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, 1997
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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.)
535 Griswold Street, Suite 2400, 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 require- ments for the past 90 days. YES __ X __ NO _______
At September 30, 1997, the Company had one class of common stock outstanding,
$1.00 par value common stock. There were 1,086,512 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
1997 1997
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ASSETS
<S> <C> <C>
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . $ 131 $ 1,176
Accounts Receivable, Less Allowance of $50 . . . 12,680 11,893
Inventories:
Finished Products. . . . . . . . . . . . . . . . 3,206 3,872
In-Process Products. . . . . . . . . . . . . . . 5,468 5,018
Raw Materials And Supplies . . . . . . . . . . . 1,335 2,350
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10,009 11,240
Prepaid Expenses And Other Current Accounts. . . 312 276
Deferred Income Taxes . . . . . . . . . . . . . 910 909
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Total Current Assets. . . . . . . . . . . . . 24,042 25,494
Other Assets:
Intangible Pension Asset . . . . . . . . . . . . 2,550 2,550
Cash Value Of Life Insurance . . . . . . . . . . 5,092 5,065
Miscellaneous. . . . . . . . . . . . . . . . . . 1,459 1,407
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9,101 9,022
Property, Plant And Equipment. . . . . . . . . . . 80,440 79,348
Less Accumulated Depreciation. . . . . . . . . . 46,392 45,706
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34,048 33,642
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Total Assets . . . . . . . . . . . . . . . . . . . $67,191 $68,158
======= =======
</TABLE>
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<PAGE>
Part I FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
September 30 June 30
1997 1997
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LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts Payable . . . . . . . . . . . . . . . . $ 4,035 $ 5,394
Payroll And Employee Benefits. . . . . . . . . . 4,173 7,072
Dividends Payable. . . . . . . . . . . . . . . . 1,847 109
Federal Income Taxes . . . . . . . . . . . . . . 466 849
Taxes, Other Than Income Taxes . . . . . . . . . 1,200 1,429
Accrued Pension Contributions . . . . . . . . . 236 429
Other Accrued Liabilities. . . . . . . . . . . . 463 375
Current Maturities Of Long-Term Debt . . . . . . 400 400
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Total Current Liabilities . . . . . . . . . . 12,820 16,057
Long Term Liabilities:
Long-Term Debt . . . . . . . . . . . . . . . . . 3,360 600
Unfunded Pension Obligation. . . . . . . . . . . 1,526 1,526
Postretirement Benefits Other Than Pensions. . . 7,113 6,746
Deferred Income Taxes. . . . . . . . . . . . . . 1,602 1,564
Employee Benefits. . . . . . . . . . . . . . . . 1,082 1,105
Other Liabilities. . . . . . . . . . . . . . . . 495 479
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Total Long-Term Liabilities . . . . . . . . . 15,178 12,020
Stockholders' Equity:
Common Stock, $1.00 Par Value, Authorized
2,000,000 Shares; 1,086,512 Shares Outstanding
at Sept. 30, 1997 and at June 30, 1997 . . . . . 1,087 1,087
Additional Capital . . . . . . . . . . . . . . . 3,074 3,066
Retained Earnings. . . . . . . . . . . . . . . . 36,530 37,426
Unfunded Pension Costs . . . . . . . . . . . . . (1,498) (1,498)
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Total Stockholders' Equity. . . . . . . . . . 39,193 40,081
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Total Liabilities and Stockholders' Equity . . . . $67,191 $68,158
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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
l997 1996
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<S> <C> <C>
Net Sales..................................... $24,716 $23,706
Costs And Expenses:
Cost of Products Sold...................... 21,594 21,130
Selling And Administrative Expenses ....... 1,661 1,242
Interest Expense........................... 20 132
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Total Costs and Expenses................ 23,275 22,504
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Earnings Before Federal
Income Taxes............................... 1,441 1,202
Federal Income Taxes ......................... 489 409
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Net Earnings.................................. $ 952 $ 793
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Per Share Of Common Stock:
Net Earnings Per Share....................... $ .88 $ .73
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Cash Dividends Per Share..................... $ 1.70 $ .90
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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
1997 1996
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<S> <C> <C>
Operating Activities
Net Earnings ............................................. $ 952 $ 793
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization......................... 991 922
Increase In Cash Value of Life Insurance.............. (27) (27)
Change In Deferred Income Taxes....................... 38 (38)
Employee Benefits..................................... (22) (33)
Amortization of Restricted Stock...................... 0 6
Other................................................. 337 406
Changes In Operating Assets And Liabilities:
Accounts Receivable.................................. (787) (836)
Inventories And Prepaid Expenses..................... 1,195 932
Accounts Payable And Accrued Expenses................ (4,976) (2,064)
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Net Cash Provided By (Used In) Operating Activities ........ (2,299) 61
Investing Activities
Purchases of Property, Plant And Equipment-Net ........... (1,397) (629)
Financing Activities
Net Proceeds From Bank Borrowings......................... 2,760 160
Dividends Paid............................................ (109) (109)
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Net Cash Provided By Financing Activities................... 2,651 51
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Decrease In Cash............................................ (1,045) (517)
Cash At Beginning Of Period................................. 1,176 782
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Cash At End Of Period....................................... $ 131 $ 265
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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, 1997, are not necessarily indicative of the
results to be expected for the fiscal year ending June 30, 1998.
