-----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, FtOGAzUyxmdTSz5HMVI/6R9gF0uSDqsbw1YdA+MjSv7w2a1eHlgK7ONxv9rW+WfG 3Y/lU2gtAQ1c1Oec15iBeg== 0000950124-96-002210.txt : 19960517 0000950124-96-002210.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950124-96-002210 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCCLAIN INDUSTRIES INC CENTRAL INDEX KEY: 0000063686 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 381867649 STATE OF INCORPORATION: MI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07770 FILM NUMBER: 96565631 BUSINESS ADDRESS: STREET 1: 6200 ELMRIDGE RD CITY: STERLING HEIGHTS STATE: MI ZIP: 48310 BUSINESS PHONE: 8102643611 10-Q 1 FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 [ ] TRANSITION REPORT PURSUANT OR SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ------------------------ Commission File No. 0-7770 McCLAIN INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Michigan 38-1867649 State of Incorporation I.R.S. Employer I.D. No. 6200 Elmridge Road Sterling Heights, Michigan 48310 (313) 264-3611 (Address of principal executive offices and telephone number) 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 . --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of May 8, 1996. Common Stock, No Par Value 4,710,081 - -------------------------- ---------------- Class Number of Shares 1 of 11 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements
McCLAIN INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, SEPTEMBER 30, 1996 1995 (unaudited) * ----------- ------------- CURRENT ASSETS - -------------- Cash and Cash Equivalents $ 357,278 $ 1,173,370 Accounts Receivable (Net) 17,524,011 15,590,278 Inventories 31,494,061 31,229,399 Prepaid Expenses 396,299 176,075 ----------- ----------- Total Current Assets 49,771,649 48,169,122 ----------- ----------- Property and Equipment 33,736,998 33,078,135 Accumulated Depreciation (13,002,138) (11,894,922) ----------- ----------- Net Property and Equipment 20,734,860 21,183,213 ----------- ----------- Other Assets 7,254,897 4,546,862 ----------- ----------- Total Assets $77,761,406 $73,899,197 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES - ------------------- Current Portion of Long-Term Debt $ 1,905,213 $ 2,179,449 Accounts Payable 7,679,689 9,190,309 Accrued Liabilities 2,603,984 2,331,809 Federal Income Tax 582,179 598,999 ----------- ----------- Total Current Liabilities 12,771,065 14,300,566 ----------- ----------- Deferred Income Taxes 1,440,000 1,440,000 ----------- ----------- Long Term Debt - Less Current Portion 33,899,755 31,170,287 ----------- ----------- Other Liabilities and Contingencies 6,210,162 4,147,070 ----------- ----------- Stockholders' Equity 23,440,424 22,841,274 ----------- ----------- Total Liabilities and Stockholders' equity $77,761,406 $73,899,197 =========== ===========
See notes to consolidated financial statements. * Derived from audited financial statements. 2 of 11 3 McCLAIN INDUSTRIES, INC. CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS Unaudited Three Months Ended Six Months Ended March 31, March 31, 1996 1995 1996 1995 ------------------------- ------------------------- [S] [C] [C] [C] [C] Net Sales $20,686,753 $21,382,043 $37,081,435 $41,984,074 Cost of Sales 15,697,652 16,542,603 28,654,718 32,557,845 ----------- ----------- ----------- ----------- Gross Profit 4,989,101 4,839,440 8,426,717 9,426,229 Selling, General and Administrative Expenses 3,l55,373 3,033,963 6,413,948 5,894,793 ----------- ----------- ----------- ----------- Operating Income 1,833,728 1,805,477 2,012,769 3,531,436 ----------- ----------- ----------- ----------- Other Income (Expense) Interest Expense (892,700) (494,616) (1,556,550) (911,521) Interest Income 181,585 9,818 363,385 65,743 Other Expense (306,096) (159,515) (407,116) (476,601) ----------- ----------- ----------- ----------- (1,017,211) (644,313) (1,600,281) (1,322,379) ----------- ----------- ----------- ----------- Income before Income taxes 816,517 l,161,164 412,488 2,209,057 Provision for Income taxes 277,000 395,000 140,000 751,000 ----------- ----------- ----------- ----------- Net Income $ 539,517 766,164 $ 272,488 $ 1,458,057 =========== =========== =========== =========== Net Income per Common and Common Equivalent Shares $ .11 $ .17 $ .06 $ .32 =========== =========== =========== =========== Weighted Average Number of Common and Common Equivalent Shares Outstanding 4,744,018 4,619.193 4,744,018 4,619,193 =========== =========== =========== =========== See notes to consolidated financial statements 3 of 11 4 McCLAIN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
