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 March 31, 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 March 31, 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)
March 31 June 30
1996 1995
-------- -------
ASSETS
<S> <C> <C>
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . $ 72 $ 395
Accounts Receivable, Less Allowance of $25,000 . 10,469 10,238
Inventories:
Finished Products. . . . . . . . . . . . . . . . 5,806 3,636
In-Process Products. . . . . . . . . . . . . . . 5,896 6,163
Raw Materials And Supplies . . . . . . . . . . . 2,601 3,337
------- -------
14,303 13,136
Prepaid Expenses And Other Current Accounts. . . 379 502
Deferred Income Taxes . . . . . . . . . . . . . 130 91
------- -------
Total Current Assets. . . . . . . . . . . . . 25,353 24,362
Other Assets:
Intangible Pension Asset . . . . . . . . . . . . 2,624 2,624
Cash Value Of Life Insurance . . . . . . . . . . 4,836 4,730
Miscellaneous. . . . . . . . . . . . . . . . . . 1,102 973
------- -------
8,562 8,327
Property, Plant And Equipment. . . . . . . . . . . 72,149 68,574
Less Accumulated Depreciation. . . . . . . . . . 42,194 39,961
------- -------
29,955 28,613
------- -------
Total Assets . . . . . . . . . . . . . . . . . . . $63,870 $61,302
======= =======
</TABLE>
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<PAGE>
Part I FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
March 31 June 30
1996 1995
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LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts Payable . . . . . . . . . . . . . . . . $ 4,404 $ 4,607
Payroll And Employee Benefits. . . . . . . . . . 3,802 4,857
Dividends Payable. . . . . . . . . . . . . . . . 109 109
Federal Income Taxes . . . . . . . . . . . . . . 0 349
Taxes, Other Than Income Taxes . . . . . . . . . 861 1,284
Accrued Pension Contributions. . . . . . . . . . 8 481
Other Accrued Liabilities. . . . . . . . . . . . 809 749
Current Maturities Of Long-Term Debt . . . . . . 400 400
------- -------
Total Current Liabilities . . . . . . . . . . 10,393 12,836
Long Term Liabilities:
Long-Term Debt . . . . . . . . . . . . . . . . . 10,800 8,700
Unfunded Pension Obligation. . . . . . . . . . . 3,399 3,399
Postretirement Benefits Other Than Pensions. . . 4,950 3,745
Deferred Income Taxes. . . . . . . . . . . . . . 718 341
Employee Benefits. . . . . . . . . . . . . . . . 1,221 1,324
------- -------
Total Long-Term Liabilities . . . . . . . . . 21,088 17,509
Stockholders' Equity:
Common Stock, $1.00 Par Value, Authorized
2,000,000 Shares; 1,086,662 Shares
Outstanding Both at March 31, 1996
and June 30, 1995 . . . . . . . . . . . . . . . 1,087 1,087
Additional Capital . . . . . . . . . . . . . . . 2,824 2,772
Retained Earnings. . . . . . . . . . . . . . . . 29,745 28,365
Unfunded Pension Costs . . . . . . . . . . . . . (1,267) (1,267)
------- -------
Total Stockholders' Equity. . . . . . . . . . 32,389 30,957
------- -------
Total Liabilities and Stockholders' Equity . . . . $63,870 $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 Nine Months
Ended Ended
March 31 March 31
------------ -----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales ............................... $23,517 $24,914 $66,925 $66,486
Costs And Expenses:
Cost of Products Sold ................ 20,136 21,528 58,965 58,582
Selling And Administrative Expenses .. 1,406 1,543 3,548 3,782
Interest Expense ..................... 212 149 674 378
------- ------- ------- -------
Total Costs And Expenses .......... 21,754 23,220 63,187 62,742
------- ------- ------- -------
Earnings Before Federal
Income Taxes ......................... 1,763 1,694 3,738 3,744
Federal Income Taxes .................... 600 553 1,271 1,219
------- ------- ------- -------
Net Earnings ............................ $ 1,163 $ 1,141 $ 2,467 $ 2,525
======= ======= ======= =======
Per Share Of Common Stock:
Net Earnings Per Share .................. $ 1.07 $ 1.05 $ 2.27 $ 2.32
======= ======= ======= =======
Cash Dividends Per Share ................ $ .10 $ .10 $ 1.00 $ .70
======= ======= ======= =======
<FN>
See Accompanying Notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)
Nine Months
Ended March 31
--------------
1996 1995
---- ----
<S> <C> <C>
Operating Activities
Net Earnings ....................................... $ 2,467 $ 2,525
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization .................. 2,623 2,244
Change In Cash Value of Life Insurance ......... (106) (23)
Change In Deferred Income Taxes ................ 338 520
