0000007533-95-000005.txt : 19950926 0000007533-95-000005.hdr.sgml : 19950926 ACCESSION NUMBER: 0000007533-95-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950624 FILED AS OF DATE: 19950922 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARROW AUTOMOTIVE INDUSTRIES INC CENTRAL INDEX KEY: 0000007533 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 041449115 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07737 FILM NUMBER: 95575455 BUSINESS ADDRESS: STREET 1: 3 SPEEN ST CITY: FRAMINGHAM STATE: MA ZIP: 01701 BUSINESS PHONE: 5088723711 MAIL ADDRESS: STREET 1: 3 SPEEN STREET CITY: FRAMINGHAM STATE: MA ZIP: 01701 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF - THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 24, 1995 ------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) - OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________. Commission File No. 1-7737 ------ ARROW AUTOMOTIVE INDUSTRIES, INC. --------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-1449115 ---------------------------------- ---------------------------- (State or other jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 3 Speen Street, Framingham, Massachusetts 01701 ----------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 872-3711 --------------- Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Title of Each Class Which Registered ------------------- ------------------------- Common Stock, $.10 Par Value American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 -- -- Exhibit Index begins on Page 45 of this Report. Page 1 of 54 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of the voting stock held by non-affiliates of the registrant as of September 15, 1995: $8,584,182 Number of shares of Common Stock, $.10 Par Value, outstanding as of September 15, 1995: 2,873,083 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the 1995 Annual Meeting of Stockholders are incorporated by reference into Part III hereof. Page 2 PART 1 ITEM 1. BUSINESS. ------------------ General ------- Arrow Automotive Industries, Inc. (the "Company") was founded in 1929, incorporated in 1946 as a Massachusetts corporation and became a public company in 1972. The Company's Common Stock has been traded on the American Stock Exchange since 1978 under the symbol AI. The Company is primarily engaged in the remanufacture of automotive parts, which includes replacement parts for domestic and imported passenger cars, light and heavy duty trucks, farm vehicles and heavy duty industrial and construction equipment. Products are manufactured at and distributed from the Company's three manufacturing facilities, located in Spartanburg, South Carolina, Morrilton, Arkansas and Santa Maria, California. The Company also maintains distribution facilities in Hammond, Indiana and in Toronto and Vancouver, Canada. The Company's corporate headquarters are in Framingham, Massachusetts, and its operations headquarters are in Conway, Arkansas. The Company operates in one industry segment as a remanufacturer and distributor of replacement parts for automotive vehicles and trucks. Product Information ------------------- The Company remanufactures and distributes a broad range of electrical and mechanical automotive parts, such as alternators, starters, water pumps, clutches, master brake cylinders, power steering pumps, power brakes, smog pumps, brake calipers, distributors, wiper motors, blower motors, crankshafts, rack and pinion steering units, radiator cooling motors, generators and carburetors. The Company also distributes new clutch kits which complement its existing line of remanufactured clutches. The Company does not consider its business to be seasonal, however, demand for certain products may be affected by extreme weather. Manufacturing Operations ------------------------ The Company's manufacturing operations consist principally of the collection, disassembly, cleaning, examination and reconditioning of used automotive parts (referred to in the industry as "cores") and the reassembly of their components, together with new replacement components where necessary, into remanufactured products. The principal raw materials used by the Company in its operations are cores, which are obtained primarily from customers on a trade-in basis and to a lesser extent from concerns which sell cores, and new component parts which are obtained Page 3 from a wide variety of suppliers. The Company's raw materials are available in adequate supply in the open market. Production of remanufactured parts is carried on in an assembly-line operation. When first received, cores are sorted and disassembled into their component parts. The major components are then further sorted and examined for suitability for further processing, and, if suitable, are cleaned, reconditioned and refinished. Components that are not reconditioned are replaced with new materials which are purchased from outside vendors. The metal components of cores not utilized in the manufacturing process are sold for scrap. Distribution ------------ The Company sells its products nationwide primarily through its own direct sales force. The Company currently maintains a direct sales force of 42 full-time salesmen. The majority of the Company's sales (approximately 74 percent in fiscal 1995) are to warehouse distributors. The balance of the Company's sales are to retailers (approximately 21 percent in fiscal 1995) and other customers. During fiscal 1995, sales to the Company's largest customer, General Parts, Inc., accounted for 15% of net sales. No other customer accounted for more than 10% of the Company's net sales. Substantially all of the Company's warehouse distributor customers are members of program distribution associations. These associations use the collective buying power of their members to negotiate price and other terms with vendors, which has the effect of encouraging competition in the automotive aftermarket. The associations do not purchase directly from vendors, and members of these associations are not obligated to purchase solely from association approved vendors. The evolution of these associations and the emergence of high volume retail chains in the automotive aftermarket have combined to create additional price competition among manufacturers. The Company utilizes its own truck fleet, and to a lesser extent independent trucking services, to handle most of its product deliveries and other shipping requirements. Special order and delivery options are also made available to customers, such as overnight direct parts service. Marketing --------- The Company markets its products under its Arrow(Reg. Trade Mark) and Lance(Reg. Trade Mark) labels, as well as under a variety of private labels. The Arrow(Reg. Trade Mark) line consists of the Company's premium quality parts often containing a number of new components. The Lance(Reg. Trade Mark) line consists of higher volume units whereby manufacturing economies of scale permit reduced pricing to customers. The Lance(Reg. Trade Mark) line is available in starters and alternators. In fiscal 1995, approximately 45 percent of the Company's sales were Page 4 made under various private labels, and the balance were made under the Company's own labels. The Company markets its remanufactured products with frequent contact by sales representatives, merchandising bulletins, direct mailing campaigns, advertising, participation in trade shows and complete catalog coverage. The Company also offers a subscription basis service bulletin program, which provides periodic technical information. The Company receives the majority of its product orders through an automated communication system called TRANSNET(Reg. Trade Mark), which enables customers to submit orders to the Company directly by computer. The TRANSNET (Reg. Trade Mark) computerized system is made available through the Motor Equipment Manufacturers Association. The Company can also accept orders through other proprietary electronic data interchange (EDI) networks for its customers'convenience upon request. Working Capital Items --------------------- Inventories are kept at a sufficient level to service customer orders. The Company provides customers with the right to return goods where the conditions of the Company's obsolescence and warranty return policies are met. These policies are consistent with industry practice, whereby under certain circumstances when the conditions of the return policies are met, remanufacturers accept product returns from current customers regardless of whether the product was actually purchased from the remanufacturer. Also, consistent with industry practice, the Company does not accept product returns from customers that no longer purchase from the Company. Competition ----------- The Company competes with other national, regional and local remanufacturers, with rebuilders of automotive parts and with manufacturers of new parts, including the leading automobile manufacturers. The Company believes it is one of the largest companies engaged primarily in the production and sale of remanufactured automotive parts, although there may be other companies whose sales of such products exceed those of the Company. The automotive aftermarket is highly competitive. The Company considers the key factors determining the ability to compete in this highly competitive industry to be product quality, a complete product offering, current product catalogs, direct factory sales service, price and serving customers with a high order fill rate. Page 5 Employees --------- On June 24, 1995, the Company employed 1,533 full-time employees and 65 part-time employees. ITEM 2. PROPERTIES. -------------------- The Company's corporate headquarters are located in Framingham, Massachusetts; its operations headquarters are located in Conway, Arkansas; and it occupies industrial and warehouse space in Spartanburg, South Carolina, Morrilton, Arkansas, Santa Maria, California, Hammond, Indiana, and Toronto and Vancouver, Canada. The Company leases approximately 15,000 square feet of office space in Framingham, Massachusetts, for its corporate headquarters under a lease expiring in 1998. Approximately 9,500 square feet of this space is subleased under an agreement which also expires in 1998. The Company also leases approximately 7,000 square feet of office space for its operations headquarters in Conway, Arkansas, under a lease expiring in November of 1996. The Company operates manufacturing facilities in Spartanburg, South Carolina (occupying approximately 315,000 square feet of floor space), Morrilton, Arkansas (occupying approximately 209,000 square feet of floor space) and Santa Maria, California (occupying approximately 98,000 square feet of floor space). The Spartanburg, Morrilton and Santa Maria facilities are all owned by the Company, subject to mortgages which, together with other collateral, secure the Company's obligations to its principal lender. In addition, the Company leases warehouse space of approximately 11,000 square feet in Hammond, Indiana, 50,000 square feet in Morrilton, Arkansas, 41,000 square feet in Spartanburg, South Carolina, 10,000 square feet in Toronto, Canada and 8,000 square feet in Vancouver, Canada. Page 6 All facilities are well maintained and in good operating condition. ITEM 3. LEGAL PROCEEDINGS. --------------------------- The Company is, from time to time, party to routine litigation incidental to the business. The amounts claimed in these matters are either covered by insurance or are not, in the aggregate, material in amount. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. ------------------------------------------------------------- The Company did not submit any matters to a vote of security holders during the fourth quarter of fiscal 1995. PART II ------- ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED -------------------------------------------------------------- STOCKHOLDER MATTERS. -------------------- The common stock of the Company is traded on the American Stock Exchange under the trading symbol AI. The approximate number of holders of record of the Company's common stock at September 15, 1995 was 322. The following table sets forth the high and low sale price on the American Stock Exchange of the Company's common stock, for each full quarterly period during the last two fiscal years: Fiscal Fiscal 1995 1994 -------------- -------------- High Low High Low First Quarter $8 3/8 $7 $8 3/8 $6 Second Quarter 8 1/2 7 8 6 1/8 Third Quarter 8 5 5/8 10 7 3/4 Fourth Quarter 6 9/16 5 1/2 9 7 Page 7 The Company did not pay any dividends during the 1995 or 1994 fiscal years. Operating covenants in the Company's loan agreement with its principal lender prohibits the Company from paying dividends unless the following conditions are met: (i) the Company is not then in default, and after giving effect to the dividend would not be in default, under the loan agreement; (ii) the aggregate amount of such dividends does not exceed the greater of (a) during any period of four (4) consecutive fiscal quarters an amount equal to fifty percent (50%) of the net income of the Company for the immediately preceding four (4) consecutive fiscal quarter periods, or (b) an amount equal to the excess of (i) twenty-five percent (25%) of the net income of the Company for the period commencing June 27, 1993 and ending with the last day of the fiscal quarter next preceding the proposed date of the dividend, treated as a single accounting period, over (ii) all dividends made subsequent to June 27, 1993. Page 8 ITEM 6. SELECTED FINANCIAL DATA. --------------------------------- FOR THE FISCAL YEARS ENDED IN JUNE (Amounts in Thousands Except Per Share Amounts and Financial Ratio Data)
1995 1994 1993 1992 1991 (52 wks) (52 wks) (52 wks) (52 wks) (52 wks) Net sales $106,574 $ 108,055 $ 100,654 $ 95,282 $ 91,238 Gross profit 25,092 27,861 26,622 26,447 25,704 Selling, administrative & general expenses 23,505 23,334 23,147 21,890 22,810 Interest expense - net 1,935 1,614 1,830 2,014 2,676 (Loss) income before income taxes and extraordinary items (348) 2,914 1,645 4,413(1) 218 (Benefit) provision for income taxes (103) 1,113 628 1,765 115 (Loss) income before extraordinary items (245) 1,801 1,017 2,648 103 Loss on refinancing of debt, net of income tax benefit -- (276) -- -- -- Utilization of income tax net operating loss carryforwards -- -- -- 400 115 Net (loss) income (245) 1,525 1,017 3,048(1) 218 (Loss) income per share before extraordinary items (.09) .64 .36 .95(1) .04 Loss per share on refinancing of debt, net of income tax benefit -- (.10) -- -- -- Utilization of income tax net operating loss carryforwards per share -- -- -- .15 .04 Net (loss) income per share (.09) .54 .36 1.10(1) .08 Cash dividends declared per share -- -- -- -- -- Capital expenditures 2,574 670 648 657 217 Depreciation and amortization $ 1,412 $ 1,546 $ 1,692 $ 1,918 $ 2,153 Average shares outstanding 2,872 2,821 2,814 2,777 2,757
(1) Includes the gain on termination of supplemental benefit arrangements with certain executives, which increased income before income taxes and extraordinary items by $1,871,000 and increased net income by $1,104,000 or $.40 per share. Page 9 FOR THE FISCAL YEARS ENDED IN JUNE (Amounts in Thousands Except Per Share Amounts and Financial Ratio Data)
1995 1994 1993 1992 1991 (52 wks) (52 wks) (52 wks) (52 wks) (52 wks) AT YEAR END Working capital $ 40,152 $ 33,702 $ 31,675 $ 30,175 $ 26,973 Total assets 69,006 71,121 62,026 62,990 64,429 Long-term debt 19,265 11,732 12,487 12,418 14,440 Stockholders' equity 32,739 32,974 31,175 30,155 26,729 Equity per common share $ 11.40 $ 11.69 $ 11.08 $ 10.86 $ 9.69 FINANCIAL RATIOS (%) Gross profit margin 23.54 25.78 26.45 27.76 28.17 Net profit margin (.23) 1.41 1.01 3.20 0.24 Return on equity (.74) 4.75 3.32 10.72 0.82 Current ratio (to 1) 3.94 2.46 3.04 2.76 2.37
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION -------------------------------------------------------------------- AND RESULTS OF OPERATION. ------------------------- The following discussion and analysis should be read in conjunction with the financial statements and notes thereto. Results of Operations --------------------- The Company incurred a net loss of $245,000 for the fiscal year ended June 24, 1995. During fiscal 1994 and 1993, the Company had net income of $1,525,000 and $1,017,000, respectively. Fiscal 1994 net income included an extraordinary charge of $276,000 (net of a tax benefit of $169,000) relating to the refinancing of the Company's bank debt. Operating results in the current fiscal year were adversely affected by lower sales volumes during the last six months of the fiscal year, which the Company attributes primarily to the unusually mild winter experienced throughout the country combined with changes in the Company's customer base. Also, the cost of manufacturing has continued to rise due to continued significant price increases in certain raw materials. Further, the Company experienced manufacturing inefficiencies during the year related to the installation of a new raw material cleaning system. Finally, increases in selling, administrative and general expenses occurred in fiscal 1995 related to the acquisition Page 10 of new business during the first nine months of the current year and certain marketing programs completed during the current fiscal year. Sales ----- Net sales for fiscal 1995 of $106,574,000 were down 1.4% from fiscal 1994's net sales of $108,055,000. In comparison to fiscal 1993, the current fiscal year's net sales have increased 5.9%. Unit sales for fiscal 1995 were down 4.9% from fiscal 1994 and down 3.7% from fiscal 1993. The net sales volume of the first and second quarters in the current fiscal year were $32,818,000 and $29,163,000, respectively, the highest quarterly sales volumes ever achieved by the Company. The third and fourth quarters' net sales of $19,820,000 and $24,773,000 respectively, represented a significant decline from the net sales achieved in the first two quarters of the fiscal year. The decline in net sales in the latter half of the current fiscal year is attributable to several factors. The most significant factor was the mild winter weather pattern experienced throughout most of the country which resulted in fewer part failures and reduced the demand for many of the Company's products. In addition, the Company lost several customer accounts during fiscal 1995 and the first quarter of fiscal 1996. However, during the first quarter of fiscal 1996 the Company acquired new customers, which, while not replacing the lost business entirely, will mitigate the negative impact of the customer turnover. Gross Margin ------------ Gross margin as a percentage of sales was 23.5%, 25.8% and 26.4% for the fiscal years ended 1995, 1994, and 1993, respectively. A change in the mix of products sold has contributed to the margin decline. Throughout the last three fiscal years, sales have migrated to the Company's Lance(Reg. Trade Mark) product lines, which generate lower margins than the Company's traditional premium lines. This migration of sales to lower priced lines reflects several issues impacting the remanufactured parts market. Retail outlets have become a significant factor in the distribution of automotive parts while at the same time most traditional warehouse distributors have joined large buying groups. This emergence of "power buyers" has dramatically increased pricing pressures at a time when manufacturing overcapacity remains prevalent. Also during the last three fiscal years, the Company's mix of products sold reflected proportionately more unit sales in newer vehicle applications. While generating higher sales dollars, these newer vehicle applications provided lower gross margins due to the higher costs to produce a product in the early stage of its product cycle. During the current Page 11 fiscal year, the product mix was also impacted by the decline in the sales of certain products which tend to have higher failure rates in severe winter weather. These products on average generate a gross profit margin percentage that exceeds the Company's average gross profit margin percentage. In fiscal 1995 the Company experienced increases in the cost of certain basic raw materials (e.g., copper, aluminum and linerboard products), increased unit costs due to lower plant utilization caused by the decline in sales volume and inefficiencies incurred during the installation of new raw material cleaning systems. The new raw material cleaning systems were necessary in order to comply with regulations promulgated pursuant to the Clean Air Act Amendments of 1990 which mandated that the production of a certain degreasing agent used by the Company in its manufacturing operations cease completely by January 1, 1996. The move toward an environmentally friendly degreasing agent required the replacement of equipment that was key to the flow of the manufacturing process. Certain delivery and installation delays created less efficient product processing during the third and fourth quarters of fiscal 1995. The Company strives to source its raw materials at favorable prices. The Company continues to review its operations to reduce overall costs to manufacture its products. Selling, Administrative and General Expenses -------------------------------------------- Selling, administrative and general expenses as a percentage of sales were 22.1%, 21.6% and 23.0% for the fiscal years 1995, 1994, and 1993, respectively. Spending in these areas increased $170,000 in fiscal 1995 over fiscal 1994 and $358,000 over fiscal 1993. Beginning late in fiscal 1994 and continuing into the first three quarters of the current fiscal year, the Company incurred increased business acquisition costs. Such costs incurred in fiscal 1995 exceeded similar costs in the prior year by $357,000. Also, during the current fiscal year the Company invested in the development of new marketing programs which resulted in additional expense of approximately $340,000. The Company constantly reviews its selling, administrative and general expenses for areas where reductions can be made, and continues to exercise strict control over discretionary spending. Net Interest Expense -------------------- Net interest expense in fiscal 1995 of $1,935,000 increased 20.0% or $322,000, from fiscal 1994's net interest expense which was down $217,000, or 12%, from net interest expense in fiscal 1993. Higher borrowing levels and higher interest rates resulted in the additional net interest expense incurred in the current fiscal year. The reduction in net interest expense in fiscal year 1994 in comparison to fiscal 1993 was due primarily to the lower interest rates available under replacement Page 12 financing obtained in the third quarter of fiscal 1994. Income Taxes ------------ The Company's tax benefit was 29.6% in fiscal 1995, which was less than the statutory rate of 34%, primarily due to certain nondeductible expenses. The effective tax rate for both fiscal years 1994 and 1993 was 38.2%. Impact of Inflation and Changing Prices --------------------------------------- Although the Company cannot accurately determine the