<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
===========================================================================
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
SEPTEMBER 30, 1996 1-3574
HASTINGS MANUFACTURING COMPANY
(Exact name of registrant as specified in its charter)
MICHIGAN 38-0633740
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
325 NORTH HANOVER STREET
HASTINGS, MICHIGAN 49058
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 616-945-2491
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS NOVEMBER 1, 1996
<S> <C> <C>
Common stock, $2 par value 390,473 shares
</TABLE>
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<PAGE> 2
Hastings Manufacturing Company and Subsidiaries
Contents
==================================
PART I - FINANCIAL INFORMATION
PAGE
Item 1 - Financial Statements:
Report on Review by Independent Certified Public
Accountants 3
Condensed Consolidated Balance Sheets -
September 30, 1996, and December 31, 1995 4-5
Condensed Consolidated Statements of Operations -
Three Months and Nine Months Ended
September 30, 1996 and 1995 6
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 7-8
Notes to Condensed Consolidated Financial
Statements 9-11
Review by Independent Certified Public Accountants 12
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-16
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 17
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<PAGE> 3
Report on Review by Independent Certified Public Accountants
==================================
Board of Directors
Hastings Manufacturing Company
Hastings, Michigan
We have reviewed the accompanying condensed consolidated balance sheets of
Hastings Manufacturing Company and subsidiaries as of September 30, 1996,
and the related condensed consolidated statements of operations and cash
flows for the three-month and nine-month periods ended September 30, 1996
and 1995, included in the accompanying Securities and Exchange Commission
Form 10-Q for the period ended September 30, 1996. These condensed
consolidated financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
As described in Note 6, the Company sold its filter product line assets
effective September 3, 1995.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of operations, stockholders' equity and
cash flows for the year then ended (not presented herein). In our report
dated March 1, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1995, is fairly stated in all material respects in relation to
the consolidated balance sheet from which it has been derived.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
October 28, 1996
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<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Balance Sheets
==================================
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 842,542 $ 1,909,506
Accounts receivable, less allowance
for possible losses of $435,000
and $225,000 5,168,352 6,584,392
Refundable income taxes 99,276 226,037
Inventories:
Finished products 7,361,867 6,544,211
Work in process 462,202 769,917
Raw materials 2,165,861 2,621,566
Prepaid expenses and other assets 142,898 131,166
Future income tax benefits 2,161,578 2,108,578
----------- -----------
TOTAL CURRENT ASSETS 18,404,576 20,895,373
----------- -----------
PROPERTY AND EQUIPMENT
Land and improvements 648,858 648,266
Buildings 4,321,140 4,045,784
Machinery and equipment 17,139,210 16,061,415
----------- -----------
22,109,208 20,755,465
Less accumulated depreciation 13,961,282 12,902,944
----------- -----------
NET PROPERTY AND EQUIPMENT 8,147,926 7,852,521
----------- -----------
INTANGIBLE PENSION ASSET 1,222,783 1,222,783
----------- -----------
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<PAGE> 5
FUTURE INCOME TAX BENEFITS 6,547,834 6,548,202
----------- -----------
OTHER ASSETS 1,034,750 1,028,689
----------- -----------
$35,357,869 $37,547,568
=========== ===========
</TABLE>
-5-
<PAGE> 6
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Balance Sheets
==================================
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to banks $ 2,800,000 $ 1,500,000
Accounts payable 973,638 2,487,870
Accruals:
Compensation 300,987 384,909
Pension plan contribution 172,439 659,387
Taxes other than income 285,944 204,992
Miscellaneous 238,350 459,719
Current portion of postretirement
benefit obligation 1,541,126 1,541,126
Current maturities of
long-term debt 1,560,500 1,560,500
----------- -----------
TOTAL CURRENT LIABILITIES 7,872,984 8,798,503
LONG-TERM DEBT,
less current maturities 2,393,750 3,490,625
PENSION AND DEFERRED COMPENSATION
OBLIGATIONS, less current portion 4,440,028 4,457,614
POSTRETIREMENT BENEFIT OBLIGATION,
less current portion 15,665,920 15,575,848
----------- -----------
TOTAL LIABILITIES 30,372,682 32,322,590
----------- -----------
-6-
<PAGE> 7
STOCKHOLDERS' EQUITY
Preferred stock, $2 par value,
authorized and unissued
500,000 shares - -
Common stock, $2 par value,
1,750,000 shares authorized;
390,473 and 388,813
shares issued and outstanding 780,946 777,626
Additional paid-in capital 151,475 119,318
