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, 1996
---------------------------
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
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-0533740
- ---------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 Buhl Building, Detroit Michigan 48226
- ---------------------------------------------------------------------
(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 require- ments for the past 90 days. YES_ X_ NO___
At December 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)
Part I FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED BALANCE SHEETS (UNAUDITED)
(Thousands of Dollars)
December 31 June 30
1996 1996
----------- -------
ASSETS
<S> <C> <C>
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . $ 237 $ 782
Accounts Receivable, Less Allowance of $25,000 . 10,681 10,882
Inventories:
Finished Products. . . . . . . . . . . . . . . . 3,712 4,731
In-Process Products. . . . . . . . . . . . . . . 5,225 5,388
Raw Materials And Supplies . . . . . . . . . . . 2,057 2,122
------ ------
10,994 12,241
Prepaid Expenses And Other Current Accounts. . . 522 471
Deferred Income Taxes . . . . . . . . . . . . . 855 752
------ ------
Total Current Assets. . . . . . . . . . . . . 23,289 25,128
Other Assets:
Intangible Pension Asset . . . . . . . . . . . . 2,548 2,548
Cash Value Of Life Insurance . . . . . . . . . . 4,943 4,889
Miscellaneous. . . . . . . . . . . . . . . . . . 1,226 1,130
------ ------
8,717 8,567
Property, Plant And Equipment. . . . . . . . . . . 75,375 73,420
Less Accumulated Depreciation. . . . . . . . . . 44,603 42,755
------ ------
30,772 30,665
------- -------
Total Assets . . . . . . . . . . . . . . . . . . . $62,778 $64,360
======= =======
</TABLE>
- 2 -
<PAGE>
Part I FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
December 31 June 30
1996 1996
----------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts Payable . . . . . . . . . . . . . . . . $ 3,546 $ 2,977
Payroll And Employee Benefits. . . . . . . . . . 3,666 5,262
Dividends Payable. . . . . . . . . . . . . . . . 109 109
Federal Income Taxes . . . . . . . . . . . . . . 458 415
Taxes, Other Than Income Taxes . . . . . . . . . 1,337 1,318
Accrued Pension Contributions. . . . . . . . . . 79 664
Other Accrued Liabilities. . . . . . . . . . . . 458 371
Current Maturities Of Long-Term Debt . . . . . . 400 400
------- -------
Total Current Liabilities . . . . . . . . . . 10,053 11,516
Long Term Liabilities:
Long-Term Debt . . . . . . . . . . . . . . . . . 5,985 7,960
Unfunded Pension Obligation. . . . . . . . . . . 2,977 2,977
Postretirement Benefits Other Than Pensions. . . 6,022 5,250
Deferred Income Taxes. . . . . . . . . . . . . . 1,175 1,122
Employee Benefits. . . . . . . . . . . . . . . . 1,135 1,194
Other Liabilities. . . . . . . . . . . . . . . . 482 440
------- -------
Total Long-Term Liabilities . . . . . . . . . 17,776 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 . . . . . . . . . . . . . . . 2,940 2,918
Retained Earnings. . . . . . . . . . . . . . . . 32,587 31,561
Unfunded Pension Costs . . . . . . . . . . . . . (1,665) (1,665)
------- -------
Total Stockholders' Equity. . . . . . . . . . 34,949 33,901
------- -------
Total Liabilities and Stockholders' Equity . . . . $62,778 $64,360
======= =======
<FN>
See Accompanying Notes.
