<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 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: 811-854
IIC Industries, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-567594
- --------------------------------- ---------------------------------
(State of Other Jurisdiction of (IRS Identification
Incorporation or Organization) Number)
420 Lexington Avenue; New York, N.Y. 10170
--------------------------------- ---------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 297-6132
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check 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
--- ---
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 practicable date: 1,423,368 shares of common
stock outstanding at April 30, 1997.
<PAGE>
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets
at March 31, 1997
and December 31, 1996 3
Consolidated Statements of Income
for the Three Months Ended March 31,
1997 and March 31, 1996 5
Consolidated Statement of Cash Flows
for the Three Months Ended March 31,
1997 and March 31, 1996 6
Notes to Consolidated Financial
Statements 7
-2-
<PAGE>
IIC Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
----------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 18,955 $ 17,211
Accounts receivable, net 42,753 43,400
Advances to subcontractors 282 282
Inventories (Note C) 53,177 61,178
Other current assets 5,600 10,561
-------- --------
Total current assets 120,767 132,632
RESTRICTED CASH 4,017 8,356
PROPERTY AND EQUIPMENT, NET 32,429 33,630
INVESTMENTS IN AND ADVANCES TO AFFILIATES 23,821 26,525
OTHER INVESTMENTS 547 555
OTHER ASSETS 4,460 1,858
-------- --------
$186,041 $203,556
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE>
IIC Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (continued)
(unaudited)
(dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
----------- ---------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 25,298 $ 20,554
Bank loans 26,967 35,750
Current maturities of long-term debt 47 88
Accrued expenses and other payables 12,044 18,083
Advances from customers 7,991 10,693
--------- ---------
Total current liabilities 72,347 85,168
LONG-TERM DEBT, less current portion 2,098 2,160
DUE TO AFFILIATES 1,922 1,850
OTHER LIABILITIES AND DEFERRED
CREDITS 5,262 5,854
MINORITY INTEREST IN SUBSIDIARIES 18,360 20,494
--------- ---------
99,989 115,526
CONTINGENCIES (Note D)
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value per share;
authorized 1,800,000 shares; issued
1,585,806 shares 1,586 1,586
Additional paid-in capital 22,941 22,941
Retained earnings 92,350 92,053
Foreign translation adjustment (28,100) (25,825)
Less treasury stock - at cost (162,438 shares) (2,725) (2,725)
--------- ---------
86,052 88,030
--------- ---------
$ 186,041 $ 203,556
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
IIC Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
Three months ended March 31,
1997 1996
---- ----
<S> <C> <C>
Net sales $ 60,441 $ 59,498
Cost of sales 48,354 45,540
----------- -----------
Gross profit 12,087 13,958
Selling, general and administrative expenses 11,321 11,661
----------- -----------
Operating income 766 2,297
----------- -----------
Other income (expenses)
Interest income 540 945
Equity in (loss) earnings of affiliates (516) 427
Foreign currency loss (Note B) (87) (408)
Gain on sale of noncurrent assets, net 1,501 72
Interest expense (1,709) (915)
Other, net 291 160
----------- -----------
Income before income taxes and
minority interest 786 2,578
Income taxes (753) (511)
----------- -----------
Income before minority interest 35 2,067
Minority Interest 262 (313)
----------- -----------
NET INCOME $ 297 $ 1,754
=========== ===========
Net income per common share $ 0,21 $ 1.23
=========== ===========
Weighted average number of common shares outstanding 1,423,368 1,423,368
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
IIC Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
1997 1996
---- ----
<S> <C> <C>
Net cash provided by operating activities $ 4,803 $ 9,478
-------- --------
Cash flows from investing activities
Purchase of property and equipment (900) (1,806)
Purchase of investments (79) (2,729)
Proceeds on disposal of property and equipment 113 22
Proceeds on disposal of investments 3 375
Restricted cash 4,339 408
-------- --------
Net cash provided by (used in) investing activities 3,476 (3,730)
-------- --------
Cash flows from financing activities
Issuance of long-term debt 30 26
Net payments of short-term bank loans (6,232) (6,505)
-------- --------
Net cash used in financing activities (6,202) (6,479)
Effect of exchange rate on cash (333) (410)
-------- --------
Net increase (decrease) in cash and cash equivalents
during the period 1,744 (1,141)
Cash and cash equivalents at beginning of period 17,211 19,414
-------- --------
Cash and cash equivalents at end of period $ 18,955 $ 18,273
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for
Interest $ 1,361 $ 1,039
Income taxes 828 1,574
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
IIC Industries, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE A - BASIS OF PRESENTATION
The consolidated financial statements included herein which have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, include the
accounts of IIC Industries Inc. and all material majority-owned
subsidiaries (collectively the "Company"). All material intercompany
transactions and balances have been eliminated. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the consolidated financial statements
contain all adjustments which are those of a normal recurring accrual
nature and disclosures necessary to present fairly the financial
position of the Company as of March 31, 1997 and December 31, 1996 and
the results of operations and cash flows for the three months ended
March 31, 1997 and March 31, 1996.
