<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended April 30, 1995
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Commission File Number 0-9556
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ABS INDUSTRIES, INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-0074580
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Interstate Square I, Suite 300, Willoughby, OH 44094
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(Address of principal executive offices) (Zip Code)
(216) 946-2274
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(Registrant's telephone number, including area code)
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.
<TABLE>
<CAPTION> Outstanding at
Class April 30, 1995
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<S> <C>
Common Stock, without 5,052,000
par value
</TABLE>
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<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ABS INDUSTRIES, INC.
STATEMENTS OF INCOME
Dollar Amounts in Thousands, Except Per Share Data
(Unaudited)
<CAPTION>
SIX MONTHS ENDED APRIL 30
1995 1994
------------------------------------
<S> <C> <C>
NET SALES $52,408 $42,351
COSTS & EXPENSES
Costs of products sold 42,756 34,857
Admin. & selling expenses 2,826 2,365
Interest expense 2,593 1,562
--------- ---------
48,175 38,784
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INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES 4,233 3,567
Income taxes 1,524 1,213
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INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING FOR INCOME TAXES $2,709 $2,354
CUMULATIVE EFFECT AS OF NOVEMBER 1, 1993
OF CHANGE IN METHOD OF ACCOUNTING
FOR INCOME TAXES 332
--------- ---------
NET INCOME $2,709 $2,686
========= =========
EARNINGS PER SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING FOR INCOME TAXES $0.54 $0.47
CUMULATIVE EFFECT AS OF NOVEMBER 1, 1993
OF CHANGE IN METHOD OF ACCOUNTING
FOR INCOME TAXES 0.06
--------- ---------
NET INCOME $0.54 $0.53
========= =========
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING 5,052,000 5,052,000
========= =========
<FN>
See notes to unaudited financial statements.
</TABLE>
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<TABLE>
ABS INDUSTRIES, INC.
STATEMENTS OF INCOME
Dollar Amounts in Thousands, Except Per Share Data
(Unaudited)
<CAPTION>
THREE MONTHS ENDED APRIL 30
1995 1994
---------------------------
<S> <C> <C>
NET SALES $29,725 $25,959
COSTS & EXPENSES
Costs of products sold 23,502 21,074
Admin. & selling expenses 1,562 1,290
Interest expense 1,421 767
_________ _________
26,485 23,131
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INCOME FROM OPERATIONS BEFORE
INCOME TAXES 3,240 2,828
Income taxes 1,167 962
--------- ---------
NET INCOME $2,073 $1,866
========= =========
PER SHARE OF COMMON STOCK:
Net Income $0.41 $0.37
========= =========
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING 5,052,000 5,052,000
========= =========
</TABLE>
See notes to unaudited financial statements.
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<TABLE>
ABS INDUSTRIES, INC.
STATEMENTS OF FINANCIAL POSITION
Dollar Amounts in Thousands
<CAPTION>
APRIL 30 OCTOBER 31
1995 1994
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<S> <C> <C>
ASSETS (Unaudited)
Current Assets
Cash $435 $159
Accounts Receivable 26,606 18,103
Inventories
Raw material 2,744 1,989
Work-in-process & finished goods 5,683 5,185
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8,427 7,174
Prepaid expenses & other 9,738 8,360
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TOTAL CURRENT ASSETS 45,206 33,796
Restricted cash equivalents-construction fund 461 4,245
Property, Plant and Equipment 86,601 76,434
Allowances for Depreciation (22,751) (20,664)
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63,850 55,770
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$109,517 $93,811
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $3,940
Accounts payable 19,091 $14,142
Accrued expenses 5,510 4,685
Current portion of long-term debt 7,119 6,767
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TOTAL CURRENT LIABILITIES 35,660 25,594
Deferred Income Taxes 1,639 1,639
Long-Term Debt 55,699 52,263
Shareholders' Equity
Common stock, without par value, at stated
capital: authorized 12,000,000 shares,
issued 6,000,000 shares 2,606 2,606
Treasury stock, at cost, 948,000 shares (1,764) (1,764)
Retained earnings 15,677 13,473
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16,519 14,315
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$109,517 $93,811
========= =========
<FN>
See notes to unaudited financial statements.
</TABLE>
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<TABLE>
ABS INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
Dollar Amounts in Thousands
(Unaudited)
<CAPTION>
SIX MONTHS ENDED APRIL
1995 1994
---------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,709 $2,686
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 2,125 1,645
Provision for deferred income taxes 0 881
Changes in operating assets and
liabilities:
Trade accounts receivable (8,503) (1,082)
Inventories (1,253) (3,874)
Prepaid expenses (1,378) (598)
Accounts payable 4,949 3,013
Accrued expenses 825 (318)
Other 0 0
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NET CASH PROVIDED FROM
OPERATING ACTIVITIES (526) 2,353
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction fund 3,784 (7,010)
Purchases of property, plant and equipment (10,167) (8,989)
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NET CASH (USED IN)
INVESTING ACTIVITIES (6,383) (15,999)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 3,940 0
Proceeds from revolving line of credit 10,895 12,901
Payments on revolving line of credit (6,866) (11,101)
Proceeds from long-term debt 3,185 15,448
Payments on long-term debt (3,464) (3,104)
Cash dividends (505) (505)
Receipt from employee stock purchase plan 0 68
Financing costs 0 (104)
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NET CASH PROVIDED FROM
FINANCING ACTIVITIES 7,185 13,603
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INCREASE (DECREASE) IN CASH 276 (43)
Cash at beginning of period 159 103
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CASH AT END OF PERIOD $435 $60
============= ==========
<FN>
See notes to unaudited financial statements.
