FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 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 0-12808
Cade Industries, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1371038
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5640 Enterprise Drive, Lansing, Michigan 48911
(Address of principal executive offices)
(Zip Code)
(517) 394-1333
(Registrant's telephone number, including area code)
_____________________________________________________
(Former name, former address and former fiscal
year, if changed since last report)
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 periods 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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common stock, $0.001 Par Value -- 21,681,431 shares as of
May 8, 1995
<PAGE>
INDEX
CADE INDUSTRIES, INC.
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of
Operations for the three months ended
March 31, 1995 and 1994 3
Condensed Consolidated Statements of
Cash Flows for the three months
ended March 31, 1995 and 1994 4
Note to Condensed Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 9
Item 6(b). Exhibits & Reports on Form 8-K 9
<PAGE> -1-
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994*
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 11,994 $ 71,537
Trade accounts receivable 4,481,559 4,817,958
Inventories:
Finished goods and
work in progress 7,172,557 6,653,385
Materials and supplies 2,867,008 2,667,904
----------- ----------
10,039,565 9,321,289
Deferred income taxes 153,000 153,000
Prepaid expenses and other
current assets 135,216 170,375
----------- -----------
TOTAL CURRENT ASSETS 14,821,334 14,534,159
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 500,864 500,864
Buildings 4,295,453 4,290,599
Machinery and equipment 8,165,414 8,128,368
Tooling 9,626,527 9,256,142
----------- -----------
22,588,258 22,175,973
Less accumulated depreciation 7,124,083 6,624,101
----------- -----------
15,464,175 15,551,872
INTANGIBLE AND OTHER ASSETS
Goodwill 2,687,911 2,707,361
Other assets 131,519 143,491
----------- -----------
2,819,430 2,850,852
----------- -----------
$33,104,939 $32,936,883
=========== ===========
</TABLE>
<PAGE> -2-
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994*
----------- -------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 3,600,000 $ 3,100,000
Trade accounts payable 2,355,819 2,552,679
Employee compensation and amounts
withheld 582,701 633,736
Accrued expenses 476,521 507,568
Accrued income taxes 293,617 237,101
Current portion of long-term debt 933,769 937,648
------------ ------------
TOTAL CURRENT LIABILITIES 8,242,427 7,968,732
LONG-TERM DEBT 4,386,108 4,616,991
DEFERRED INCOME TAXES 313,000 313,000
SHAREHOLDERS' EQUITY
Preferred Stock, 10% cumulative,
non-voting, stated value $300
per share; authorized 500
shares, none issued
Common Stock, par value $.001 per
share; authorized 100,000,000
shares, issued 21,881,499
shares; outstanding
21,681,431 shares 21,881 21,881
Additional paid-in capital 8,824,874 8,824,874
Retained earnings 11,571,091 11,445,847
----------- -----------
20,417,846 20,292,602
Less cost of Common Stock
in treasury 254,442 254,442
----------- -----------
20,163,404 20,038,160
----------- -----------
$33,104,939 $32,936,883
=========== ===========
</TABLE>
*The balance sheet at December 31, 1994 has been derived from the
audited financial statements at that date.
See notes to condensed consolidated financial statements.
<PAGE> -3-
PART I ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
---------------------------
<S> <C> <C>
Sales $ 7,349,861 $ 5,203,256
Operating expenses:
Cost of sales 5,775,640 4,012,412
Selling, general and
administrative expenses 1,236,296 1,095,708
----------- ------------
7,011,936 5,108,120
----------- ------------
INCOME FROM OPERATIONS 337,925 95,136
Interest expense - net 169,918 90,977
----------- ------------
INCOME BEFORE INCOME TAXES 168,007 4,159
Income taxes 42,761 3,000
----------- ------------
NET INCOME $ 125,246 $ 1,159
=========== ============
NET INCOME PER SHARE $ 0.01 $ 0.00
=========== ============
Weighted average number of
shares of common stock
outstanding 21,681,431 16,907,238
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> -4-
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
---------- ---------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES $ 90,773 $1,751,112
INVESTING ACTIVITIES
Additions to property, plant
and equipment (412,285) (23,195)
Increase in other assets (3,269) (152,941)
-------- ---------
(415,554) (176,136)
FINANCING ACTIVITIES
Increase (decrease) in notes
payable to bank 500,000 (1,200,000)
Payments of long-term debt (234,762) (223,928)
-------- ----------
265,238 (1,423,928)
-------- ----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (59,543) 151,048
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 71,537 31,534
-------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 11,994 $ 182,582
======== ==========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> -5-
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CADE INDUSTRIES, INC.
