THIS CONFORMING PAPER FORMAT DOCUMENT
IS BEING SUBMITTED PURSUANT TO RULE 901(d)
OF REGULATION S-T
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 December 31, 1995
---------------------------
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
-----------------------------------
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
--------------------------------
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 December 31, 1995, 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)
December 31 June 30
1995 1995
----------- -------
ASSETS
<S> <C> <C>
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . $ 158 $ 395
Accounts Receivable, Less Allowance of $25,000 . 9,975 10,238
Inventories:
Finished Products. . . . . . . . . . . . . . . . 3,390 3,636
In-Process Products. . . . . . . . . . . . . . . 6,303 6,163
Raw Materials And Supplies . . . . . . . . . . . 3,107 3,337
------ ------
12,800 13,136
Prepaid Expenses And Other Current Accounts. . . 728 502
Deferred Income Taxes . . . . . . . . . . . . . 130 91
------ ------
Total Current Assets. . . . . . . . . . . . . 23,791 24,362
Other Assets:
Intangible Pension Asset . . . . . . . . . . . . 2,624 2,624
Cash Value Of Life Insurance . . . . . . . . . . 4,809 4,730
Miscellaneous. . . . . . . . . . . . . . . . . . 1,093 973
------ ------
8,526 8,327
Property, Plant And Equipment. . . . . . . . . . . 71,068 68,574
Less Accumulated Depreciation. . . . . . . . . . 41,290 39,961
------ ------
29,778 28,613
------ ------
Total Assets . . . . . . . . . . . . . . . . . . . $62,095 $61,302
====== ======
</TABLE>
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<PAGE>
Part I FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
December 31 June 30
1995 1995
----------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts Payable . . . . . . . . . . . . . . . . $ 4,043 $ 4,607
Payroll And Employee Benefits. . . . . . . . . . 2,874 4,857
Dividends Payable. . . . . . . . . . . . . . . . 109 109
Federal Income Taxes . . . . . . . . . . . . . . 0 349
Taxes, Other Than Income Taxes . . . . . . . . . 1,078 1,284
Accrued Pension Contributions. . . . . . . . . . 127 481
Other Accrued Liabilities. . . . . . . . . . . . 801 749
Current Maturities Of Long-Term Debt . . . . . . 400 400
------ ------
Total Current Liabilities . . . . . . . . . . 9,432 12,836
Long Term Liabilities:
Long-Term Debt . . . . . . . . . . . . . . . . . 11,470 8,700
Unfunded Pension Obligation. . . . . . . . . . . 3,399 3,399
Postretirement Benefits Other Than Pensions. . . 4,498 3,745
Deferred Income Taxes. . . . . . . . . . . . . . 718 341
Employee Benefits. . . . . . . . . . . . . . . . 1,257 1,324
------ ------
Total Long-Term Liabilities . . . . . . . . . 21,342 17,509
Stockholders' Equity:
Common Stock, $1.00 Par Value, Authorized
2,000,000 Shares; 1,086,662 Shares
Outstanding Both at December 31, 1995
and June 30, 1995 . . . . . . . . . . . . . . . 1,087 1,087
Additional Capital . . . . . . . . . . . . . . . 2,811 2,772
Retained Earnings. . . . . . . . . . . . . . . . 28,690 28,365
Unfunded Pension Costs . . . . . . . . . . . . . (1,267) (1,267)
------ ------
Total Stockholders' Equity. . . . . . . . . . 31,321 30,957
------ ------
Total Liabilities and Stockholders' Equity . . . . $62,095 $61,302
====== ======
<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 Six Months
Ended Ended
December 31 December 31
--------------- ---------------
l995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales .................................. $22,504 $21,734 $43,408 $41,572
Costs And Expenses:
Cost of Products Sold ................. 19,984 19,193 38,829 37,054
Selling And Administrative Expenses ... 1,040 1,157 2,142 2,239
Interest Expense ...................... 264 122 462 229
------- ------- ------- -------
Total Costs And Expenses ......... 21,288 20,472 41,433 39,522
------- ------- ------- -------
Earnings Before Federal
Income Taxes .......................... 1,216 1,262 1,975 2,050
Federal Income Taxes ....................... 414 410 671 666
------- ------- ------- -------
Net Earnings ............................... $ 802 $ 852 $ 1,304 $ 1,384
======= ======= ======= =======
Per Share Of Common Stock:
Net Earnings Per Share ..................... $ .74 $ .78 $ 1.20 $ 1.27
======= ======= ======= =======
Cash Dividends Per Share ................... $ .10 $ .10 $ .90 $ .60
======= ======= ======= =======
<FN>
See Accompanying Notes.
