UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1999
Commission file number 1-7807
Champion Parts, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-2088911
------------------------------- ---------------------------------
(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
751 Roosevelt Road, #7-110, Glen Ellyn, IL 60137
------------------------------------------------
(Address of principal executive offices)
630-942-8317
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at September 26, 1999
------------------------------ ---------------------------------
Common Shares - $.10 par value 3,655,266
<PAGE> -1-
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FOR THE PERIOD ENDING September 26, 1999
<CAPTION>
($ thousands) Sept. 26, 1999 Dec. 27, 1998
-------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 1,095 $ 784
Accounts receivable, less allowance
for uncollectible accounts of
$337,000 and $339,000 in 1999 and
1998, respectively 3,544 4,701
Inventories 8,247 6,414
Prepaid expenses and other assets 330 388
Deferred income tax asset 349 380
------- -------
Total current assets 13,565 12,667
PROPERTY, PLANT AND EQUIPMENT:
Land 197 197
Buildings 7,821 7,821
Machinery and equipment 12,977 12,720
------- -------
Gross property,plant & equipment 20,995 20,738
Less: Accumulated depreciation 16,625 16,125
------- -------
Net property, plant & equipment 4,370 4,613
Other assets 24 39
------- -------
Total assets $ 17,959 $ 17,319
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> -2-
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FOR THE PERIOD ENDING September 26, 1999
<CAPTION>
($ Thousands) Sept. 26, 1999 Dec. 27, 1998
-------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND
STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 5,835 $ 5,297
Accrued expenses:
Salaries, wages and benefits 647 817
Other accrued expenses 6,102 6,211
Taxes other than income 127 170
Current maturities of L-T debt:
Current mat. - term notes 601 601
Current mat. - vendor debt 192 167
Current mat. - IRB Loan 300 300
------- -------
Total current liabilities 13,804 13,563
DEFERRED INCOME TAXES 351 351
LONG-TERM DEBT:
L-T notes payable - revolver 338 699
L-T notes payable - term notes 1,753 2,203
L-T notes payable - vendors 2,601 2,361
Industrial revenue bond (IRB) 1,000 1,000
------- -------
Total long-term debt 5,692 6,263
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock - No par value;
authorized, 10,000,000 shares:
issued and outstanding, none -0- -0-
Common stock - $.10 par value;
authorized, 50,000,000 shares:
issued and outstanding 3,655,266 366 366
Additional paid-in capital l5,578 15,578
(Accumulated deficit) (17,382) (18,385)
Accum. other comp.(loss) (450) (417)
------- -------
Total stockholders'(deficit) (1,888) (2,858)
------- -------
Total liabilities and
stockholders'(deficit) $ 17,959 $ 17,319
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> -3-
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (CONDENSED)
FOR THE PERIOD ENDING September 26, 1999
(Unaudited)
<CAPTION>
($ Thousands) Nine Months Ended Three Months Ended
-------------------- ------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1999 1998 1999 1998
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 21,737 $ 19,810 $ 5,895 $ 6,066
Costs and Expenses:
Cost of products sold 18,218 16,464 5,068 5,148
Selling, dist. and admin. 2,158 2,073 678 638
------- ------- ------ ------
Total costs and expenses 20,376 18,537 5,746 5,786
------- ------- ------ ------
Operating income 1,361 1,273 149 280
Non-operating (income)expense:
Interest expense 464 690 150 175
Other non-operating income (78) (340) (24) (291)
------- ------- ------ ------
Total non-operating expense 386 350 126 (116)
Earnings before extraordinary
gain and income taxes 975 923 23 396
Income Taxes 31 7 15 4
------- ------- ------ ------
Earnings before
extraordinary gain 944 916 8 392
------- ------- ------ ------
Extraordinary (gain) (59) (281) 0 (261)
------- ------- ------ ------
Net Income $ 1,003 $ 1,197 $ 8 $ 653
======== ======== ======= =======
Weighted Average Common Shares
Outstanding at Sept. 26, 1999 3,655 3,655 3,655 3,655
===== ===== ===== =====
Earnings per Common Share -
Basic and Diluted:
Net Income before extraordinary
gain per common share $ 0.26 $ 0.25 $ 0.00 $ 0.11
Extraordinary gain
per common share $ 0.02 $ 0.08 $ 0.00 $ 0.07
Net Income per Common Share $ 0.28 $ 0.33 $ 0.00 $ 0.18
====== ====== ====== ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> -4-
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT)
FOR THE PERIOD ENDING September 26, 1999
(Unaudited)
<CAPTION>
($ Thousands) Accum.