SIX MONTHS ENDED MARCH 31, --------------------- 1 9 9 6 1 9 9 5 --------- --------- Net income $ 272,488 1,458,057 ---------- ---------- Adjustments to reconcile net income to net cash (used) by operating activities: Depreciation and amortization 1,245,844 876,369 Deferred Income Taxes - ( 2,084) Common stock issued in lieu of cash 5,292 - Changes in operating assets which provided (used) cash: Current assets excluding cash & cash equivalents (2,418,619) (9,376,050) Other assets (2,708,035) ( 52,963) Accounts payable (1,510,620) 630,236 Accrued liabilities 272,175 284,080 Federal income tax ( 16,820) 1,018,331 Other liabilities 2,063,092 169,637 ---------- ---------- TOTAL ADJUSTMENTS (3,067,691) (6,452,444) ---------- ---------- NET CASH (USED) BY OPERATING ACTIVITIES (2,795,203) (4,994,387) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment ( 734,853) (1,333,433) ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES ( 734,853) (1,333,433) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal additions (repayments) of long term debt 2,455,232 6,285,347 Sale (repurchase) of common stock 258,732 5,244 ---------- ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES 2,713,964 6,290,591 ---------- ---------- NET (DECREASE) IN CASH AND CASH EQUIVALENTS ( 816,092) ( 37,229) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,173,370 1,697,713 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 357,278 $1,660,484 ========== ==========
4 of 11 5 McCLAIN INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 1. Basis of Presentation The accompanying unaudited Consolidated Financial Statements of McClain Industries, Inc. and subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, such Statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three month and six month periods ending March 31, 1996, are not necessarily indicative of the results that may be expected for the year ending September 30, 1996. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 1995. 2. Inventories Inventories at March 31, 1996 and September 30, 1995 are summarized as follows:
(Unaudited) March 31,1996 September 30,1995 Material and Supplies $18,489,757 $17,400,070 Work in Process 4,700,786 6,255,749 Finished Goods 8,303,518 7,573,580 ----------- ----------- $31,494,061 $31,229,399 =========== ===========
3. Earnings per Common Share and Common Equivalent Share: Earnings per common share and common equivalent share were calculated using the weighted average number of common shares and common stock equivalents outstanding during the period. The weighted average number of common shares actually outstanding was increased by the number of shares issuable on the exercise of the dilutive stock options when the market price of the common shares exceeds the option price granted. This increase in the number of common shares was reduced by the number of common shares that are assumed to have been repurchased with the proceeds from the exercise of the stock options; those repurchases were assumed to have been made at the average price of the common stock during the period. 5 of 11 6 McCLAIN INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED MARCH 31, 1996 4. Depreciation For the six months ended March 31, 1996 and 1995, depreciation charges were $1,183,206 and $835,929,respectively. 