SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
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/_X__/ Quarterly report pursuant to Section 13 or 15(d)of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996 or
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/____/ Transition report pursuant to Section 13 or 15(d)of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file number 1-1212
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Driver-Harris Company
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(Exact name of registrant as specified in its charter)
New Jersey 22-0870220
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
308 Middlesex Street, Harrison, New Jersey 07029
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code (201) 483-4802
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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.
Common Stock, $0.83 1/3 par value -- 1,337,171 shares as of June 30, 1996.
<PAGE>
DRIVER-HARRIS COMPANY
I N D E X
PART I FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 . . . . . . . . . . . 3
Condensed Consolidated Statements of
Income - Six Months ended June 30,
1996 and June 30, 1995. . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 1996 and June 30, 1995 . . . . .5
Notes to Financial Statements. . . . . . . . . . . . . . .6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . .7
PART II OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None filed in quarter
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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<PAGE>
DRIVER-HARRIS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in thousands)
<TABLE>
June 30, December 31,
1996 1995
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ASSETS (Unaudited)
Current assets:
<S> <C> <C>
Cash $ 891 $ 479
Accounts receivable - net 9,419 7,816
Inventories:
Materials 716 598
Work in process 245 204
Finished products 3,065 2,328
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4,026 3,130
Prepaid expenses 517 386
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Total current assets 14,853 11,811
Other assets 58 65
Property, plant & equipment - net 4,631 4,379
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$ 19,542 $ 16,255
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LIABILITIES
Current Liabilities:
Short-term borrowings $ 2,113 $ 704
Current portion of long-term debt 377 522
Accounts payable 6,469 5,888
Accrued expenses 1,433 1,059
Income taxes payable 131 106
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Total current liabilities 10,523 8,279
Long-term debt 2,646 2,419
Deferred income taxes 157 157
Postretirement benefit liabilities 232 205
Investment in related company - 1,561
Sundry liabilities 204 222
Deferred credit - related company - 968
Stockholders' equity:
Common stock 1,187 1,187
Additional paid-in capital 2,234 1,997
Retained earnings 2,600 1,143
Equity adjustment from translation (241) (1,883)
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Stockholders' equity 5,780 2,444
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$ 19,542 $ 16,255
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</TABLE>
See accompanying notes.
<PAGE>
DRIVER-HARRIS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share data)
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30 June 30
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net sales-customers $ 9,966 $ 8,340 $20,117 $17,231
Other income - net 183 291 350 529
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Total Revenues 10,149 8,631 20,467 17,760
Cost of sales-customers 8,180 7,076 16,853 15,089
----- ----- ----- ------
1,969 1,555 3,614 2,671
Selling, general and
administrative exps. 1,308 1,247 2,586 2,209
------ ----- ----- ------
661 308 1,028 462
Other charges (credits):
Interest expense 202 216 367 402
Foreign exchange loss(gain) (3) (27) 8 (19)
Equity in related company - (64) - (221)
Gain in connection with sale
of foreign operations
by related company - - (895) -
----- ----- ----- -----
Income before income taxes 462 183 1,548 300
Income taxes 61 11 91 21
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NET INCOME $ 401 $ 172 $1,457 $ 279
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NET INCOME PER SHARE $ .30 $ .13 $ 1.11 $ .21
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Average common shares outstanding 1,314,346 1,295,177
</TABLE>
See accompanying notes.
<PAGE>
DRIVER-HARRIS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands)
<TABLE>
SIX MONTHS ENDED
June 30
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1996 1995
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OPERATING ACTIVITIES
<S> <C> <C>
Net income $1,457 $ 279
Adjustments to reconcile net income
to net cash provided:
Depreciation and amortization 247 217
Equity in related company (1,561) (221)
Deferred credit (968) (149)
Elimination of equity adjustment from
translation for foreign operations
sold by related company 1,634 -
Due from related companies 213 15
Receivables (1,820) 53
Inventories (881) (469)
Accounts payable and accrued expenses 941 811
Sundry (47) 14
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CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (785) 550
INVESTING ACTIVITIES
Capital expenditures (522) (194)
Sundry 42 93
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CASH USED IN INVESTING ACTIVITIES (480) (101)
FINANCING ACTIVITIES
Change in short-term debt 1,366 (185)
Issuance of long-term debt 347 140
Reduction of long-term debt (273) (314)
Issuance of Capital Stock 237 -
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CASH PROVIDED BY(USED IN)FINANCING ACTIVITIES 1,677 (359)
Effect of exchange rate changes on cash - 24
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Net change in cash 412 114
Cash at beginning of year 479 461
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CASH AT END OF PERIOD $ 891 $ 575
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</TABLE>
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1 - Basis of Presentation
These financial statements have been prepared in accordance with the
instructions to Form 10-Q and therefore do not include all information,
disclosures, and notes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. Reference should be made to the financial
statements contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995. These financial statements include all adjustments
which are, in the opinion of management, necessary to a fair presentation of
the results for the interim period.