NOTE B - FOREIGN CURRENCY TRANSLATION
Investor Rt ("Investor"), a majority-owned subsidiary, uses the local
currency, the Hungarian forint, as its functional currency and translates
all assets and liabilities at year-end exchange rates, all income and
expense accounts at average rates and records adjustments resulting from
the translation in a separate component of shareholders' equity.
The Israel Tractors and Equipment Company Limited ("Israel Tractor"), a
wholly-owned subsidiary, uses the US dollar as the functional currency,
since the dollar is the currency in which most of the significant
business of Israel Tractor is conducted, or to which it is linked. Balton
C.P. Limited ("Balton"), a majority-owned subsidiary, uses the US dollar
as the functional currency, since the African subsidiaries operate in
hyperinflationary economies. These subsidiaries translate monetary assets
and liabilities at historical rates. Income and expense accounts are
translated at the rate of exchange prevailing at the date of transaction,
except that depreciation is translated at historical rates. Adjustments
resulting from the translation of these entities are included in results
of operations.
Transactions arising in a foreign currency are translated into the
functional currency at the rate of exchange effective at the date of the
transaction and gains or losses are included in results of operations.
-7-
<PAGE>
IIC Industries, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE C - INVENTORIES
<TABLE>
<CAPTION>
Inventories are as follows:
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Raw materials $15,059 $23,127
Work-in-progress 489 452
Finished goods 37,629 37,599
------ ------
$53,177 $61,178
======= =======
</TABLE>
NOTE D - CONTINGENCIES
The Company has given a guarantee to the bankers of Balton amounting to
$1.6 million. The guarantee is in respect of various outstanding letters
of credit given by the bankers of certain of Balton's creditors. The
Company has also agreed to indemnify a co-guarantor for any losses
accumulating to $510,000.
Balton has given guarantees to third parties in the amount of
approximately $1,250,000.
Investor and certain subsidiaries are potentially liable with respect to
certain guarantees of debt and other financial instruments of other
related and nonrelated companies to the extent of approximately $9.4
million.
NOTE E - INVESTMENT IN AFFILIATE
At March 31, 1997, the Company's effective ownership percentage of
Danubius, Rt. ("Danubius"), a publicly traded company, was approximately
30% at a cumulative cost of approximately $25 million. Danubius owns a
number of hotels in Hungary and specializes in spa facilities.
-8-
<PAGE>
IIC Industries, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
NOTE E (continued)
Accordingly, the Company accounted for this investment under the equity
method at March 31, 1997. Under this method, the investment is carried at
cost plus the Company's share of earnings or losses less distributions.
Since the Company's share of the underlying net assets of Danubius
exceeded the cost at the various purchase dates, the excess of the fair
value of the net assets acquired over the cost is amortized over a period
of forty years.