Employee Benefits .............................. (103) (81)
Amortization of Restricted Stock ............... 35 60
Other .......................................... 1,093 1,016
Changes In Operating Assets And Liabilities:
Accounts Receivable ........................... (231) (1,827)
Inventories And Prepaid Expenses .............. (1,044) (2,408)
Accounts Payable And Accrued Expenses ......... (2,443) 740
------- -------
Net Cash Provided By Operating Activities ............ 2,629 2,766
Investing Activities
Purchases of Property, Plant And Equipment-Net ..... (3,965) (5,602)
Financing Activities
Proceeds From Bank Borrowings ...................... 2,300 2,515
Principal Payments On Lease Purchase Obligations ... (200) (200)
Purchases of Common Stock .......................... 0 (14)
Dividends Paid ..................................... (1,087) (762)
------- -------
Net Cash Provided By Financing Activities ............ 1,013 1,539
------- -------
Decrease In Cash ..................................... (323) (1,297)
Cash At Beginning Of Period .......................... 395 1,373
------- -------
Cash At End Of Period ................................ $ 72 $ 76
======= =======
<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 nine months ended March
31, 1996, 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 March 31, 1996, there was $9,600,000 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.
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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 third quarter ended March
31, 1996, decreased $1,397,000, or 5.6%, compared with net sales for the third
quarter of the prior year. Net sales for the nine month period ended March 31,
1996, increased $439,000, or 0.7%, compared with the nine month period of the
prior year. The decrease for the third quarter of the current year is mainly
attributable to a seventeen day strike at one of the Company's largest
customers.
Gross profit for the three month period ended March 31, 1996, decreased
$5,000, or 0.1%, as compared with gross profit for the third quarter of the
prior year. Gross profit for the nine month period ended March 31, 1996,
increased $56,000, or 0.7%, compared with the nine month period of the prior
year. The increase is largely attributable to productivity improvements.
Selling and administrative expenses decreased $137,000, or 8.9%, for the third
quarter ended March 31, 1996, as compared with the third quarter of the prior
year. Selling and administrative expenses decreased $234,000, or 6.2%, as
compared with the nine month period ended March 31, 1995. The decrease is
mainly attributable to a decrease in the accrual of professional services and
employee benefit costs.
DIVIDENDS: The Board of Directors, in February 1996, declared a $.10 per share
dividend paid April 1, 1996, to shareholders of record March 8, 1996.
LIQUIDITY AND CAPITAL RESOURCES: Working capital increased by $3,434,000 from
$11,526,000 at June 30, 1995, to $14,960,000 at March 31, 1996. The principal
changes in the components of working capital included an increase in
inventories and reductions in the accruals for payroll, employee benefits,
pensions and other tax accruals.
At March 31, 1996, the Company had available $15,400,000 under its bank credit
agreement.
Capital expenditures for the nine month period ended March 31, 1996, were
approximately $4.0 million, and, for the year, are expected to approximate
$6.0 million, of which approximately $1.5 million has been committed as of
March 31, 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, 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
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Date May 13, 1996 /s/ W. T. ZurSchmiede, Jr.
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W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date May 13, 1996 /s/ John M. O'Brien
---------------- ---------------------------------
John M. O'Brien
Vice President
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> $ 72
<SECURITIES> 0
<RECEIVABLES> 10,469
<ALLOWANCES> 0
<INVENTORY> 14,303
<CURRENT-ASSETS> 25,353
<PP&E> 72,149
<DEPRECIATION> 42,194
<TOTAL-ASSETS> 63,870
<CURRENT-LIABILITIES> 10,393
<BONDS> 1,000
<COMMON> 1,087
0
0
<OTHER-SE> 31,302
<TOTAL-LIABILITY-AND-EQUITY> 63,870
<SALES> 66,925
<TOTAL-REVENUES> 66,925
<CGS> 58,965
<TOTAL-COSTS> 62,513
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 674
<INCOME-PRETAX> 3,738
<INCOME-TAX> 1,271
<INCOME-CONTINUING> 2,467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,467
<EPS-PRIMARY> 2.27
<EPS-DILUTED> 2.27
</TABLE>