MARCH 31, 1995
NOTE A -- BASIS OF PRESENTATION
The condensed consolidated financial statements as of and for the
three month periods ended March 31, 1995 and 1994, have been
prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the
opinion of management, such condensed consolidated financial
statements reflect all adjustments necessary (consisting only of
normal recurring accruals) for a fair presentation. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1994.
<PAGE> -6-
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CADE INDUSTRIES, INC.
RESULTS OF OPERATIONS
SALES
The Company's sales of $7,350,000 in the first quarter of 1995
increased 41.3% or $2,147,000 from the same quarter of 1994.
First quarter 1995 sales included $2,911,000 of sales attributed
to the Company's H.A.C. subsidiary which was acquired November
30, 1994. Sales for the quarter (excluding the effect of
H.A.C.'s sales) actually decreased $764,000 or 14.7% from the
prior year's comparable quarter due mainly to reduced shipments
of test nacelles and other ground support equipment.
Sales for 1995 are still expected to increase slightly, before
giving consideration to a full year's sales from the Company's
H.A.C. subsidiary. Its expected this sales increase will result
from higher gas turbine engine component and repair and overhaul
sales during the balance of 1995.
Sales backlog (representing orders for delivery through 1996) was
approximately $14,600,000, including $3,400,000 related to
H.A.C., at March 31, 1995, compared to $13,000,000 at the same
date in 1994. The Company's backlog includes only "firm" orders
supported by customer purchase orders with fixed delivery dates
and excludes "blanket" purchase orders against which customers
issue production releases covering relatively short time periods.
The decrease (excluding H.A.C.) in order backlog from the first
quarter of 1994 primarily reflects the continued efforts by
customers to reduce both inventory levels and production
leadtimes.
COST OF SALES
Cost of sales increased 43.9% or $1,763,000 (decreased 16.1% or
$646,000 without regard to H.A.C.) in the first quarter of 1995
from the same quarter in 1994, primarily as a result of the 41.3%
increase in sales. Cost of sales increased as a percent of sales
to 78.6% (decreased to 75.8% without regard to H.A.C.) from 77.1%
in 1994.
The product mix of sales at the Company's Auto-Air subsidiary in
the 1995 first quarter included a larger portion of gas turbine
engine components and repair and overhaul services having lower
material and slightly higher labor contents than the mix of sales
in the 1994 first quarter. The favorable effect on the material
cost percentage of the shift in product mix was essentially
offset by cost increases on several of the Company's primary raw
material components. The Company's H.A.C. subsidiary has higher
material and overhead costs as a percentage of sales than the
Company's historical cost relationships. Overhead cost of sales
for the Company as a percent of sales increased due primarily to
the higher overhead percentage at H.A.C.
<PAGE> -7-
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("administrative
expenses") as a percent of sales were 16.8% in the first quarter
of 1995 (20.3% excluding H.A.C.) and 21.1% for the first quarter
of 1994. The decreased percentage primarily resulted from the
positive effect of H.A.C.'s administrative expenses as a percent
of sales which is lower than the Company's historical cost
relationship, offset in part by a smaller sales base over which
to spread fixed costs at the Company's other subsidiaries. In
addition, sales commissions decreased $248,000 from the first
quarter of 1994 to the 1995 first quarter (1.7% of net sales in
1995 compared to 7.2% in 1994) as a result of a change in the
customer mix of test nacelle equipment sales.
NET INTEREST EXPENSE
Net interest expense as a percent of sales was 2.4% and 1.8% for
the first quarters of 1995 and 1994, respectively. This increase
resulted primarily from higher borrowing (due in large part to
the acquisition of H.A.C.) and higher interest rates.
INCOME TAX EXPENSE
First quarter 1995 income taxes were $43,000 or 0.6% of sales
compared to $3,000 or 0.1% of sales for the same quarter of 1994.