The following is summarized financial information of Danubius (in
thousands), which was prepared in accordance with international
accounting standards. There were no significant differences between
international accounting standards and generally accepted accounting
standards in the United States:
<TABLE>
<CAPTION>
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Current assets $ 21,388 $ 24,372
Noncurrent assets 148,421 122,081
Current liabilities 11,478 4,538
Noncurrent liabilities 25,491 11,004
Stockholders' equity 132,840 130,911
Three Months ended Three Months ended
March 31, 1997 March 31, 1996
-------------- --------------
Sales $ 17,920 $ 12,225
Operating income (2,342) 1,175
Net income (1,897) 1,289
</TABLE>
-9-
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
The Company is presently operated as a holding company with subsidiaries
in three principal operating geographic areas: (1) Investor RT, a Hungarian
holding company ("Investor" or "Investor Group"), which through its
subsidiaries, engages in a variety of commercial activities in Hungary; (2)
The Israel Tractors and Equipment Company Limited ("Israel Tractor"), an
Israeli corporation, which distributes tractors and related heavy machinery in
Israel and (3) Balton C.P. Limited, an English holding company with African
subsidiaries ("Balton CP") engaged in trading activities in several African
countries.
Substantially all of the Company's revenues are derived from foreign
operations. As such, its income is significantly affected by fluctuations in
currency exchange rates and by currency controls. Most of the countries where
the Company operates such as Hungary and several African countries do not have
freely convertible currencies and their currencies have been subject to
devaluations in recent years. In particular, during 1996, the income from the
Company's Hungarian and African subsidiaries was significantly reduced by
losses arising from foreign exchange transactions due to significant currency
devaluations against the U.S. dollar. The Hungarian currency which is not
freely convertible and which floats against a basket of two currencies (the
U.S. Dollar and the European Currency Unit) underwent devaluations against the
U.S. Dollar at the rate of 21% during 1996. Since the beginning of 1997, the
Hungarian currency has been further devalued by approximately 9% against the
U.S. Dollar. Since the functional currency for Investor is the Hungarian
Forint, these devaluations have resulted in certain currency translation
adjustments directly impacting stockholders' equity. See Notes A(8) and P of
Notes to Registrant's Consolidated Financial Statements on Form 10-K for the
year ended December 31, 1996.
The Company may be subject to tax in some or all of the foreign countries
in which it has operations. However, foreign taxes imposed on the Company's
income may qualify as a foreign income tax and therefore be eligible for
credit against the Company's United States income tax liability subject to
certain limitations set out in the Internal Revenue Code of 1986, as amended
(or alternatively, for deduction against income in determining such
liability). The limitations set out in the Code include, among others,
computation rules under which foreign tax credits allowable with respect to
specific classes of income cannot exceed the United States federal income
taxes otherwise payable with respect to each class of income. Foreign income
taxes exceeding the credit limitation for the year of payment or accrual can
be carried back for two taxable years and forward for five taxable years, in
order to reduce United States federal income taxes, subject to the credit
limitations applicable in each of such years. Other restrictions on the
foreign tax credit include a prohibition on the use of the credit to reduce
liability for the United States corporate alternative minimum taxes by more
than 90%.
-10-
<PAGE>
The Company has three primary areas of operation with respect to its
subsidiaries:
(a) Investor and its subsidiaries in Hungary
(b) Israel Tractor in Israel
(c) Balton CP and its subsidiaries in Nigeria, Ghana, Zambia,
Tanzania, Kenya and Uganda.
The Company has five principal business segments:
(a) vehicle sales and service
(b) export/import and processing/storage of agricultural products
(c) the distribution of tractors and other heavy equipment
(d) the sale of agricultural, communications and electrical equipment
(e) other industries including retail and wholesale consumer products
and Hungarian corporate.
Results of Operations
<TABLE>
<CAPTION>
The table below sets forth for fiscal quarters ended March 31,
1997 and 1996 certain information with respect to the results of operations of
the Company and its principal subsidiaries.