5. Contingencies Legal Proceedings The Company is from time to time subject to various claims from existing or former employees alleging gender, age or racial discrimination and anti-union activity, none of which are expected to have a material adverse affect on the Company. In addition, as a manufacturer of industrial products, the Company is, from time to time, subjected to various product liability claims. Such claims typically involve personal injury or wrongful death associated with the use or misuse of the Company's products. While such claims have not been material to the Company in any year and the Company believes that it maintains adequate product liability insurance, there can be no assurance that such insurance will continue to be available on terms acceptable to the Company. Any product liability claim not fully covered by insurance, as well as any adverse publicity from a product liability claim, could have a material adverse effect on the Company. The Company is currently defending a few legal proceedings involving product liability claims relating to McClain, Galion Dump and E-Z Pack brand products. Galion Holding, pursuant to an indemnification it provided Peabody Galion Division of Peabody International Corporation ("Peabody") in connection with the Galion Acquisition, is currently defending a number of legal proceedings involving product liability claims arising out of products manufactured by Peabody prior to the date of the Galion Acquisition. These claims are also covered by insurance. Although the Company has already settled many of these cases and the Company believes that it can continue to successfully resolve these product liability claims, there can be no assurance that the Company can continue to do so. The Company is not presently a party to any material legal proceedings except as described above. 6 of 11 7 McCLAIN INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED MARCH 31, 1996 5. Contingencies - (continued) Environmental Matters The Company's operations are subject to extensive federal, state and local regulation under environmental laws and regulations concerning, among other things, emissions into the air, discharges into the waters and the generation, handling, storage, transportation, treatment and disposal of waste and other materials. Inherent in manufacturing operations and in owning real estate is the risk of environmental liabilities as a result of both current and past operations, which cannot be predicted with certainty. The Company has incurred and will continue to incur costs, on an ongoing basis, associated with environmental regulatory compliance in its business. 7 of 11 8 McCLAIN INDUSTRIES, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview The following discussion should be read in conjunction with the condensed consolidated financial statements, including the notes thereto, appearing elsewhere in this report. Selected financial data for the Company for the periods indicated:
(unaudited) (unaudited) Three Months ended Six Months ended March 31, March 31, 1996 1995 1996 1995 ---- ---- ---- ---- Net Sales $20,686,753 $21,382,043 $37,081,435 $41,984,074 Net Income $ 539,517 $ 766,164 $ 272,488 $ 1,458,057 Net Earnings Per Common and Common Equivalent Share $ .11 $ .17 $ .06 $ .32
(unaudited) As of As of March 31, September 30, 1996 1995 ---- ---- Working Capital $37,000,584 $33,868,556 Total Assets 77,761,406 73,899,197 Long-Term Debt 33,899,755 31,170,287 Stockholders' Investment 23,440,424 22,841,274 Weighted Average Number of Common and Common Equivalent Shares Outstanding 4,744,018 4,657,476 Current Ratio 3.89:1 3.37:1 Long-Term Debt to Stockholders'Equity 1.45:1 1.36:1
8 of 11 9 McCLAIN INDUSTRIES, INC. The following table presents, as a percentage of net sales certain selected financial data for the Company for the periods indicated:
(Unaudited) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, 1996 1995 1996 1995 -------------------------------------- Sales 100.00% 100.00% 100.00% 100.00% Cost of Sales 75.88 77.37 77.28 77.55 ------ ----- ------ ------- Gross Profit 24.12 22.63 22.72 22.45 Selling, General & Admin. Expense 15.25 14.19 17.29 14.04 ------ ----- ------ ------- Operating Income 8.87 8.44 5.43 8.41 Other Expenses (4.92) (3.01) (4.32) (3.15) ------ ----- ------ ------ Income Before Income Tax 3.95 5.43 1.11 5.26 Provision for Income Taxes 1.34 1.85 .38 1.79 ------ ----- ------ ------ Net Income 2.61% 3.58% .73% 3.47% ====== ===== === ======
The following table presents the net sales of the Company by major product line for the periods indicated (in thousands)
