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, 1997 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
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HOWELL INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
MICHIGAN 38-0479830
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17515 West Nine Mile Road, Suite 650, Southfield, Michigan 48075
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 424-8220
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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, 1997: 622,738
(1)
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Part I - Financial Information
<TABLE>
<CAPTION>
Item 1. Financial Statements. HOWELL INDUSTRIES, INC.
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(A Michigan Corporation)
SOUTHFIELD, MICHIGAN
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CONSOLIDATED BALANCE SHEETS
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ASSETS
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April 30, 1997 July 31, 1996
-------------- -------------
(Unaudited) (Unaudited)
CURRENT ASSETS:
- ---------------
<S> <C> <C>
Cash and cash equivalents $ 1,182,382 $ 4,660,050
Accounts receivable, net 14,214,605 5,855,052
Cost of unbilled dies 1,677,819 708,486
Inventories (last in-first out):
Raw materials 1,540,376 1,737,051
Work in process 1,927,309 2,417,602
Finished goods 3,802,023 3,594,653
----------- -----------
Total inventories 7,269,708 7,749,306
Prepaid expenses 1,202,919 1,472,434
Deferred tax asset - current 59,000 59,000
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TOTAL CURRENT ASSETS 25,606,433 20,504,328
- --------------------
PROPERTY, PLANT AND EQUIPMENT-(At cost, 9,461,137 7,769,521
- ---------------------------- ----------- -----------
less accumulated depreciation of
$16,147,718 and $15,180,642 at
4/30/97 and 7/31/96 respectively)
TOTAL $35,067,570 $28,273,849
=========== ===========
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(2)
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<TABLE>
<CAPTION>
HOWELL INDUSTRIES, INC.
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(A Michigan Corporation)
SOUTHFIELD, MICHIGAN
--------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
April 30, 1997 July 31, 1996
-------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
- -------------------
Accounts payable $ 9,285,471 $ 5,620,751
Accrued expenses 4,353,077 2,357,956
Taxes on income 278,229 41,420
Restructuring costs 46,118 46,118
----------- -----------
TOTAL CURRENT LIABILITIES 13,962,895 8,066,245
- -------------------------
OTHER (Includes restructuring costs
- -----
of $119,599.) 516,746 1,123,152
DEFERRED FEDERAL TAXES ON INCOME 124,000 124,000
- --------------------------------
SHAREHOLDERS' INVESTMENT:
- -------------------------
Common stock, no par value:
Authorized 2,500,000 shares,
issued and outstanding,
622,738 shares at 4/30/97
and at 7/31/96 593,584 593,584
Retained earnings 19,870,345 18,366,868
----------- -----------
TOTAL SHAREHOLDERS' INVESTMENT 20,463,929 18,960,452
- ------------------------------ ----------- -----------
TOTAL $35,067,570 $28,273,849
------ ============ ===========
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(3)
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<TABLE>
<CAPTION>
HOWELL INDUSTRIES, INC.
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
--------------------------------------------
For The For The
Nine Months Ended Year Ended
April 30, 1997 July 31, 1996
------------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
Balance, beginning $18,366,868 $18,514,815
Add:
Net profit for the period 1,970,530 474,791
----------- -----------
20,337,398 18,989,606
Deduct:
Cash dividend 467,053 622,738
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Balance, ending $19,870,345 $18,366,868
=========== ===========
</TABLE>
(4)
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<TABLE>
<CAPTION>
HOWELL INDUSTRIES, INC.
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CONSOLIDATED STATEMENTS OF NET EARNINGS (UNAUDITED)
---------------------------------------------------
For the Nine Months For the Three Months
Ended Ended
April 30, April 30, April 30, April 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 72,358,533 $ 60,026,644 $ 24,270,005 $ 25,871,817
Cost of Goods Sold 66,167,213 54,748,102 21,677,708 23,460,502
Selling, General and
Administrative Expenses 3,556,484 3,556,558 1,067,125 1,267,433
------------ ------------ ------------ ------------
Income From Operations 2,634,836 1,721,984 1,525,172 1,143,882
Other Income (Expense)
Interest Expense (5,243) (188) (5,091) (188)
Net Other Income 388,937 19,051 198,658 (336,515)
------------ ------------ ------------ ------------
Earnings Before Income
Taxes 3,018,530 1,740,847 1,718,739 807,179
Taxes on Income 1,048,000 605,000 593,000 284,000
------------ ------------ ------------ ------------
Net Earnings $ 1,970,530 $ 1,135,847 $ 1,125,739 $ 523,179
============ ============ ============ ============
Earnings Per Share $ 3.16 $ 1.82 $ 1.80 $ .84
============ ============ ============ ============
Average Number of Shares
Outstanding During the
Period 622,738 622,738 622,738 622,738
Dividends Per Share .75 .75 .25 .25
</TABLE>
The unaudited consolidated financial statements of Howell Industries, Inc.
for the three and nine months ended April 30, 1997 and 1996 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.