Additional Other
Common Stock Paid-in (Accum. Compreh.
Shares Amount Capital Deficit) Inc/(Loss)
--------- -------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE,
Dec. 27, 1998 3,655 $ 366 $ 15,578 $ (18,385) $ (417)
Net Income - - - 1,003 -
Foreign currency
translation adj. - - - - (33)
------ ----- -------- --------- ------
BALANCE,
Sept. 26, 1999 3,655 $ 366 $ 15,578 $ (17,382) $ (450)
====== ===== ======== ========= ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> -5-
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED September 26, 1999
(Unaudited)
<CAPTION>
($ Thousands) Nine Months Ended Three Months Ended
-------------------- -------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income $ 1,003 $ 1,197 $ 8 $ 653
Other comprehensive income:
Foreign currency
translation adjustment (33) 170 (23) 50
------- ------- ------- -------
Comprehensive income $ 970 $ 1,367 $ (15) $ 703
======= ======= ======= =======
<FN>
Components of accumulated other comprehensive income, included in the
Company's consolidated balance sheet, consist of the foreign currency
translation adjustments.
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE> -6-
<TABLE>
CHAMPION PARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED September 26, 1999
<CAPTION>
($ Thousands) Nine Months Ended
----------------------------
Sept. 26, 1999 Sept. 27, 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,003 $ 1,197
Adj. to reconcile net income to net
cash provided by operating activities:
Extraordinary gain (59) (281)
(Gain) on the sale of assets 0 (277)
Depreciation and amortization 515 523
Provision for inventory write-offs 504 (61)
Changes in assets and liabilities:
Accounts receivable 1,157 (817)
Inventories (gross) (2,337) (445)
Accounts payable & accrued liabilities 766 180
------- -------
NET CASH PROVIDED BY OPERATIONS 1,549 19
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (257) (27)
Proceeds from the sale of assets -0- 328
------- -------
NET CASH PROVIDED/(USED) BY INVESTING (257) 301
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments - revolving loan (361) (245)
Payments - vendor note obligations (137) (83)
Principal payments on L-T debt (450) (50)
------- -------
NET CASH (USED) BY FINANCING ACTIVITIES (948) (378)
------- -------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (33) 170
------- -------
NET INCREASE IN CASH & CASH EQUIVALENTS 311 112
------- -------
CASH AND CASH EQUIVALENTS:
Beginning of year 784 488
------- -------
CASH AND CASH EQUIVALENTS:
End of third quarter $ 1,095 $ 600
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> -7-
CHAMPION PARTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. The accompanying financial statements for the nine months
ended September 26, 1999 have been prepared, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading.
The condensed consolidated financial statements and these notes
should be read in conjunction with the consolidated financial
statements of the Company included in the Company's Annual
Report on Form 10-K for the year ended December 27, 1998.
The consolidated balance sheet at December 27, 1998 has been
derived from the audited financial statements at that date and
condensed.
Note 2. The information furnished herein reflects all adjustments
(consisting only of normal recurring accruals) which are, in the
the opinion of management, necessary for a fair presentation of
the results of operations for the interim period. Results of
operations for the nine months ending September 26, 1999 are not
necessarily indicative of results to be expected for the entire
year.
