-----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, J+orByVhkgDtNFx4yflRz4XmK4m3oUyj9ObD4df0kvNky3RpI3L17hBOlJHi0U9b DjeM0CCGClutPavzKFyi1w== 0000740868-97-000012.txt : 19970514 0000740868-97-000012.hdr.sgml : 19970514 ACCESSION NUMBER: 0000740868-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXCEL INDUSTRIES INC CENTRAL INDEX KEY: 0000740868 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 351551685 STATE OF INCORPORATION: IN FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08684 FILM NUMBER: 97601570 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 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 ____________________________ For the Quarterly Period Ended March 29, 1997 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 "X" whether the registrant (a) 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 prior 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 April 17, 1997, there were outstanding 10,727,123 common shares, no par value. EXCEL INDUSTRIES, INC. Index
Page No. PART I Financial Information Consolidated Balance Sheet - March 29, 1997 and December 28, 1996 1 Consolidated Statement of Income - Quarter Ended March 29, 1997 and March 30, 1996 2 Consolidated Statement of Shareholders' Equity - Quarter Ended March 29, 1997 and March 30, 1996 3 Consolidated Statement of Cash Flows - Quarter Ended March 29, 1997 and March 30, 1996 4 Notes to Consolidated Financial Statements 5-8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II Other Information 12 Signatures 13 Financial Data Schedules Exhibit 27
EXCEL INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands)
March 29, December 28, 1997 1996 ASSETS Current assets Cash and short-term investments $ 6,023 $ 6,580 Marketable securities 35,339 23,981 Accounts receivable 140,660 127,351 Customer tooling to be billed 16,993 17,278 Inventories 43,949 43,960 Prepaid expenses 19,540 19,800 Total current assets 262,504 238,950 Property, plant and equipment, less accumulated depreciation of (1997 - $99,478; 1996 - $90,723) 159,161 159,775 Other assets 51,473 44,509 $473,138 $443,234 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 82,950 $ 68,673 Accrued liabilities 57,437 46,583 Current portion of debt 9,480 9,554 Total current liabilities 149,867 124,810 Long-term debt 122,951 123,452 Other long-term liabilities 44,735 44,247 Commitments and contingent liabilities -- -- Shareholders' equity Preferred shares - no par value, authorized 1,000 shares, none issued -- -- Common shares - no par value, authorized 20,000 shares; issued and outstanding in 1997, 92,258 92,187 10,723, in 1996, 10,718 Retained earnings 63,614 58,653 Minimum pension liability adjustment (160) (160) Cumulative translation adjustment (127) 45 Total shareholders' equity 155,585 150,725 $473,138 $443,234
NOTE: The balance sheet at December 28, 1996 has been derived from the audited financial statements at that date. The accompanying notes are an integral part of this statement. EXCEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (thousands, except per share amounts)
Quarter Ended March 29, March 30, 1997 1996 Net sales $251,216 $150,607 Cost of goods sold 220,218 134,704 Gross profit 30,998 15,903 Selling, administrative and engineering expenses 18,923 7,923 Operating income 12,075 7,980 Interest expense (2,769) (809) Other income, net 390 400 Income before income taxes 9,696 7,571 Provision for taxes on income 3,394 2,688 Net income $ 6,302 $ 4,883 Net income per share: Primary $ .59 $ .46 Fully diluted $ .54 $ .41 Cash dividends per share $ .125 $ .11 The accompanying notes are an integral part of this statement.
EXCEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) FOR THE QUARTER ENDED MARCH 29, 1997 AND MARCH 30, 1996 (in thousands)
MINIMUM PENSION COMMON RETAINED LIABILITY SHARES EARNINGS ADJUSTMENT Balance at December 28, 1996 $92,187 $ 58,653 $ (160) Net income 6,302 Dividends (1,341) Share options exercised 5 Shares issued under employee stock purchase plan 66 Cumulative translation adjustment Balance at March 29, 1997 $92,258 $ 63,614 $ (160) Balance at December 30, 1995 $95,157 $ 44,412 $ (659) Net income 4,883 Dividends (1,179) Shares issued under employee stock purchase plan 67 Balance at March 30, 1996 $95,224 $48,116 $ (659) The accompanying notes are an integral part of this statement. EXCEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) FOR THE QUARTER ENDED MARCH 29, 1997 AND MARCH 30, 1996 (in thousands) CUMULATIVE TRANSLATION TREASURY ADJUSTMENT SHARES TOTAL Balance at December 28, 1996 $ 45 $ -- $150,725 Net income 6,302 Dividends (1,341) Share options exercised 5 Shares issued under employee stock purchase plan 66 Cumulative translation adjustment (172) (172) Balance at March 29, 1997 $ (127) $ -- $155,585 Balance at December 30, 1995 $ -- $ (4,593) $134,317 Net income 4,883 Dividends (1,179) Shares issued under employee stock purchase plan 67 Balance at March 30, 1996 $ -- $ (4,593) $138,088 The accompanying notes are an integral part of this statement.
EXCEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Quarter Ended March 29, March 30, 1997 1996 Cash flows from operating activities Net income $ 6,302 $ 4,883 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 9,178 4,077 Deferred income taxes and other 1,592 196 Changes in current assets and liabilities, excluding effect of acquisition: Accounts receivable and other (8,707) (5,468) Inventories and customer tooling 529 9,579 Accounts payable and accrued liabilities 15,258 7,205 Total adjustments 17,850 15,589 Net cash provided by operating activities 24,152 20,472 Cash flows from investing activities Purchase of property, plant and equipment (8,686) (7,112) Investment in marketable securities (11,358) (11,814) Business acquired (2,741) -- Net cash used for investing activities (22,785) (18,926) Cash flows from financing activities Issuance of common shares 71 67 Maturities of long-term debt (654) (203) Dividends (1,341) (1,179) Net cash used for financing activities (1,924) (1,315) Net change in cash and short-term investments (557) 231 Cash and short-term investments at beginning of year 6,580 391 Cash and short-term investments at end of first quarter $ 6,023 $ 622 Supplemental Schedule of Noncash Activities: In connection with the restructuring reserve established for plant closures in March, 1997, goodwill has been increased by $5,400, which is net of income taxes. The accompanying notes are an integral part of this statement.
EXCEL INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 - Inventories: Inventories consist of the following: (in thousands of dollars)
March 29, December 28, 1997 1996 Raw materials $24,840 $24,047 Work in process and finished goods 19,966 20,770 LIFO Reserve (857) (857) $43,949 $43,960
Note 3 - 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: (amounts in thousands)
Quarter Ended March 29, March 30, 1997 1996 Primary 10,722 10,707 Fully diluted 12,387 12,978
Note 4 - Contingencies A chemical cleaning compound, trichloroethylene (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. 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 Northern 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. On September 5, 1996 the United States Department of Justice lodged with the United States District Court for the Northern District of Indiana a proposed partial consent decree which specifies payment of Federal Past Response Costs from certain PRPs which for Excel amounted to approximately $3.2 million which together with amounts due IDEM would bring Excel's total obligation to approximately $3.4 million. This consent decree has not been accepted by the Court, and comments objecting to the consent decree have been lodged with the United States Department of Justice. 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. The Company believes that adequate provisions have been recorded for its costs and its anticipated share of the EPA Costs and that its cash on hand, unused lines of credit or cash from operations are sufficient to fund any required expenditures. The Company has been named a PRP for costs at seven other disposal sites. The remedial investigations and feasibility studies have been completed, and the results of those studies have been provided to the appropriate agencies. The studies indicated a range of viable remedial approaches, but agreement has not yet been reached on the final remediation approach. Furthermore, the PRPs for these sites have not reached an agreement on the allocation of costs between the PRPs. The Company believes it either has no liability as a responsible party or that adequate provisions have been recorded for current estimates of the Company's liability and estimated legal costs associated with the settlement of these claims. It is reasonably possible that the Company's recorded estimate of its obligation may change in the near term. 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 29, 1997 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 5 - Acquisitions On April 3, 1996, the Company completed the purchase of all of the outstanding common shares of Anderson Industries, Inc. (Anderson). The accompanying consolidated statement of income for the quarter ended March 29, 1997 includes the operating results of Anderson. Pro forma unaudited consolidated operating results of the Company and Anderson for the three months ended March 30, 1996, assuming the acquisition had been made as of the beginning of 1996, are summarized below (in thousands except per share amounts): Net sales $ 248,421 Net income 6,574 Net income per share, primary .61 Net income per share, fully diluted .54
The unaudited pro forma financial information presented is not necessarily indicative either of the results of operations that would have occurred had the transactions been completed on the indicated dates or of future results of operations of the combined companies. In the first quarter of 1997 the Company recorded an $8.7 million pre-tax restructuring reserve for closing manufacturing facilities in 1997 at Rockford, Illinois and Battle Creek, Michigan which had been acquired as part of the acquisition of Anderson. The reserve consists of personnel related costs (mainly severance pay and fringe benefits) and costs related to the disposals of buildings and equipment. The reserve increased the associated goodwill by $5.4 million (which is net of income taxes) and was not a charge to earnings. In addition, the Company expects that additional expenses including relocation, start-up and other related costs not covered by the reserve will be approximately $4.2 million pretax or about 24 cents per share after tax. In January, 1997, the Company completed the purchase of the assets of the Compliance Group located in Greendale, Wisconsin for approximately $2.7 million in cash. The excess of the purchase price over the estimated fair value of assets acquired has been acccounted for as goodwill. Note 6 - Segment Information and Major Customers The Company operates in two primary business segments. They consist of sales to original equipment manufacturers of light vehicles and sales to the recreational vehicle, mass transit and heavy truck industries (RV/MT/HT). The following information summarizes segment information for the Company's primary business segment.