Retained earnings 6,573,038 6,854,865
Cumulative foreign currency
translation adjustment (593,842) (600,401)
Pension liability adjustment (1,926,430) (1,926,430)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 4,985,187 5,224,978
----------- -----------
$35,357,869 $37,547,568
=========== ===========
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
-7-
<PAGE> 8
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Operations
==================================
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ ----------------
September 30, 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $9,120,821 $17,369,464 $31,262,856 $52,458,346
COST OF SALES 6,616,002 14,646,262 22,872,877 41,963,113
---------- ----------- ----------- -----------
Gross profit 2,504,819 2,723,202 8,389,979 10,495,233
EXPENSES
Advertising 79,008 586,668 294,893 1,190,931
Selling 819,908 1,643,029 2,786,198 4,797,397
General and administrative 1,525,744 2,457,436 4,980,642 6,739,567
Interest, net 133,030 178,770 304,473 659,059
Loss on sale of filter
operations (Note 6) - 67,254 - 67,254
Non-recurring relocation
costs (Note 6) - - 468,422 -
Other, net (Note 5) 11,550 60,086 (194,388) 80,468
---------- ----------- ----------- -----------
Total expenses 2,569,240 4,993,243 8,640,240 13,534,676
---------- ----------- ----------- -----------
Loss before
income tax benefit (64,421) (2,270,041) (250,261) (3,039,443)
---------- ----------- ----------- -----------
INCOME TAX BENEFIT (10,000) (283,785) (85,000) (558,785)
---------- ----------- ----------- -----------
NET LOSS (54,421) (1,986,256) (165,261) (2,480,658)
---------- ----------- ----------- -----------
NET LOSS PER SHARE
OF COMMON STOCK $ (.14) $ (5.11) $ (.42) $ (6.38)
-8-
<PAGE> 9
AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 390,473 388,668 389,695 388,668
DIVIDENDS PER SHARE
OF COMMON STOCK $ .10 $ .10 $ .30 $ .30
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
-9-
<PAGE> 10
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
==================================
<CAPTION>
Nine months ended September 30, 1996 1995
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (165,261) $(2,480,658)
Adjustments to reconcile net
loss to net cash from
(for) operating activities:
Depreciation 1,045,507 1,412,798
Loss on sale of filter operations - 67,254
Gain on sale of property
and equipment (588) (900)
Change in postretirement
benefit obligation 90,072 2,872
Changes in operating
assets and liabilities:
Accounts receivable 1,417,838 2,594,538
Inventories (7,229) (1,637,189)
Prepaid expenses and other
current assets (11,641) 8,515
Future income tax benefits and
refundable income taxes 73,613 (362,199)
Other assets 25,667 69,277
Accounts payable and accruals (2,208,747) (1,357,274)
----------- -----------
Net cash from (for) operating activities 259,231 (1,682,966)
----------- -----------
INVESTING ACTIVITIES
Capital expenditures (1,337,519) (1,311,305)
Proceeds from sale of filter
operations, net of
related expenses paid - 13,647,443
Proceeds from sale of property
and equipment 1,000 900
Investment of proceeds from
filter sale escrow (31,851) -
----------- -----------
Net cash from (for) investing
activities (1,368,370) 12,337,038
----------- -----------
</TABLE>
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<PAGE> 11
<TABLE>
Hastings Manufacturing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
==================================
<CAPTION>
Nine months ended September 30, 1996 1995
----------- -------------
<S> <C> <C>
FINANCING ACTIVITIES
Proceeds from issuance of notes
payable to banks 7,900,000 18,874,460
Principal payments on notes
payable to banks (6,600,000) (24,438,200)
Principal payments on long-term debt (1,096,875) (2,585,950)
Dividends paid (117,105) (116,600)
----------- ------------
Net cash from (for) financing activities 86,020 (8,266,290)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (43,845) 2,873
----------- ------------
NET INCREASE (DECREASE) IN CASH (1,066,964) 2,390,655
CASH, beginning of period 1,909,506 485,034
----------- ------------
CASH, end of period $ 842,542 $ 2,875,689
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 293,467 $ 803,005
Income taxes, net of refunds 4,880 (222,077)
</TABLE>
See accompanying independent accountants' review report and notes to
condensed consolidated financial statements.
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<PAGE> 12
Hastings Manufacturing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
==================================
NOTE 1 In the opinion of the management of Hastings Manufacturing Company
and subsidiaries (Company), the accompanying unaudited condensed
consolidated financial statements include all normal recurring
adjustments considered necessary to present fairly the financial
position as of September 30, 1996, and the results of operations
and cash flows for the three months and nine months ended
September 30, 1996 and 1995.
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
NOTE 2 The results of operations for the nine months ended September 30,
1996, are not necessarily indicative of the results for all of
1996.