Note 3. Inventories are valued at the lower of cost (first-in, first-out
method) or market. A summary of the inventories follows:
($ Thousands) September 26, 1999 December 27, 1998
------------------ -----------------
Raw materials $ 3,273 $ 2,491
Work-in-process 2,676 2,208
Finished goods 2,298 1,715
-------- --------
Total Inventories $ 8,247 $ 6,414
======== ========
Included in inventory above were net cores of $2.1 million
(Sept. 26, 1999) and $1.7 million (December 27, 1998).
Note 4. For reporting purposes, product and core returns are offset
against gross sales in arriving at net sales. Total returns
for the nine months ending September 26, 1999 were $6,601,000
versus $6,306,000 during the same period in 1998.
<PAGE> -8-
Note 5. Business Segments - The Company has adopted Statement of
Financial Accounting Standards (SFAS) No. 131," Disclosures
About Segments of an Enterprise and Related Information."
Following the provisions of SFAS No. 131, the Company is
reporting two operating business segments in the same format
as reviewed by the Company's senior management. Segment one,
Fuel Systems & C.V. Assemblies, remanufactures and sells
replacement fuel system components (carburetors and diesel
fuel injection components) and constant velocity drive
assemblies for substantially all makes and models of domestic
and foreign automobiles and trucks. Segment two, Electrical
& Mechanical Products, remanufactures and sells replacement
electrical and mechanical products for passenger car,
agricultural and heavy-duty truck original equipment
applications. Management uses operating income as the measure
of profit or loss by business segment. Segment assets include
amounts specifically identified with each operation. Corporate
assets consist primarily of property and equipment. Business
segment information is as follows:
Nine Months Ended
------------------------------
($ Thousands) Sept. 26, 1999 Sept. 27, 1998
-------------- --------------
Revenues:
Fuel Systems & C.V. Assy's $ 16,029 $ 14,998
Elect. & Mech. Products 5,708 4,812
-------- --------
Total Revenues $ 21,737 $ 19,810
======== ========
Depr. & Amort. Expense:
Fuel Systems & C.V. Assy's $ 176 $ 187
Elect. & Mech. Products 275 287
Corporate 64 49
-------- --------
Total depr. & amort. $ 515 $ 523
======== ========
Net Income/(Loss):
Fuel Systems & C.V. Assy's $ 2,656 $ 2,653
Elect .& Mech. Products (530) (735)
Corporate (1,123) (701)
--------- --------
Total Income $ 1,003 $ 1,197
======== ========
Capital Additions:
Fuel Systems & C.V. Assy's $ 72 $ 5
Elect. & Mech. Products 29 17
Corporate 156 5
-------- --------
Total Capital Additions $ 257 $ 27
======== ========
Total Assets:
Fuel Systems & C.V. Assy's $ 9,551 $ 9,305
Elect. & Mech. Products 7,772 8,193
Corporate 686 625
-------- --------
Total assets $ 17,959 $ 17,579
======== ========
<PAGE> -9-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 26, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 27, 1998
Net sales for the quarter ended September 26, 1999 were $5,895,000, down
$171,000 (2.8%) from net sales of $6,066,000 for the same period in 1998.
Gross rebuilding sales decreased $83,000, or 1.0% from 1998 reflecting a
significant decrease in constant velocity joint sales and heavy-duty
starter sales for the quarter. The sales of constant velocity joints in
the third quarter of 1998 were higher due to the initial start-up orders
with a new OEM customer. Lower heavy-duty starter sales are a result of
the soft agricultural market. Total product and core returns, which are
reflected in reductions to net sales, were 26.8% and 25.0% of gross sales
in the third quarter 1999 and 1998, respectively. The higher return
percentage in 1999 is a function of the new business changeover of other
manufacturers' carburetors to Champion's. The Company has a customer
product return policy to control product and core returns. It has also
established reserves against expected future declining core values.
However, there can be no assurance that these reserves will be adequate.
