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 December 31, 1996
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. 0-8836
NUCLEAR METALS, INC.
--------------------
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2506761
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2229 Main Street, Concord
Concord, Massachusetts 01742
(Address of Principal Executive Offices) (Zip Code)
(508) 369-5410
--------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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 |_|
As of February 10, 1997, there were issued and outstanding 2,390,964 shares of
the Registrant's Common Stock.
<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
FORM 10-Q
for the quarterly period ended December 31, 1996
INDEX
Page
----
Part I. Financial Information 2
Item I. Financial Statements
Consolidated Balance Sheets,
December 31, 1996 and September 30, 1996 3
Consolidated Statements of Income:
Three Months Ended December 31, 1996 and December 31,1995 4
Consolidated Statements of Cash Flow:
Three Months Ended December 31, 1996 and December 31, 1995 5
Notes to Consolidated Financial Statements 6
Item II. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
Part II. Other Information
Item VI. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
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<PAGE>
PART I
Item 1. FINANCIAL STATEMENTS
PREPARATION OF FINANCIAL STATEMENTS
The financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission
and are subject to year end audit by independent public accountants. 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. It is suggested
that the financial statements be read in conjunction with the financial
statements and notes included in the Company's most recent Annual Report on form
10-K.
The information furnished reflects all adjustments which, in the opinion of
management, are necessary for a fair statement of results for the interim
periods. It should also be noted that results for the interim periods are not
necessarily indicative of the results expected for the full year.
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<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, September 30,
1996 1996
----------- -----------
Assets
Current Assets:
Cash and cash equivalents $ 297,000 $ 1,051,000
Restricted Cash 250,000 250,000
Marketable Securities -- --
Accounts receivable, net of allowances
for doubtful accounts of $821,000 at
December 31, 1996 and September 30, 1996 7,550,000 4,931,000
Inventories 10,908,000 12,025,000
Other current assets 480,000 376,000
----------- -----------
Total current assets 19,485,000 18,633,000
----------- -----------
Property, Plant and Equipment 47,386,000 46,980,000
Less accumulated depreciation 32,218,000 31,834,000
----------- -----------
Net property, plant and equipment 15,168,000 15,146,000
----------- -----------
Other assets 1,224,000 1,339,000
----------- -----------
$35,877,000 $35,118,000
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,064,000 $ 510,000
Notes payable -- --
Accounts payable and accrued expenses 8,550,000 8,874,000
----------- -----------
Total current liabilities 9,614,000 9,384,000
----------- -----------
----------- -----------
Long term obligations 648,000 644,000
----------- -----------
Notes payable to Shareholders' 735,000 720,000
----------- -----------
Stockholders' equity:
Common stock, par value $.10; authorized-
6,000,000 shares; 2,390,964 issued and
outstanding for December 31, 1996
and September 30, 1996 239,000 239,000
Additional paid-in capital 14,258,000 14,258,000
Warrants issued 130,000 130,000
Retained earnings 10,253,000 9,743,000
----------- -----------
Total stockholders' equity 24,880,000 24,370,000
----------- -----------
$35,877,000 $35,118,000
=========== ===========
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<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED:
(Unaudited)
Quarter Ended
----------------------------
December 31, December 31,
1996 1995
----------- -----------
Net sales and contract revenues $ 7,271,000 $ 6,671,000
----------- -----------
Cost and expenses
Cost of sales 5,270,000 5,236,000
Selling, general and administrative 1,188,000 1,103,000
Research and development 247,000 134,000
----------- -----------
6,705,000 6,473,000
----------- -----------
Operating income 566,000 198,000
Other income 9,000 2,000
Interest (expense), net (55,000) (89,000)
----------- -----------
Income before income taxes 520,000 111,000
Provision for income taxes 11,000 2,000
----------- -----------
Net income $ 509,000 $ 109,000
=========== ===========
Per Share Information
Net income per common and common
equivalent share $ 0.21 $ 0.05
=========== ===========
Weighted average number of common and
