SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
__________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 22, 1997
(October 21, 1997)
HON INDUSTRIES Inc.
(Exact name of registrant as specified in its charter)
Iowa 0-2648 42-0617510
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
414 East Third Street 52761-7109
P.O. Box 1109 (Zip Code)
Muscatine, IA
(Address of principal executive office)
(319)264-7400
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On October 21, 1997, HON INDUSTRIES Inc. issued a press release
to report its third fiscal quarter consolidated results of
operations for the period ended October 4, 1997, the text of
which is filed as Exhibit 99.1 to this Current Report on Form 8-K
and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
99.1 Text of press release dated October 21, 1997.
Signature.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Current Report on Form
8-K to be signed on its behalf by the undersigned hereunto duly
authorized.
HON INDUSTRIES Inc.
Date: October 22, 1997 By: /s/ Melvin L. McMains
_____________________
Melvin L. McMains
Controller and
Principal Accounting Officer
-2-
EXHIBIT 99.1
HON INDUSTRIES P.O. Box 1109 Muscatine, Iowa 52761-7109
News Release
FOR INFORMATION CONTACT: David C. Stuebe, Vice President and
Chief Financial Officer
319/264-7400
HON INDUSTRIES SALES AND EARNINGS SOAR FOR THIRD QUARTER
Net Income Rose 60% on a 53% Sales Gain
Muscatine, IA (October 21, 1997) -- HON INDUSTRIES Inc.
(NASDAQ/NMS: HONI) today reported its seventh consecutive quarter
of record results for its third fiscal quarter ended October 4,
1997. This record performance was primary driven by profitable
growth of existing products, contributions from a steady flow of
new product introductions and acquisitions. Earnings were
favorably influenced by the Company's Rapid Continuous
Improvement (RCI) program that eliminates waste from
manufacturing, distribution and administrative processes, while
improving productivity and efficiency and lowering costs.
For third quarter 1997, consolidated sales increased 53% to
$391.3 million compared with $255.3 million in the third quarter
of 1996. Net income was $25.2 million, or $0.85 per share, up
41% from
$17.9 million, or $0.60 per share, a year-ago. Net income for
1996 includes a one-time income tax
credit of $2.1 million, or $0.07 per share. Adjusting for this
1996 nonoperating event, net income and net income per share for
third quarter 1997 from operations, on a comparative basis,
actually increased 60% over the prior year quarter.
Gross profit rose to 31.5% from 30.9% in the same quarter a year
ago, and operating margins increased to 10.9% from 9.9% as
expenses grew at a slower rate than sales.
The increase in sales volume for third quarter 1997 includes the
initial contribution from HON INDUSTRIES' June 17, 1997,
acquisition of Allsteel Inc., as well as the additional volume
generated by Heat-N-Glo, a division of the Company's Hearth
Technologies subsidiary, which was acquired in the fourth
quarter of 1996. Ongoing new product introductions also
contributed to the Company's top line growth in the quarter.
Third quarter 1997 results were also helped by it being a 14-week
period rather than the normal 13 weeks, an event that occurs once
every six years.
Year-to-date in 1997, consolidated sales rose 37% to $970.8
million from $708.0 million last year. Net income was $61.0
million, or $2.05 per share, up 30% from $47.0 million, or $1.56
per share, earned in 1996. Last year's net income results were
favorably impacted by a $2.0 million gain on the sale of a
subsidiary as well as the income tax credit previously mentioned.
Disregarding these two nonoperating events, comparative net
income from operations for the current year increased 36% and net
income per share rose 38%.
"The strength and growth of the value-priced segment of the
office furniture industry provides us with a solid foundation for
continuing to build market share in our core business. In
addition, the hearth products industry, which is linked to both
home sales and home remodeling, is also thriving," said Jack D.
Michaels, Chairman, President and Chief Executive Officer.
During the third quarter, including contribution from
acquisitions, sales from office products rose 43% while sales
from hearth products grew 159%. Without the impact of the
Allsteel and Heat-N-Glo acquisitions, internal sales growth was
25% and 16%, respectively.
On September 26, 1997, the Company announced it filed a
Registration Statement with the Securities and Exchange
Commission relating to a proposed offering to include 1,000,000
primary shares of its Common Stock offered by HON INDUSTRIES and
2,395,000 secondary shares offered by Bandag, Incorporated. The
proposed offering will be made through the representatives of the
underwriters, Merrill Lynch & Co. and Merrill Lynch
International, William Blair & Company, Robert W. Baird & Co.
Incorporated, and McDonald & Company Securities, Inc. The
Company will not receive any of the proceeds of the secondary
offering of its shares by Bandag, Incorporated.
Just after the close of the quarter, HON INDUSTRIES announced the
signing of a purchase agreement to acquire substantially all of
the assets of Bevis Custom Furniture, Inc., a manufacturer of
affordably priced office furniture, including folding tables,
with 1996 sales of $62 million. Bevis is a synergistic
acquisition, strengthening the Company's presence in the value
segment of the office furniture industry, expanding its product
offering with a complementary line, and enhancing its
distribution channels. This transaction is expected to close in
early November 1997, contingent upon regulatory clearance.