Light Vehicle RV/MT/HT Products Products Corporate Total (000 Omitted) Quarter Ended March 29, 1997 Sales $196,686 $ 54,530 $ -- $251,216 Operating income (expense) 9,991 4,440 (2,356) 12,075 Depreciation and amortization expense 6,724 2,139 315 9,178 Quarter Ended March 30, 1996 Sales $137,078 $ 13,529 $ -- $150,607 Operating income (expense) 8,664 747 (1,431) 7,980 Depreciation and amortization expense 3,696 110 271 4,077 March 29, 1997 Assets 306,694 113,656 52,788 473,138 Capital expenditures 6,414 1,907 365 8,686 December 28, 1996 Assets 297,042 106,915 39,277 443,234 Capital expenditures 23,582 4,002 1,625 29,209
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General In 1996, the Company acquired all of the outstanding common shares of Anderson Industries, Inc., (Anderson) located in Rockford, Illinois. With this acquisition, the Company established lines of business to distinguish activities for the light vehicle segment separate from the recreational vehicles, mass transit and heavy truck segment (RV/MT/HT). The light vehicle products segment normally experiences reduced sales volumes in the months of July, August and December as vacation periods, model changeover and start-up and holidays affect the number of production days. The RV/MT/HT products segment is seasonal in that sales in the quarter October through December are normally at reduced levels. Material Changes in Results of Operations: Quarter Ended March 29, 1997 Compared to Quarter Ended March 30, 1996 Sales in the first quarter of 1997 increased 67% or $100.6 million to $251.2 million from the $150.6 million in 1996. The acquisition of Anderson added $98.2 million in 1997. The remainder of the increase was due to a slight increase in overall automotive volumes as selling prices remained stable. Increases in production of our products for light trucks and sport utility vehicles were offset by decreases in production for passenger cars. Sales for the light vehicle products segment were $196.7 million in the first quarter of 1997 compared to $137.1 million in the 1996 period. For the RV/MT/HT products segment sales increased to $54.5 million in 1997 from $13.5 in 1996. Increases in both segments were due to the Anderson acquisition. Gross profit was $31.0 million in the current quarter or 12.3% of sales, up from $15.9 million or 10.6% of sales in the first quarter of 1996. The higher gross margin from Anderson had the effect of increasing overall gross margin by .5 percentage point. The remaining improvement in margin results from continued emphasis on cost reductions. Selling, administrative and engineering expenses totaled $18.9 million in the first quarter of 1997, up from $7.9 million in the 1996 first quarter. The increase was primarily due to the additional costs associated with the Anderson operations. Interest expense totaled $2,769,000 in 1997 up from $809,000 in the year ago first quarter. The increase was due to the increased long-term debt outstanding including new senior notes issued in connection with the Anderson acquisition. Other income of $390,000, which is primarily interest income on marketable debt securities, was comparable to the $400,000 in the 1996 first quarter. Provision for taxes on income was at an effective rate of 35% for 1997, down slightly from 35.5% in 1996. Material Changes in Financial Condition: For the quarter ended March 29, 1997 cash flow from operations totaled $24.2 million of which $8.7 million was used for capital expenditures, $2.7 million for the acquisition of The Compliance Group and an additional $1.3 million for dividends. Capital expenditures for the year are estimated to be $50.5 million. The Company recorded an $8.7 million pre-tax restructuring reserve in the first quarter of 1997 for closing manufacturing facilities in 1997 at Rockford Illinois and Battle Creek, Michigan which had been acquired in 1996 as part of the acquisition of Anderson. The reserve increased the associated goodwill by $5.4 million (which is net of income taxes) and was not a charge to earnings. In addition, the Company expects that additional expenses including relocation, start-up and other related costs not covered by the reserve will be approximately $4.2 million pretax or about 24 cents per share after tax. The Company estimates that annual savings from the plant closures will be approximately $7 million to $8 million or 40 cents to 45 cents per share. In January, 1997, the Company completed the purchase of the assets of the Compliance Group located in Greendale, Wisconsin for approximately $2.7 million in cash. The excess of the purchase price over the estimated fair value of assets acquired has been accounted for as goodwill. Cash and short-term marketable securities amounted to $41.4 million at March 29, 1997, an increase of $10.8 million from December 28, 1996. At March 29, 1997, the Company had available unused lines of credit of approximately $60 million. For the remainder of 1997 the Company expects its current cash balances, operating cash flow and available credit lines to be sufficient to finance operating cash needs, capital expenditures and any environmental clean-up requirements. Forward-Looking Statements This report contains certain forward-looking statements which involve certain risks and uncertainties. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those anticipated. Potential risks and uncertainties include economic factors, concentration of a substantial percentage of sales in a few major OEM customers, and other business factors. Readers are cautioned not to place undue reliance on those forward-looking statements which speak only as of the date of this report. 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: May 12, 1997 s/ James O. Futterknecht James O. Futterknecht Chairman, President and Chief Executive Officer Date: May 12, 1997 s/ Joseph A. Robinson Joseph A. Robinson Senior Vice President, Secretary and Chief Financial Officer Date: May 12, 1997 s/ Ike K Eikelberner Ike K. Eikelberner Vice President, Corporate Controller and Chief Accounting Officer
EX-27 2
5 1,000 3-MOS DEC-27-1997 MAR-29-1997 6023 35339 143053 2393 43949 262504 258639 99478 473138 149867 0 0 0 92258 63327 473138 251216 251216 220218 239141 (390) 0 2769 9696 3394 6302 0 0 0 6302 .59 .54
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