Three Months Net Sales Gross Profit Income (Loss) Net Income (Loss)
- ------------- --------- ------------ before Income -----------------
Ended Taxes and
March 31, 1997 Minority Interests
------------------
Amount % Amount % Amount % Amount %
------ --- ------ --- ------ --- ------ --
(In thousands) (In thousands) (In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IIC Industries Inc. -- -- -- -- $17 2.2 $15 4.7
(parent company)
Israel Tractors & $20,761 34.3 $5,251 43.4 864 109.9 502 169.5
Equipment Co.
(Israel)
Balton CP Group 11,775 19.5 3,601 29.8 908 115.5 299 101.0
(Africa)
Investor RT 27,905 46.2 3,235 26.8 (1,003) (127.6) (519) (175.2)
Group (Hungary) ------ ---- ----- ---- ------- ------- ----- -------
$60,441 100.0 $12,087 100.0 $786 100.0 $297 100.0
======= ===== ======= ===== ==== ===== ==== =====
Three Months Net Sales Gross Profit Net Income (Loss)
Ended --------- ------------ Income (Loss) -----------------
March 31, 1996 before Income
Taxes and
Minority Interests
------------------
Amount % Amount % Amount % Amount %
------ - ------ - ------ - ------ -
(In thousands) (In thousands) (In thousands) (In thousands)
IIC Industries Inc. -- -- -- -- $93 3.6 $90 5.1
(parent company)
Israel Tractors & $22,630 38.0 $5,705 40.9 1,453 56.4 1,251 71.3
Equipment Co.
(Israel)
Balton CP Group 7,296 12.3 2,470 17.7 264 10.2 75 4.3
(Africa)
Investor RT 29,572 49.7 5,783 41.4 768 29.8 338 19.3
Group (Hungary) ------ ---- ----- ---- --- ---- --- ----
$59,498 100.0 $13,958 100.0 $2,578 100.0 $1,754 100.0
======= ===== ======= ===== ====== ===== ====== =====
</TABLE>
-11-
<PAGE>
Consolidated Results of Operations
Net Sales. Net Sales on a consolidated basis for the fiscal quarter ended
March 31, 1997 increased by approximately $943,000 as compared to the
comparable period in 1996.
Gross Profit. Gross Profit on a consolidated basis for the fiscal quarter
ended March 31, 1997 decreased by approximately $1.9 million or approximately
13.4%, to approximately $12.1 million, or approximately 20% of Net Sales, from
approximately $14 million, or approximately 23.5% of Net Sales, in the
corresponding period in 1996. This decrease was mainly attributable to depressed
market conditions, and reductions of margins in the Investor group, primarily
in the agricultural sector. Furthermore, the legacy of the irregular activities
of the previous management of Agrimill who were removed from their posts in
February 1997 contributed to the decrease. Agrimill operates in the
agricultural sector of the Investor group. (See Note O to the Notes of the
1996 Consolidated Financial Statements.
Operating income. Operating income on a consolidated basis for the first
fiscal quarter of 1997 decreased by approximately $1.5 million, or
approximately 67%, to $766,000, or approximately 1.3% of net sales, from
approximately $2.3 million, or approximately 3.9% of Net Sales for the
corresponding period in 1996. This decrease was principally due to the reasons
stated in the gross profit section.
Interest income. Interest income decreased for the quarter by $405,000,
or approximately 43%, to $540,000 due to the investment of its cash by Interag
in shares in Danubius Hotel & Spa Rt. (the "Hotel Company" or the "Danubius").
Interest expense. Interest expense in the quarter increased by $794,000,
or approximately 87%, to approximately $1.7 million due to an increase in bank
loans.
Income before Income Taxes and Minority Interest. Income before Income
Taxes and Minority Interest in the fiscal quarter decreased by approximately
$1.8 million, or approximately 70%, to $786,000 in the quarter (representing
approximately 1.3% of Net Sales for that period) from approximately $2.6
million for the corresponding period in 1996 (representing 4.3% of Net Sales
for that period).
Minority Interests. Minority Interests in the quarter decreased by
$575,000 thousand as a result of losses in the Investor Group.