precise overall effect of inflation on its business, the Company is conscious of the impact of inflation and, when possible, will compensate by increasing selling prices. The Company has refrained from passing on all of the increased costs through pricing because of the current competitive climate. The Company will continue its efforts to reduce costs through improvements in product distribution, purchasing practices, manufacturing techniques and more intense reclamation efforts. However, due to the cost increases in raw materials mentioned earlier, the Company has found it necessary to implement certain price increases scheduled to take effect late in the first quarter of fiscal 1996. The Company follows the LIFO method of determining inventory costs to better match current costs with current revenues. In fiscal 1995, 1994 and 1993, the impact of inflation and operating factors increased cost of goods sold over the respective prior years by $795,000, $121,000 and $273,000. Charges to operations for depreciation represent the allocation of historical cost incurred in prior years and are significantly less than if they were based on current or replacement cost of the Company's production capacity. In the normal course of business, the Company will replace its productive capacity over an extended period of time. Decisions concerning such replacements will be made in light of economic, regulatory and competitive conditions existing from time to time. These new assets will result in additional depreciation charges. In many cases, however, there will be offsetting cost savings from technological advances. Liquidity and Financial Condition --------------------------------- In fiscal 1995, cash provided by operating activities of $2,871,000 was substantially used to purchase new raw material cleaning Page 13 systems, while cash provided by net financing activities remained relatively unchanged from the beginning of the fiscal year. The decline in the Company's sales volume and related reductions in spending and purchasing levels in the second half of the current fiscal year resulted in decreases in accounts receivable, inventories and outstanding accounts payable as of June 24, 1995 when compared to those balances on June 25, 1994. As previously mentioned, the Company replaced raw material cleaning systems at all three manufacturing plants during fiscal 1995. The investment in those capital expenditures approximated $2,214,000. Cash used in operating activities in fiscal 1994 was $4,131,000 and cash used in investing activities was $804,000. Cash was provided from financing activities of $4,940,000. At June 25, 1994, increases in inventory and accounts receivable levels over the prior year's levels absorbed cash of $6,190,000 and $3,003,000, respectively. The positive cash flow from net income combined with cash provided by an increase in accounts payable and advances under the Company's revolving line of credit supported the growth in inventory and accounts receivable. Cash of $1,846,000 was provided by operations in fiscal 1993 relative to the prior year. The positive cash flow was substantially generated from net income and a reduction in inventory and accounts receivable, offset to some extent by increases in accrued liabilities and other current assets. Cash of $1,173,000 was used for financing activities, primarily to reduce outstanding long-term debt. Capital Resources ----------------- On December 29, 1993, the Company entered into an agreement with a commercial bank to provide replacement financing of its existing credit line and term loan. The replacement financing consisted of a $20 million revolving line of credit and a $9 million term loan. The balance of the term loan at June 24, 1995 was $7,392,857. The difference between amounts paid to retire the former indebtedness and the related carrying amounts, principally the unamortized balance of debt issue costs and early payment penalties, of $276,000, net of an income tax benefit of $169,000, has been reflected as an extraordinary charge in the fiscal 1994 statement of income. The Company's obligations under this financing agreement are secured by substantially all of its assets. The agreement contains certain provisions and covenants which, among other things, restrict the amount of future indebtedness, the amount of cash dividends and capital expenditures and require the Company to maintain specified levels of tangible net worth, debt service and net worth ratios. The debt service covenant of this financing agreement was amended during the third and fourth quarters of fiscal 1995 such that the loss sustained by the Page 14 Company during the respective quarters did not result in a breach of the covenant. The Company anticipates that operating revenues and existing credit lines will be adequate to provide for the Company's cash requirements for fiscal 1996. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ----------------------------------------------------- The response to this item is included as part of Item 14 of this report. An index to the financial statements and schedules filed as a part of this report appears on page 16 of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING -------------------------------------------------------------------- AND FINANCIAL DISCLOSURE. ------------------------- The Company has not reported on Form 8-K any disagreement with its public accountants on any matter of accounting principles or practices or financial statement disclosure. PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; ------------------------------------------------------------- ITEM 11. EXECUTIVE COMPENSATION; --------------------------------- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND ------------------------------------------------------------- MANAGEMENT; ----------- ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: --------------------------------------------------------- Information required under these items has been omitted, as the Company intends to file with the Securities and Exchange Commission not later than 120 days after the close of its fiscal year a definitive proxy statement pursuant to Regulation 14A. The information concerning directors and executive officers of the Company, executive compensation, security ownership of certain beneficial owners and management, and certain relationships and related transactions is incorporated by reference in the Company's Annual Proxy Statement for its 1995 Annual Meeting of Stockholders. Page 15 PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON ----------------------------------------------------------------- FORM 8-K. --------- (a) 1. Financial Statements. The following financial --------------------- statements of the Company are included in Item 8: Page ---- Report of Independent Auditors 20 Balance Sheets - June 24, 1995 and June 25, 1994 21 Statements of Operations - Years ended June 24, 1995, June 25, 1994, and June 26, 1993 23 Statements of Changes in Stockholders' Equity - Years ended June 24, 1995, June 25, 1994, and June 26, 1993 25 Statements of Cash Flows - Years ended June 24, 1995, June 25, 1994, and June 26, 1993 27 Notes to Financial Statements 29 2. Financial Statement Schedules. The following ------------------------------ financial statement schedules of the Company are included in Item 14(d): Page ---- Schedule II - Valuation and Qualifying Accounts 44 All other schedules have been omitted since the required information is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements or the notes thereto. 3. Listing of Exhibits. A listing of exhibits filed as -------------------- part of this Form 10-K begins on page 45 hereof. (b) The Company did not file any reports on Form 8-K during the fourth quarter of fiscal 1995. Page 16 (c) The Company hereby files as a part of this Form 10-K the exhibits listed in Item 14(a)(3) above. (d) The Company hereby files as a part of this Form 10-K the financial statements and schedules listed in Items 14(a)(1) and (2) above. Page 17 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) 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. ARROW AUTOMOTIVE INDUSTRIES, INC. --------------------------------- Dated: September 21, 1995 By: /s/ Jim L. Osment --------------------------------- Jim L. Osment, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. President, Chief Executive /s/ Jim L. Osment Officer, (Principal September 21, 1995 ------------------------- Executive Officer) and Jim L. Osment Director Executive Vice President, September 21, 1995 /s/ James F. Fagan Chief Financial Officer ------------------------- (Principal Financial James F. Fagan Officer), Treasurer and Director /s/ Harry A. Holzwasser Chairman of the Board and September 21, 1995 ------------------------- Director Harry A. Holzwasser ------------------------- Director September 21, 1995 Mary S. Holzwasser /s/ Robert A. Holzwasser Director September 21, 1995 ------------------------- Robert A. Holzwasser /s/ Joel D. Holzwasser Director September 21, 1995 ------------------------- Joel D. Holzwasser /s/ Lawrence M. Levinson Director September 21, 1995 ------------------------- Lawrence M. Levinson Page 18 ------------------------- Director September 21, 1995 Winthrop P. Rockefeller ------------------------- Director September 21, 1995 Alan Steinert, Jr. /s/ Kathaleen M. Vice President and September 21, 1995 Carroll-Coelho Controller ------------------------- Kathaleen M. Carroll-Coelho Page 19 Report of Independent Auditors To The Stockholders and Board of Directors Arrow Automotive Industries, Inc. We have audited the accompanying balance sheets of Arrow Automotive Industries, Inc.(the Company) as of June 24, 1995 and June 25, 1994, and the related statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended June 24, 1995. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Arrow Automotive Industries, Inc. at June 24, 1995 and June 25, 1994, and the results of its operations and its cash flows for each of the three years in the period ended June 24, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as whole, presents fairly, in all material respects, the information set forth therein. As discussed in Notes 9 and 10 to the financial statements, in 1994, the Company changed its method of accounting for postretirement benefits and income taxes. ERNST & YOUNG LLP /s/ Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts August 30, 1995 Page 20 ARROW AUTOMOTIVE INDUSTRIES, INC. BALANCE SHEETS
June 24, June 25, 1995 1994 ------------- ------------- Assets (Note 5) Current assets: Cash and equivalents $ 753,010 $ 445,320 Accounts receivable, less allowance ($477,285 in 1995 and $552,622 in 1994) for doubtful accounts 12,535,646 15,661,427 Inventories (Note 2) 36,307,861 37,433,020 Deferred income taxes (Note 10) 1,778,000 1,919,000 Other current assets 2,422,578 1,373,477 ------------ ------------ Total current assets 53,797,095 56,832,244 Property, plant and equipment (Note 8): Land 952,087 952,087 Buildings and building improvements 15,656,256 15,621,268 Leasehold improvements 258,221 258,221 Machinery and equipment 18,567,735 16,307,227 Construction in progress 25,052 47,678 ------------ ------------ 35,459,351 33,186,481 Less allowances for depreciation and amortization 22,174,393 21,134,125 ------------ ------------ Net property, plant and equipment 13,284,958 12,052,356 Other assets 1,923,519 2,236,194 ------------ ------------ $ 69,005,572 $ 71,120,794 ============ ============ The accompanying notes are an integral part of the financial statements.