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)
Six Months
Ended December 31
-----------------
1995 1994
---- ----
<S> <C> <C>
Operating Activities
Net Earnings ...................................... $ 1,304 $ 1,384
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization ................. 1,719 1,450
Change In Cash Value of Life Insurance ........ (79) 8
Change In Deferred Income Taxes ............... 338 609
Employee Benefits ............................. (67) (38)
Amortization of Restricted Stock .............. 23 38
Other ......................................... 647 555
Changes In Operating Assets And Liabilities:
Accounts Receivable ......................... 263 (638)
Inventories And Prepaid Expenses ............ 110 8
Accounts Payable And Accrued Expenses ....... (3,404) (3,144)
------- -------
Net Cash Provided By Operating Activities ........... 854 232
Investing Activities
Purchases of Property, Plant And Equipment-Net .... (2,883) (2,975)
Financing Activities
Proceeds From Bank Borrowings ..................... 2,970 2,080
Principal Payments On Lease Purchase Obligations .. (200) (200)
Purchases of Common Stock ......................... 0 (14)
Dividends Paid .................................... (978) (217)
------- -------
Net Cash Provided By Financing Activities ........... 1,792 1,649
------- -------
Decrease In Cash .................................... (237) (1,094)
Cash At Beginning Of Period ......................... 395 1,373
------- -------
Cash At End Of Period ............................... $ 158 $ 279
======= =======
<FN>
See Accompanying Notes.
</TABLE>
- 5 -
<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 six months ended
December 31, 1995, are not necessarily indicative of the results to be
expected for the fiscal year ending June 30, 1996.
Note B - Debt
On October 24, 1995, the Company entered into a new $25,000,000 Revolving
Credit and Term Loan Agreement with a Bank. This Agreement replaces the
Agreement in effect as of September 21, 1989, as amended. The Company has the
option to convert borrowings thereunder (classified as long-term debt) to a
term note through October 31, 1998, the expiration date of the Agreement.
Payments under the term note, if the conversion option is exercised, would be
made quarterly and could extend to October 31, 1999. The Company has the
option to extend the Agreement for one year beyond the revolving credit
maturity date then in effect. As of December 31, 1995, there was $10,270,000
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.
- 6 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS: Net sales for the Company's second quarter ended
December 31, 1995, increased $770,000, or 3.5%, compared with net sales for
the second quarter of the prior year. Net sales for the six month period ended
December 31, 1995, increased $1,836,000, or 4.4%, compared with the six month
period of the prior year. The increase is largely attributable to significant
new product programs that are coming on line.
Gross profit for the three month period ended December 31, 1995, decreased
$21,000, or 0.8%, as compared with gross profit for the second quarter of the
prior year. Gross profit for the six month period ended December 31, 1995,
increased $61,000, or 1.3%, compared with the six month period of the prior
year. The increase is largely attributable to productivity improvements.
Selling and administrative expenses decreased $117,000, or 10.1%, for the
second quarter ended December 31, 1995, as compared with the second quarter of
the prior year. Selling and administrative expenses decreased $97,000, or
4.3%, as compared with the six month period ended December 31, 1994. The
decrease is mainly attributable to a decrease in the accrual of professional
services.
DIVIDENDS: The Board of Directors, in October 1995, declared a $.10 per share
dividend paid January 2, 1996, to shareholders of record December 8, 1995.
LIQUIDITY AND CAPITAL RESOURCES: Working capital increased by $2,833,000 from
$11,526,000 at June 30, 1995, to $14,359,000 at December 31, 1995. The
principal factors that contributed to the change were the reduction in payroll
and employee benefits due to the payment of year-end bonuses and profit
sharing payments. Also contributing were the decrease in accounts payable due
to lower inventory levels.
At December 31, 1995, the Company had available $14,730,000 under its bank
credit agreement.
Capital expenditures for the six month period ended December 31, 1995, were
approximately $2.9 million, and, for the year, are expected to approximate
$7.0 million, of which approximately $2.4 million has been committed as of
December 31, 1995.
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, 1995.
- 7 -
<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) Reports on Form 8-K. There was no SEC Form 8-K filed this quarter.
There were no unusual charges or credits to income, nor a change
in independent accountants.
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
---------------------------------
Date ________________________ /s/ W. T. ZurSchmiede, Jr.
---------------------------------
W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date ________________________ /s/ John M. O'Brien
---------------------------------
John M. O'Brien
Vice President
- 8 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> $ 158
<SECURITIES> 0
<RECEIVABLES> 9,975
<ALLOWANCES> 0
<INVENTORY> 12,800
<CURRENT-ASSETS> 23,791
<PP&E> 71,068
<DEPRECIATION> 41,290
<TOTAL-ASSETS> 62,095
<CURRENT-LIABILITIES> 9,432
<BONDS> 1,200
<COMMON> 1,087
0
0
<OTHER-SE> 30,234
<TOTAL-LIABILITY-AND-EQUITY> 62,095
<SALES> 43,408
<TOTAL-REVENUES> 43,408
<CGS> 38,829
<TOTAL-COSTS> 40,971
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 462
<INCOME-PRETAX> 1,975
<INCOME-TAX> 671
<INCOME-CONTINUING> 1,304
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,304
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.20
</TABLE>
