UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended September 30, 1996
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OR
[ ] 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: O-1837
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FEDERAL SCREW WORKS
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(Exact name of registrant as specified in its charter)
Michigan 38-0533740
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 Buhl Building, Detroit Michigan 48226
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, and area code (313) 963-2323
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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 _______
At September 30, 1996, the Company had one class of common stock outstanding,
$1.00 par value common stock. There were 1,086,662 shares of such common stock
outstanding at that time.
(continued)
<PAGE>
Part I FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED BALANCE SHEETS (UNAUDITED)
(Thousands of Dollars)
September 30 June 30
1996 1996
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ASSETS
<S> <C> <C>
Current Assets:
Cash .............................................. $ 265 $ 782
Accounts Receivable, Less Allowance of $25,000 .... 11,718 10,882
Inventories:
Finished Products ................................. 3,973 4,731
In-Process Products ............................... 5,106 5,388
Raw Materials And Supplies ........................ 2,185 2,122
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11,264 12,241
Prepaid Expenses And Other Current Accounts ....... 518 471
Deferred Income Taxes ............................. 753 752
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Total Current Assets ........................... 24,518 25,128
Other Assets:
Intangible Pension Asset .......................... 2,548 2,548
Cash Value Of Life Insurance ...................... 4,916 4,889
Miscellaneous ..................................... 1,128 1,130
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8,592 8,567
Property, Plant And Equipment ....................... 74,049 73,420
Less Accumulated Depreciation ..................... 43,677 42,755
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30,372 30,665
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Total Assets ........................................ $63,482 $64,360
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</TABLE>
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<PAGE>
Part I FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
September 30 June 30
1996 1996
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LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts Payable ............................... $ 3,700 $ 2,977
Payroll And Employee Benefits .................. 3,014 5,262
Dividends Payable .............................. 978 109
Federal Income Taxes ........................... 417 415
Taxes, Other Than Income Taxes ................. 1,157 1,318
Accrued Pension Contributions .................. 217 664
Other Accrued Liabilities ...................... 438 371
Current Maturities Of Long-Term Debt ........... 400 400
-------- --------
Total Current Liabilities ................... 10,321 11,516
Long Term Liabilities:
Long-Term Debt ................................. 8,120 7,960
Unfunded Pension Obligation .................... 2,977 2,977
Postretirement Benefits Other Than Pensions .... 5,636 5,250
Deferred Income Taxes .......................... 1,085 1,122
Employee Benefits .............................. 1,161 1,194
Other Liabilities .............................. 461 440
-------- --------
Total Long-Term Liabilities ................. 19,440 18,943
Stockholders' Equity:
Common Stock, $1.00 Par Value, Authorized
2,000,000 Shares; 1,086,662 Shares
Outstanding .................................... 1,087 1,087
Additional Capital ............................. 2,924 2,918
Retained Earnings .............................. 31,375 31,561
Unfunded Pension Costs ......................... (1,665) (1,665)
-------- --------
Total Stockholders' Equity .................. 33,721 33,901
-------- --------
Total Liabilities and Stockholders' Equity ....... $ 63,482 $ 64,360
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<FN>
See Accompanying Notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands of Dollars, Except Per Share)
Three Months Three Months
Ended Ended
September 30 September 30
1996 1995
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<S> <C> <C>
Net Sales ............................... $23,706 $20,904
Costs And Expenses:
Cost of Products Sold ................ 21,130 18,845
Selling And Administrative Expenses .. 1,242 1,102
Interest Expense ..................... 132 198
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Total Costs And Expenses .......... 22,504 20,145
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Earnings Before Federal
Income Taxes ......................... 1,202 759
Federal Income Taxes .................... 409 257
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Net Earnings ............................ $ 793 $ 502
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Per Share Of Common Stock:
Net Earnings Per Share .................. $ .73 $ .46
======= =======
Cash Dividends Per Share ................ $ .90 $ .80
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<FN>
See Accompanying Notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)
Three Months
Ended September 30
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1996 1995
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<S> <C> <C>
Operating Activities
Net Earnings ....................................... $ 793 $ 502
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization .................. 922 836
Increase In Cash Value of Life Insurance ....... (27) (27)
Change In Deferred Income Taxes ................ (38) (53)
Employee Benefits .............................. (33) (30)
Amortization of Restricted Stock ............... 6 12
Other .......................................... 406 355
Changes In Operating Assets And Liabilities:
Accounts Receivable ........................... (836) (613)
Inventories And Prepaid Expenses .............. 932 (1,219)
Accounts Payable And Accrued Expenses ......... (2,064) (2,030)
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Net Cash Provided By (Used In) Operating Activities .. 61 (2,267)
Investing Activities
Purchases of Property, Plant And Equipment-Net ..... (629) (1,502)
Financing Activities
Proceeds From Bank Borrowings ...................... 160 3,555
Dividends Paid ..................................... (109) (109)
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Net Cash Provided By Financing Activities ............ 51 3,446
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Decrease In Cash ..................................... (517) (323)
Cash At Beginning Of Period .......................... 782 395
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Cash At End Of Period ................................ $ 265 $ 72
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<FN>
See Accompanying Notes.