Carburetor sales were 77.6% and 75.5% of net sales in the third quarter
of 1999 and 1998, respectively. The Company continues to be a significant
supplier of carburetors to the aftermarket. Although new vehicles sold
in the United States and Canada are no longer equipped with carburetors,
the Company continues to sell replacement units for older vehicles, many
of which use carburetors. The Company expects that carburetor sales will
decline in future years. In addition, carburetor margins may be
negatively impacted in the future as customers seek to return product
during periods of declining demand.
Cost of products sold was $5,068,000, or 86.0% of net sales in the third
quarter of 1999 compared to $5,148,000, or 84.9% in the third quarter of
1998. The increase in the cost of products sold as a percent of net
sales is primarily attributed to significantly higher direct labor costs
incurred to meet shipping demand for carburetors together with higher
accruals for inventory write-offs. Reductions in manufacturing overhead
expenses Company-wide helped to partially offset the unfavorable expense
variances.
Selling, distribution and administrative expenses were $678,000, or 11.5%
of net sales, in the third quarter of 1999 compared to $638,000, or 10.5%
of net sales, for the same quarter of 1998. The $40,000 increase over
the same period in 1998 entirely reflects higher administration costs.
Administrative costs in 1998 were favorably impacted by the transfer of
professional fees associated with the vendor settlements to extraordinary
gain. Distribution costs declined in the third quarter 1999 versus 1998
reflecting lower sales.
Interest expense was $150,000 for the third quarter of 1999 as compared
to $175,000 in the same period of 1998. This reduction is due to lower
amount of revolving debt outstanding and new financing.
<PAGE> -10-
Net income $8,000 before extraordinary gains for 1999 was $384,000 lower
than the third quarter of 1998. In 1998, net income before extraordinary
gains included a net gain of $264,000 for the sale of the Forth Worth
Texas property. The remaining $120,000 of variance reflects lower net
sales combined with the higher cost of products sold and operating
expenses noted earlier.
There were no extraordinary gains recorded in the third quarter of 1999.
In 1998, a $261,000 extraordinary gain was recorded in the third quarter
as a result of creditor debt restructuring settlements.
NINE MONTHS ENDED SEPTEMBER 26, 1999 COMPARED TO NINE MONTHS ENDING
SEPTEMBER 27, 1998
For the nine months ended September 26, 1999, net sales were $21,737,000,
reflecting a significant increase of $1,937,000 (9.7%) over net sales
of $19,810,000 for the same period in 1998. Gross rebuilding sales
increased $2,320,000, or 8.7%, over 1998 reflecting a substantial
increase in carburetor business with existing customers, increased
constant velocity joint sales, higher heavy-duty and domestic passenger
car product sales, and additional sales from a new agricultural OEM
customer. Total product and core returns, which are reflected in
reductions to net sales, were 22.9% and 23.8% of gross sales in the
first nine months 1999 and 1998, respectively.
Carburetor sales were 75.6% and 76.4% of net sales in the first nine
months of 1999 and 1998, respectively. While overall carburetor sales
are declining in the U.S. market, the Company continues to be a
significant supplier of carburetors in the aftermarket and realized
increased carburetor sales for the first nine months of 1999. Although
new vehicles sold in the United States and Canada are no longer equipped
with carburetors, the Company continues to sell replacement units for
older vehicles, many of which use carburetors. The Company expects that
carburetor sales will decline in futue years. In addition, carburetor
margins may be negatively impacted in the future as customers seek to
return product during periods of declining demand.
Cost of products sold were $18,218,000, or 83.8% of net sales in the
first nine months of 1999 as compared to $16,464,000, or 83.1% for the
first same period in 1998. This increase in the cost of products sold as
a percent of net sales is primarily attributed to higher direct labor
costs incurred to meet shipping demand for carburetors and increased
materials costs. Reductions in manufacturing overhead expenses helped
to partially offset the unfavorable variances.
Selling, distribution and administrative expenses were $2,158,000 for
the first nine months of 1999 compared to $2,073,000 in the first nine
months of 1998. Administrative costs were lower in 1998 because of the
transfer of professional fees associated with the vendor settlements to
net against extraordinary gain.
