<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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 quarterly period ended April 30, 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 1-4615
HOWELL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-0479830
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17515 West Nine Mile Road, Suite 650, Southfield, Michigan 48075
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (810) 424-8220
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_____
Number of shares of common stock outstanding at April 30, 1995: 622,738
(1)
<PAGE> 2
Part I - Financial Information
HOWELL INDUSTRIES, INC.
(A Michigan Corporation)
SOUTHFIELD, MICHIGAN
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
April 30, 1995 July 31, 1994
-------------- -------------
(Unaudited) (Note)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 295,190 $ 9,661,018
Marketable securities, at cost 401,101 2,045,034
Accounts receivable, net 9,853,119 7,291,663
Cost of unbilled dies 3,922,065 30,988
Inventories (last in-first out):
Raw materials 1,416,783 1,036,312
Work in process 1,178,375 1,531,541
Finished goods 2,667,478 4,326,093
----------- -----------
Total inventories 5,262,636 6,893,946
Prepaid expenses 1,095,300 790,143
Deferred tax asset - current 751,000 751,000
----------- -----------
TOTAL CURRENT ASSETS 21,580,411 27,463,792
MARKETABLE SECURITIES - NONCURRENT 850,000 850,000
PROPERTY, PLANT AND EQUIPMENT-(At cost, 6,955,287 5,419,360
less accumulated depreciation of
$14,170,701 and $13,552,759 at
4/30/95 and 7/31/94 respectively)
TOTAL $29,385,698 $33,733,152
=========== ===========
</TABLE>
See notes to interim financial statements.
Note: The balance sheet at July 31, 1994 has been taken from the audited
financial statements at that date, and condensed.
(2)
<PAGE> 3
HOWELL INDUSTRIES, INC.
(A Michigan Corporation)
SOUTHFIELD, MICHIGAN
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
April 30, 1995 July 31, 1994
-------------- -------------
(Unaudited) (Note)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 5,677,929 $ 2,864,351
Accrued expenses 2,725,150 2,385,812
Taxes on income 284,725 229,457
Restructuring costs 479,036 1,462,713
----------- -----------
TOTAL CURRENT LIABILITIES 9,166,840 6,942,333
OTHER (Includes restructuring costs
of $400,000.) 830,807 900,000
DEFERRED FEDERAL TAXES ON INCOME 396,000 396,000
SHAREHOLDERS' INVESTMENT:
Common stock, no par value:
Authorized 2,500,000 shares,
issued and outstanding,
622,738 shares at 4/30/95
and 864,738 shares at 7/31/94 593,584 824,255
Retained earnings 18,398,467 24,670,564
----------- -----------
TOTAL SHAREHOLDERS' INVESTMENT 18,992,051 25,494,819
----------- -----------
TOTAL $29,385,698 $33,733,152
=========== ===========
</TABLE>
See notes to interim financial statements.
Note: The balance sheet at July 31, 1994 has been taken from the audited
financial statements at that date, and condensed.
(3)
<PAGE> 4
HOWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<TABLE>
<CAPTION>
For The For The
Nine Months Ended Year Ended
April 30, 1995 July 31, 1994
-------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
Balance, beginning $24,670,564 $23,486,350
Add:
Net profit for the period 1,284,785 2,048,952
----------- -----------
25,955,349 25,535,302
Deduct:
Cash dividend 527,553 864,738
Retirement of Common Stock 7,029,329 -0-
----------- -----------
Balance, ending $18,398,467 $24,670,564
=========== ===========
</TABLE>
See notes to interim financial statements.
(4)
<PAGE> 5
HOWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF NET EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended Ended
April 30, April 30, April 30, April 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $47,860,639 $48,615,746 $15,929,143 $18,062,608
Cost of Goods Sold 43,238,277 42,264,127 14,565,643 15,421,896
Restructuring Costs (300,000) 1,900,000 -0- 1,900,000
Selling, General and
Administrative Expenses 3,362,057 3,290,894 1,110,562 1,169,773
---------- ----------- ----------- -----------
Income (Loss) From Operations 1,560,305 1,160,725 252,938 (429,061)
Other Income (Expense)
Interest Expense (2,488) -0- (2,488) -0-
Net Other Income 474,968 418,675 143,867 101,041
----------- ----------- ----------- -----------
Earnings (Loss) Before
Income Taxes 2,032,785 1,579,400 394,317 (328,020)
Taxes (Credit) on Income 748,000 550,000 163,000 (109,000)
----------- ----------- ----------- ------------
Earnings (Loss) After Income
Taxes, Before Cumulative
Effect of Change in Method
of Accounting for Income
Taxes 1,248,785 1,029,400 231,317 (219,020)
Cumulative Effect of Change
in Method of Accounting
for Income Taxes -0- 240,000 -0- -0-
----------- ----------- ----------- ------------
Net Earnings (Loss) $ 1,284,785 $ 1,269,400 $ 231,317 $ (212,020)
=========== =========== =========== ============
Earnings (Loss) Per Share
After Income Taxes, Before
Change in Method of
Accounting for Income Taxes 1.77 1.19 .37 (.25)
Earnings Per Share on Cum-
ulative Effect of Change
in Method of Accounting for
Income Taxes -0- .28 -0- -0-
----------- ---------- ---------- -----------
Net Earnings (Loss) Per Share $ 1.77 $ 1.47 $ .37 $ (.25)
=========== ========== ========== ===========
Average Number of Shares
Outstanding During the
Period 712,269 864,738 622,738 864,738
Dividends Per Share .75 .75 .25 .25
</TABLE>
The unaudited consolidated financial statements of Howell Industries, Inc. for
the nine months ended April 30, 1995 and 1994 reflect all adjustments which
are, in the opinion of management, necessary to a fair statement of the results
of operations for the interim periods. The operating results for the nine
months ended April 30 are not necessarily indicative of results of operations
for an entire year.