(5)
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<CAPTION>
HOWELL INDUSTRIES, INC.
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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For the Nine For the Nine
Months Ended Months Ended
April 30, 1997 April 30, 1996
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Earnings $ 1,970,530 $ 1,135,847
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Depreciation and amortization 1,154,430 1,131,390
Other - reserves -0- 375,000
Change in operating assets and liabilities:
Accounts receivable (8,359,553) (11,037,456)
Cost of unbilled dies (969,333) (119,794)
Inventories 479,598 (971,114)
Prepaid expenses 269,515 196,788
Accounts payable and accrued expenses 5,659,841 7,379,110
Taxes on income 236,809 59,347
Other non-current liabilities (606,406) (190,617)
------------ ------------
NET CASH PROVIDED BY (USED IN) (164,569) (2,041,499)
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale or purchases of -0- 850,066
marketable securities
Proceeds from sale of equipment 53,063 91,740
Capital expenditures (2,899,109) (1,096,271)
------------ ------------
NET CASH PROCEEDS FROM (USED IN)
INVESTING ACTIVITIES (2,846,046) (154,465)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (467,053) (467,053)
------------ ------------
NET CASH PROCEEDS FROM (USED IN)
FINANCING ACTIVITIES: (467,053) (467,053)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (3,477,668) (2,663,017)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 4,660,050 2,979,374
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,182,382 $ 316,357
============ ============
</TABLE>
(6)
<PAGE>
HOWELL INDUSTRIES, INC.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS
---------------------
The increase in income from operations for the nine months ended April 30,
1997 as compared to the nine months ended April 30, 1996 was primarily
attributable to higher sales. The higher sales were generated mainly by parts
supplied for production of a new vehicle line. Sales of the parts
progressively increased over the nine month period.
The increase in net earnings for the quarter ended April 30, 1997 as compared
to the quarters ended April 30, 1996 and January 31, 1997 was primarily
attributable to lower manufacturing overhead due to efficiencies in the
Masury, Ohio plant and a reserve increase of $375,000 in the quarter ended
April 30, 1996 in connection with the settlement of environmental litigation.
GENERAL
-------
The increase in accounts receivable was due to increased sales by the Company
in April, 1997 and the timing of collections at the end of the month.
Accounts payable have increased due to the timing of payments.
A strike at a Chrysler Corporation plant from April 10 to May 9, 1997
adversely affected sales in late April and early May.
On November 12, 1996, the Company announced that it had retained the
investment firm of Roney & Co. to explore the possible sale or merger of the
Company. On May 21, 1997, the Company agreed to a merger transaction under
which shareholders would receive $37 per share in cash.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- ------- ------------------
There have been no changes in the legal proceedings of the Company regarding
the environmental matters disclosed in the 1996 financial statements.
Item 6. Exhibits and Reports on Form 8-K.
- ------- ---------------------------------
No Form 8-K was filed during the quarter.
SIGNATURES
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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.
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(Registrant)
By: /s/Morton Schiff
----------------
Morton Schiff
President and Principal Financial
Officer
Date: May 28, 1997
(7)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> APR-30-1997
<CASH> $ 1,182,382
<SECURITIES> 0
<RECEIVABLES> 14,214,605
<ALLOWANCES> 0
<INVENTORY> 7,269,708
<CURRENT-ASSETS> 25,606,433
<PP&E> 25,608,855
<DEPRECIATION> 16,147,718
<TOTAL-ASSETS> 35,067,570
<CURRENT-LIABILITIES> 13,962,895
<BONDS> 0
<COMMON> 593,584
0
0
<OTHER-SE> 19,870,345
<TOTAL-LIABILITY-AND-EQUITY> 35,067,570
<SALES> 72,358,533
<TOTAL-REVENUES> 72,747,470
<CGS> 66,167,213
<TOTAL-COSTS> 69,723,697
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,243
<INCOME-PRETAX> 3,018,530
<INCOME-TAX> 1,048,000
<INCOME-CONTINUING> 1,970,530
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,970,530
<EPS-PRIMARY> 3.16
<EPS-DILUTED> 0.00
</TABLE>