(Unaudited) For the Three Months Ended March 31, -------------------------------------- 1996 1995 ----------------- ----------------- amount % amount % ----------------- ----------------- Dump Truck Bodies $ 5,301 25.62 $ 5,252 24.56 Containers 4,199 20.30 4,696 21.96 Compactors and Unitized Compaction Systems 1,750 8.46 2,412 11.28 Balers 849 4.10 - - Garbage and Recycling Truck Bodies 5,567 26.91 6,544 30.60 Transfer Trailers 1,143 5.53 975 4.56 Replacement Parts 640 3.10 494 2.32 Other Product Sales 1,237 5.98 1,009 4.72 ------- ------ ------- ------ Total Net Sales $20,686 100.00% $21,382 100.00% ======= ====== ======= ======
(Unaudited) For the Six Months Ended March 31, -------------------------------------- 1996 1995 ----------------- ----------------- amount % amount % ----------------- ----------------- Dump Truck Bodies $ 8,312 22.42 $ 8,946 21.31 Containers 6,896 18.60 10,198 24.29 Compactors and Unitized Compaction Systems 4,536 12.23 4,292 10.22 Balers 1,694 4.57 - - Garbage and Recycling Truck Bodies 10,048 27.10 11,431 27.23 Transfer Trailers 2,589 6.98 3,984 9.49 Replacement Parts 1,369 3.69 1,312 3.12 Other Product Sales 1,637 4.41 1,821 4.34 ------- ------ ------- ------ Total Net Sales $37,081 100.00% $41,984 100.00% ======= ====== ======= ======
9 of 11 10 McCLAIN INDUSTRIES, INC. DISCUSSION OF RESULTS OF OPERATIONS Net sales for the quarter ended March 31, 1996 (Quarter 1996) decreased 3.36% to $20.7 million from $21.4 million for the quarter ended March 31, 1995 (Quarter 1995). The decline in sales is attributable primarily to intense competition among manufacturers within the Solid Waste Equipment Industry. The restructuring of the sales department that the Company began in the first quarter of fiscal 1996 is continuing as planned. Management believes this effort began to show positive results late in the Quarter 1996 and expects the positive results realized by this restructuring to continue into the foreseeable future. Cost of sales as a percentage of net sales decreased to 75.88% for the Quarter 1996 from 77.37% for the Quarter 1995 due primarily to lower raw material costs. Selling, General and Administrative expenses increased to 15.25% of net sales for the Quarter 1996 from 14.19% for the Quarter 1995 primarily due to the lower sales volume. Net sales for the six months ended March 31, 1996 decreased 13.22% to $37.01 million from $42.0 million for the six months ended March 31, 1995. Cost of sales for the six months ended March 31, 1996 decreased to 77.28% from 77.55% for the six months ended March 31, 1995. Selling, General and Administrative expenses increased to 17.29% of net sales for the six months ended March 31, 1996 from 14.04% for the six months ended March 31, 1995 due primarily to the lower sales volume, particularly in the first quarter of fiscal 1996. DISCUSSION OF FINANCIAL CONDITION The Company had working capital of approximately $37.0 million at March 31, 1996 compared to $33.9 million at September 30, 1995. The ratio of current assets to current liabilities was 3.89 to 1 at March 31, 1996 compared to 3.37 to 1 at September 30, 1995. Cash flows utilized by operations were $2.8 million for the six months ended March 31, 1996 primarily due to increased activity by the Company's leasing subsidiary and a reduction in accounts payable. During this period the Company utilized $734,853 for the acquisition of machinery and equipment. The increase in leasing activity, accounts payable reduction and machinery and equipment acquisitions were financed primarily by increased borrowings. 10 of 11 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorizd. McCLAIN INDUSTRIES, INC. Date: MAY 9, 1996 By: /s/ Carl Jaworski ----------------------- ---------------------------- Carl Jaworski, Treasurer Date: MAY 9, 1996 By: /s/ Kenneth D. McClain ----------------------- ---------------------------- Kenneth D. McClain, President 11 of 11 12 Exhibit Index -------------
Exhibit No. Description - ----------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS SEP-30-1996 OCT-01-1995 MAR-31-1996 357,278 0 17,524,011 0 31,494,061 49,771,649 33,736,998 13,002,138 77,761,406 12,771,065 0 5,366,821 0 0 18,073,603 77,761,406 37,081,435 37,081,435 28,654,718 28,654,718 6,824,806 0 1,556,550 412,488 140,000 272,488 0 0 0 272,488 .06 0
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