common equivalent shares outstanding 2,441,413 2,387,964
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<PAGE>
NUCLEAR METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE PERIODS ENDED:
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
December 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 509,000 $ 109,000
Adjustments to reconcile net income
to net cash provided (used) by operating
activities:
Depreciation and amortization 384,000 358,000
Changes in assets and liabilities, net
(Increase) decrease in accounts receivable (2,619,000) (406,000)
(Increase) decrease in deferred income tax benefit -- --
(Increase) decrease in inventories 1,117,000 (325,000)
Increase (decrease) in accounts payable
and accrued expenses (322,000) 168,000
(Increase) decrease in other current assets (104,000) (88,000)
Other 115,000 (76,000)
----------- -----------
Net cash provided (used) by operating activities (920,000) (260,000)
----------- -----------
Cash flows from investing activities:
Capital expenditures, net (406,000) (114,000)
(Purchases) Sales of marketable securities, net -- 55,000
----------- -----------
Net cash provided (used) in investing activities (406,000) (59,000)
----------- -----------
Cash flows from financing activities:
Repayments of debt, net (428,000) (482,000)
Proceeds from debt 1,000,000 755,000
(Purchases) issuances of common stock & equivalents -- --
Cash Dividends -- --
----------- -----------
Net cash provided (used) in financing activities 572,000 273,000
----------- -----------
Net increase (decrease) in cash and equivalents (754,000) (46,000)
Cash and equivalents at beginning of the period 1,301,000 1,076,000
----------- -----------
Cash and equivalents at end of the period $ 547,000 $ 1,030,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 14,000 $ 105,000
Income taxes $ -- $ --
</TABLE>
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<PAGE>
NOTES
1. The significant accounting policies followed by the Company in preparing
its consolidated financial statements are set forth in Note (2) to such
financial statements included in Form 10-K for the year ended September 30,
1996.
2. Inventories are stated at the lower of cost (first-in, first-out) or
market, and include labor, materials, and overheads for manufacturing and
engineering. Inventories at December 31, 1996 and September 30, 1996 consist of:
December 31, September 30,
1996 1996
----------- -------------
Work-in process $ 7,526,000 $ 8,697,000
Raw materials 2,653,000 2,620,000
Spare parts 729,000 708,000
----------- -----------
$10,908,000 $12,025,000
=========== ===========
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FIRST QUARTER FISCAL 1997 COMPARED WITH FIRST QUARTER FISCAL 1996
Net sales increased by $600,000 or 9% to $7,271,000 in the first quarter of
fiscal 1997, as compared to the first quarter of the prior year. Sales in the
Uranium Services and Recycle industry segment decreased by $407,000 or 23%.
Sales in the Specialty Metal Products industry segment decreased by $704,000 or
22%. Sales in the Depleted Uranium Penetrator industry segment increased by
$1,711,000 or 99%.
The sales decrease in the Uranium Services and Recycle industry segment was
primarily due to lack of volume in depleted uranium products in the current
quarter due to completion of a production contract for a foreign customer in
fiscal 1996. This decrease was partially offset by increase in Atomic Vapor
Laser Isotope Separation (AVLIS) feedstock production. The sales decrease in the
Specialty Metal Products industry segment was primarily due to decreased volumes
of beryllium products. The sales increase in the Depleted Uranium Penetrator
industry segment was due to volume increases in foreign military sales.
Gross profit in the first quarter increased by $566,000 or 39% to
$2,001,000, as compared to the first quarter of fiscal 1996. The increase in
gross profit for the quarter is primarily attributable to the receipt of an
anticipated contract valued at $8,600,000 from a foreign customer for the
manufacture of DU penetrator blanks. This was partially offset by start-up costs
on the first production order for Beralcast(R) parts, NMI's patented lightweight
material. Approximately 30% of the total contract for the DU penetrator blanks
was recognized in revenue and earnings in the first quarter. The remainder of
the contract will be produced over the next eighteen to twenty-four months. As a
percentage of sales, gross profit was 28% as compared to 22% for the first
quarter of fiscal 1996.
Selling, general and administrative expenses increased by $85,000 or 8% as
compared to the first quarter of fiscal 1996. As a percentage of sales, these
expenses were 16% as compared to 17% the same period a year earlier.