Net Income. Net Income for the quarter decreased by $1.46 million (or
approximately 83%) to approximately $297,000 (representing approximately 0.5%
of Net Sales for that period) from approximately $1.75 million for the
corresponding period in 1996 (representing approximately 2.9% of Net Sales for
that period).
-12-
<PAGE>
<TABLE>
<CAPTION>
The table below sets forth for the three months ended March 31, 1997 and
1996 certain information with respect to the results of operations of the
Company and its five principal business segments.
Three Months Ended March 31, 1997 Three Months Ended March 31, 1996
Income (Loss) before Income (Loss) before
Income Taxes and Income Taxes and
Net Sales Minority Interest Net Sales Minority Interest
--------- -------------------- --------- --------------------
Amount % Amount % Amount % Amount %
(In thousands) (In thousands) (In thousands) (In thousands)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vehicle sales and $ 2,179 3.6 $(31) (3.9) $ 2,238 3.8 $83 3.2
distribution (Investor)
Export and import of 25,413 42.1 (2,014) (256.3) 26,366 44.3 736 28.6
agricultural products
(Investor)
Other Industries 313 0.5 1,059 134.7 968 1.6 42 1.6
(Investor)
Tractors and heavy 20,761 34.3 864 110.0 22,630 38.0 1,453 56.4
equipment
(Israel Tractor)
Agricultural, 11,775 19.5 908 115.5 7,296 12.3 264 10.2
communications and
electrical equipment
(Balton CP)
-------- ---- ------- ---- ------- ----- ------ ----
$60,441 100.0 $786 100.0 $59,498 100.0 $2,578 100.0
========= ===== ===== ===== ======= ===== ====== =====
</TABLE>
Investor
The operations of three of the Company's segments are conducted in
Hungary through Investor. Investor's business is significantly affected by
general conditions in Hungary. General economic difficulties have contributed
to a recession in Hungary, which has had a negative effect on Investor's
business. With such conditions, despite management's actions in reducing
overhead costs and closing unprofitable operations, Investor has shown a loss
for the quarter.
Vehicle Sales and Service Segment
o Net Sales for the three months ended March 31, 1997 decreased by
approximately $59,000, or approximately 2.6%, as compared to the
corresponding period in 1996.
o There was a Loss before Minority Interests and Income Taxes for the
three months ended March 31, 1997 of $31,000 as compared to a profit
of $83,000 in the corresponding period in 1995.
The decrease in Net Sales and the decrease in Income before Income Taxes
and Minority Interests was primarily due to increased competition throughout
the motor trade business.
-13-
<PAGE>
Export/Import and Processing/Storage of Agricultural Products Segment
o Net Sales for the three months ended March 31, 1997 decreased by
approximately $950,000, or 3.6%, as compared to the corresponding
period in 1996. The decrease in Net Sales was primarily due to
difficult market conditions and lack of export opportunities.
o Income before Income Taxes and Minority Interest for the three months
ended March 31, 1997 decreased by approximately $2.8 million to a net
loss of $2,014,000. This decrease was primarily due to depressed
conditions in the domestic and export markets, a reduction of margins
due to fierce competition, and the legacy of the irregular activities
of the previous management who were only removed from their posts in
the middle of February. (See Note O to 1996 Consolidated Financial
Statements).
Other Industries
o Net Sales for the quarter ended March 31, 1997 decreased by
approximately $655,000, or approximately 67.6%, as compared to the
corresponding period in 1996. This decrease was due to the disposal
of businesses in late 1996.
o Income before Income Taxes and Minority Interest was approximately
$1.06 million for the three months ended March 31, 1997, compared to
income of approximately $42,000 for the three months ended March 31,
1996. The increase arose primarily due to the sale of land and
investments.
Israel Tractor: Tractors and Heavy Equipment Segment
o Net Sales for the three months ended March 31, 1997 decreased by $1.9
million, or approximately 8.3% as compared to the corresponding
period in 1996. This decrease was due to a reduction in demand for
the Company's products.
o Income before Income Taxes and Minority Interest for the three months
ended March 31, 1997 decreased by $589,000 or approximately 40.5% as
compared to the corresponding period in 1996 as a result of lower
trading activity.