HON INDUSTRIES Inc. is the nation's largest manufacturer of
value-priced office furniture and the fourth largest office
furniture manufacturer and marketer in the U.S. It is also the
nation's largest manufacturer and marketer of fireplaces. HON
INDUSTRIES' common stock is traded on the NASDAQ Stock Market
under the symbol HONI.
For further information on HON INDUSTRIES free of charge via fax,
dial 1-800-PRO-INFO and enter the ticker symbol HONI.
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<TABLE>
HON INDUSTRIES Inc.
Unaudited Condensed Consolidated Statement of Operations
<CAPTION>
(Dollars in thousands, except per share data)
Three Months Nine Months
Oct.4,1997(1) Sept.28,1996 Oct.4,1997(1) Sept.28,1996
________________________________________________________________________________
<S> <C> <C> <C> <C>
Net sales $391,348 $255,254 $970,744 $707,991
Cost of products sold 268,147 176,403 663,310 486,636
________________________________________________________________________________
Gross profit 123,201 78,851 307,464 221,355
Selling and
administrative expenses 80,641 53,605 205,397 152,958
Gain on sale of
subsidiary (2) - - - 3,200
________________________________________________________________________________
Operating income 42,560 25,246 102,067 71,597
Interest income 601 806 1,453 2,306
Interest expense 2,810 715 5,945 2,342
________________________________________________________________________________
Income before income
taxes 40,351 25,337 97,575 71,561
Income taxes 15,132 7,430 36,591 24,533
________________________________________________________________________________
Net income (3) $ 25,219 $ 17,907 $ 60,984 $ 47,028
________________________________________________________________________________
Net income per common
share $0.85 $0.60 $2.05 $1.56
________________________________________________________________________________
Average number of
common shares outstanding 29,677,952 30,063,124 29,689,679 30,192,770
________________________________________________________________________________
(1) Three months ended October 4, 1997, represents 14 weeks
of business activity compared to 13 weeks in the prior
year. Nine months ended October 4, 1997, similarly
represents 40 weeks compared to 39 weeks in the prior
year. Three and nine month periods ended October 4,
1997, also includes the results of operations of the
Allsteel Inc. acquisition from June 17, 1997, date
acquired.
(2) Represents the pre-tax gain on the sale of Ring King
Visibles, Inc., a wholly owned subsidiary (after-tax
effect of $2.0 million, or $0.07 per share).
(3) Net income and net income per share amounts for the
three and nine month periods ended September 28, 1996,
include a one-time federal and state income tax credit
of $2.1 million, or $0.07 per share.
</TABLE>
<TABLE>
Unaudited Condensed Consolidated Statement of Cash Flows
<CAPTION>
Nine Months Ended
(Dollars in thousands) Oct. 4, 1997 Sept. 28, 1996
________________________________________________________________________________
<S> <C> <C>
Net cash flows from (to) operating
activities $ 73,008 $ 58,615
Net cash flows from (to) investing
activities (122,598) (18,081)
Net cash flows from (to) financing
activities 37,642 (22,345)
_______________________________________________________________________________
Net increase (decrease) in cash and cash
equivalents (11,948) 18,189
Cash and cash equivalents at beginning of
period 31,196 32,231
________________________________________________________________________________
Cash and cash equivalents at end of period $ 19,248 $ 50,420
</TABLE>
<TABLE>
Unaudited Condensed Consolidated Balance Sheet
<CAPTION>
Assets Liabilities and Shareholders' Equity
(Dollars in thousands)
As of As of
Oct. 4, 1997 Dec. 28, 1996 Oct. 4, 1997 Dec. 28,
1996
________________________________________________________________________________
<S> <C> <C> <S> <C> <C>
Cash and cash Current
equivalents $19,248 $31,196 liabilities $191,522 $152,553
________________________________________________________________________________
Long-term
Short-term and other
investments 258 1,502 liabilities 156,280 91,468
______________________________________________________________________________
Capital lease
Receivables 166,496 109,095 obligations 5,484 6,320
_________________________________________________________________________________
Deferred
Inventories 65,011 43,550 income taxes 19,389 10,726
_________________________________________________________________________________
Minority
Deferred income interest in
taxes 19,916 9,046 subsidiary - 50
_________________________________________________________________________________
Prepaid
expenses and
other current Total
assets 15,713 11,138 liabilities 372,675 261,117
_________________________________________________________________________________
Capital stock 29,676 29,713
______________________________________
Current assets 286,642 205,527 Paid-in capital 164 360
___________________________________________________________________________________
Property and Retained
equipment-net 305,678 234,616 earnings 274,330 227,365
___________________________________________________________________________________
Receivable
from HON
Members
Company
Ownership
Goodwill 53,253 51,213 Plan (5,041) (5,041)
___________________________________________________________________________________
Total
shareholders'
Other assets 26,231 22,158 equity 299,129 252,397
___________________________________________________________________________________
Total
liabilities
and
shareholders'
Total assets $671,804 $513,514 equity $671,804 $513,514
___________________________________________________________________________________
</TABLE>