Other income increased by $7,000 to $9,000 for the first quarter of fiscal
1996.
Interest expense decreased by $34,000 to $55,000 from $89,000 for the same
period a year earlier.
Income taxes in the first quarter of fiscal 1997 and 1996 were at an
effective rate of 2%. The Company has unrecognized net operating loss
carryforwards resulting in a minimal effective tax rate.
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<PAGE>
FIRST QUARTER FISCAL 1997 COMPARED WITH FOURTH QUARTER FISCAL 1996
Net sales increased by $1,703,000, or 26% in the first quarter of fiscal
1997 as compared to the fourth quarter of fiscal 1996. Sales in the Uranium
Services and Recycle industry segment increased by $1,080,000 or 346%. Sales in
the Specialty Metal Products industry segment decreased by $1,010,000 or 29%.
Sales in the Depleted Uranium Penetrator industry segment increased by
$1,633,000 or 91%.
The increase in Uranium Services and Recycle industry segment sales were
primarily due to increased volume in AVLIS feedstock production. Decreased sales
in the Specialty Metal Products industry segment were primarily the result of
decreased sales in beryllium products and commercial depleted uranium. The
Depleted Uranium Penetrator industry segment sales increase was primarily due to
increases in foreign military sales.
Gross profit increased by $3,757,000 to $2,001,000 for the first quarter of
fiscal 1997 compared to ($1,756,000) for the prior quarter. This increase was
primarily the result of the Company establishing a $2,100,000 reserve for
estimated fiscal 1997 losses associated with Carolina Metals, Inc. production
contracts in the fourth quarter of fiscal 1996.
Selling, general and administrative expenses decreased by $377,000 compared
to the fourth quarter of fiscal 1996. This decrease was primarily a result of
reduced cost structures. As a percentage of sales, these expenses decreased to
16% for the first quarter of fiscal 1996 as compared to 28% for the fourth
quarter of fiscal 1996.
Income taxes during the first quarter of fiscal 1997 and the fourth quarter
of fiscal 1996 were at an effective rate of 2%, and 0%, respectively.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of fiscal 1997, working capital increased by
$621,000. The increase is primarily the result of the increase in accounts
receivable. Cash decreased by $754,000 primarily from the underutilization of
the Carolina Metals, Inc. facility and from approximately 40% of the first
quarter revenue falling during the last week of the quarter.
Capital spending is expected to continue in support of facilities both in
Concord, Massachusetts and at Carolina Metals, Inc., the Company's Barnwell,
South Carolina subsidiary. The Company anticipates that this will require
approximately $1,000,000 during fiscal 1997.
PART II
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits: None
b. Reports on Form 8-K: The Company did not file any reports on Form 8-K
during the first quarter ended December 31, 1996.
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<PAGE>
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.
NUCLEAR METALS, INC.
By /s/ Robert E. Quinn
------------------------------------------
Robert E. Quinn, President
Chief Executive Officer
Date February 14, 1997
By /s/ James M. Spiezio
------------------------------------------
James M. Spiezio, Vice President, Finance
Chief Financial Officer
Date February 14, 1997
By /s/ Rebecca L. Perry
------------------------------------------
Rebecca L. Perry, Controller
Chief Accounting Officer
Date February 14, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 547,000
<SECURITIES> 0
<RECEIVABLES> 7,550,000
<ALLOWANCES> 821,000
<INVENTORY> 10,908,000
<CURRENT-ASSETS> 19,485,000
<PP&E> 47,386,000
<DEPRECIATION> 32,218,000
<TOTAL-ASSETS> 35,877,000
<CURRENT-LIABILITIES> 9,614,000
<BONDS> 0
0
0
<COMMON> 239,000
<OTHER-SE> 24,641,000
<TOTAL-LIABILITY-AND-EQUITY> 35,877,000
<SALES> 7,271,000
<TOTAL-REVENUES> 7,271,000
<CGS> 5,270,000
<TOTAL-COSTS> 6,705,000
<OTHER-EXPENSES> (9,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,000
<INCOME-PRETAX> 520,000
<INCOME-TAX> 11,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 509,000
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
