-----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, E45h76MIvrghPIEO8VXV3nhYC1rRQkS1Mej4i5pn0+jkkcsRMCggeSByLH8Dbzv0 Nt6Pk/iRXcTlSe+Wsz7W2w== 0000950152-95-002590.txt : 19951119 0000950152-95-002590.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950152-95-002590 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD PRODUCTS CO CENTRAL INDEX KEY: 0000093448 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 340549970 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02917 FILM NUMBER: 95590680 BUSINESS ADDRESS: STREET 1: 2130 W 110TH ST CITY: CLEVELAND STATE: OH ZIP: 44102 BUSINESS PHONE: 2162818300 MAIL ADDRESS: STREET 1: 2130 W 110TH ST CITY: CLEVELAND STATE: OH ZIP: 44102 10-Q 1 STANDARD PRODUCTS 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from _____________________ to ____________________ Commission file number: 1-2917 THE STANDARD PRODUCTS COMPANY (Exact Name of Registrant as Specified in its Charter) OHIO 34-0549970 (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.)
2401 SOUTH GULLEY ROAD DEARBORN, MICHIGAN 48124 (Address of Principal Executive Offices and Zip Code) Registrant's telephone number, including area code: (313) 561-1100 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 ----- ----- THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF OCTOBER 27, 1995 WAS 16,754,555 SHARES. This report consists of 10 pages. 2 THE STANDARD PRODUCTS COMPANY QUARTERLY REPORT ON FORM 10-Q TABLE OF CONTENTS PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 4 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 5 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 6 Item 2. Managements's Discussion and Analysis of Financial Condition and Results of Operations . . .. . . . . 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 9 Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 9 Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 9 Item 4. Submission of Matters to a Vote of Security-Holders . . . . . . . . . . . . . . . . . . . .. . . . . 9 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 9 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 9 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 10 UNLESS OTHERWISE INDICATED, REFERENCES TO "COMPANY" MEAN THE STANDARD PRODUCTS COMPANY AND ITS SUBSIDIARIES AND REFERENCE TO A FISCAL YEAR MEANS THE COMPANY'S YEAR ENDED JUNE 30 OF THE SAME YEAR (E.G., "FISCAL 1996" REFERS TO THE PERIOD BEGINNING JULY 1, 1995 AND ENDING JUNE 30, 1996).
-2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
THREE MONTHS ENDED SEPT. 30, ---------------------------- 1995 1994 -------- -------- Net Sales........................................................................ $238,760 $220,927 Cost of Goods Sold: Materials, wages and other manufacturing costs................................. 219,778 191,884 Research, engineering and development expenses................................. 9,577 7,445 -------- -------- 229,355 199,329 -------- -------- Gross income.................................................................. 9,405 21,598 Rationalization of Business Units................................................ -- 2,309 Selling, General and Administrative Expenses (Note 4)............................ 17,143 14,748 -------- -------- (7,738) 4,541 -------- -------- Other (Income) Expense: Royalty and dividend income.................................................... (119) (292) Net interest expense........................................................... 3,733 2,948 Other, net..................................................................... 435 (68) -------- -------- 4,049 2,588 -------- -------- Income (Loss) before Taxes on Income............................................. (11,787) 1,953 Provision for Taxes on Income.................................................... (2,003) (945) -------- -------- Net Income (Loss)............................................................. $ (9,784) $ 2,898 ======== ======== Earnings Per Common Share........................................................ $ (0.58) $ 0.17 ======== ======== Weighted average shares outstanding (in thousands)............................... 16,746 16,687 ======== ======== Dividends declared per share..................................................... $ 0.17 $ 0.16 ======== ========
The accompanying notes are an integral part of these statements. -3- 4 THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (THOUSANDS OF DOLLARS)
SEPT. 30, JUNE 30, 1995 1995 -------- -------- ASSETS Current Assets: Cash and cash equivalents......................................................... $ 8,008 $ 19,546 Receivables, less allowances of $4,853 at September 30 and $4,978 at June 30 (Note 4)....................................................... 157,640 196,613 Inventories....................................................................... 72,750 69,458 Prepaid insurance, taxes, etc..................................................... 23,497 21,820 -------- -------- Total current assets............................................................. 