======= ======= Earnings per share from continuing operations - primary $ 0.12 $0.16 $ 0.24 $ 0.42 Earnings per share from discontinued operations - primary 1.99 0.01 1.98 0.03 ------- ------ ------- ------ Earnings per share - primary $ 2.11 $0.17 $ 2.22 $ 0.45 ======= ====== ======= ====== FULLY DILUTED: Weighted average common shares outstanding 2,760 2,757 2,760 2,757 Common equivalent shares 144 47 121 47 Additional shares assuming conversion of subordinated debentures 0 753 0 753 Fully diluted weighted average common shares and common equivalent shares outstanding 2,904 3,557 2,881 3,557 ====== ====== ======= ======== Net income from continuing operations $ 339 $ 552 $ 690 $1,346 Earnings from discontinued operations 5,690 20 5,609 96 ------- ------ ------ ------- Net income applicable to common shares $6,029 $ 572 $6,299 $1,442 ======= ====== ====== ======= Earnings per share from continuing operations - fully diluted $ 0.12 $0.15 $ 0.24 $ 0.38 Earnings per share from discontinued operations - fully diluted 1.99 0.01 1.98 0.03 Earnings per share - fully diluted $ 2.11 $0.16 $ 2.22 $ 0.41 ====== ====== ====== ======
--------------------------------- Common shares have been adjusted to give effect to the 5% stock dividend paid January 24, 1997. The $4,500,000 8% Convertible Subordinated Notes at June 29, 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. The Notes were repaid on May 29, 1997 and options were issued concurrently to the holder of the Notes. 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
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 SIX MONTHS ENDED JUNE 28, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND COMPUTATION. 1000 6-MOS DEC-31-1997 JAN-01-1997 JUN-28-1997 8,861 0 14,497 1,569 9,727 38,929 7,503 4,726 43,305 18,153 0 0 0 2,760 20,491 43,305 19,639 19,639 10,570 18,614 0 0 114 823 133 690 5,609 0 0 6,299 2.22 2.22
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