-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NQBo8f+PF/nBIb6vQXfXnVA9GSU9Wh+QKDVXcf5lQICcccsybdKyD/tmBCdJJbti 4JZfdtHke4jvtePKw9YudQ== 0000740868-94-000020.txt : 19940525 0000740868-94-000020.hdr.sgml : 19940525 ACCESSION NUMBER: 0000740868-94-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXCEL INDUSTRIES INC CENTRAL INDEX KEY: 0000740868 STANDARD INDUSTRIAL CLASSIFICATION: 3714 IRS NUMBER: 351551685 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08684 FILM NUMBER: 94527093 BUSINESS ADDRESS: STREET 1: 1120 N MAIN ST STREET 2: P O BOX 3118 CITY: ELKHART STATE: IN ZIP: 46515-3118 BUSINESS PHONE: 2192642131 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________________ Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 __________________________________ For Quarter Ended March 31, 1994 Commission File No. 1-8684 Excel Industries, Inc. (Exact name of registrant as specified in its charter) Indiana 35-1551685 (State or other jurisdiction (IRS Employer Identification of incorporation or organization) Number) 1120 North Main Street, Elkhart, Indiana 46514 (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code:(219) 264-2131 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 the latest practicable date. At March 31, 1994, there were issued and outstanding 10,957,936 common shares, no par value. EXCEL INDUSTRIES, INC. Index Page No. PART I Financial Information Consolidated Balance Sheets March 31, 1994 and December 31, 1993 1 Consolidated Statements of Income - Three Months Ended March 31, 1994 and 1993 2 Consolidated Statements of Shareholders' Equity Three Months Ended March 31, 1994 and 1993 3 Consolidated Statements of Cash Flows Three Months Ended March 31, 1994 and 1993 4 Notes to Consolidated Financial Statements 5-7 Management's Discussion and Analysis of Financial Condition and Results of Operation 8-9 PART II Other Information 10 Signatures 11 EXCEL INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands of dollars) March 31, December 31, 1994 1993 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 9,695 $ 6,767 Marketable securities 39,819 39,786 Accounts receivable - trade 86,356 70,653 Customer tooling to be billed 10,605 9,161 Inventories (Note 2) 30,496 29,867 Prepaid expenses 4,087 6,113 Total current assets 181,058 162,347 Property, plant and equipment, less accumulated depreciation of (1994 - $56,549; 1993 - $53,773) 52,183 49,746 Other assets 16,776 17,223 $250,017 $229,316 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable - trade $ 52,972 $ 46,983 Accrued liabilities 22,377 19,050 Current portion of debt 1,429 1,553 Total current liabilities 76,778 67,586 Long-term debt 34,761 35,094 Other long-term liabilities 20,667 20,200 Commitments and contingent liabilities -- -- Shareholders' equity Preferred shares - no par value, 1,000 shares authorized, none issued -- -- Common shares - authorized 20,000 shares without par value; issued 1994 - 10,958; 1993 - 10,575 94,651 87,537 Retained earnings 23,876 19,615 Unrecognized pension actuarial losses, net of tax (716) (716) Total shareholders' equity 117,811 106,436 $250,017 $229,316 NOTE: The balance sheet at December 31, 1993 has been derived from the audited financial statements at that date. EXCEL INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (thousands, except per share amounts) Three Months Ended March 31, 1994 1993 Net sales $151,972 $127,340 Cost of goods sold 135,475 113,045 Gross profit 16,497 14,295 Selling, administrative and engineering expenses 7,844 7,881 Operating income 8,653 6,414 Other income (expense): Interest expense (839) (914) Other income, net 341 202 Income before income taxes 8,155 5,702 Provision for taxes on income 3,017 2,280 Net income $ 5,138 3,422 Net income per share (Note 4): Primary $ 0.48 $ 0.39 Fully diluted $ 0.44 $ 0.35 Cash dividends per share $ 0.08 $ 0.06 EXCEL INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 (in thousands of dollars) UNRECOGNIZED PENSION COMMON RETAINED ACTUARIAL SHARES EARNINGS LOSSES TOTAL Balance at December 31, 1993 $87,537$19,615 $(716) $106,436 Net income 5,138 5,138 Dividends (877) (877) Issuance of 380,000 Common Shares 7,059 7,059 Shares issued under employee stock purchase plan 55 55 Balance at March 31, 1994 $94,651 $23,876 $(716) $117,811 Balance at December 31, 1992 $57,282$10,346 $(598) $ 67,030 Net income 3,422 3,422 Dividends (634) (634) Issuance of 2,000,000 Common Shares 30,019 30,019 Shares issued under employee stock purchase plan 43 43 Balance at March 31, 1993 $87,344 $13,134 $(598) $ 99,880 EXCEL INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands of dollars) Three Months Ended March 31, 1994 1993 Cash flows from operating activities Net income $ 5,138 $ 3,422 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 3,016 2,487 Deferred income taxes and other 582 1,172 Changes in current assets and liabilities: Accounts receivable and other (13,677) (14,835) Inventories and customer tooling (2,073) (2,017) Investment in marketable securities (33) (43,392) Accounts payable and accrued liabilities 9,316 12,649 Total adjustments (2,869) (43,936) Net cash provided by (used for) operating activities 2,269 (40,514) Cash flows from investing activities Purchase of property, plant and equipment (5,580) (2,479) Other 459 (139) Net cash used for investing activities (5,121) (2,618) Cash flows from financing activities Issuance of common shares 7,114 30,062 Maturities of long-term debt (457) (521) Dividends (877) (634) Net cash from (for) financing activities 5,780 28,907 Net change in cash and cash equivalents 2,928 (14,225) Cash and cash equivalents at beginning of year 6,767 27,510 Cash and cash equivalents at end of first quarter $ 9,695 $ 13,285 EXCEL INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Basis of Presentation: The financial statements have been prepared from the unaudited financial records of the Company. In the opinion of management, the financial statements include all adjustments consisting only of normal recurring adjustments necessary for a fair presentation of the results of operations and financial position for the interim periods. Note 2 - Marketable Securities: Marketable securities consist of U.S. Government securities, tax-free municipal securities and municipal fund par value preferred shares and are classified as trading securities. Certain amounts for 1993 have been reclassified to conform to the 1994 classification. Note 3 - Inventories: Inventories consist of the following: March 31, December 31, 1994 1993 (000 omitted) Raw materials $18,328 $17,948 Work in process and finished goods 13,690 12,378 LIFO Reserve (1,522) (459) $30,496 $29,867 Note 4 - Net Income per Share: Primary net income per share is computed using the weighted average number of shares outstanding during the period. In computing fully diluted earnings per share, the conversion of the Company's 10% Convertible Subordinated Notes is also assumed except when the effect of the conversion is anti-dilutive. Shares used to compute net income per share data are as follows: Three Months Ended March 31, 1994 1993 (000 omitted) Primary 10,605 8,789 Fully diluted 12,875 11,073 Note 5 - Contingencies A chemical cleaning compound, trichlorethylene ("TCE"), has been found in the soil and groundwater on the Company's property in Elkhart, Indiana, and in 1981, TCE was found in a well field of the City of Elkhart in close proximity to the Company's facility. The Company has been named as one of nine potentially responsible parties (PRPs) in the contamination of this site. The United States Environmental Protection Agency (EPA) and the Indiana Department of Environmental Management (IDEM) have conducted a preliminary investigation and evaluation of the site and have undertaken temporary remedial action in the nature of air-stripping towers. In early 1992, the EPA issued a Unilateral Order under Section 106 of the Comprehensive Environmental Response, Compensation and Liability Act which required the Company and other PRPs to undertake remedial work. The Company and the other PRPs have reached an agreement regarding the funding of groundwater monitoring and the operation of the air-strippers as required by the Unilateral Order. The Company was required to install and operate a soil vapor extraction system to remove TCE from the Company's property. As of February 1, 1994, the Company has installed and is operating the equipment pursuant to the Unilateral Order. In addition, the EPA and IDEM have asserted a claim for reimbursement of their investigatory costs and the costs of installing and operating the air-strippers on the municipal well field (the EPA Costs). On February 22, 1993, the United States filed a lawsuit in the United States District Court for the Norther District of Indiana against eight of the PRPs, including the Company. On July 20,1993, IDEM joined in the lawsuit. The lawsuit seeks recovery of the costs of enforcement, prejudgment interest and an amount in excess of $6.8 million, which represents costs incurred to date by the