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 March 31, 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 -- 1,294,539 shares as of May 8, 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
March 31, 1996 and December 31, 1995 . . . . . . . . . . 3
Condensed Consolidated Statements of
Income - Three Months ended March 31,
1996 and March 31, 1995. . . . . . . . . . . . . . . . . .4
Condensed Consolidated Statements of Cash Flows -
Three Months ended March 31, 1996 and March 31, 1995. . . 5
Notes to Financial Statements. . . . . . . . . . . . . . .6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . .6
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 . . . . . . . . . . . . . . . . . . . . . . . . . .7
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<PAGE>
DRIVER-HARRIS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
March 31, December 31,
1996 1995
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ASSETS (Unaudited)
Current assets:
<S> <C> <C>
Cash $ 1,165 $ 479
Accounts receivable - net 8,401 7,816
Inventories:
Materials 692 598
Work in process 287 204
Finished products 2,376 2,328
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3,355 3,130
Prepaid expenses 303 386
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Total current assets 13,224 11,811
Other assets 61 65
Property, plant & equipment - net 4,344 4,379
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$17,629 $ 16,255
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LIABILITIES
Current Liabilities:
Short-term borrowings $ 1,108 $ 704
Current portion of long-term debt 379 522
Accounts payable 6,713 5,888
Accrued expenses 1,300 1,059
Income taxes payable 133 106
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Total current liabilities 9,633 8,279
Long-term debt 2,378 2,419
Deferred income taxes 154 157
Postretirement benefit liabilities 218 205
Investment in related company 1,561
Deferred credit - related company 968
Sundry liabilities 213 222
Stockholders' equity:
Common stock 1,187 1,187
Additional paid-in capital 1,997 1,997
Retained earnings 2,199 1,143
Equity adjustment from translation (350) (1,883)
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Stockholders' equity 5,033 2,444
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$17,629 $ 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
MARCH 31
1996 1995
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<S> <C> <C>
Net sales $10,151 $ 8,891
Other revenues 167 238
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Total Revenues 10,318 9,129
Cost of sales 8,673 8,013
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1,645 1,116
Selling, general and
administrative expenses 1,278 962
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367 154
Other charges (credits):
Interest 165 186
Foreign exchange loss 11 8
Gain in connection with sale of
foreign operations by related company (895) (157)
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Income before income taxes 1,086 117
Income taxes 30 10
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NET INCOME $ 1,056 $ 107
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NET INCOME PER SHARE $ .81 $ .08
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Average common shares outstanding 1,303,789 1,295,088
</TABLE>
See accompanying notes.
<PAGE>
DRIVER-HARRIS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands)
<TABLE>
THREE MONTHS ENDED
March 31
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1996 1995
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OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 1,056 $ 107
Adjustments to reconcile net income
to net cash provided:
Depreciation and amortization 112 108
Equity in related company (1,561) (157)
Deferred credit (968) (74)
Elimination of equity adjustment from
translation for foreign operations
sold by related company 1,634
Due from related company 251 (35)
Receivables (910) (372)
Inventories (258) (269)
Accounts payable and accrued expenses 1,180 1,350
Sundry 69 (51)
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CASH PROVIDED BY OPERATING ACTIVITIES 605 607
INVESTING ACTIVITIES
Capital expenditures (137) (112)
Sundry (9) 41
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CASH USED IN INVESTING ACTIVITIES (146) (71)
FINANCING ACTIVITIES
Change in short-term debt 388 (459)
Issuance of long-term debt 93 106
Reduction of long-term debt (240) (161)
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CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 241 (514)
Effect of exchange rate changes on cash (14) 18
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Net change in cash 686 40
Cash at beginning of year 479 461
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CASH AT END OF PERIOD $ 1,165 $ 501
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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 - Investments in Related Company and other subsidiaries
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 a
restructuring in 1994, equaled the balance of a bank loan of Harrison
($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).
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
was able to repay domestic bank debt and collect 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 continues, however, to be
dependent upon Harrison for its U.S. cash flow.
Results of Operations
Net sales to customers increased by 14.2% during the first quarter of
1996 compared to the same period in 1995. This was principally due to an
increase in higher sales prices, primarily in cable products. The gross
profit percentage improved to 14.6% in 1996 compared to 9.9% in 1995. The
gross profit percentage had decreased in 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 increased to 12.7% of net sales in 1996 from 10.8% in 1995.
Interest expense decreased due to lower average borrowings in 1996 compared
to the first quarter of 1995.
The first quarter of 1996 includes $895,000 equity in related company,
consisting of $1,561,000 elimination of negative equity in Harrison plus
related $968,000 amortization of deferred credit, less the balance of the
accumulated translation adjustment of $1,634,000 (relating to the Harrison
overseas subsidiaries transferred in 1994) 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 equity in 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 $25,000 and $23,000 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: May 13, 1996 By Thomas J. Carey
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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 March 31, 1996 and the
Company's Condensed Consolidated Statement of Operations for the three
months ended March 31, 1996, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1165
<SECURITIES> 0
<RECEIVABLES> 8672
<ALLOWANCES> 271
<INVENTORY> 3355
<CURRENT-ASSETS> 13224
<PP&E> 6139
<DEPRECIATION> 1795
<TOTAL-ASSETS> 17629
<CURRENT-LIABILITIES> 9633
<BONDS> 2378
0
0
<COMMON> 1187
<OTHER-SE> 3846
<TOTAL-LIABILITY-AND-EQUITY> 17629
<SALES> 10151
<TOTAL-REVENUES> 10318
<CGS> 8673
<TOTAL-COSTS> 8673
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12
<INTEREST-EXPENSE> 165
<INCOME-PRETAX> 1086
<INCOME-TAX> 30
<INCOME-CONTINUING> 1056
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1056
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