Page 21 ARROW AUTOMOTIVE INDUSTRIES, INC. BALANCE SHEETS (continued)
June 24, June 25, 1995 1994 ------------- ------------- Liabilities and Stockholders' Equity Current liabilities: Current portion of advances under revolving line of credit (Note 5) $ 2,729,975 $ 10,219,446 Cash overdraft (Note 3) 1,216,348 907,095 Trade accounts payable 3,089,034 3,951,308 Accrued expenses (Note 4) 5,009,865 5,718,304 Income taxes payable 227,477 961,842 Current portion of long-term debt 1,372,486 1,372,538 ------------ ------------ Total current liabilities 13,645,185 23,130,533 Long-term debt, net of current portion (Note 5) 19,265,190 11,732,234 Deferred income taxes (Note 10) 1,634,000 1,631,000 Accrued retirement benefits (Note 9) 1,721,867 1,653,287 Stockholders' equity (Notes 6 and 7): Preferred stock, par value $.01 per share--authorized 1,000,000 shares, none issued Common stock, par value $.10 per share--authorized 5,000,000 shares, issued 2,968,870 in 1995 and 2,967,670 in 1994 296,887 296,767 Capital in excess of par value 7,428,254 7,418,004 Retained earnings 25,463,513 25,708,217 ------------ ------------ 33,188,654 33,422,988 Less cost of common stock in treasury (95,787 shares in 1995 and 95,775 in 1994) 449,324 449,248 ------------ ------------ Total stockholders' equity 32,739,330 32,973,740 Commitments and Contingency (Note 8) ------------ ------------ $ 69,005,572 $ 71,120,794 ============ ============ The accompanying notes are an integral part of the financial statements.
Page 22 Arrow Automotive Industries, Inc. Statements of Operations
Fiscal Year Ended ----------------------------------------- June 24, June 25, June 26, 1995 1994 1993 ------------- ------------- ------------- Net sales $106,574,023 $108,054,720 $100,654,148 ------------- ------------- ------------- Cost and expenses: Cost of products sold 81,482,460 80,193,327 74,032,182 Selling, administrative and general 23,504,545 23,334,056 23,146,655 Interest 1,934,722 1,613,508 1,830,401 ------------- ------------- ------------- 106,921,727 105,140,891 99,009,238 ------------- ------------- ------------- (Loss) income before income taxes and extraordinary item (347,704) 2,913,829 1,644,910 (Benefit) provision for income taxes (Note 10) (103,000) 1,113,000 628,000 ------------- ------------- ------------- (Loss) income before extraordinary item (244,704) 1,800,829 1,016,910 Extraordinary charge from refinancing of debt, net of income tax benefit of $169,000 (Note 5) (275,985) ------------- ------------- ------------- Net (loss) income $ (244,704) $ 1,524,844 $ 1,016,910 ============= ============= ============= (Loss) income per share before extraordinary item $ (.09) $ .64 $ .36 Page 23 Extraordinary charge per share from refinancing of debt, net of income tax benefit of $.06 per share (.10) ------------- ------------- ------------- Net (loss) income per share $ (.09) $ .54 $ .36 ============= ============= ============= The accompanying notes are an integral part of the financial statements.
Page 24 Arrow Automotive Industries, Inc. Statements of Changes in Stockholders' Equity
Capital in Common Excess of Retained Treasury Stock Par Value Earnings Stock ------------ ------------ ------------ ------------ Balance at June 27, 1992 $ 290,897 $ 7,146,712 $ 23,166,463 $ 449,128 Income tax benefit resulting from disqualifying disposition of shares under stock option plans 463 Exercise of stock options 60 2,696 Net income for the year 1,016,910 ------------ ------------ ------------ ------------ Balance at June 26, 1993 290,957 7,149,871 24,183,373 449,128 Income tax benefit resulting from disqualifying disposition of shares under stock option plans 20,780 Purchase of treasury stock 120 Exercise of stock options 5,810 247,353 Net income for the year 1,524,844 ------------ ------------ ------------ ------------ Balance at June 25, 1994 $ 296,767 $ 7,418,004 $ 25,708,217 $ 449,248 Page 25 Income tax benefit resulting from disqualifying disposition of shares under stock option plans 3,920 Purchase of treasury stock 76 Exercise of stock options 120 6,330 Net loss for the year (244,704) ------------ ------------ ------------ ------------ Balance at June 24, 1995 $ 296,887 $ 7,428,254 $ 25,463,513 $ 449,324 ============ ============ ============ ============ The accompanying notes are an integral part of the financial statements.
Page 26 Arrow Automotive Industries, Inc. Statements of Cash Flows
Fiscal Year Ended ----------------------------------------- June 24, June 25, June 26, 1995 1994 1993 ------------- ------------- ------------- Operating activities Net (loss) income $ (244,704) $ 1,524,844 $ 1,016,910 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,411,722 1,546,047 1,691,854 Write off of deferred financing costs (Note 5) 344,985 Deferred income taxes (credits) 144,000 (271,000) (112,000) Provision for bad debts 41,376 105,008 23,905 (Increase) decrease in assets: Accounts receivable 3,084,405 (3,003,313) 211,099 Inventories 1,125,159 (6,190,209) 607,667 Other current assets (763,598) (366,993) (715,498) Increase (decrease) in liabilities: Accounts payable, accrued expenses and other current liabilities (1,261,460) 934,558 (574,966) Income taxes payable (734,365) 765,106 7,284 Accrued retirement benefits 68,580 480,294 (310,708) ------------- ------------- ------------- Cash provided by (used for) operating activities 2,871,115 (4,130,673) 1,845,547 Investing activities Purchase of property, plant and equipment (2,551,563) (437,563) (510,854) Increase in net cash surrender value of life insurance policies $ (139,599) $ (223,174) $ (233,445) The accompanying notes are an integral part of the financial statements.