Note B - Debt
On October 15, 1997, the Bank approved a one year extension of the Company's
$25,000,000 Revolving Credit and Term Loan Agreement. The Company has the
option to convert borrowings thereunder (classified as long-term debt) to a
term note through October 31, 2000, 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, 2002. As of September 30,
1997, there was $2,760,000 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.
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, 1997, increased $1,010,000, or 4.3%, compared with net sales
for the first quarter of the prior year. The increase is attributable to new
product development and the continued strong demand in North American
automobile sales.
Gross profit for the three month period ended September 30, 1997, increased
$546,000, or 21.2%, as compared with gross profit for the first quarter of
the prior year. The increase is attributable mainly to additional volume and
product mix.
Selling and administrative expenses increased $419,000, or 33.7%, for the
first quarter ended September 30, 1997, as compared with the first quarter of
the prior year. The increase is mainly attributable to the increase in
compensation which is driven by increased profitability.
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<PAGE>
DIVIDENDS: The Board of Directors, in August 1997, declared a $.10 per share
dividend and an extra $1.60 per share dividend, paid October 1, 1997, to
shareholders of record September 5, 1997.
LIQUIDITY AND CAPITAL RESOURCES: Working capital increased by $1,785,000 from
$9,437,000 at June 30, 1997, to $11,222,000 at September 30, 1997.
At September 30, 1997, the Company had available $22,240,000 under its bank
credit agreement.
Capital expenditures for the three month period ended September 30, 1997,
were approximately $1.4 million, and, for the year, are expected to
approximate $7.0 million, of which approximately $5.1 million has been
committed as of September 30, 1997.
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, 1997.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth at the conclusion 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 10.2. One year extension of Revolving Credit and Term
Loan Agreement by and between Registrant and Comerica Bank,
dated October 15, 1997.
Exhibit 27 Financial Data Schedule
(b) 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.
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<PAGE>
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 13, 1997 /s/ W. T. ZurSchmiede, Jr.
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W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date November 13, 1997 /s/ John M. O'Brien
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John M. O'Brien
Vice President
Exhibit Index:
Exhibit 10.2 One Year Extension of Revolving
Credit and Term Loan Agreement
Exhibit 27 Financial Data Schedule
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Comerica [ Logo ]
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Comerica Bank One Detroit Center
500 Woodward Ave.
Detroit, MI 48226-3265
(313) 222-5431
October 23, 1997 Deborah S. Albrecht
Account Officer
U. S. Banking
Automotive
Mr. W.T. ZurSchmiede, Jr,
Chairman
Federal Screw Works
2400 Buhl Building
Detroit, Michigan 48226
Dear Mr. ZurSchmiede,
Please accept this letter as a revision to the one previously sent
regarding the extension of your Credit Facilities. (The revision
has been underlined.)
Per your request dated September 8, 1997 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, 2000 and October 31,
2002 respectively.
Please feel free to contact me if you have any questions.
Sincerely,
/s/ Debbie
cc: Wade Plaskey
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE COMPANY'S
FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD
ENDING SEPTEMBER 30, 1997, 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-30-1998
<PERIOD-END> SEP-30-1997
<CASH> $ 131
<SECURITIES> 0
<RECEIVABLES> 12,680
<ALLOWANCES> 0
<INVENTORY> 10,009
<CURRENT-ASSETS> 24,042
<PP&E> 80,440
<DEPRECIATION> 46,392
<TOTAL-ASSETS> 67,191
<CURRENT-LIABILITIES> 12,820
<BONDS> 600
<COMMON> 1,087
0
0
<OTHER-SE> 38,106
<TOTAL-LIABILITY-AND-EQUITY> 67,191
<SALES> 24,716
<TOTAL-REVENUES> 24,716
<CGS> 21,594
<TOTAL-COSTS> 23,255
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20
<INCOME-PRETAX> 1,441
<INCOME-TAX> 489
<INCOME-CONTINUING> 952
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 952
<EPS-PRIMARY> 0.88
<EPS-DILUTED> 0.88
</TABLE>
