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, 1998 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 (973) 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 -- 1,340,421 shares as of May 4,
1998.
<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, 1998 and December 31, 1997 . . . . . . . . . . 3
Condensed Consolidated Statements of
Income - Three Months ended March 31,
1998 and March 31, 1997. . . . . . . . . . . . . . . . . .4
Condensed Consolidated Statements of Cash Flows -
Three Months ended March 31, 1998 and
March 31, 1997 . . . . . . . . . . . . . . . . . . . . . .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,
1998 1997
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ASSETS (Unaudited)
Current assets:
<S> <C> <C>
Cash $ 944 $ 848
Accounts receivable - net 8,881 9,325
Inventories:
Materials 640 536
Work in process 187 254
Finished products 3,820 3,920
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4,647 4,710
Prepaid expenses 749 497
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Total current assets 15,221 15,380
Other assets 12 16
Property, plant & equipment - net 5,025 5,328
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$ 20,258 $ 20,724
======= ======
LIABILITIES
Current Liabilities:
Short-term borrowings $ 3,174 $ 4,179
Current portion of long-term debt 530 515
Accounts payable 6,236 5,176
Accrued expenses 1,673 1,293
Income taxes payable 105 108
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Total current liabilities 11,718 11,271
Long-term debt 2,401 2,524
Deferred Grants 748 796
Deferred foreign income taxes 142 147
Postretirement benefit liabilities 539 574
Sundry liabilities 139 149
Stockholders' equity:
Common stock 1,223 1,223
Additional paid-in capital 2,228 2,228
Retained earnings 2,605 3,030
Accumulated other comprehensive loss (1,485) (1,218)
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Stockholders' equity 4,571 5,263
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$ 20,258 $ 20,724
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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
1998 1997
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<S> <C> <C>
Net sales $ 9,520 $10,932
Other revenues 49 125
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Total Revenues 9,569 11,057
Cost of sales 8,429 9,146
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Selling, general and administrative
expenses 1,271 1,611
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(131) 300
Other charges (credits):
Interest 257 270
Foreign exchange loss (gain) (15) (70)
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(Loss) Income before income taxes (373) 100
Income taxes - 45
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Net (Loss) Income $ (373) $ 55
BASIC NET (LOSS) INCOME PER SHARE $ (.28) $ .04
DILUTED NET (LOSS) INCOME PER SHARE $ (.28) $ .04
Basic earnings per share - weighted
average shares 1,340,421 1,338,171
Diluted earnings per share - adjusted
weighted average shares 1,354,319 1,345,943
</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
----------------
1998 1997
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OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) income $ (373) $ 55
Adjustments to reconcile net income
to net cash provided:
Depreciation and amortization 137 163
Receivables 444 (1,569)
Inventories (63) (957)
Prepaid expenses (252) 35
Accounts payable and accrued expenses 1,440 1,993
Sundry (126) 92
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NET CASH PROVIDED BY(USED IN)OPERATING ACTIVITIES 1,207 (188)
INVESTING ACTIVITIES
Capital expenditures (50) (350)
Sundry 18 53
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NET CASH USED IN INVESTING ACTIVITIES (32) (297)
FINANCING ACTIVITIES
Change in short-term debt (1,005) 349
Change in deferred grants 8 60
Proceeds from issuance of long-term debt 23 81
Reduction of long-term debt (111) (43)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,085) 447
Effect of exchange rate changes on cash 6 1
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Net change in cash 96 (37)
Cash at beginning of year 848 402
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CASH AT END OF PERIOD $ 944 $ 365
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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, 1997. 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
The Company owns Irish Driver-Harris Co. Ltd. ("IDH"),
located in Ireland and the U.K. The Company also owns 50% of
Harrison Alloys Inc. ("Harrison") which is carried at zero value
on its balance sheet. Although Harrison is required to pay to the
Company license fees and commissions totaling $500,000 per year to
2003, no payments have been received since December 1996. Income
from Harrison will not be recorded until amounts are received.
3 - Comprehensive Income
As of January 1, 1998, the Company adopted Financial
Accounting Standard 130, Reporting Comprehensive Income.
Statement 130 establishes new rules for the reporting and display
of comprehensive income and its components; however, the adoption
of this Statement had no impact on the Company's net (loss) income
or stockholders' equity. Statement 130 requires foreign currency
translation adjustments, which prior to adoption were reported
separately in shareholders' equity, to be included in other
comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of Statement 130.
The components of comprehensive income for the three month
periods ended March 31, 1998 and 1997 are as follows:
<TABLE>
1998 1997
<S> <C> <C>
Net (loss) income $(373) $ 55
Foreign currency translation adjustment (267) (452)
---- ----
Comprehensive loss $(640) $(397)
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
Harrison is presently restructuring its operations and as
such, the Company does not contemplate that amounts due under the
license agreements will be paid in the near future. The Company
believes it has adequate cash and other options available in the
foreseeable future should these amounts ultimately not be fully
collected.
Results of Operations
Net sales to customers decreased by 12.9% during the first
quarter of 1998 compared to the same period in 1997. Although
units shipped were level, the foreign rate impact of the value of
the Irish Punt to the U.S. Dollar resulted in a 15.6% decrease in
translated sales from 1997 to 1998. 1998 has no revenues from the
Australian subsidiary, which was sold in the third quarter of
1997. In 1997, this subsidiary contributed $720,000 to first
quarter revenue. The gross profit percentage dropped to 11.5% in
1998 compared to 16.3% in 1997 due primarily to lower selling
prices resulting from aggressive price cutting within the cable
industry and the impact of changes in the relative value of U.K.
Sterling to the Irish Punt. Other revenues decreased since no
fees from Harrison were recorded in 1998. Selling, general and
administrative expenses decreased to 13.3% of net sales from 13.7%
in the preceding year and decreased by 21.1% on an overall basis
from 1997.
Income taxes for 1997 resulted from foreign taxable income
at the Company's Irish subsidiary. The Company has tax loss
carryforwards of approximately $6,400,000 available to offset
future U.S. taxable income, which expire between 1999 and 2010.
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 14, 1998 By: Thomas J. Carey
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, 1998 and the
Company's Condensed Consolidated Statement of Operations for the three
months ended march 31, 1998, 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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 944
<SECURITIES> 0
<RECEIVABLES> 9199
<ALLOWANCES> 318
<INVENTORY> 4647
<CURRENT-ASSETS> 15221
<PP&E> 7194
<DEPRECIATION> 2169
<TOTAL-ASSETS> 20258
<CURRENT-LIABILITIES> 11718
<BONDS> 2401
0
0
<COMMON> 1223
<OTHER-SE> 3348
<TOTAL-LIABILITY-AND-EQUITY> 20258
<SALES> 9520
<TOTAL-REVENUES> 9569
<CGS> 8429
<TOTAL-COSTS> 8429
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 257
<INCOME-PRETAX> 0
<INCOME-TAX> (373)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (373)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