Page 27 Arrow Automotive Industries, Inc. Statements of Cash Flows (continued)
Fiscal Year Ended ----------------------------------------- June 24, June 25, June 26, 1995 1994 1993 ------------- ------------- ------------- Other $ 84,898 $ (143,155) $ 72,320 ------------- ------------- ------------- Cash used for investing activities (2,606,264) (803,892) (671,979) Financing activities Replacement financing proceeds 21,456,514 Indebtedness repaid, principally with the proceeds from the replacement financing (20,134,246) Increase in advances under revolving line of credit 1,410,529 4,763,770 440,452 Deferred financing costs of replacement financing (281,964) Repayments of other long- term debt and capital lease obligations (1,377,984) (1,137,478) (1,617,167) Proceeds from exercise of stock options and related tax benefits 10,370 273,943 3,219 Purchase of treasury stock (76) (120) ------------- ------------- ------------- Cash provided by (used for) financing activities 42,839 4,940,419 (1,173,496) ------------- ------------- ------------- Increase in cash and equivalents 307,690 5,854 72 Cash and equivalents at beginning of year 445,320 439,466 439,394 ------------- ------------- ------------- Cash and equivalents at end of year $ 753,010 $ 445,320 $ 439,466 ============= ============= ============= The accompanying notes are an integral part of the financial statements.
Page 28 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 1. Summary of Significant Accounting Policies The principal accounting policies of Arrow Automotive Industries, Inc. (the Company) are as follows: Fiscal Year: The Company's fiscal year ends on the last Saturday of June. Fiscal years 1995, 1994, and 1993 each contained 52 weeks. The number of weeks in fiscal quarters varies from twelve to fourteen. Business Segment: The Company is a remanufacturer and distributor of replacement parts for automotive vehicles and trucks, which is considered to be a single line of business. In fiscal 1995, sales to the Company's largest customer represented 15% of net sales and no other customer accounted for more than 10% of net sales. Inventories: Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method. Property, Plant and Equipment: Property, plant and equipment is recorded on the basis of cost or, in the case of leased assets under certain capital leases (see Note 8), at the present value of future lease payments. Depreciation and amortization of plant and equipment are provided on a straight-line basis, based upon the following estimated useful lives of the assets: Buildings and building improvements 10-33 years Leasehold improvements 10-33 years Machinery and equipment 2-10 years The Company eliminates from its accounts the cost and accumulated depreciation of the assets when they are retired, sold or abandoned. Gains and losses are reflected in the statements of operations. Income Taxes: The Company provides deferred taxes to recognize temporary differences between financial reporting and tax accounting. The amounts deductible in determining income taxes may exceed amounts charged to income as a result of tax deductions arising from disqualifying dispositions of stock acquired under the Company's qualified stock option plans. Any reduction in income taxes as a result of these differences is credited to capital in excess of par value. Earnings (Loss) Per Share: Earnings (loss) per share is computed based upon the weighted average number of common shares outstanding during each year, plus the dilutive effect, if any, of the assumed exercise of outstanding stock options. Weighted average shares used in the calculation of earnings (loss) per share were 2,872,309 for 1995, 2,821,063 for 1994 and 2,813,752 for 1993. Page 29 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 1. Summary of Significant Accounting Policies (continued) Cash Equivalents: The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Concentration of Credit Risk: The Company sells its products nationwide, primarily to warehouse distributors and to a lesser extent, to retailers. The Company performs ongoing credit evaluations of its customers and when appropriate registers UCC filings to provide a security interest in its customers' inventory. The Company maintains reserves for potential credit losses and such losses have been within management's expectations. Note 2. Inventories Inventories consist of the following: 1995 1994 ------------ ------------ Stated at cost on first-in, first out (FIFO) method (which approximates replacement cost): Finished goods $10,471,077 $11,027,263 Work in process and materials 32,651,784 32,425,757 ------------ ------------ 43,122,861 43,453,020 Less reserve required to state inventory on the last-in, first-out (LIFO) method (6,815,000) (6,020,000) ------------ ------------ $36,307,861 $37,433,020 ============ ============ Note 3. Cash Management System Daily, under the Company's cash management system, the bank notifies the Company of checks presented for payment against imprest operating accounts. The Company transfers funds from other sources, such as short-term investments or available lines of credit, to cover the checks presented for payment. The Company reflects a book cash overdraft as a result of the checks outstanding. Page 30 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 3. Cash Management System (continued) The cash (overdraft) balance consists of the following: 1995 1994 ------------ ------------ Bank balance $ 39,223 $ 87,679 Less outstanding checks (1,255,571) (994,774) ------------ ------------ $(1,216,348) $ (907,095) ============ ============ Note 4. Accrued Expenses Accrued expenses consist of the following: 1995 1994 ------------ ------------ Compensation and taxes withheld therefrom $ 3,390,337 $ 3,466,210 Promotional allowances 497,133 780,156 Other 1,122,395 1,471,938 ------------ ------------ $ 5,009,865 $ 5,718,304 ============ ============ Note 5. Long-Term Debt and Credit Arrangements Long-term debt consists of the following: 1995 1994 ------------ ------------ Term loans $ 7,392,857 $ 8,678,571 Noncurrent portion of advances under revolving line of credit 13,000,000 4,100,000 Other 244,819 326,201 ------------ ------------ 20,637,676 13,104,772 Less current portion (1,372,486) (1,372,538) ------------ ------------ $19,265,190 $11,732,234 ============ ============ Page 31 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 5. Long-Term Debt and Credit Arrangements (continued) Maturities of amounts classified as long-term debt are as follows: 1997-- $14,363,316; 1998--$1,353,345; 1999--$1,298,528; 2000--$1,285,714; 2001-- $964,287. Interest paid amounted to $1,960,718 during 1995, $1,681,952 during 1994 and $1,884,380 during 1993. On December 29, 1993, the Company entered into an agreement with a commercial bank to provide replacement financing of its existing credit line and term loan. The replacement financing consists of a $20 million revolving line of credit and a $9 million term loan. In connection therewith, the Company recorded an extraordinary charge of $275,985, net of income tax benefit of $169,000. Of this amount, $215,985, net of income tax benefit of $131,000, represents a non-cash charge to write off the unamortized balance of deferred financing costs and the balance relates to charges arising from the early termination of that debt. At June 24, 1995, the revolving line of credit enables the Company to borrow up to $20 million through December 31, 1996, based on a formula applied to the balances of the Company's inventory and accounts receivable. Amounts outstanding under the line ($15,729,975 at June 24, 1995) bear interest (at the Company's option) of 0.5% over the prime lending rate or 2% over the Eurodollar rate. A commitment fee of 0.25% per annum is due on the unused portion of the borrowing facility. The interest rate at June 24, 1995 on outstanding borrowings under the revolving line of credit was approximately 8.3%. Optional prepayment is permitted. At June 24, 1995, the Company has classified $13 million of advances outstanding under the line as noncurrent, since it does not intend to reduce its advances under the credit line below this amount during fiscal 1996. The $9 million term loan bears interest (at the Company's option) of 0.75% over the prime lending rate or 2.25% over the Eurodollar rate payable monthly. The interest rate at June 24, 1995 on outstanding term loan borrowings of $7,392,857 was approximately 8.4%. Principal is payable in equal quarterly installments which are intended to extinguish the debt by December 31, 2000. Optional prepayment is permitted. The Company's obligations under these agreements are secured by substantially all of its assets. Page 32 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 5. Long-Term Debt and Credit Arrangements (continued) Both the term loan and revolving line of credit agreements contain certain provisions and covenants which, among other things, restrict the amount of future indebtedness, amount of cash dividends and capital expenditures and require the Company to maintain specified levels of tangible net worth, debt service and net worth ratios. At June 24, 1995, the Company had $379,000 of outstanding letters of credit. Note 6. Preferred Stock The Board of Directors has the authority to issue Preferred Stock in one or more series, and to fix the dividend, redemption, liquidation, conversion and voting rights associated with each such series. Note 7. Stock Options Effective as of December 21, 1992, the Company adopted the 1993 Incentive Stock Option Plan. The 1993 Plan provides for grants of options to key employees to purchase up to 200,000 shares of common stock of the Company. Options