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, 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 -- 1,343,671 shares as of August 3, 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
June 30, 1998 and December 31, 1997 . . . . . . . . . . 3
Condensed Consolidated Statements of
Income - Three and Six Months ended June 30,
1998 and June 30, 1997. . . . . . . . . . . . . . . . . .4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 1998 and June 30, 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>
<TABLE>
DRIVER-HARRIS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
June 30, December 31,
1998 1997
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ASSETS (Unaudited)
Current assets:
<S> <C> <C>
Cash $ 369 $ 848
Accounts receivable - net 9,293 9,325
Inventories:
Materials 727 536
Work in process 265 254
Finished products 4,039 3,920
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5,031 4,710
Prepaid expenses 905 497
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Total current assets 15,598 15,380
Other assets 8 16
Property, plant & equipment - net 5,081 5,328
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$20,687 $ 20,724
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LIABILITIES
Current Liabilities:
Short-term borrowings $ 3,253 $ 4,179
Current portion of long-term debt 543 515
Accounts payable 6,604 5,176
Accrued expenses 2,048 1,293
Income taxes payable 37 108
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Total current liabilities 12,485 11,271
Long-term debt 2,337 2,524
Deferred Grants 781 796
Deferred foreign income taxes 146 147
Postretirement benefit liabilities 553 574
Sundry liabilities 130 149
Stockholders' equity:
Common stock 1,226 1,223
Additional paid-in capital 2,258 2,228
Retained earnings 1,925 3,030
Accumulated other comprehensive loss (1,154) (1,218)
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Stockholders' equity 4,255 5,263
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$20,687 $ 20,724
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</TABLE>
See accompanying notes.
<PAGE>
DRIVER-HARRIS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Dollar amounts in thousands, except per share data)
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net sales $ 9,590 $10,581 $19,110 $21,513
Other revenues 48 89 97 214
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Total Revenues 9,638 10,670 19,207 21,727
Cost of sales 8,854 9,052 17,283 18,198
------ ------ ------ ------
784 1,618 1,924 3,529
Selling, general and
administrative expenses 1,424 1,664 2,695 3,275
------ ------ ------ ------
(640) (46) (771) 254
Other charges (credits):
Interest 106 229 363 499
Foreign exchange (gain) loss (14) (178) (29) (248)
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(Loss) Income before
income taxes (732) (97) (1,105) 3
Income taxes - 36 - 81
----- ----- ----- -----
NET LOSS $ (732) $ (133) $(1,105) $ (78)
===== ===== ===== =====
BASIC NET LOSS PER SHARE $(.54) $(.10) $(.82) $(.06)
==== ==== ==== ====
DILUTED NET LOSS PER SHARE $(.54) $(.10) $(.82) $(.06)
==== ==== ==== ====
Basic earnings per share-weighted
average shares 1,341,504 1,340,421
Diluted earnings per share-weighted
average shares 1,355,404 1,348,209
</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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1998 1997
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OPERATING ACTIVITIES
<S> <C> <C>
Net loss $(1,105) $ (78)
Adjustments to reconcile net income
to net cash provided:
Depreciation and amortization 268 318
Receivables (632) (2,473)
Inventories (216) (1,511)
Accounts payable and accrued expenses 2,272 3,596
Sundry 39 88
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CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES 626 (60)
INVESTING ACTIVITIES
Capital expenditures (137) (753)
Sundry 8 43
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CASH USED IN INVESTING ACTIVITIES (129) (710)
FINANCING ACTIVITIES
Change in deferred grants (15) 101
Change in short-term debt (842) 317
Issuance of long-term debt 35 274
Reduction of long-term debt (203) (14)
Sundry 47 49
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CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (978) 727
Effect of exchange rate changes on cash 2 (2)
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Net change in cash (479) (45)
Cash at beginning of year 848 402
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CASH AT END OF PERIOD $ 369 $ 357
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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 six month periods ended
June 30, 1998 and 1997 are as follows:
<TABLE>
1998 1997
<S> <C> <C>
Net loss $(1,105) $ (78)
Foreign currency translation adjustment 64 (761)
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Comprehensive loss $(1,041) $(839)
</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 11.2% during the first six months of
1998 compared to the same period in 1997. 1997 included $1,060,000 in
sales from the Australian subsidiary, which was sold in the third quarter
of 1997. Also, the foreign rate impact of the value of the Irish Punt to
the U.S. Dollar resulted in a 7.9% decrease in translated sales for the
six months of 1998 compared to 1997. Although units shipped increased
by 5% over the same period in 1997, the gross profit percentage decreased
to 9.6% compared to 15.4%in 1997 due primarily to continuing pressure on
selling prices resulting from aggressive price cutting within the cable
industry, particularly in the U.K., the Company's primary market. Other
revenues decreased since no fees from Harrison have been recorded since
the first quarter of 1997. Selling, general and administrative
expenses decreased to 14.1% in 1998 compared to 15.2% in 1997. These
expenses were high in 1997 due to start-up costs at a new production
facility in ireland and restructuring costs at the new U.K. distribution
company.
Income taxes for 1997 result 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: August 12, 1998 By: s/s 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 June 30, 1998 and the
Company's Condensed Consolidated Statement of Operations for the six
months ended June 30, 1998, 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-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 369
<SECURITIES> 0
<RECEIVABLES> 9980
<ALLOWANCES> 687
<INVENTORY> 5031
<CURRENT-ASSETS> 15598
<PP&E> 7426
<DEPRECIATION> 2345
<TOTAL-ASSETS> 20687
<CURRENT-LIABILITIES> 12485
<BONDS> 2337
0
0
<COMMON> 1226
<OTHER-SE> 3029
<TOTAL-LIABILITY-AND-EQUITY> 20687
<SALES> 19110
<TOTAL-REVENUES> 19207
<CGS> 17283
<TOTAL-COSTS> 17283
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12
<INTEREST-EXPENSE> 363
<INCOME-PRETAX> (1105)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1105)
<EPS-PRIMARY> (.82)
<EPS-DILUTED> (.82)
</TABLE>