NOTE 3 Net income (loss) per share is determined based on the weighted
average number of shares of common stock outstanding during each
period.
NOTE 4 The condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All
significant intercompany balances, transactions and stockholdings
have been eliminated.
The accompanying consolidated financial statements are condensed
and do not contain all of the information and footnote disclosures
required by generally accepted accounting principles for complete
financial statements.
NOTE 5 Under the terms of a debt agreement, the Company is subject to
specific limitations and restrictions pertaining to working
capital, net worth, dividends, etc. The Company has obtained a
waiver from the bank for its noncompliance with the working
capital restriction.
On March 13, 1996, the Company terminated its interest rate swap
agreement with a commercial bank. This agreement, having a
notional principal amount at the time of termination of
$6,487,500, effectively limited the Company's interest rate
exposure to a fixed rate of 6.92% on its floating rate borrowings.
At termination, the Company received $204,500 from the bank as a
result of favorable interest rates. This amount is included in
other, net expenses in the accompanying 1996 condensed
consolidated statement of operations.
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<PAGE> 13
At the same time, in order to continue to limit its interest rate
exposure, the Company entered into an interest rate collar
agreement with a current notional principal amount of $3 million.
This agreement provides for a cap rate on floating rate borrowings
of 8.25% and a related floor rate of 6.75%.
NOTE 6 As disclosed in Note 2 to the Company's consolidated financial
statements included in its 1995 Annual Report on Form 10-K,
effective on September 3, 1995, the Company entered into an
agreement and sold its filter product line assets to CLARCOR Inc.
(CLARCOR) of Rockford, Illinois. The Company and CLARCOR also
entered into a Transition Agreement on that date whereby the
Company manufactured and supplied certain filters and filter
component parts to CLARCOR through a transition period, which was
completed during the third quarter of 1996. The Transition
Agreement also provides for the reimbursement to the Company of
certain administrative costs directly related to the manufacture
and supply of filters and filter components to CLARCOR.
Total filter-related assets were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C> <C>
Accounts receivable $52,000 $ 765,000
Inventory - 1,458,000
------- ----------
$52,000 $2,223,000
======= ==========
</TABLE>
In September 1995, a total of $720,400 in employee severance
benefits were accrued and expensed relating to the sale. Through
September 30, 1996, the entire amount has been paid ($146,900
during the three months ended December 31, 1995, and $350,500 and
$573,500 during the three and nine months ended September 30,
1996, respectively).
Expense reimbursement for the period September 4, 1995, through
September 30, 1995, included in net sales, amounted to $357,000
and for the three and nine months ended September 30, 1996,
amounted to $10,900 and $776,800, respectively.
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<PAGE> 14
Sales, exclusive of the above expense reimbursement, and estimated
operating profit (loss) amounts for filter operations were
approximately as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
September 30, 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sales $879,000 $ 7,803,000 $5,785,000 $25,458,000
Estimated operating
profit (loss) 87,000 (1,716,000) 698,000 (2,820,000)
</TABLE>
In conjunction with the sale of its filter operations, the Company
relocated its piston ring packaging operations from its former
Knoxville, Tennessee facility to its Hastings, Michigan facility
in 1996. The relocation and associated training costs are non-
recurring in nature. While these costs are directly related to
the 1995 sale of filter operations and the restructuring of the
Company's remaining operations, they were expensed as incurred in
1996 as required by recently issued accounting standards. These
costs, all of which were incurred during the first and second
quarters, totaled $468,422.
The Transition Agreement with CLARCOR also included certain
provisions for the continued distribution of filter products
through the Company's Canadian subsidiary, at the discretion of
CLARCOR. In early November 1996, the Company received
notification from CLARCOR that this arrangement will be
terminated on December 31, 1996. Management is currently
evaluating the Canadian operating alternatives in light of that
notification.
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<PAGE> 15
Hastings Manufacturing Company and Subsidiaries
Review by Independent Certified Public Accountants
==================================
The September 30, 1996 and 1995, condensed consolidated financial
statements included in this filing on Form 10-Q have been reviewed by BDO
Seidman, LLP, Independent Certified Public Accountants, in accordance with
established professional standards and procedures for such a review.
-15-
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As disclosed in the Company's September 30, 1995 and December 31, 1995
filings, and as further updated in Note 6 to the condensed consolidated
financial statements, the Company sold its filter operations and assets
effective September 3, 1995. Under the terms of a Transition Agreement
associated with this sale, results from certain filter operations continued
to impact the Company's financial results through the third quarter of 1996.