NET INCOME
The net income of $125,000 in the first quarter of 1995
represents an increase in after-tax earnings of $124,000 from the
comparable period of 1994. This increase in net earnings
resulted from the factors discussed above.
<PAGE> -8-
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its working capital and longer term capital
needs through short and long-term bank debt, a tax-exempt bond
issue and leasing arrangements on certain items of capital
equipment. The Company decreased its investment in accounts
receivable by approximately $514,000 (excluding H.A.C.) from
December 31, 1994, primarily due to improved collection efforts
and increased its investment in inventory by approximately
$708,000 (excluding H.A.C.) primarily to facilitate shipment in
the second quarter of several test nacelle and other ground
support products requiring longer production runs.
Capital has principally been used to fund the Company's business
development and capital expenditure programs. Management
presently expects to invest at reduced levels in 1995 in
production technology and equipment for improved manufacturing
efficiency, quality enhancement, and joint development efforts
with customers. The Company will also continue to seek
acquisition opportunities to expand and/or diversify its markets.
The Company maintains a $5,000,000 unsecured credit line with a
bank, $1,400,000 of which was available at March 31, 1995. The
Company also has outstanding approximately $1,349,000 of secured
term debt, $1,110,000 of tax-exempt bonds and $2,861,000 of
subordinated notes.
Management believes that expected increased revenues and
continued emphasis on working capital management will lead to
improved cash flow from operations. As a result, the Company's
cash flow from operations and its current credit facilities are
felt to be adequate to finance its operations and capital
expenditure requirements at present and forecasted levels.
<PAGE> -9-
PART II - ITEM 4
At the Company's Annual Meeting of Shareholders on May 2, 1995,
shareholders approved the Cade Industries, Inc. 1994 Stock Option
Plan, with 17,341,605 votes in favor, 701,330 against, 137,880
abstaining, and 373,143 broker nonvotes.
The shareholders also elected the seven nominees for the Board of
Directors. There was no solicitation in opposition to the
nominees proposed in the Proxy Statement and there were no
abstentions or broker nonvotes. The votes with respect to the
nominees was as follows:
DIRECTOR NAME VOTES FOR VOTES WITHHELD
Molly F. Cade 18,216,042 340,916
Conrad G. Goodkind 18,252,935 304,023
William T. Gross 18,230,272 326,686
Richard A. Lund 18,245,402 311,556
Terrell L. Ruhlman 18,257,702 299,256
John W. Sandford 18,229,905 327,053
Steven M. Tadler 18,234,730 322,228
ITEM 6
Registrant filed a report on Form 8-K dated May 1, 1995 reporting
on Item 4 of Form 8-K. No financial statements were contained in
that report.
<PAGE> -10-
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.
CADE INDUSTRIES, INC.
May 12, 1995
By: /s/ Edward B. Stephens
------------------------------
Edward B. Stephens
Vice President, Treasurer and
Chief Financial Officer
104197.2
Cade Industries, Inc.
* * *
Exhibit Index
to
Quarterly Report on Form 10-Q for the period ended March 31, 1995
Exhibit Incorporated Herein Filed
Number Description by Reference To: Herewith
27 Financial Data X
Schedule
104241.01
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CADE
INDUSTRIES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 11,994
<SECURITIES> 0
<RECEIVABLES> 4,481,559
<ALLOWANCES> 0
<INVENTORY> 10,039,565
<CURRENT-ASSETS> 14,821,334
<PP&E> 22,588,258
<DEPRECIATION> 7,124,083
<TOTAL-ASSETS> 33,104,939
<CURRENT-LIABILITIES> 8,242,427
<BONDS> 4,386,108
<COMMON> 21,881
0
0
<OTHER-SE> 20,141,523
<TOTAL-LIABILITY-AND-EQUITY> 33,104,939
<SALES> 7,349,861
<TOTAL-REVENUES> 7,349,861
<CGS> 5,775,640
<TOTAL-COSTS> 5,775,640
<OTHER-EXPENSES> 1,236,296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 169,918
<INCOME-PRETAX> 168,007
<INCOME-TAX> 42,761
<INCOME-CONTINUING> 125,426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,426
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