under the 1993 Plan may be granted during a period of ten years beginning December 21, 1992, and are exercisable ratably over a period of five years from date of grant. The Company's Stock Option Plan for Non-Employee Directors provides for grants of options to purchase up to 20,000 shares of Common Stock of the Company. Options granted under the Non-Employee Directors' Plan become fully exercisable six months after the date of grant, and expire ten years from the date of grant. As of November 22, 1993, no further options could be granted under the Stock Option Plan for Non-Employee Directors. Page 33 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 7. Stock Options (continued) Information with respect to stock options is as follows: 1995 1994 ----------------------------------------------------- Number Price Per Number Price Per of Shares Share of Shares Share ----------------------------------------------------- Outstanding at beginning of year 128,700 $5.375-$8.750 197,400 $4.125-$8.750 Options cancelled or expired (6,000) $5.375-$6.625 (10,600) $4.125-$6.625 Options exercised (1,200) $5.375 (58,100) $4.125-$6.625 --------- --------- Outstanding at year end 121,500 $6.125-$8.750 128,700 $5.375-$8.750 ========= ========= Exercisable at year end 76,900 58,800 ========= ========= Available for future grant 87,500 82,500 ========= ========= At June 24, 1995, 209,000 shares of Common Stock were reserved for issuance under the Company's stock option plans. The weighted average exercise price for stock options outstanding at June 24, 1995 was $6.69. Note 8. Leases Property, plant and equipment includes the following amounts for leases of manufacturing facilities that have been capitalized: 1995 1994 ------------ ------------ Building, building improvements and machinery and equipment $ 342,937 $ 454,980 Less accumulated amortization (154,783) (159,289) ------------ ------------ $ 188,154 $ 295,691 ============ ============ Page 34 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 8. Leases (continued) Lease amortization is included in depreciation expense and amounted to $72,643 in 1995, $79,510 in 1994 and $35,430 in 1993. During 1995 and 1994, the Company acquired $10,888 and $217,426, respectively, of equipment under capital lease arrangements. The future minimum rental commitments as of June 24, 1995 for all noncancelable operating leases are as follows: Trucks and Total Real Estate Trailers Other ----------- --------------- ------------- ----------- 1996 $ 958,245 $ 306,634 $ 635,399 $ 16,212 1997 498,218 303,201 195,017 0 1998 314,816 270,536 44,280 0 1999 74,654 54,359 20,295 0 2000 10,278 10,278 0 0 ----------- --------------- ------------- ----------- Total $ 1,856,211 $ 945,008 $ 894,991 $ 16,212 =========== =============== ============= =========== Total rental expense for all operating leases was: 1995 1994 1993 ------------ ------------ ------------ Minimum rentals $ 1,309,206 $ 1,267,108 $ 1,455,686 Contingent rentals 592,707 690,606 795,448 Less: Sublease rentals (114,629) (60,338) ------------ ------------ ------------ $ 1,787,284 $ 1,897,376 $ 2,251,134 ============ ============ ============ The contingent rentals are based on additional truck miles driven over a specified minimum. Note 9. Employee Benefit Plans The Company maintains the Arrow Automotive Industries Hourly and Sales Employees' Retirement Plan (Hourly Plan) for substantially all hourly paid employees and contract salesmen. Monthly benefits are based on years of benefit service multiplied by the applicable dollar rate. Annual Company contributions to the Hourly Plan are determined using the entry age normal actuarial cost method and are equal to or exceed the minimum required by law. Page 35 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 9. Employee Benefit Plans (continued) Pension fund assets of the Hourly Plan are invested primarily in stocks, bonds and cash by a financial institution that was hired as the investment manager of the plan assets. The Company maintains Supplemental Benefit Agreements (Supplemental Agreements) which provide retirement and death benefits to certain executive officers and their beneficiaries. The annual benefit is equal to a percentage of the executive's average final salary. The benefits will be funded by the proceeds of certain life insurance policies purchased by the Company on the lives of these executives. The Company is the beneficiary under these life insurance policies. The Company's obligation under the Supplemental Agreements are limited in all events to an amount not greater than the benefits available to the Company under these life insurance policies, less the aggregate net outlay by the Company on such policies. Page 36 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 9. Employee Benefit Plans (continued) The following table sets forth the Hourly Plan and the Supplemental Agreements (Plans) funded status and amounts recognized in the Company's balance sheet at June 24, 1995 and June 25, 1994 (in thousands): Plans in Which Accumulated Benefits Exceed Assets -------------------------- 1995 1994 ---------- ---------- Actuarial present value of benefit obligations: Accumulated benefit obligations, including vested benefits of $4,986 in 1995 and $4,565 in 1994 $ (5,515) $ (5,037) Recognition of future salary increases (276) (327) -------- -------- Projected benefit obligation for service rendered to date (5,791) (5,364) Plan assets at fair value 4,589 4,487 -------- -------- Projected benefit obligation in excess of plan assets (1,202) (877) Unrecognized net gain from past experience different from that assumed and effects of changes in assumptions (208) (557) Adjustment to record minimum liability (65) (150) -------- -------- Accrued pension cost included in the balance sheet $(1,475) $ (1,584) ======== ======== Page 37 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 9. Employee Benefit Plans (continued) Net pension expense includes the following components (in thousands): 1995 1994 1993 ------ ------ ------ Service cost--benefits earned during the period $ 237 $ 242 $ 218 Interest cost on projected benefit obligation 434 402 341 Expected return on plan assets (334) (324) (297) Amortization of transition assets (65) (65) (65) Amortization of unrecognized net gain (22) (16) (13) Amortization of unrecognized prior service costs 23 22 ------ ------ ------ Total pension expense $ 273 $ 261 $ 184 ====== ====== ====== The weighted-average discount rate used in determining the actuarial present value of the projected benefit obligation for the Plans was 8%. The rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation under the Supplemental Agreements was 6%. The expected long-term rate of return on plan assets of the Hourly Plan was 8%. The Company maintains The Arrow Automotive Industries, Inc. Salaried and Clerical Employees' Profit Sharing Plan (Profit Sharing Plan) for substantially all clerical and salaried employees. Under the terms of the Profit Sharing Plan, the amount of the Company's contribution is determined at the sole discretion of the Board of Directors. There were no amounts charged to operations under the Profit Sharing Plan in 1995. During 1994 and 1993, the Company accrued a contribution of $107,000 and $138,000, respectively, to the Profit Sharing Plan. Page 38 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 9. Employee Benefit Plans (continued) The Company also maintains The Arrow Automotive Industries, Inc.'s 401(K) Plan for all employees. Effective as of July 1, 1994, the Company instituted a matching contribution based on participants' elective deferrals to the 401(K) Plan. The cost of providing the matching contributions for the year ended June 24, 1995 was $36,500. The Company provides for the continuation of health care and life insurance benefits upon retirement for certain of its active and retired employees. Effective June 27, 1993, the Company adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" (FAS 106). The Company elected to recognize the FAS 106 liability of $2.4 million on a prospective basis to be amortized over 20 years as a part of the future annual postretirement benefit cost. The effect of adopting FAS 106 increased 1994 net periodic postretirement benefit cost by approximately $65,000. The following represents the unfunded accumulated postretirement benefit obligation reconciled with amounts recognized in the Company's balance sheet on June 24, 1995 and June 25, 1994 (in thousands): 1995 1994 Accumulated postretirement benefit obligation: -------- -------- Retirees $( 1,388) $( 1,423) Fully eligible active plan participants (266) (855) Other active plan participants (378) (219) -------- -------- Accumulated postretirement benefit obligation ( 2,032) (2,497) Unrecognized transition obligation 2,169 2,290 Unrecognized net gain (458) -------- -------- Accrued postretirement benefit cost $ ( 321) $ (207) ======== ======== Page 39 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 9. Employee Benefit Plans (continued) Net periodic postretirement benefit cost includes the following components: 1995 1994 --------- --------- Service cost $ 20,000 $ 20,000 Interest cost 156,000 191,000 Amortization of transition obligation over 20 years 121,000 121,000 Amortization of unrecognized gain (18,000) --------- --------- Net periodic postretirement benefit cost $ 279,000 $ 332,000 ========= ========= The cost of covered health care benefits was assumed to increase 13% for retirees less than 65 years old and 7% for retirees 65 years and older for fiscal 1995. These rates are assumed to decrease incrementally to 6% in 2007 and remain at that level thereafter. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 8%. An increase of 1% in the assumed medical trend rates would result in an accumulated postretirement benefit obligation of $2.7 million at June 24, 1995 and a 1995 net periodic postretirement benefit cost of $343,000. The Company maintains a severance pay plan for its clerical and salaried employees. The Company's obligation for these postemployment benefits as of June 24, 1995 is not currently material. Note 10. Income Taxes Effective June 27, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS 109). Under FAS 109, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be realized or settled. Prior to the adoption of FAS 109, income tax expense was determined using the deferred method. Under the deferred method, deferred taxes are measured using tax rates effective when timing differences originate. The adoption of FAS 109 in fiscal year 1994 did not have a material impact on the Company's accounting for income taxes. Page 40 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 10. Income Taxes (continued) The (benefit) provision for income taxes consists of the following: 1995 1994 1993 ------------ ------------ ------------ Current: Federal $ (225,000) $ 1,022,000 $ 626,000 State (22,000) 193,000 114,000 Deferred 144,000 (271,000) (112,000) ------------ ------------ ------------ $ (103,000) $ 944,000 $ 628,000 ============ ============ ============ The deferred income tax provision in 1995 results primarily from costs related to the Company's employee benefit plans and changes in inventory reserve levels. The deferred income tax credit in 1994 and 1993 results principally from costs related to the Company's Supplemental Benefit Agreements, changes in inventory reserve levels and depreciation. A reconciliation of the statutory federal income tax rate to the annual effective income tax rate follows: 1995 1994 1993 ------------ ------------ ------------ Income tax at statutory rate (34.0)% 34.0% 34.0% State income tax, net of federal tax benefit 4.0 3.9 Nondeductible portion of travel and entertainment expenses 4.4 0.3 0.6 Officers life insurance expense 0.3 (0.9) Other (0.4) 0.6 ------------ ------------ ------------ (29.6)% 38.2% 38.2% ============ ============ ============ Page 41 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 10. Income Taxes (continued) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of June 24, 1995 and June 25, 1994 are as follows: 1995 1994 ------------ ------------ Deferred tax assets: Inventory $ 1,439,000 $ 1,486,000 Accrued retirement benefits 643,000 657,000 Accounts receivable 191,000 221,000 Other 148,000 212,000 ------------ ------------ Total deferred tax asset 2,421,000 2,576,000 ------------ ------------ Deferred tax liabilities: Book/tax depreciation 2,166,000 2,122,000 Other 111,000 166,000 ------------ ------------ Total deferred tax liabilities 2,277,000 2,288,000 ------------ ------------ Net deferred tax asset $ 144,000 $ 288,000 ============ ============ Income taxes paid amounted to $1,365,465 during 1995, $429,115 during 1994, and $732,716 during 1993. Page 42 Arrow Automotive Industries, Inc. Notes to Financial Statements Note 11. Selected Quarterly Financial Data (Unaudited) Fiscal Quarters 1995 --------------------------------------- 1st 2nd 3rd 4th (13 wks) (14 wks) (12 wks) (13 wks) --------------------------------------- (Amounts in thousands, except per share data) Net sales $ 32,818 $ 29,163 $ 19,820 $ 24,773 Gross margin 7,700 7,075 4,783 5,534 Net (loss) income 544 69 (749) (109) Net (loss) income per share $ .19 $ .02 $ (.26) $ (.04) Weighted average shares outstanding 2,872 2,872 2,872 2,873 Fiscal Quarters 1994 --------------------------------------- 1st 2nd 3rd 4th (13 wks) (13 wks) (13 wks) (13 wks) --------------------------------------- (Amounts in thousands, except per share data) Net sales $ 28,843 $ 25,842 $ 25,199 $ 28,171 Gross margin 6,815 6,569 6,674 7,803 Income before extraordinary item 502 494 355 450 Net income 502 218 355 450 Income per share before extraordinary item .18 .18 .13 .16 Net income per share $ .18 $ .08 $ .13 $ .16 Weighted average shares outstanding 2,814 2,814 2,818 2,838 The second quarter of fiscal 1994 included an extraordinary charge to income of $275,985 or $.10 per share (net of income tax benefit of $169,000 or $.06 per share) as a result of bank debt refinancing. Page 43 Arrow Automotive Industries, Inc. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS YEARS ENDING JUNE 1995, 1994 AND 1993
ADDITIONS --------------------- Charged Charged Balance at to Costs to Other (1) Balance Beginning and Accounts- Deductions- at End of Description of Period Expenses Describe Describe Period ------------------------------------------------------------- --------- Allowance for Doubtful Accounts- Accounts Receivable: Year Ended June 26, 1993 $ 461,598 $ 23,905 $ 0 $ 6,191 $ 479,312 Year Ended June 25, 1994 $ 479,312 $ 105,008 $ 0 $ 31,698 $ 552,622 Year Ended June 24, 1995 $ 552,622 $ 41,376 $ 0 $ 116,712 $ 477,286 (1) Uncollectible accounts written off, net of recoveries.
Page 44 LIST AND INDEX OF EXHIBITS
Filed with This Item Incorporated by Form 10-K at Number Description Reference To or Page Indicated ------- --------------------- --------------------- ---------------- 3.1 Restated Articles of Organization Form 10-Q for quarter ended as amended to date December 31, 1983, Exhibit 3.1 3.2 By-Laws as amended to date Form 10-Q for quarter ended December 31, 1983, Exhibit 3.2 4. Copies of Stock Certificates Form 10-K for year ended June 29, 1991, Exhibit 4 9.1 Arrow Automotive Industries, Inc. Form 10-K for year ended June Voting Trust Agreement 29, 1991, Exhibit 9 9.2 Extension of Term of Arrow Form 10-K for year ended June Automotive Industries, Inc. 27, 1992, Exhibit 9.2 Voting Trust Agreement Dated May 20, 1992 10.1 Agreement and Lease Amendment Form 10-K for year ended June dated March 15, 1984 with 30, 1984, Exhibit 10.2 Holzwasser Realty Trust 10.2* Exec-U-Care Participation Form 10-K for year ended June Agreement dated December 22, 1982 30, 1984, Exhibit 10.21 10.3* Arrow Automotive Industries, Inc. Proxy Statement for 1983 Special Stock Option Plan for Non- Meeting of Stockholders in Lieu Employee Directors of Annual Meeting
* Indicates management contract or compensation plan, contract or arrangement. Page 45
Filed with This Item Incorporated by Form 10-K at Number Description Reference To or Page Indicated ------- --------------------- --------------------- ---------------- 10.4* Supplemental Benefit Form 10-K for the year Plan Agreement ended June 28, 1995 Exhibit 10.15 10.5 $450,000 demand promissory note Form 10-K for year ended June from Harry A. Holzwasser 29, 1985, Exhibit 10.25 10.6* Executive Life Insurance Plan Form 10-K for year ended June Agreement 27, 1987, Exhibit 10.28 10.7 Lease with CFMS General Form 10-K for year ended June Partnership dated July 14, 1987 27, 1987, Exhibit 10.31 re: 8000 New Jersey Avenue, Hammond, Indiana 10.8 Lease Agreement with Point West Form 10-K for year ended June Office Center Limited Partnership 25, 1988, Exhibit 10.29 Associates dated July 15, 1988 re: 3 Speen Street, Framingham, Massachusetts 10.9* Employment Agreement with Jim L. Form 10-K for year ended June Osment dated May 14, 1991 29, 1991, Exhibit 10.15 10.10* Employment Agreement with James Form 10-K for year ended June F. Fagan dated May 14, 1991 29, 1991, Exhibit 10.16 10.11* Arrow Automotive Industries, Inc. Registration Statement No. 33- 1993 Incentive Stock Option Plan 64990 on Form S-8 filed June 25, 1993
* Indicates management contract or compensation plan, contract or arrangement. Page 46
Filed with This Item Incorporated by Form 10-K at Number Description Reference To or Page Indicated ------- --------------------- --------------------- ---------------- 10.13 Financing Agreement with The Form 10-Q for quarter ended First National Bank of Boston December 25, 1993, Exhibit 10.1 dated December 29, 1993 10.14* Employment Agreement with Harry Form 10-Q for quarter ended A. Holzwasser dated as of June December 25, 1993, Exhibit 10.2 28, 1993 10.15* Directors and Officers Liability Form 10-K for year ended June Insurance Policy and Excess 25, 1994, Exhibit 10.16 Policy 10.16* Amendment No. 1 to Employment Form 10-K for year ended June Agreement with Jim L. Osment 25, 1994, Exhibit 10.17 dated May 3, 1994 10.17* Amendment No. 1 to Employment Form 10-K for year ended June Agreement with James F. Fagan 25, 1994, Exhibit 10.18 dated May 3, 1994 10.18 First Amendment to Lease with Form 10-K for year ended June Point West Office Center Limited 25, 1994, Exhibit 10.19 Partnership Associates dated March 31, 1994 re: 3 Speen Street, Framingham, MA 10.19 Sublease Agreement by and between Form 10-K for year ended June Arrow Automotive Industries, Inc. 25, 1994, Exhibit 10.20 and Carlson Design/Construct Corp dated October 28, 1993 re: 3 Speen Street, Framingham, MA
* Indicates management contract or compensation plan, contract or arrangement. Page 47
Filed with This Item Incorporated by Form 10-K at Number Description Reference To or Page Indicated ------- --------------------- --------------------- ---------------- 10.20 First Amendment to Financing Form 10-Q for quarter ended Agreement with The First National March 25, 1995, Exhibit 10.1 Bank of Boston dated March 24, 1995 10.21* Amendment No. 1 to Employment Page 49 Agreement with Harry A. Holzwasser dated August, 1995 10.22 Second Amendment to Revolving Page 51 Credit and Term Loan Agreement with The First National Bank of Boston dated as of June 24, 1995 11. Statement re Computation of per Note 1 to Notes to Financial share earnings (loss) Statements filed herewith 23. Consent of Independent Auditors Page 54