Balton CP: Agricultural, Communications and Electrical Equipment
Segment
o Net Sales for the three months ended March 31, 1997 increased by
approximately $4.5 million, or approximately 61%, as compared to the
corresponding period in 1996. This was due to increased demand for
the Company's products and the consolidation of Dizengoff W.A.
Nigeria, that was previously accounted for under the equity method.
-14-
<PAGE>
o Income before Income Taxes and Minority Interests for the three
months ended March 31, 1997 increased by approximately $644,000, or
approximately 244% as compared to the corresponding period in 1995.
This increase was due to the increase in sales.
Liquidity and Capital Resources
The Company has financed its operations through funds generated
internally and through cash and cash equivalents available at the beginning of
1997. At March 31, 1997, IIC Industries Inc., the parent company (the "Parent
Company"), and its wholly-owned Israel Tractor subsidiary, had working capital
of $38.3 million, including cash and cash equivalents of $12.8 million. Cash
of subsidiaries that are not wholly-owned (including the Investor Group and
the Balton CP Group) is generally not available for use by the Parent Company
or other subsidiaries (except to the extent paid to the Parent Company as
reimbursement for general overhead paid by the Parent Company or as management
fees) other than in the form of dividends, if and when declared. Dividends to
the Parent Company from its Israel Tractor subsidiary are subject to a
withholding tax of 15% to 25%. The Parent Company does not expect to receive
cash dividends or other distributions in the foreseeable future from any of
its subsidiaries.
At March 31, 1997, Investor and Israel Tractor had outstanding short-term
indebtedness of approximately $22.9 million and $2.7 million, respectively.
At March 31, 1997, Investor , Israel Tractor, and Balton had unused lines
of short-term credit of $18.4 million, $2.4 million and $2.5 million,
respectively .
During the first quarter of 1997, Investor and Balton made capital
expenditures of $312,000 and $438,000, respectively, for the purchase of
equipment and vehicles and improvements to property. Such expenditures were
made from internally generated funds.
At March 31, 1997, the Company had no significant capital commitments.
Inflation
Inflation has been a persistent aspect of the Hungarian economy in recent
years, although the annual rate of inflation has been predictable and has
therefore been taken into account by the government and private businesses.
Inflation has contributed to the devaluation of the Hungarian currency and has
therefore had an effect on Investor's financial condition.
-15-
<PAGE>
Inflation in Israel was moderate in 1996 and during the first quarter of
1997, and therefore did not significantly affect operations in that country.
Furthermore, the devaluation of the Israeli shekel against the U.S. Dollar for
the first three months of 1997 was an annual rate of 10.4%.
Significant rates of inflation persisted in the African countries where
Balton CP operates, triggering significant devaluations of local currencies.
-16-
<PAGE>
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the period covered by this
report.
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
-17-
<PAGE>
SIGNATURES
In accordance with 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.
Date: May 14, 1997
IIC INDUSTRIES, INC.
By: /s/ Fortunee F. Cohen
--------------------------
Fortunee F. Cohen, Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 18,955
<SECURITIES> 0
<RECEIVABLES> 42,753
<ALLOWANCES> 3,088
<INVENTORY> 53,177
<CURRENT-ASSETS> 120,767
<PP&E> 32,429
<DEPRECIATION> 14,761
<TOTAL-ASSETS> 186,041
<CURRENT-LIABILITIES> 72,347
<BONDS> 0
0
0
<COMMON> 1,586
<OTHER-SE> 84,466
<TOTAL-LIABILITY-AND-EQUITY> 186,041
<SALES> 60,441
<TOTAL-REVENUES> 60,441
<CGS> 48,354
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,321
<LOSS-PROVISION> (249)
<INTEREST-EXPENSE> 1,709
<INCOME-PRETAX> 786
<INCOME-TAX> 753
<INCOME-CONTINUING> 297
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 297
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0
</TABLE>