EPA and IDEM, and a declaration that the eight defendant PRPs are liable for any future costs incurred by the EPA and IDEM in connection with the site. The Company does not believe the annual cost to the Company of monitoring groundwater and operating the soil vapor extraction system and the air-strippers will be material. Each of the PRPs, including the Company, is jointly and severally liable for the entire amount of the EPA Costs. Certain PRPs, including the Company, are currently attempting to negotiate an agreed upon allocation of such liability. The Company believes that adequate provisions have been recorded for its costs and its anticipated share of EPA Costs and that its cash on hand, unused lines of credit or cash from operations are sufficient to fund any required expenditures. The EPA has also named the Company as a PRP for costs at three other disposal sites. It has also asked the Company for information about contamination at other sites. The Company believes it either has no liability as a responsible party or that adequate provisions have been recorded for any costs to be incurred. There are claims and pending legal proceedings against the Company and its subsidiaries with respect to taxes, workers' compensation, warranties and other matters arising out of the ordinary conduct of the business. The ultimate result of these claims and proceedings at March 31, 1994 is not determinable, but, in the opinion of management, adequate provision for anticipated costs has been made or insurance coverage exists to cover such costs. Note 6 - Share Ownership On March 24, 1994, Ford Motor Company and Ford Motor Company Fund disposed of their combined 24% ownership in the Company through a secondary public offering. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MATERIAL CHANGES IN FINANCIAL CONDITION: Cash flow from operations totalled $2.3 million. Investment in receivables and inventories increased $16.3 million due to higher level of sales. This increase was partially offset by an increase of $9.3 million in trade accounts payable and accruals. Capital expenditures in the first quarter totalled $5.6 million and the capital expenditure budget for the year totals $18 million. The Company received $7.1 million for the sale of common shares. Cash and short-term marketable securities amounted to $49.5 million at March 31, 1994, an increase of $2.9 million from December 31, 1993. MATERIAL CHANGES IN RESULTS OF OPERATIONS: THREE MONTHS ENDED MARCH 31, 1994 COMPARED TO THREE MONTHS ENDED MARCH 31, 1993 Sales in the first quarter of 1994 increased 19% or $24.6 million to $151.9 million from the $127.3 million in 1993. The increased sales occurred primarily in automotive original equipment products as production and sales of light vehicles in North America remained strong. Overall first quarter production of light vehicles totalled approximately 3.7 million units, an increase of 12% over the year ago first quarter. Gross profit was $16.5 million in the current quarter or 10.9% of sales and compares with gross profit of $14.3 million or 11.2% of sales in the first quarter of 1993. The increase in gross profit in the quarter is due to the increase sales. The decline in gross profit as a percent of sales results primarily from a shortfall of cost reductions against productivity commitments and a change in product mix. Selling, administrative and engineering expenses totalled $7.8 million in the first quarter which was comparable with the $7.9 million in the 1993 first quarter. Offsetting a reduction in the provision for doubtful accounts and increased compensation costs were increased personnel costs for research, engineering and development. Interest expense totaled $839,000 in 1994 and compares with $914,000 in the year ago first quarter. Other income of $341,000 which is primarily interest income on marketable debt securities compares to $202,000 in the 1993 first quarter. Provision for taxes on income was at an effective rate of 37% as compared to 40% in 1993. The decline in the overall effective rate results from reduction in effective state rates. PART II. OTHER INFORMATION All items in Part II are either not applicable or answerable in the negative. SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EXCEL INDUSTRIES INC. (Registrant) Date: , 1994 s/ James J. Lohman Chairman and Chief Executive Officer Date: , 1994 s/ Joseph A. Robinson Secretary/Treasurer and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description -----END PRIVACY-ENHANCED MESSAGE-----