The more significant provisions of the Transition Agreement related to the
domestic manufacture and supply of certain filters and filter component
parts, which were completed during the third quarter of 1996. The
Transition Agreement also included provisions for the continued distribution
of filter products through the Company's Canadian subsidiary, at the discretion
of the buyer. In early November 1996, the Company received notification from
the buyer that this arrangement will be terminated on December 31, 1996.
Management is currently evaluating the Canadian operating alternatives in
light of that notification. The related effects on operations of the
September 3, 1995 filter operations sale are noted in greater detail within
the various categories below.
RESULTS OF OPERATIONS
NET SALES
Net sales in the third quarter of 1996 decreased $8,248,643, or 47.5% from
$17,369,464 in the third quarter of 1995 to $9,120,821. Net sales for the
nine-month period ended September 30, 1996, decreased $21,195,490, or 40.4%
from $52,458,346 in 1995 to $31,262,856 in 1996. As disclosed in Note 6, the
sales volume from filter operations declined from $25,458,000 in the first nine
months of 1995 to $5,785,000 thus far this year. Net sales from the remaining
product lines have experienced a decline of $1,522,000 through the first nine
months of this year. The export piston ring volume is down considerably in
1996, reflecting lower export sales and an internal inventory reduction effort
on the part of the Company's primary export representative. In addition, the
Company was more selective in its commitment to certain export markets due to
pricing issues. For future years, the Company intends to broaden its export
sales base to minimize the annual fluctuations of this sales segment. In
contrast to the decreased 1996 export activity, the Company continued to
generate higher volumes within its traditional distributor, original equipment
and private brand piston ring markets. These gains have been attained from a
targeted sales effort following the sale of the filter operations and a
restoration to an acceptable order fill position following the Company's
soft performance through much of 1995. Sales of the Company's additives
product line, however, remained soft through the 1996 nine-month period.
The Company hopes that a recently implemented marketing campaign will
strengthen this sales base in 1997. Though not a significant contributor
to the net sales total, the additives line generates a favorable gross margin
level.
-16-
<PAGE> 17
Net sales in the third quarter of 1995 decreased $656,645, or 3.6%, from the
third quarter of 1994 and declined $2,646,124 in the first nine months of 1995
from the same period in 1994. These declines resulted from the inclusion in
1994 of proceeds from the sale of technology and equipment to a foreign
customer, the Company's inability to meet total customer demands due to
inventory shortages and the sale of the filter operations as of September 3,
1995.
COST OF SALES AND GROSS PROFIT
Reflecting the net sales declines, the cost of sales during the third quarter
of 1996 decreased $8,030,260, or 54.8%, from $14,646,262 in the third quarter
of 1995 to $6,616,002. For the nine-month period in 1996, cost of sales
declined $19,090,236, or 45.5% from $41,963,113 to $22,872,877. The 1995 third
quarter and nine-month cost of sales, reported as $13,346,262 and $38,163,113,
respectively, in the September 30, 1995 Form 10-Q/A, have been restated to
reflect the reclassification of various operating expenses into cost of sales
that took effect January 1, 1996. Those expenses included the group health care
costs associated with production personnel and distribution costs associated
with product handling and shipping.
The gross profit margin for the three- and nine-month periods ended September
30, 1996, were 27.5% and 26.8%, respectively, an improvement over the margins
of 15.7% and 20.0% in the prior year periods. This improvement resulted from
the September 1995 filter operations sale, as margins on other product lines
have traditionally been higher than those generated from filter operations.
The 1996 third quarter results were also favorably impacted by the final LIFO
reserve decline associated with the elimination of filter inventories. The
cost components--materials, labor and overhead--of the remaining product
lines have incurred minimal cost increases causing some pressure upon the
gross profit performance.
The previously reported 1995 third quarter and nine-month gross profit results
weakened from the comparative periods in 1994. The 1994 periods were favorably
impacted by the margin realized on the technology and equipment sale. In
addition, the 1995 results were unfavorably impacted by higher direct labor
costs and overhead charges reflecting, in part, significant overtime costs as
the Company attempted to attain an improved order fill level.