261,895 307,437 -------- -------- Property, Plant and Equipment, at cost.............................................. 507,051 489,534 Less - Accumulated depreciation................................................... (231,120) (220,095) -------- -------- 275,931 269,439 Goodwill, net....................................................................... 61,566 64,976 Other Assets........................................................................ 61,076 60,037 -------- -------- $660,468 $701,889 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term notes payable.......................................................... $ 1,379 $ 4,609 Current maturities of long-term debt.............................................. 2,142 2,176 Accounts payable.................................................................. 103,639 102,066 Accrued payrolls.................................................................. 24,106 26,360 Accrued expenses.................................................................. 51,090 50,931 Dividend payable.................................................................. 2,847 2,845 -------- -------- Total current liabilities........................................................ 185,203 188,987 -------- -------- Long-term Debt, net of current maturities........................................... 164,890 190,522 Other Postretirement Benefits....................................................... 25,998 25,907 Deferred Income Taxes and Other Credits............................................. 36,827 35,978 Commitments and Contingent Liabilities (Note 3) Shareholders' Equity: Serial preferred shares, without par value, authorized 6,000,000 voting and 6,000,000 non-voting shares, none issued..................................... -- -- Common shares, par value $1 per share; authorized 50,000,000 shares, issued and outstanding, 16,754,055 shares at September 30 and 16,736,155 at June 30............................................................ 16,754 16,736 Paid-in capital................................................................... 96,234 96,237 Retained earnings................................................................. 138,861 151,492 Foreign currency translation adjustments.......................................... (818) (496) Minimum pension liability......................................................... (3,481) (3,474) -------- -------- Total shareholders' equity....................................................... 247,550 260,495 -------- -------- $660,468 $701,889 ======== ========
The accompanying notes are an integral part of these statements. -4- 5 THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (THOUSANDS OF DOLLARS)
THREE MONTHS ENDED SEPT. 30, ----------------------------- 1995 1994 --------- --------- Net cash provided by (used for) operating activities: Net income (loss)........................................................... $ (9,784) $ 2,898 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................................... 10,765 10,736 Deferred taxes and other credits........................................ 799 1,235 Effect of changes in foreign currency................................... 605 (703) Other operating items................................................... 1,556 (653) --------- --------- Net cash provided by continuing operations........................... 3,941 13,513 --------- --------- Net cash provided by (used for) changes in operating assets and liabilities: Receivables (Note 4).................................................... 38,758 (12,575) Inventories............................................................. (3,292) (4,764) Accounts payable and accrued expenses................................... (520) (7,384) Other................................................................... (1,462) 2,745 --------- --------- Net cash used for changes in operating assets and liabilities ....... 33,484 (21,978) --------- --------- Net cash provided by operating activities............................ 37,425 (8,465) --------- --------- Net cash used for investments: Purchase of property, plant and equipment, net.............................. (17,063) (16,311) Investments in affiliates................................................... (340) - --------- --------- Net cash used for investments........................................ (17,403) (16,311) --------- --------- Net cash provided by (used for) financing: Proceeds of long-term borrowings............................................ 14,456 20,000 Net increase (decrease) in short-term borrowings............................ (3,230) 8,126 Repayment of long-term borrowings (Note 4).................................. (40,131) (213) Cash dividends.............................................................. (2,847) (2,840) --------- --------- Net cash provided by financing....................................... (31,752) 25,073 --------- --------- Effect of exchange rate changes on cash....................................... 192 (297) --------- --------- Decrease in cash and cash equivalents......................................... (11,538) - Cash and cash equivalents at the beginning of the period...................... 19,546 - --------- --------- Cash and cash equivalents at the end of the period............................ $ 8,008 $ - ========= ========= The accompanying notes are an integral part of these statements.