See notes to interim financial statements.
(5)
<PAGE> 6
HOWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
April 30, 1995 April 30, 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings After Income Taxes Before
Cumulative Effect of Change in
Method of Accounting for Income Taxes $1,284,785 $1,029,400
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 906,390 873,630
Other - reserves (69,193) 460,000
Change in operating assets and liabilities:
Accounts receivable (2,561,456) (4,775,554)
Cost of unbilled dies (3,891,077) 190,455
Inventories 1,631,310 409,853
Prepaid expenses (305,157) (379,304)
Accounts payable and accrued expenses 3,152,916 2,988,260
Taxes on income 55,268 (519,005)
Restructuring costs (983,677) 1,491,713
---------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (779,891) 1,769,448
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale or purchases
of marketable securities 1,643,933 (1,493,963)
Proceeds from sale of equipment 39,921 43,820
Capital expenditures (2,482,238) (1,032,429)
---------- -----------
NET CASH PROCEEDS FROM (USED IN)
INVESTING ACTIVITIES (798,384) (2,482,572)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (527,553) (648,553)
Purchase of stock (7,260,000) -0-
---------- -----------
NET CASH PROCEEDS FROM (USED IN)
FINANCING ACTIVITIES: (7,787,553) (648,553)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (9,365,828) (1,361,677)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 9,661,018 4,086,405
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 295,190 $2,724,728
========== ==========
See notes to interim financial statements.
</TABLE>
(6)
<PAGE> 7
HOWELL INDUSTRIES, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
Note 1 - Accounting For Income Taxes
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," effective August 1, 1993. This Statement
establishes new financial accounting guidelines for recording income taxes.
The Company had previously recorded income taxes in accordance with Accounting
Principles Board Opinion No. 11, "Accounting for Income Taxes." The cumulative
effect of adopting SFAS No. 109 on the Company's financial statements was to
increase income by $240,000 ($0.28 per share) for the nine months ended April
30, 1994.
Note 2 - Plant Consolidation
During 1994, the Company began consolidating their manufacturing operations,
which resulted in moving a significant amount of production from the Lapeer,
Michigan plant to the Masury, Ohio plant. The estimated costs of the
consolidation, $1,900,000, were accrued during the third quarter of 1994.
During the quarter ended January 31, 1995, $300,000 of these costs were
returned to income after a determination that they would not be incurred.
Approximately $684,000 in cash was expended during the nine months ended April
30, 1995 related to the consolidation of the manufacturing plants.
(7)
<PAGE> 8
HOWELL INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
During the quarter ended April 30, 1994, earnings were charged with
restructuring expenses of $1,900,000 related to the plant consolidation.
Without this charge to earnings, the third quarter of 1994 would have had a
profit of $1,571,980 before income taxes as compared to a profit of $394,317
for the third quarter of 1995. This decrease in earnings was primarily
attributable to lower sales, start-up costs and inefficiencies related to the
plant consolidation not covered by the reserve for restructuring costs, and
higher steel prices.
Earnings for the third quarter ended April 30, 1995 as compared to the second
quarter ended January 31, 1995 were approximately the same before the recapture
of $300,000 before taxes of the reserve for consolidation costs in the second
quarter.
Earnings for the nine months ended April 30, 1995 as compared to April 30, 1994
were lower before the reserve for consolidation costs, primarily due to higher
material costs and inefficiencies from the consolidation not covered by the
reserve as discussed above.
Cumulative effect of accounting change represents the favorable impact of the
Company adopting the Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," as of August 1, 1993.
Approximately $684,000 in cash was expended during the nine months ended April
30, 1995 related to the consolidation of the manufacturing plants.
PART II - OTHER INFORMATION
Item 5. Other Information
On November 10, 1994, 242,000 shares of common stock were purchased by the
Company at $30.00 per share from the Estate of Herbert Freedland, reducing the
number of shares outstanding to 622,738.
Item 6. Exhibits and Reports on Form 8-K.
No Form 8-K was filed during the quarter.
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 duly authorized.
HOWELL INDUSTRIES, INC.
(Registrant)
/s/ Morton Schiff
By:__________________________________
Morton Schiff President and
Principal Financial Officer
Date: June 1, 1995
(8)
<PAGE> 9
Exhibit Index
Exhibit
Number Description
- - ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> APR-30-1995
<CASH> 295,190
<SECURITIES> 401,101
<RECEIVABLES> 9,853,119
<ALLOWANCES> 0
<INVENTORY> 5,262,636
<CURRENT-ASSETS> 21,580,411
<PP&E> 21,125,988
<DEPRECIATION> 14,170,701
<TOTAL-ASSETS> 29,385,698
<CURRENT-LIABILITIES> 9,166,840
<BONDS> 0
<COMMON> 593,584
0
0
<OTHER-SE> 18,398,467
<TOTAL-LIABILITY-AND-EQUITY> 29,385,698
<SALES> 47,860,639
<TOTAL-REVENUES> 48,335,607
<CGS> 42,938,277
<TOTAL-COSTS> 46,300,334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,488
<INCOME-PRETAX> 2,032,785
<INCOME-TAX> 748,000
<INCOME-CONTINUING> 1,284,785
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,284,785
<EPS-PRIMARY> 1.77
<EPS-DILUTED> 0.00
</TABLE>
