-----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, VD3pysOMYfop9aFJsiwi3BgYlP6m2m766/KioyDlxVeHKT/qNfO8w5q27ACW5JRA osTUuGiVQQQhjk60WRKsRw== 0000914760-97-000096.txt : 19970512 0000914760-97-000096.hdr.sgml : 19970512 ACCESSION NUMBER: 0000914760-97-000096 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL STANDARD CO CENTRAL INDEX KEY: 0000070564 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 381493458 STATE OF INCORPORATION: IN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03940 FILM NUMBER: 97598827 BUSINESS ADDRESS: STREET 1: 1618 TERMINAL RD CITY: NILES STATE: MI ZIP: 49120 BUSINESS PHONE: 6166838100 MAIL ADDRESS: STREET 1: 1618 TERMINAL RD CITY: NILES STATE: MI ZIP: 49120 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORM 10-Q For the period ended March 31, 1997 Commission file number 1-3940 National-Standard Company (Exact name of registrant as specified in its charter) Indiana 38-1493458 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1618 Terminal Road, Niles, Michigan 49120 (Address of principal executive offices) (Zip Code) (616) 683-8100 (Registrant's telephone number, including area code) Indicate by check mark whether 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. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Each Class Shares Outstanding at May 1, 1997 Common Stock, $ .01 par value 5,271,539 Part I. FINANCIAL INFORMATION NATIONAL-STANDARD COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000, Except Per Share Amounts)
Three Months Ended Six Months Ended March 31 March 31 1997 1996 1997 1996 Net Sales $63,127 $66,016 $ 123,001 $ 126,547 Cost of sales 56,703 57,476 109,554 110,444 Gross profit 6,424 8,540 13,447 16,103 Selling and administrative expenses 5,971 5,748 11,349 11,084 UK restructuring 9,850 - 9,850 - Operating profit (loss) (9,397) 2,792 (7,752) 5,019 Interest expense (1,064) (1,273) (2,113) (2,608) Other income (expense), net (143) 92 (104) 3,714 Income (loss) (10,604) 1,611 (9,969) 6,125 Income taxes 83 101 (19) 271 Net income (loss) $(10,687) $ 1,510 $ (9,950) $ 5,854 Income (loss) per share $ (2.03) $ .28 $ (1.88) $ 1.09 Dividends per share $ 0.00 $ 0.00 $ 0.00 $ 0.00 Average shares outstanding 5,272,000 5,374,709 5,291,854 5,379,684 See accompanying notes to financial statements.
National-Standard Company and Subsidiaries Consolidated Balance Sheets ($000)
Assets March 31, 1997 September 30, 1996 Current assets: (Unaudited) Cash $ 607 $ 2,423 Receivables, net 24,962 24,532 Inventories: Raw material $ 8,766 $ 7,573 Work-in-process 14,218 12,863 Finished goods 1,016 24,000 1,708 22,144 Prepaid expenses 2,854 3,283 Deferred tax asset 1,300 1,300 Other current assets - 200 Total current assets $ 53,723 $ 53,882 Property, plant and equipment $ 158,428 $ 155,870 Less accumulated depreciation 111,424 47,004 108,431 47,439 Other assets 13,733 13,367 $ 114,460 $ 114,688 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 24,411 $ 23,067 Employee compensation and benefits 3,480 2,021 Accrued pension 334 334 Other accrued expenses 14,627 7,765 Current accrued postretirement benefit cost 2,500 2,500 Notes payable under revolving credit agreement expiring October 1997 (see Note 2) 17,989 18,443 Current portion of long-term debt 17,459 7,244 Total current liabilities $ 80,800 $ 61,374 Long-term debt 407 11,203 Other long-term liabilities 7,724 6,433 Accrued postretirement benefit cost 49,440 49,440 Stockholders equity: Common stock $ .01 par value. Authorized 25,000,000 shares; issued 5,413,644 and 5,409,144 shares, respectively $ 27,720 $ 27,689 Retained deficit (46,947) (36,997) $ (19,227) $ (9,308) Less: Foreign currency translation adjustments 1,999 2,175 Unamortized value of restricted stock 83 73 Treasury stock, at cost, 142,105 and 86,609 shares, respectively 1,109 713 Excess of additional pension liability over unrecognized prior service cost 1,493 (23,911) 1,493 (13,762) $ 114,460 $ 114,688 See accompanying notes to financial statements.
National-Standard Company and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) ($000)
Six Months Ended March 31 1997 1996 Net cash provided by operating activities $ 4,929 $ 8,059 Investing Activities: Capital expenditures (5,089) (3,391) Net cash used for investing activities (5,089) (3,391) Financing Activities: Net borrowings (reduction) under revolving credit agreements 618 (4,309) Principal payments under term loans (1,878) (1,414) Stock option proceeds - 58 Other (396) (349) Net cash used for financing activities (1,656) (6,014) Net increase (decrease) in cash (1,816) (1,346) Beginning cash 2,423 2,064 Ending cash $ 607 $ 718 Supplemental Disclosures: Interest paid $ 2,017 $ 2,314 Income taxes paid $ 95 $ 176 See accompanying notes to financial statements.