-5- 6 THE STANDARD PRODUCTS COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (1) BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared by management and in the opinion of management, contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 1995 and June 30, 1995, and the results of its operations for the three months ended September 30, 1995 and 1994 and cash flows for the three months ended September 30, 1995 and 1994. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995. Results for interim periods are not necessarily indicative of those to be expected for the year. (2) INVENTORIES Inventories are stated at the lower of cost or market. The majority of domestic inventories are valued using the last-in, first-out (LIFO) method and the remaining inventories are valued using the first-in, first-out (FIFO) method. The major components of inventory are as follows:
Sept. 30, 1995 June 30, 1995 -------------- ------------- (Thousands of Dollars) Raw materials........................................... $27,182 $25,726 Work-in-process and finished goods................ 45,568 43,732 ------- ------- Totals............................................. $72,750 $69,458 ======= =======
(3) COMMITMENTS AND CONTINGENCIES At September 30, 1995, management believes that the Company was in compliance with its various financial covenants. Under the most restrictive covenants of the Company's various loan agreements, principally the Revolving Credit Agreement, $64,140,000 of retained earnings were not restricted at September 30, 1995 for the payment of dividends, and the ratio of current assets to current liabilities was in excess of the minimum requirement of 1.25 to 1. Management expects that the Company will remain in compliance with its financial covenants in all material respects through the period ending September 30, 1996. The Company and its subsidiaries are involved in certain legal actions and claims. In the opinion of management, any liability which may ultimately be incurred would not materially affect the financial position or results of operations of the Company. (4) ACCOUNTS RECEIVABLE SECURITIZATION In September 1995, the Company entered into an agreement to sell, on a revolving basis, an undivided interest in a designated pool of the Company's accounts receivable. Accordingly, the Company irrevocably and without recourse transferred all of its U.S. dollar denominated trade accounts receivable (principally representing amounts owed to the Company by original equipment customers in the U.S. automotive and related industries) to the Standard Products Funding Company (Funding Co.). The Funding Co. sold an interest in a portion of the receivables to the Clipper Receivables Corporation. The Funding Co. is permitted to receive advances of up to 84% of the receivables purchased up to $50,000,000. At September 30, 1995 the entire amount available has been advanced. The agreement expires in September 1998. -6- 7 The Company maintains an allowance for accounts receivable ($4,853,000 and $4,978,000 at September 30, 1995 and June 30, 1995, respectively) based on the expected collectibility of all trade accounts receivable, including receivables sold. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (1) RESULTS OF OPERATIONS Sales for the first quarter of fiscal 1996 were $238,760,000, an increase of $17,833,000, or 8.1%, over the first quarter of fiscal 1995. The Company reported a net loss of $9,784,000, or .58 cents per share for this year's first quarter period. A year ago, the Company reported net income of $2,898,000, or .17 cents per share, for the first quarter of fiscal 1995. In the Transportation Equipment Segment, sales for the first quarter of 1996 were $207,392,000, an increase of 10.5% over the prior year first quarter period. In North America, sales of $126,400,000 for the fiscal 1996 first quarter were 8.8% ahead of the prior year. North American sales reflect the contribution of new business on new models for Ford's Taurus/Sable and Chrysler's minivan which were not in production for last year's first quarter period. These increases were reduced by production volume declines on existing carryover models. In Europe, Transportation Equipment Segment sales were $51,024,000, an increase of 8% over the prior year first quarter period. The weakened U.S. dollar in relation to European currencies accounted for the majority of the increase. New model startups caused the remainder of the increase net of volume declines of sales of parts for existing models. New vehicle sales declined during the first quarter period compared to the prior year, thereby affecting our European sales. The first quarter of fiscal 1996 also includes Itatiaia Standard sales of $6,682,000. At Holm Industries, Inc., the Company's subsidiary which supplies the appliance and building products industries, sales declined 4.9%. Appliance industry sales have declined from the