<PAGE> -11-
Interest expense was $464,000 for the first nine months of 1999 as
compared to $690,000 in the same period of 1998. This reduction is
due to significantly lower interest and fees under the new loan
facility, as well as reduction in the amount of revolving debt
outstanding.
For the first nine months of 1999, net income was $944,000 before
extraordinary gains, compared to $916,000 for the same period in 1998.
This $28,000, or 3.1%, increase primarily reflects the significant
increase in net sales together with lower operating costs over 1998.
An extraordinary gain of $59,000 was recorded in the second quarter of
1999 reflecting a creditor debt restructuring settlement (See Note 6).
In 1998, a $281,000 extraordinary gain was recorded during the first
nine months.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
Net working capital at September 26, 1999 was a negative $239,000,
compared to a negative $896,000 at the end of 1998, and a negative
$130,000 for September 27, 1998. The $657,000 improvement in working
capital over year-end is principally a result of higher inventories
versus a nominal increase in current liabilities. The decline of
$130,000 as compared to September 27, 1999 reflects higher accrued
expenses and current maturities of long term debt versus a nominal
increase in current assets.
Accounts receivable at September 26, 1999, were $3,544,000, or $1,157,000
(25%) lowerer versus the year-end 1998 balance of $4,701,000. Receivables
decreased $1,770,000 compared to the September 27, 1998 ending balance.
These decreases reflect the lower sales volume combined with higher
return credits during the third quarter.
At September 26, 1999, net inventories were higher by $1,833,000,
compared to year-end fiscal 1998, due to increases in all inventory
catagories to satisfy anticipated higher sales demand in the fourth
quarter. Net inventories also increased by $1,549,000 versus September
1998 for the same reason.
Accounts payable at the end of the first nine months of 1999 were
$538,000 higher than year-end 1998 and $847,000 higher than the first
nine months of 1998. Accrued expenses at the end of September 1999
were $109,000 lower than fiscal year-end 1998 and $453,000 lower than
September 1998. Primarily accounting for this was the vendor settlement,
which lowered accrued expenses and increased vendor debt.
<PAGE> -12-
DEBT
At September 26, 1999 the balance outstanding on the Bank America loan
facility was $2,692,000 plus letter of credit accommodations of
$1,993,000. This compares to a loan balance at December 27, 1998
of $3,503,000 and accommodations of $2,193,000 and a loan balance at
September 27, 1998 of $4,422,000 and accomodations of $2,200,000.
The Company is continuing discussions with certain other unsecured
creditors with past due balances to restructure of approximately
$700,000 of associated indebtedness upon substantially the same terms
as the settlement with the trade creditors. There is no assurance that
any of these creditors will accept the proposal.
FACTORS WHICH MAY AFFECT FUTURE RESULTS
This quarterly report contains forward-looking statements that are
subject to risks and uncertainties, including but not limited to the
following:
The Company expects the existing over-capacity in the automotive
aftermarket and consolidation within its distribution channels to
cause continued selling price pressure for the foreseeable future.
The present competitive environment is causing change in traditional
aftermarket distribution channels resulting in volume retailers gaining
additional market presence at the expense of traditional wholesalers.
In response, the Company has attempted to diversify its customer base
and currently serves all major segments, including automotive warehouse
distributors and jobbers, original equipment manufacturers of automotive
equipment and large volume automotive retailers. The anticipated decline
in sales from the profitable carburetor product line over the longer
term will impact future results. The Company intends to offset these
impacts through development of niche product markets, new product
development, improvements in its manufacturing processes and cost
containment with a strong focus on capacity utilization. There is no
assurance that the Company's efforts will be successful.
The Company's three largest customers accounted for an aggregate of 86%
of the Company's total sales in first nine months of 1999. Given the
Company's current financial condition and its manufacturing cost
structure, the loss of a large customer would have a materially adverse
impact on the Company's financial condition and results of operations.