* Indicates management contract or compensation plan, contract or arrangement. Page 48 EX-1 2 AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT Reference is made to the Employment Agreement between Arrow Automotive Industries, Inc., a Massachusetts corporation (the "Company") and Harry A. Holzwasser (the "Executive") dated as of June 28, 1993 (the "Agreement"). WHEREAS, the Company and Executive desire to amend the Agreement as hereinafter set forth; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows: 1. Section 2 of the Agreement is hereby deleted in its entirety, and the following is substituted therefor: 2. TERM. The term of the Executive's employment pursuant to this Agreement shall commence on the date hereof and shall continue until June 27, 1998, subject to the earlier termination as provided in Section 7 and 8 hereof. Thereafter, the term of the Executive's employment hereunder shall be automatically extended for up to two (2) additional successive terms of one year each unless terminated in accordance with Section 7 or 8 hereof or unless terminated by the Company by notice in writing at least 6 months before the end of the initial term or any such one year continuation, as the case may be. 2. Section 3 of the Agreement is hereby deleted in its entirety, and the following is substituted therefor: 3. DUTIES. (a) During the term of the Executive's employment hereunder, the Executive shall be employed by the Company to serve as Chairman of the Board of Directors or in such other executive capacity as the Board may reasonably prescribe. As such, he shall use his best efforts to promote the business and affairs of the Company and shall perform all duties normally inherent in his position and such other duties and responsibilities consistent with his position as may be reasonably assigned to him by the Board of Directors of the Company from time to time. Page 49 (b) For a period of five (5) years following the expiration of the term of the Executive's employment hereunder, the Executive shall make himself available from time to time, at the request of the Company upon reasonable advance notice, to consult with and advise senior management of the Company with respect to the business and operations of the Company. Such consultations shall take place at times which are mutually convenient to the Company and the Executive and may be by telephone, in person or in any other manner that may reasonably be agreed upon by the parties hereto. 3. Except as hereby amended, the Agreement shall remain unchanged and in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement effective as of August, 1995. The Company: ARROW AUTOMOTIVE INDUSTRIES, INC. By:/S/ JIM L. OSMENT Jim L. Osment, President The Executive: /S/ HARRY A. HOLZWASSER Harry A. Holzwasser Page 50 EX-2 3 ARROW AUTOMOTIVE INDUSTRIES, INC. SECOND AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT THIS SECOND AMENDMENT (this "Amendment"), dated as of June 24, 1995, by and between Arrow Automotive Industries, Inc. (the "Borrower") and The First National Bank of Boston (the "Bank") as parties to a certain Revolving Credit and Term Loan Agreement, dated as of December 29, 1993, as amended by the First Amendment to Revolving Credit and Term Loan Agreement, dated as of March 24, 1995 (the "Credit Agreement"). Capitalized terms not otherwise defined herein shall have the same meanings ascribed thereto in the Credit Agreement. WHEREAS, the Borrower has requested the Bank to make certain amendments to the Credit Agreement; and WHEREAS, the Bank is willing to make such amendments to the Credit Agreement subject to the terms and conditions set forth herein. NOW THEREFORE, the Borrower and the Bank hereby covenant and agree as follows: 1. Amendment to Credit Agreement. The Credit Agreement is hereby amended by: (a) deleting the definition of "Total Debt Service" contained in Section 1.1 of the Credit Agreement and restating it in its entirety as follows: Total Debt Service. For any period, the sum of (a) Total Interest Expense plus (b) Current Financial Obligations multiplied by the percentage of the fiscal year represented by such period. For example, if the relevant period is comprised of (i) one fiscal quarter, Current Financial Obligations would be multiplied by 25%, (ii) two fiscal quarters, Current Financial Obligations would be multiplied by 50%, (iii) three fiscal quarters, Current Financial Obligations would be multiplied by 75%, and (iv) four fiscal quarters, Current Financial Obligations would be multiplied by 100%. (b) deleting Section 11.2 and restating it in its entirety as follows: Section 11.2 Debt Service. The Borrower will not permit, as at the end of each fiscal period described in the table set forth below, the ratio of (a) the sum of (i) Net Income, plus (ii) Total Interest Expense, plus (iii) depreciation, plus (iv) amortization to (b) Total Debt Service to be less than the ratio set forth opposite such period in such table: Fiscal Period Ratio Q4, 1995 0.8:1.0 Q1, 1996 1.2:1.0 6 month period: Q1, 1996 through Q2, 1996 1.2:1.0 9 month period: Q1, 1996 through Q3, 1996 1.2:1.0 12 month period: Q1, 1996 through Q4, 1996 1.2:1.0 Each period of four consecutive fiscal quarters thereafter, commencing with the four consecutive fiscal quarters ending on the last day of Q1, 1997 1.2:1.0 2. Conditions to Effectiveness. This Amendment shall be effective as of June 24, 1995, upon satisfaction of the following conditions: (a) This Amendment shall have been duly and properly executed and delivered to the Bank by the Borrower; and (b) All corporate action necessary for the valid execution, delivery and performance by the Borrower of this Amendment and the Credit Agreement as amended hereby shall have been duly and effectively taken, and evidence thereof satisfactory to the Bank shall have been provided to the Bank. 3. Representations and Warranties. The Borrower, hereby represents and warrants to the Bank as follows: (a) Representations and Warranties in Credit Agreement. The representations and warranties of the Borrower contained in the Credit Agreement (i) were true and correct in all material respects when made, and (ii) except to the extent such representations and warranties by their terms are made solely as of a prior date, continue to be true and correct in all material respects on the date hereof. (b) Ratification, Etc. Except as expressly provided by this Amendment, the Credit Agreement and all documents, instruments and agreements related thereto, including, but not limited to the Security Documents, are hereby ratified and confirmed in all respects and shall continue in full force and effect. The Credit Agreement and this Amendment shall be read and construed as a single agreement. All references in the Credit Agreement or any related agreement or instrument to the Credit Agreement shall hereafter refer to the Credit Agreement as amended hereby. (c) Authority, Etc. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of all of its agreements and obligations under the Credit Agreement as amended hereby are within the corporate authority of the Borrower and have been duly authorized by all necessary corporate action on the part of the Borrower. (d) Enforceability of Obligations. This Amendment and the Credit Agreement as amended hereby constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms. (e) No Default. No Default or Event of Default has occurred and is continuing, and no Default or Event of Default will exist after execution and delivery of this Amendment. 4. No Other Amendments or Waivers. Except as expressly provided in this Amendment, all of the terms and conditions of the Credit Agreement and the other Loan Documents remain in full force and effect. 5. Expenses. Pursuant to Section 16 of the Credit Agreement, all costs and expenses incurred or sustained by the Bank in connection with this Amendment, including the fees and disbursements of legal counsel for the Bank in producing, reproducing and negotiating the Amendment, will be for the account of the Borrower whether or not the transactions contemplated by this Amendment are consummated. 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but which together shall constitute one instrument. 7. Miscellaneous. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). The captions in this Amendment are for convenience of reference only and shall not define or limit the provisions hereof. IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment under seal as of the date first set forth above. ARROW AUTOMOTIVE INDUSTRIES, INC. By:/s/James F. Fagan Name:James F. Fagan Title:Executive Vice President and CFO THE FIRST NATIONAL BANK OF BOSTON By:/s/Mathew A. Ross Matthew A. Ross, Vice President EX-3 4 Exhibit 23. ----------- Consent of Ernst & Young LLP, Independent Auditors We consent to the incorporation by reference in Registration Statement Number 2-76091 on Form S-8, Registration Statement Number 2-89977 on Form S-8, Registration Statement Number 33-47000 on Form S-8, and Registration Statement Number 33-64990 on Form S-8 of our report dated August 30, 1995 with respect to the financial statements and schedule of Arrow Automotive Industries, Inc., included in the Annual Report (Form 10-K) for the year ended June 24, 1995. Ernst & Young LLP /s/ Ernst & Young LLP Boston, Massachusetts September 18, 1995 Page 49 EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND STATEMENT OF INCOME, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR JUN-24-1995 JUN-24-1995 753 0 13,013 477 36,308 53,797 35,459 22,174 69,006 13,645 19,265 297 0 0 32,442 69,006 106,574 106,574 81,482 81,482 0 0 1,935 (348) (103) (245) 0 0 0 (245) (0.09) (0.09)