strong levels of a year ago and Holm's sales have followed that trend. In the Tread Rubber Segment, sales declined 5.8% from the prior year first quarter period. This decline was caused by the Company's decision to exit the European market for tread rubber. Consolidated gross margin for the first quarter of fiscal 1995 was 3.9% compared to 9.8% a year ago. In North America and Europe, the Company experienced launch costs, including tooling, on new projects, primarily the Ford Taurus/Sable in North America and the Renault Laguna in Europe and these costs were in excess of launch costs recorded in last year's first quarter period. Research and development also increased over the prior year period in connection with development efforts related to future projects. Lastly, margins in the first quarter of fiscal 1996 reflect the higher material costs which the Company began to experience in fiscal 1995's third quarter. Selling, general and administrative expenses, were 7.2% of sales compared to 6.7% a year ago. The current fiscal year first quarter expenditures include the effect of the Itatiaia Standard acquisition plus the administrative expenses related to the start-up of the Company's new Brazilian subsidiary, Standard Products Brazil. In addition, in the first quarter of fiscal 1996, the Company entered an agreement for the sale of accounts receivable on a revolving basis. The administrative, legal and accounting expenses related to the beginning of this program as well as the discount on the sale were included in selling, general and administrative expenses. Net interest expense for the first quarter of fiscal 1996 was $3,733,000 compared to $2,948,000 a year ago. Net interest expense increased between years due primarily to a higher level of borrowed funds. -7- 8 Other income (expense) net was expense of $316,000 for the current year first quarter period compared to income of $360,000 a year ago. The variation between years related to the Company's joint venture, Nishikawa Standard (NSC). The current year period reflects the combined effects on NSC of a new product launch and new plant start up versus the prior year period which was absent similar activity. The provision for taxes on income reflects a lower than expected tax rate. In the current year quarter, the Company recorded the effect of an increase in the tax rates in France in accordance with recently enacted French legislation. Deferred and current tax accounts were adjusted accordingly. The earnings of the Company's subsidiary, Standard Products Limited (SPL), were tax impacted for the first time since 1991 since the remaining tax benefits of SPL's operating loss carryforward were recorded in fiscal 1995 in accordance with Financial Accounting Standard No. 109. In comparison to last year, the prior year first quarter period reflects tax benefits related to decision of the Company's subsidiary, Oliver Rubber Company, to exit the European market. (2) FINANCIAL CONDITION At September 30, 1995, the ratio of current assets to current liabilities was 1.41 to 1. Debt represented 40% of total capitalization and equity was 60%. Since June 30, 1995, debt to capitalization has improved reflecting the sale of accounts receivable and the use of proceeds to repay borrowings under the Company's Revolving Credit Agreement. For the first quarter, cash provided by operations, including the sale of accounts receivable amounted to $37,425,000. In addition to repaying borrowed funds, cash of $17,403,000 was used for capital additions and investments and dividends required $2,847,000. The Company anticipates that capital expenditures and investments for fiscal 1996 will be approximately $75,000,000. During the next five years, the Company believes that its cash requirements for working capital, capital expenditures, dividends, interest and debt repayments will be met through internally generated funds and utilization of available borrowing sources. -8- 9 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS:
Exhibit No. Under Reg. S-K Form 10-Q Item 601 Exhibit No. Description -------------- ----------- -------------------------- 27 27 Financial Data Schedule
(B) REPORTS ON FORM 8-K: None. -9- 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE STANDARD PRODUCTS COMPANY Dated: November 10, 1995 /s/ Donald R. Sheley, Jr. ----------------- ------------------------------------------------- Donald R. Sheley, Jr. Vice President-Finance Chief Financial Officer /s/ Bernard J. Theisen ------------------------------------------------ Bernard J. Theisen Corporate Controller Principal Accounting Officer
-10- EX-27 2 EXHIBIT 27
5 1,000 3-MOS JUN-30-1996 JUL-01-1995 SEP-30-1995 8,008 0 162,493 4,853 72,750 261,895 507,051 231,120 660,468 185,203 164,890 16,754 0 0 230,796 660,468 238,760 238,760 229,355 246,498 316 0 3,733 (11,787) (2,003) (9,784) 0 0 0 (9,784) (0.58) (0.58)
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