</TABLE>
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<PAGE>
FEDERAL SCREW WORKS
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial reporting. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation
have been included. The results of operations for the three months ended
September 30, 1996, are not necessarily indicative of the results to be
expected for the fiscal year ending June 30, 1997.
Note B - Debt
The Company has a $25,000,000 Revolving Credit and Term Loan Agreement with a
Bank. Under the amended agreement the Company has the option to convert
borrowings thereunder (classified as long-term debt) to a term note through
October 31, 1999, the expiration date of the Agreement. Payments under the
term note, if the conversion option is exercised, would be made quarterly
commencing three months following conversion until maturity of the term note
on October 31, 2001. As of September 30, 1996, there was $7,120,000 in
outstanding borrowings under the Revolving Credit and Term Loan Agreement.
Note C - Dividends
Cash dividends per share are based on the number of shares outstanding at the
respective dates of declaration. The dividends declared in the first quarter
of fiscal 1997 include a special dividend of $.80 per share which was paid
October 1, 1996.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS: Net sales for the Company's first quarter ended
September 30, 1996, increased $2,802,000, or 13.4%, compared with net sales
for the first quarter of the prior year. The increase is largely attributable
to the continued strong demand in North American automobile sales.
Gross profit for the three month period ended September 30, 1996, increased
$517,000, or 25.1%, as compared with gross profit for the first quarter of the
prior year. The increase is attributable mainly to the increased sales as well
as improved productivity.
Selling and administrative expenses increased $140,000, or 12.7%, for the
first quarter ended September 30, 1996, as compared with the first quarter of
the prior year. The increase is comparable to the increase in sales.
DIVIDENDS: The Board of Directors, in August 1996, declared a $.10 per share
dividend and an extra $.80 per share dividend, paid October 1, 1996, to
shareholders of record September 6, 1996.
LIQUIDITY AND CAPITAL RESOURCES: Working capital increased by $584,000 from
$13,613,000 at June 30, 1996, to $14,197,000 at September 30, 1996.
At September 30, 1996, the Company had available $17,880,000 under its bank
credit agreement.
Capital expenditures for the three month period ended September 30, 1996, were
approximately $0.6 million, and, for the year, are expected to approximate
$5.0 million, of which approximately $2.0 million has been committed as of
September 30, 1996.
There have been no material changes concerning environmental matters since
those reported in the Registrant's Form 10-K for the fiscal year ended June
30, 1996.
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<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth in the last paragraph of the Liquidity and
Capital Resources discussion in Item 2 of Part I concerning environmental
matters is incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.6. One year extension of Revolving Credit and Term
Loan Agreement by and between Registrant and Comerica Bank, dated
October 23, 1996.
There were no unusual charges or credits to income, nor a change
in independent accountants.
(b) Reports on Form 8-K. The Registrant filed Form 8-K during the
quarter ended September 30, 1996. The data and content are
described below.
July 21, 1996 - Board of Directors' adoption of a resolution
electing to have the provisions of Chapter 7A of the Michigan
Business Corporation Act apply to the Company, subject to certain
exceptions and conditions.
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.
Federal Screw Works
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Date November 12, 1996 /s/ W. T. ZurSchmiede, Jr.
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W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date November 12, 1996 /s/ John M. O'Brien
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John M. O'Brien
Vice President
-8-
Exhibit 10.6
[ Comerica Logo ]
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Comerica Bank One Detroit Center
P.O. Box 75000
Detroit, MI 48275-3265
(313) 222-5431
October 23, 1996 Deborah S. Albrecht
Account Officer
U. S. Banking
Automotive
W. T. ZurSchmiede, Jr.
Chief Executive Officer
Chief Financial Officer
Federal Screw Works
2400 Buhl Building
Detroit, Michigan 48226
Dear Mr. ZurSchmiede,
Per your request dated September 11, 1996, and pursuant to Section 2.13 of
the Revolving Credit and Term Loan Agreement between Federal Screw Works
and Comerica Bank, the Bank has approved the one year extension for the
Revolving Credit Facility and Term Loan option. The new maturity dates for
the facilities are October 31, 1999 and October 31, 2001 respectively.
Please contact me if you have any additional questions.
Sincerely,
/s/ Deborah S. Albrecht
cc: Wade Plaskey
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S AUDITED FINANCIAL STATEMENTS AS OF AND FOR
THE PERIOD ENDING SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> $ 265
<SECURITIES> 0
<RECEIVABLES> 11,718
<ALLOWANCES> 0
<INVENTORY> 11,264
<CURRENT-ASSETS> 24,518
<PP&E> 74,049
<DEPRECIATION> 43,677
<TOTAL-ASSETS> 63,482
<CURRENT-LIABILITIES> 10,321
<BONDS> 1,000
<COMMON> 1,087
0
0
<OTHER-SE> 32,634
<TOTAL-LIABILITY-AND-EQUITY> 63,482
<SALES> 23,706
<TOTAL-REVENUES> 23,706
<CGS> 21,130
<TOTAL-COSTS> 22,372
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132
<INCOME-PRETAX> 1,202
<INCOME-TAX> 409
<INCOME-CONTINUING> 793
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 793
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.73
</TABLE>