</TABLE>
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ABS INDUSTRIES, INC.
Notes To Unaudited Financial Statements
(Dollar amounts in thousands)
Note A - The accompanying unaudited financial statements have been prepared
in accordance with the instructions to Form 10-Q and, therefore,
do not include all information and footnotes necessary for the
fair presentation of financial position, statements of income and
cash flows in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments have
been made which are necessary for a fair statement of the results
of operations for the six month period ended April 30, 1995
and April 30, 1994. The adjustments made to the unaudited
financial statements were of a normal, recurring nature. The
results for the six months ended April 30, 1995 are not
necessarily indicative of the results to be expected for the year
ending October 31, 1995.
Note B - Total interest paid by the Company on its short and long-term debt
obligations in the six months ended April 30, 1995 and 1994
was $2,756 and $1,715 respectively.
Note C - The financial information included herein has been taken from the
records of the Company without examination by independent
auditors.
Note D - Change in Method of Accounting for Income Taxes
Effective November 1, 1993, the Company adopted FASB Statement No.
109, "Accounting for Income Taxes." Under Statement 109, the
liability method is used in accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax basis of
assets and liabilities and are measured using the enacted tax
rates and laws that are in effect currently. Prior to the
adoption of Statement 109, income tax expense was determined using
the deferred method, under which deferred tax expense was based on
items of income and expense that were reported in different years
in the financial statements and tax returns and was measured at
the tax rate in effect in the year the difference originated.
As permitted by Statement 109, the Company has elected not to
restate the financial statements of any prior years. The
cumulative effect of the change increased net income by $332 or
$.06 per share in the six month period ended April 30, 1994.
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<PAGE> 7
Item 2. Management's Discussion and Analysis
Sales for the second quarter ended April 30, 1995 increased 15% to a record
$29,725,000 from $25,959,000 in the second quarter 1994. After-tax income
from operations increased 11% to a record $2,075,000 ($.41 per share) from
$1,866,000 ($.37 per share) for the second quarter 1994.
Sales for the six months ended April 30, 1995 were $52,408,000, a 24%
increase over $42,351,000 in the year earlier period. After-tax income
from operations was $2,709,000 ($.54 per share) for the six month period
ended April 30, 1995, a 15% increase over $2,354,000 ($.47 per share) for
the same period a year ago.
On November 23, 1994, ABS issued a letter of intent to acquire Machine Tool
& Gear, Inc. (MT & G) in an exchange of stock. The purpose of the
acquisition was to add machining capability and meet customer demand.
After some due diligence we have decided to add additional machining
capability to Colmach in space built in 1994 rather than purchase MT & G.
This capability, including spline rolling, induction hardening, gun
drilling and broaching, will be in place beginning August 1995.
The additional machining capability as well as the global competitiveness
of our cost structure is expected to produce record years in 1995, 1996 and
1997, matching the historical perspective of 15-20% sales increase per
year. Overtime and other expenses remain under control creating
expectations for higher levels of profitability.
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<PAGE> 8
PART II OTHER INFORMATION
Item 6. (a) Exhibits Reports on Form 8-K
27 Financial Data Schedule
(b) Reports on Form 8-K
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this Report to be filed on
its behalf by the undersigned thereunto duly authorized.
ABS Industries, Inc.
by /s/ William J. McCarthy
------------------------------------------
William J. McCarthy
President and Chief Executive Officer
/s/ Theodore Ursu III
------------------------------------------
Theodore Ursu III
Corporate Controller
(Chief Accounting Officer)
Dated: June 12, 1995
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<CASH> 435
<SECURITIES> 0
<RECEIVABLES> 26,606
<ALLOWANCES> 0
<INVENTORY> 8,427
<CURRENT-ASSETS> 45,206
<PP&E> 86,601
<DEPRECIATION> 22,751
<TOTAL-ASSETS> 109,517
<CURRENT-LIABILITIES> 35,660
<BONDS> 55,699
<COMMON> 842
0
0
<OTHER-SE> 15,677
<TOTAL-LIABILITY-AND-EQUITY> 109,517
<SALES> 52,408
<TOTAL-REVENUES> 52,408
<CGS> 42,756
<TOTAL-COSTS> 45,582
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,593
<INCOME-PRETAX> 4,233
<INCOME-TAX> 1,524
<INCOME-CONTINUING> 2,709
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,709
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