While the Company has established reserves for potential environmental
liabilities that it believes to be adequate, there can be no assurance
that the reserves will be adequate to cover actual costs incurred or
that the Company will not incur additional environmental liabilities
in the future.
There can be no assurance that the impact of the Year 2000 issue will
not have a materially adverse impact on the Company's results. See
"Year 2000 Compliance" for additional information.
<PAGE> -13-
Accordingly, actual results may differ materially from those set forth
in the forward-looking statements.
YEAR 2000 COMPLIANCE
In 1997, the Company initiated a project to address Year 2000 issues
and then develop and implement a Year 2000 readiness plan. The first
phase of the readiness plan was to address its current computer systems
and upgrade them to Year 2000 compliance. The Company elected to embark
on a system and hardware conversion utilizing certified Year 2000 systems
technology on a Year 2000 compliant operating platform. The initial
implementation of systems and hardware was completed in the first Quarter
of 1999.
In addition, as a part of the first phase of the readiness plan, the
Company completed an inventory of the software applications currently
running on its personal computers. A plan was implemented to upgrade,
where necessary, all applications software to be Year 2000 compliant
during the third quarter of 1999.
The Company has analyzed its products and non-IT systems such as
imbedded chips in production equipment, and found that there are no
material Year 2000 issues.
The second phase of the readiness project was to address Year 2000
issues with significant customers, vendors and service providers,
including electronic commerce. This phase was an audit and inquiry
phase, and is complete. There can be no assurance that the systems of
other companies and service providers that interact with the Company
will be sufficiently Year 2000 compliant so as to avoid an adverse
impact on the Company's operations, financial condition and results of
operations. There are no significant costs associated with this phase.
The third and final phase of this project will be completed before the
end of the fourth Quarter of 1999. The company expects to resolve any
remaining internal Year 2000 issues and finalize testing of modifications
during this phase. The Company has developed a contingency plan to
address a worst case scenario for unresolved Year 2000 issues with
customers, vendors and service providers.
The Company does not presently anticipate that the costs to address the
Year 2000 issue will have a material adverse impact on the Company's
financial condition, results of operations or liquidity. Present
estimated costs for remediation are as follows:
Prior Fiscal Years Fiscal 1999
------------------ -----------
Software $ 332,000 $ 250,000
Hardware & Network $ 62,000 $ 25,000
<PAGE> -14-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedules
(b) No Form 8-K report was filed by the Company during the most
recently completed fiscal quarter.
<PAGE> -15-
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.
CHAMPION PARTS, INC.
(Registrant)
DATE: November 10, 1999 By: /s/ Jerry A. Bragiel
----------------------------------
Jerry A. Bragiel
President, Chief Executive Officer
and Principal Financial Officer
By: /s/ Richard W. Simmons
-----------------------------------
Richard W. Simmons
Corporate Controller and Secretary
<PAGE> -16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 26, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-26-1999
<CASH> 1095000
<SECURITIES> 0
<RECEIVABLES> 3881000
<ALLOWANCES> 337000
<INVENTORY> 8247000
<CURRENT-ASSETS> 13565000
<PP&E> 20995000
<DEPRECIATION> 16625000
<TOTAL-ASSETS> 17959000
<CURRENT-LIABILITIES> 13804000
<BONDS> 0
0
0
<COMMON> 366000
<OTHER-SE> (1888000)
<TOTAL-LIABILITY-AND-EQUITY> 17959000
<SALES> 21737000
<TOTAL-REVENUES> 21737000
<CGS> 18218000
<TOTAL-COSTS> 20376000
<OTHER-EXPENSES> (78000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 464000
<INCOME-PRETAX> 975000
<INCOME-TAX> 31000
<INCOME-CONTINUING> 944000
<DISCONTINUED> 0
<EXTRAORDINARY> 59000
<CHANGES> 0
<NET-INCOME> 1003000
<EPS-BASIC> 0.28
<EPS-DILUTED> 0.28
</TABLE>
