-----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, ThLuVG1yxJJ0V0rxoa0wtiZdAYmyXPpUnJ2i2N+ez5D6bOhKTwu9VRX1cZqPwPY1 gyoStddX1tJ+PkjS722Xcw== 0000950124-96-003609.txt : 19960816 0000950124-96-003609.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950124-96-003609 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCCLAIN INDUSTRIES INC CENTRAL INDEX KEY: 0000063686 STANDARD INDUSTRIAL CLASSIFICATION: TRUCK & BUS BODIES [3713] 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: 96612340 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 June 30, 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 (810) 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 August 9, 1996. Common Stock, No Par Value 4,698,042 Class Number of Shares 1 of 11 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements MCCLAIN INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, SEPTEMBER 30, 1996 1995 (unaudited) * ---------- ------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,042,283 $ 1,173,370 Accounts receivable (net) 18,427,386 14,284,478 Inventories 29,070,137 31,229,399 Net investments in sales type leases, current portion 2,027,623 1,305,800 Prepaid expenses 334,358 176,075 ------------- ------------- Total Current Assets 51,901,787 48,169,122 ------------- ------------- Plant and equipment 34,265,208 33,078,135 Accumulated depreciation (13,637,084) (11,894,922) ------------- ------------- Net Plant and Equipment 20,628,124 21,183,213 ------------- ------------- Net investments in sales type leases, net of current portion 3,501,756 2,255,164 Other assets 2,045,987 2,291,698 ------------- ------------- Total other assets 5,547,743 4,546,862 ------------- ------------- Total Assets $ 78,077,654 $ 73,899,197 ============= ============= LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES Current portion of long-term debt $ 1,905,213 $ 2,179,449 Accounts payable 10,618,493 9,190,309 Accrued liabilities 2,204,752 2,331,809 Federal income tax 1,032,414 598,999 ------------- ------------- Total Current Liabilities 15,760,872 14,300,566 ------------- ------------- Long Term Debt - less current portion 30,903,733 31,170,287 ------------- ------------- Other liabilities 6,151,171 5,580,070 ------------- ------------- Stockholders' investment 25,261,878 22,841,274 ------------- ------------- Total Liabilities and Stockholders' Investment $ 78,077,654 $ 73,899,197 ============= =============
See notes to condensed consolidated financial statements. *Derived from audited financial statements. 2 of 11 3 MCCLAIN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED
Three Months Ended Nine Months Ended June 30, June 30, 1996 1995 1996 1995 ------------------ ------------------- Net Sales $24,924,635 $21,171,595 $62,006,070 $63,155,669 Cost of Sales 18,414,853 15,631,620 47,069,571 48,189,465 ----------- ----------- ----------- ----------- Gross Profit 6,509,782 5,539,975 14,936,499 14,966,204 Selling, General and Administrative Expenses 3,069,875 3,267,021 9,483,823 9,161,814 ----------- ----------- ---------- ----------- Operating Profit 3,439,907 2,272,954 5,452,676 5,804,390 ----------- ----------- ---------- ----------- Other Income (Expense) Interest expense (753,650) (631,578) (2,310,200) (1,543,099) Interest income 196,096 29,879 559,481 95,622 Other expense ( 33,278) (152,275) ( 440,394) (658,755) ----------- ----------- ---------- ----------- Net Other Expense (590,832) (783,853) (2,191,113) (2,106,232) ----------- ----------- ---------- ----------- Income before Income taxes 2,849,075 1,489,101 3,261,563 3,698,158 Income taxes 969,000 505,910 1,109,000 1,256,910 ----------- ----------- ---------- ----------- Net Income $ 1,880,075 $ 983,191 $ 2,152,563 $ 2,441,248 =========== =========== =========== =========== Net Income Per Common Equivalent Shares $ .40 $ .21 $ .46 $ .53 =========== =========== =========== =========== Weighted Average Number of Common and Common Equivalent Shares Outstanding 4,698,042 4,625,284 4,698,042 4,625,284 =========== =========== =========== ===========
See notes to condensed consolidated financial statements. 3 of 11 4 MCCLAIN INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
NINE MONTHS ENDED JUNE 30, ------------------- 1 9 9 6 1 9 9 5 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,152,563 $2,441,248 ---------- ---------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 1,885,700 1,444,378 Deferred income taxes 0 ( 2,084) Common stock issued in lieu of cash 4,246 7,517 Changes in operating assets and liabilities which provided (used) cash: Current assets excluding cash & cash equivalents (2,863,752)(16,387,620) Other assets (1,000,881) (655,624) Accounts payable 1,428,184 2,558,811 Accrued liabilities (127,057) 246,692 Federal income tax 433,415 1,527,650 Other liabilities 564,101 102,174 ---------- ---------- TOTAL ADJUSTMENTS 323,956 (11,158,106) ---------- ---------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 2,476,519 ( 8,716,858) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (1,236,035)( 2,587,717) ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES (1,236,035)( 2,587,717) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Additions (reductions) to long term debt (540,790) 10,163,239 Sale (repurchase) of common stock 169,219 6,500 ---------- ---------- NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ( 371,571) 10,169,739 ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 868,913 (1,134,836) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,173,370 1,660,486 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,042,283 $ 525,650 =========== ==========