2- Investment in Related Company
Harrison Alloys Inc.("Harrison"), a fifty percent owned company, is
recorded on the equity method of accounting. The recognition of past losses
reduced the carrying amount of the Company's investment in Harrison to a
negative balance (liability) of $1,561,000 at December 31, 1995. This
amount, combined with a deferred credit of $968,000 which originated from the
restructuring in 1994, equaled the balance of a bank loan of Harrison at
December 31, 1995 ($2,529,000) which the Company guaranteed. In February
1996, Harrison sold its foreign operations and repaid the bank loan.
Accordingly, Driver-Harris Company recorded income from its negative
investment in Harrison of $1,561,000 and amortization of the deferred credit
of $968,000, less the accumulated translation adjustment related to the
foreign operations sold by Harrison carried on the balance sheet of
$1,634,000 (included in "Other Credits" in the Statement of Income).
The Company, owns Irish Driver-Harris Co. Ltd., a producer of insulated
electrical wire and cable, located in Ireland and the U.K., and Quality Heat
Treatment Pty. Ltd., a company in the furnace manufacturing and heat treating
business, located in Australia.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Financial Condition
As a result of the sale by Harrison Alloys Inc. ("Harrison), a fifty
percent owned company, of its foreign subsidiaries in February, the Company
repaid domestic bank debt and collected certain receivables from Harrison.
Also as a result of the sale, the Company may be required to make certain
payments or guarantee the debt of a subsidiary during 1996. The Company was
also relieved of a significant guarantee obligation when Harrison's bank debt
was repaid. The Company will continue, however, to be dependent upon
Harrison for its U.S. cash flow in the foreseeable future. Since Harrison
has experienced losses in recent years, its cash flow is uncertain.
Results of Operations
Net sales to customers increased by 16.7% during the first six months of
1996 compared to the same period in 1995. This was principally due to an
increase in units shipped, primarily cable products, partially offset by lower
exchange rates. The gross profit percentage improved to 16.2% in 1996
compared to 12.4% in 1995. The gross profit percentage had decreased in
early 1995 because of the higher cost of raw materials principally copper and
PVC. Selling prices were subsequently increased as a result of these higher
raw material costs, and gross profit percentage for the year 1995 was 14.4%.
Selling, general and administrative expenses remained constant at 12.8% of
net sales in 1996 and 1995. Interest expense decreased slightly due to lower
average borrowings in 1996 compared to 1995.
1996 includes an $895,000 gain in connection with the sale of Harrison's
foreign operations. This gain consists of a $1,561,000 elimination of
negative equity in Harrison plus a related $968,000 amortization of a
deferred credit, less the balance of the accumulated translation adjustment
of $1,634,000 (relating to the Harrison overseas subsidiaries transferred in
1994). This gain was recorded as income when Harrison paid off the bank loan
which the Company had guaranteed, upon Harrison's sale of its overseas
operations in February 1996.
The disproportionate income tax provision in both 1996 and 1995 is
primarily because the gain in connection with the sale of foreign operations
by a related company (Harrison) is not taxable income to the Company and
because of the benefits of operating loss carryovers available in the United
States. The utilization of tax loss carryforwards provided tax benefits of
$16,000 and $42,000 in the 1996 and 1995 periods, respectively.
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.
DRIVER-HARRIS COMPANY
Date: August 5, 1996 By Thomas J. Carey
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Thomas J. Carey
Vice President Finance and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Company's Condensed Consolidated Balance Sheet at June 30, 1996 and the
Company's Condensed Consolidated Statement of Operations for the six
months ended June 30, 1996, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 891
<SECURITIES> 0
<RECEIVABLES> 9693
<ALLOWANCES> 274
<INVENTORY> 4026
<CURRENT-ASSETS> 14853
<PP&E> 6582
<DEPRECIATION> 1951
<TOTAL-ASSETS> 19542
<CURRENT-LIABILITIES> 10523
<BONDS> 2646
0
0
<COMMON> 1187
<OTHER-SE> 4593
<TOTAL-LIABILITY-AND-EQUITY> 19542
<SALES> 20117
<TOTAL-REVENUES> 20467
<CGS> 16853
<TOTAL-COSTS> 16853
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12
<INTEREST-EXPENSE> 367
<INCOME-PRETAX> 1548
<INCOME-TAX> 91
<INCOME-CONTINUING> 1457
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1457
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
</TABLE>