National-Standard Company and Subsidiaries Notes to Consolidated Financial Statements 1. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods included herein have been made. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 1996 National-Standard Company Form 10-K, Annual Report, and this report should be read in conjunction therewith. 2. On November 16, 1995, the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board reached a consensus opinion that borrowings outstanding under a revolving credit agreement with requirements similar to those in the Company's agreement that expires October 1, 1997 should be classified as short-term obligations. Accordingly, the Company had classified all amounts due under its revolving credit agreement as a current liability at September 30, 1996. Debt under the revolving credit agreement would have been classified as long-term debt at September 30, 1996 had the EITF opinion not been issued. 3. The three- and six-month periods ended March 1997 per share data of $(2.03) and $(1.88), respectively, includes $(1.87) per share and $(1.86) per share related to the restructuring charge. The six-month period ended March 1996 per share data of $1.09 includes $0.66 per share related to the sale of shares of the Allmerica Financial Corporation. 4. The results of operations for the six-month period ended March 31, 1997 are not necessarily indicative of the results to be expected for the full year. National-Standard Company and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the three-month period ended March 31, 1997 decreased 4.4% over the same period last year, while net sales for the six-month period ended March 31, 1997 decreased 2.8% over the same period last year. Gross margin percentages were 10.2% and 10.9%, respectively, for the current three- and six- month periods compared to 12.9% and 12.7%, respectively, for the same periods last year. Sales of air bag inflator filtration products for the three- and six-month periods decreased approximately 14% and 15%, respectively, over the same periods last year. The Company's weld wire product lines, however, experienced a 12% and 14% increase over the same time periods. Air bag product sales continue to decline due to the combined effect of lower prices and a shift in market conditions between major air bag manufacturers, resulting in lower air bag product sales for the Company. Operating losses for the three- and six-month periods were $9.4 million and $7.8 million, respectively, compared to operating income of $2.8 million and $5.0 million, respectively, for the same periods last year. The second quarter results include a $9.9 million charge for restructuring the Company's operations in the United Kingdom. This restructuring charge includes $3.0 million in severance costs and estimated pension curtailment costs in addition to discontinuing the U.K. manufacture and sales of COPPERPLY wire and certain non-value added weld wire products in the U.K, thus reducing annual U.K. sales from $37.0 million to approximately $30.0 million. The resulting reduction in the U.K. work force of 124 employees will save approximately $3.0 million in annual salaries. The restructuring also includes a $2.6 million provision for the write-off of inventory and fixed assets related to the discontinued products, $1.7 million for ongoing lease commitments for associated equipment and facilities, $1.8 million for environmental costs and $ .8 million in other miscellaneous costs. Cash outlays during the next twelve months included in the $9.9 million are expected to be $2.7 million. Cash outlays expected beyond the next twelve months are approximately $3.0 million. Net losses for the current three- and six-month periods were $10.7 million or $2.03 per share and $10.0 million or $1.88 per share, respectively, compared to a net income of $1.5 million or $ .28 per share and $5.9 million or $1.09 per share for last year. This year's net income includes the $9.9 million UK restructuring charge, while last year's net income includes approximately $3.5 million or $ .66 per share from the sale of shares of Allmerica Financial Corporation which the Company received as a result of the demutualization of the State Mutual Life Assurance Company of America. The U.K. results without the restructuring charges were a loss of $1.1 million and $1.4 million in the current three- and six-month periods. Prior to this restructuring, the U.K. Company has lost $5.3 million since 1993. Without the restructuring, the Company would expect these losses to continue. North American results continue to be positive with a net income of $ .2 million and $1.3 million, respectively, for the current three- and six-month periods. Prior year six-month North American net income was $2.6 million. Cost reduction activities in all business units and strong weld wire sales have generated a $2.2 million increase in net income. However, the operations continue to be under significant price pressure in the tire bead wire and air bag filtration materials markets. As a result, pricing for all North American business units is off $3.8 million during the first six months. Interest expense in North America decreased approximately $ .3 million during the same period. National-Standard Company and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations (Continued) Interest expense of $1.1 million and $2.1 million, respectively, in the current three- and six-month periods decreased 16.4% and 19.0%, respectively, over the same periods last year, due to the combined effect of lower interest rates and a lower level of average borrowings. The Company remains in an operating loss carryforward position in the United States, Canada, and the United Kingdom. Income tax expense on current income was substantially offset by a portion of these carryforwards. Liquidity and Capital Resources Total borrowings decreased $1.3 million in the six-month period, due primarily to cash flow from operations. During 1994, the Company entered into a long-term financing arrangement, which was modified in September 1995, to provide up to $51.0 million in revolving credit facilities, term loans and a line of credit for future capital expenditures. The loans, which are fully secured by the Company's assets, mature in October 1997. The Company believes adequate funding will be available to fund future growth and meet the growing demand for our products. Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (27) Financial Data Schedule (b) A Form 8-K (Item 5) was filed on January 2, 1997 regarding the announcement to continue the program to repurchase some of the Company's common stock. A second Form 8-K (Item 5) was filed on January 2, 1997 regarding a Letter of Intent with Korea Sangsa Co., Ltd. to form a joint venture company in Korea. A third Form 8-K (Item 5) was filed on January 24, 1997 regarding Fiscal Year 1997 first quarter earnings. SIGNATURES 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. NATIONAL-STANDARD COMPANY Registrant Date May 9, 1997 /s/ M. B. Savitske M. B. Savitske President and Chief Executive Officer Date May 9, 1997 /s/ W. D. Grafer W. D. Grafer Vice President, Finance EX-27 2
5 This schedule contains second quarter summary financial information extracted from National-Standard Company 1997 Second Quarter Form 10-Q and is qualified in its entirety by reference to such Form 10-Q filing. 1,000 6-MOS SEP-30-1997 MAR-31-1997 607 0 25,366 404 24,000 53,723 158,428 111,424 114,460 80,800 0 0 0 27,720 (51,631) 114,460 123,001 123,001 109,554 109,554 104 0 2,113 (9,969) (19) (9,950) 0 0 0 (9,950) (1.88) (1.88)
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