4 of 11 5 MCCLAIN INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1996 1. Basis of Presentation The accompanying unaudited Condensed 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 (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month and nine month periods ended June 30, 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 June 30, 1996 and September 30, 1995 are summarized as follows:
(Unaudited) June 30, 1996 September 30,1995 ------------- ----------------- Material and Supplies $15,988,575 $17,400,070 Work in Process 5,814,027 6,255,749 Finished Goods 7,267,535 7,573,580 ----------- ----------- $29,070,137 $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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NINE MONTHS ENDED JUNE 30, 1996 4. Depreciation For the nine months ended June 30, 1996 and 1995, depreciation charges were $1,791,124 and $1,383,718. 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NINE MONTHS ENDED JUNE 30, 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 Nine Months ended June 30, June 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net Sales $24,924,634 $21,171,595 $62,006,070 $63,155,669 Net Income $ 1,880,075 $ 983,191 $ 1,109,000 $ 2,441,248 Net Earnings Per Common and Common Equivalent Share $ .40 $ .21 $ .46 $ .53
(unaudited) As of As of June 30, September 30, 1996 1995 ----------- ------------- Working Capital $36,140,915 $33,868,556 Total Assets 78,077,654 73,899,197 Long-Term Debt 30,903,733 31,170,287 Stockholders' Investment 25,261,878 22,841,274 Weighted Average Number of Common and Common Equivalent Shares Outstanding 4,698,042 4,657,476 Current Ratio 3.29:1 3.37:1 Long-Term Debt to Stockholders'Equity 1.22:1 1.36:1
8 of 11 9 MCCLAIN INDUSTRIES, INC. DISCUSSION OF RESULTS OF OPERATIONS 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 Nine Months Ended June 30, June 30, 1996 1995 1996 1995 ---------------------------------------------------- Sales 100.00% 100.00% 100.00 100.00% Cost of Sales 73.88 73.83 75.91 76.30 ------ ------ ------ ------ Gross Profit 26.12 26.17 24.09 23.70 Selling, General & Admin. Expense 12.32 15.43 15.30 14.51 ------ ------ ------ ------ Operating Income 13.80 10.74 8.79 9.19 Other Expenses (2.37) (3.70) (3.53) (3.33) ------ ------ ------ ------ Income Before Income Taxes 11.43 7.04 5.26 5.86 Provision for Income Taxes 3.89 2.39 1.79 1.91 ------ ------ ------ ------ Net Income 7.54% 4.65% 3.47% 3.87% ====== ====== ====== =====
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS Net sales for the quarter ended June 30, 1996 (Quarter 1996) increased 17.73% to $24.9 million from $21.2 million for the quarter ended June 30, 1995 (Quarter 1995). Management believes the increase in sales is primarily attributable to the restructuring of the sales department begun in the first quarter of fiscal 1996. Cost of sales as a percentage of net sales increased to 73.88% for the Quarter 1996 from 73.83% for the Quarter 1995 due primarily to higher raw material costs. Selling, General and Administrative expenses decreased to 12.32% of net sales for the Quarter 1996 from 15.43% for the Quarter 1995 primarily due to the higher sales volume. Net sales for the nine months ended June 30, 1996 decreased 1.85% to $62.0 million from $63.0 million for the nine months ended June 30, 1995. Cost of sales for the nine months ended June 30, 1996 decreased to 75.91% from 76.3 % for the nine months ended June 30, 1995. Selling, General and Administrative expenses increased to 15.30% of net sales for the nine months ended June 30, 1996 from 14.5% for the nine months ended June 30, 1995 due primarily to the lower sales volume, particularly in the first quarter of fiscal 1996. 9 of 11 10 MCCLAIN INDUSTRIES, INC. DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION The Company had working capital of approximately $36.1 million at June 30, 1996 compared to $33.9 million at September 30, 1995. The ratio of current assets to current liabilities was 3.29 to 1 at June 30, 1996 compared to 3.37 to 1 at September 30, 1995. Cash flows provided by operations were $2.5 million for the nine months ended June 30, 1996 primarily due to the reduction in inventory levels. During this period the Company utilized $1.2 million for the acquisition of machinery and equipment. The increase in leasing activity and machinery and equipment acquisitions were financed primarily by 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: AUGUST 9, 1996 By: /s/ Carl Jaworski ------------------------------- Carl Jaworski, Treasurer Date: AUGUST 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 9-MOS SEP-30-1996 OCT-01-1995 JUN-30-1996 2,042,283 0 18,427,386 0 29,070,137 51,901,787 34,265,208 13,637,084 78,077,654 15,760,872 0 0 0 5,325,269 19,936,609 78,077,654 62,006,070 62,006,070 47,069,571 47,069,571 9,364,736 0 2,310,200 3,261,563 1,109,000 2,152,563 0 0 0 2,152,563 .46 0
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