</TABLE>
- 3 -
<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
l996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales.......................................... $23,759 $22,504 $47,465 $43,408
Costs And Expenses:
Cost of Products Sold........................... 20,176 19,984 41,306 38,829
Selling And Administrative Expenses............. 1,441 1,040 2,684 2,142
Interest Expense................................ 143 264 275 462
------- ------- ------- -------
Total Costs and Expenses..................... 21,760 21,288 44,265 41,433
------- ------- ------- -------
Earnings Before Federal
Income Taxes.................................... 1,999 1,216 3,200 1,975
Federal Income Taxes .............................. 679 414 1,088 671
------- ------- ------- -------
Net Earnings....................................... $ 1,320 $ 802 $ 2,112 $ 1,304
======= ======= ======= =======
Per Share Of Common Stock:
Net Earnings Per Share............................. $ 1.21 $ .74 $ 1.94 $ 1.20
======= ======= ======= =======
Cash Dividends Per Share........................... $ .10 $ .10 $ 1.00 $ .90
======= ======= ======= =======
<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
1996 1995
---- ----
<S> <C> <C>
Operating Activities
Net Earnings ..................................................... $ 2,112 $ 1,304
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization................................. 1,870 1,719
Increase In Cash Value of Life Insurance...................... (54) (79)
Change In Deferred Income Taxes............................... (50) 338
Employee Benefits............................................. (58) (67)
Amortization of Restricted Stock.............................. 12 23
Other......................................................... 727 647
Changes In Operating Assets And Liabilities:
Accounts Receivable.......................................... 201 263
Inventories And Prepaid Expenses............................. 1,197 110
Accounts Payable And Accrued Expenses........................ (1,463) (3,404)
------- -------
Net Cash Provided By Operating Activities........................... 4,494 854
Investing Activities
Purchases of Property, Plant And Equipment-Net.................... (1,977) (2,883)
Financing Activities
Proceeds and Repayments From Bank Borrowings...................... (1,775) 2,970
Principal Payments on Lease Purchase Obligations.................. (200) (200)
Dividends Paid.................................................... (1,087) (978)
------- -------
Net Cash Provided By (Used In) Financing Activities................. (3,062) 1,792
------- -------
Decrease In Cash.................................................... (545) (237)
Cash At Beginning Of Period......................................... 782 395
------- -------
Cash At End Of Period............................................... $ 237 $ 158
======= =======
<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, 1996, are not necessarily indicative of the results to be
expected for the fiscal year ending June 30, 1997.
Note B - Debt
On October 24, 1995, the Company entered into a $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. On October 23, 1996, the Bank
approved a one year extension of the revolving credit facility and term loan
option. The Company now has the option to convert borrowings thereunder
(classified as long-term debt) to a term note through October 31, 1999, the
new 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, 2001. As of December 31, 1996, there was $5,185,000 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, 1996, increased $1,255,000, or 5.6%, compared with net sales for
the second quarter of the prior year. Net sales for the six month period
ended December 31, 1996, increased $4,057,000, or 9.3%, compared with the six
month period of the prior year. The increase is largely attributable to new
product programs.
Gross profit for the three month period ended December 31, 1996,increased
$1,063,000, or 42.2%, as compared with gross profit for the second quarter
of the prior year. Gross profit for the six month period ended December 31,
1996, increased $1,580,000, or 34.5%, compared with the six month period of
the prior year. The increase is attributable mainly to the new product
programs.
Selling and administrative expenses increased $401,000, or 38.6%, for the
second quarter ended December 31, 1996, as compared with the second quarter
of the prior year. Selling and administrative expenses increased $542,000,
or 25.3%, as compared with the six month period ended December 31,1995.
The increase is mainly attributable to increases in compensation.
DIVIDENDS: The Board of Directors, in October 1996, declared a $.10 per share
dividend paid January 3, 1997, to shareholders of record December 9, 1996.
LIQUIDITY AND CAPITAL RESOURCES: Working capital decreased by $377,000
from $13,613,000 at June 30, 1996, to $13,236,000 at December 31, 1996.
At December 31, 1996, the Company had available $19,815,000 under its bank
credit agreement.
Capital expenditures for the six month period ended December 31, 1996,
were approximately $2.0 million, and, for the year, are expected to
approximate $5.0 million, of which approximately $2.4 million has been
committed as of December 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, 1996.
- 7 -
<PAGE>
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 5. Other Events
At its meeting held December 6, 1996, the Company's Board of
Directors took action to extend until June 21, 1997, its election to have
certain provisions of Chapter 7A of the Michigan Business Corporation Act
apply to the Company. The election would have expired on December 21, 1996,
if it had not been so extended. The original election to become subject to
Chapter 7A was reported by the Company in a current report on Form 8-K dated
July 11, 1996.
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 February 13, 1997 /s/ W. T. ZurSchmiede, Jr.
------------------- ---------------------------
W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date February 13, 1997 /s/ John M. O'Brien
------------------- --------------------
John M. O'Brien
Vice President
-8-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> $ 237
<SECURITIES> 0
<RECEIVABLES> 10,681
<ALLOWANCES> 0
<INVENTORY> 10,994
<CURRENT-ASSETS> 23,289
<PP&E> 75,375
<DEPRECIATION> 44,603
<TOTAL-ASSETS> 62,778
<CURRENT-LIABILITIES> 10,053
<BONDS> 800
<COMMON> 1,087
0
0
<OTHER-SE> 33,862
<TOTAL-LIABILITY-AND-EQUITY> 62,778
<SALES> 47,465
<TOTAL-REVENUES> 47,465
<CGS> 41,306
<TOTAL-COSTS> 43,990
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 275
<INCOME-PRETAX> 3,200
<INCOME-TAX> 1,088
<INCOME-CONTINUING> 2,112
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,112
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 1.94
</TABLE>