EXPENSES
Total expenses during the third quarter of 1996, excluding net interest,
decreased $2,378,263 or 49.4%, from $4,814,473 for the third quarter of 1995
to $2,436,210. For the 1996 nine-month period, these expenses decreased
$4,539,850, or 35.3%, from $12,875,617 to $8,335,767. Again, the filter
operations sale was the primary factor for the decline as the Company reduced
or eliminated various programs and personnel relative to the refocused
operations. Advertising expenses declined $507,660 and $896,038 for the
three- and nine-month periods, respectively, reflecting the absence of all
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<PAGE> 18
filter-related materials combined with lower support personnel costs and
reduced cooperative advertising exposure. Selling expenses declined $823,121
and $2,011,199, respectively, reflecting lower field staff and support
personnel levels combined with a reduction in the various sales promotion
efforts previously associated with the filter operations. General and
administrative expenses declined $931,692 and $1,758,925, respectively,
which mainly resulted from lower support personnel levels as well as an
overall reduction in most of the office support expenses. The "Other-net"
expense category reflects a "net income" position for the first nine months
of 1996. As disclosed in Note 5, this represents a gain of $204,500 in
March of this year from the termination of an interest rate swap agreement.
As discussed in Note 6, the Company incurred $468,422 of non-recurring costs
during the first half for 1996 relating to the relocation of its piston ring
packaging operations from its former Knoxville, Tennessee facility to its
Hastings, Michigan facility. These costs are reflected on a separate line
in the accompanying 1996 condensed consolidated statements of operations.
While these costs are directly related to the 1995 sale of filter operations
and the restructuring of the Company's remaining operations, they were
expensed as incurred in 1996 as required by recently issued accounting
standards.
INTEREST, NET
Net interest during the first nine months of 1996 decreased $354,586 or 53.8%
from the first nine months of 1995. Following the sale of the filter
operations, various short-term and long-term debt obligations were liquidated.
While some debt balances remain in place, certain invested funds, dedicated
to planned capacity improvements (as discussed in the following section),
remain on hand as well. The net impact of these lower net borrowings and
earnings on the invested funds resulted in the favorable reduction. Net
interest expense increased in the third quarter of 1996 from the second
quarter of this year, reflecting higher average short-term borrowings in
support of higher inventory levels.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1996, the Company generated net cash of
$259,321 from operating activities. Cash flow adjustments from depreciation
and reduced accounts receivable in support of the restructured organization
were sufficient to offset the reduction of trade accounts payable and
miscellaneous accruals. The accounts payable and accruals reductions reflect
activity in the first quarter of 1996 related to scheduled payments to vendors
and the liquidation of accruals from year-end activities.
During the first nine months of 1995, the Company used net cash of $1,682,966
in operations due primarily to the net loss for the period. The depreciation
and accounts receivable sources were largely offset by an increase in
inventory, after adjustment for the sale of filter-related items, and decreases
in accounts payable and accrued liabilities. The accounts receivable reduction
-18-
<PAGE> 19
resulted from reduced filter sales subsequent to the sale of filter operations
in early September, 1995.
During the first nine months of 1996, the Company invested $1,337,519 in
capital expenditures. This included new equipment to enhance production
capabilities within the existing facilities and to upgrade sections of those
facilities in support of the relocation of product inventories and shipping
to Hastings, Michigan. The Company now anticipates that the full year 1996
capital outlays will slightly trail the 1995 total of $2,055,000. Certain
funds resulting from the filter operations sale continue to be targeted for
most of that remaining outlay. The proposed capital outlay, target for 1997
is less than half the estimated 1996 outlay as production capacities should
exceed demand through that period.
The generation of net cash from operating activities in the third quarter of
1996 helped to reverse the net cash decline posted through June of this year.
Only minimal use of additional short-term borrowings was necessary as the
Company increased its total capital outlay through the third quarter and
further reduced its long-term obligations through scheduled debt payments.
As of September 30, 1996, the Company had available approximately $3.5 million
of unused capacity under its short-term lines of credit. Having now fully
absorbed the balance of the relocation costs and any ancillary costs
associated with the filter sale transition period, the Company believes
that current operating activities, combined with those funds targeted for
capacity enhancements, will be sufficient to meet its working capital,
capital expenditure and dividend requirements throughout the coming year.
-19-
<PAGE> 20
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT. The following document is filed as an exhibit to this
report on Form 10-Q:
EXHIBIT
NUMBER DOCUMENT
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K. No reports on Form 8-K have been filed
during the quarter for which this report is filed.
-20-
<PAGE> 21
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.
HASTINGS MANUFACTURING COMPANY
Date: November 14, 1996 By: /S/ MONTY C. BENNETT
Monty C. Bennett
Its Vice President, Employee
Relations, Secretary and Director
Date: November 14, 1996 By: /S/ THOMAS J. BELLGRAPH
Thomas J. Bellgraph
Its Vice President, Finance
-21-
<PAGE> 22
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
27 Financial Data Schedule
-22-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE HASTINGS MANUFACTURING COMPANY AND SUBSIDIARIES FORM
10-Q FOR THE NINE MONTHS ENDED SEPTMEBER 30, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
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0
0
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</TABLE>
