FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 34-26589, eff. 4/12/89)
UNITED STATES 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 period ended December 31, 1993
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 1-3940
National-Standard Company
(Exact name of registrant as specified in its charter)
Delaware 38-1493458
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1618 Terminal Road, Niles, Michigan 49120
(Address of principal executive offices) (Zip Code)
(616) 683-8100
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether 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.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
Form 551a.wp - 1 -
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.
Shares Outstanding at
Title of Each Class February 1, 1994
Common Stock, $ .01 par value 5,367,543
Form 551a.wp - 2 -
Part I. FINANCIAL INFORMATION
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
($000, Except Per Share Amounts)
Three Months Ended
December 31
1993 1992
Net Sales $52,242 $50,941
Cost of sales 46,985 45,057
-------- -------
Gross profit 5,257 5,884
Selling and administrative expenses 8,934 4,825
-------- -------
Operating profit (loss) (3,677) 1,059
Interest expense (899) (1,046)
Other income 91 95
-------- -------
Income (loss) before income taxes
and effect of accounting change (4,485) 108
Income taxes 33 -
Net income (loss) before effect
of accounting change (4,518) 108
Effect of accounting change - (48,676)
-------- --------
Net loss $(4,518) $(48,568)
-------- --------
Income (loss) per share before effect
of accounting change $ (.84) $ .02
Loss per share $ (.84) $(11.01)
Dividends per share $ 0.00 $ 0.00
Average shares outstanding 5,361,907 4,412,149
See accompanying notes to financial statements.
Form 551a.wp - 3 -
<TABLE>
<CAPTION>
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($000)
<S> <C> <C> <C> <C>
December 31, 1993 September 30, 1993
Assets (Unaudited)
Current assets:
Cash $ 1,016 $ 339
Receivables, net 23,713 24,842
Inventories:
Raw material $ 8,699 $ 8,977
Work-in-process 9,749 13,896
Finished goods 1,668 1,688
Supplies 1,665 21,781 58 24,619
Prepaid expenses 3,578 3,477
Other current assets 761 627
Total current assets $50,849 $ 53,904
Property, plant and equipment $ 148,152 $148,798
Less accumulated depreciation 108,833 39,319 107,239 41,559
Other assets 8,595 8,513
$98,763 $103,976
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $29,539 $ 31,342
Employee compensation and benefits 2,090 2,073
Accrued pension 388 106
Other accrued expenses 9,623 7,278
Current accrued postretirement
benefit cost 4,150 4,150
Notes payable to banks and current
portion of long-term debt 31,734 8,994
Total current liabilities $77,524 $ 53,943
Other long-term liabilities 5,424 5,481
Long-term debt 75 24,100
Accrued postretirement benefit cost 45,279 45,279
Stockholders equity:
Common stock $ .01 par value. Authorized
25,000,000 shares; issued 5,376,526 and
5,368,026 shares, respectively $ 27,000 $ 26,932
Retained deficit (53,093) (48,574)
$(26,093) $(21,642)
Less:
Foreign currency translation
adjustments 2,641 2,425
Note receivable ESOP common stock - 17
Unamortized value of restricted stock 104 42
Treasury stock, at cost, 8,983 shares 67 67
Excess of additional pension liability
over unrecognized prior service cost 634 (29,539) 634 (24,827)
$98,763 $103,976
See accompanying notes to financial statements.
</TABLE>
Form 551a.wp - 4 -
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
($000)
Three Months Ended
December 31
1993 1992
Net cash provided by operating activities $ 2,771 $ 641
Investing Activities:
Capital expenditures (893) (660)
Proceeds from sales of operations - 2,037
--------- ---------
Net cash provided by (used for)
investing activities (893) 1,377
--------- ---------
Financing Activities:
Decrease in debt (1,218) (2,825)
Other 17 276
--------- ---------
Net cash used for financing activities (1,201) (2,549)
--------- ---------
Net increase (decrease) in cash 677 (531)
Beginning cash 339 1,417
--------- ---------
Ending cash $ 1,016 $ 886
--------- ---------
Supplemental Disclosures:
Interest paid $ 901 $ 953
--------- ---------
Income taxes paid $ 28 $ -
--------- ---------
See accompanying notes to financial statements.
Form 551a.wp - 5 -
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, all adjustments necessary for a fair
statement of the financial statements for the interim periods included
herein have been made. All such adjustments are of a normal recurring
nature.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements in the 1993 National-Standard Company
Form 10-K, Annual Report.
2. The results of operations for the three-month period ended December 31,
1993 are not necessarily indicative of the results to be expected for the
full year.
3. During the fourth quarter of 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," retroactive to the beginning
of 1993. The results of operations for the three-month period ended
December 31, 1992 have been restated to reflect the effect of the change
in the accounting method.
Form 551a.wp - 6 -
NATIONAL-STANDARD COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the three months ended December 31, 1993 increased 2.6% over the
same period last year. Gross margin percentages were 10.1% for the current
three-month period compared to 11.6% for the same period last year.
The Company continues to experience an increase in demand for most of its
domestic product lines, including a continued significant strengthening in the
air bag and rechargeable battery materials business during the first quarter.
Gross margins in the first quarter were adversely affected by the continuing
work stoppage at the Columbiana, Alabama wire drawing facility. Additional
costs incurred to meet customer commitments were in excess of $1.5 million in
the quarter. Although the facility continues to operate with supervisory
personnel and replacement workers, the Company recently announced that it
anticipates the Columbiana facility will close by June 1994. The Company has
taken a $4.9 million charge to earnings, as reflected in the first quarter of
1994 selling and administrative expenses, for costs associated with the
potential close of the Columbiana facility and relocation of a portion of its
bead and hose wire production capacity to other National-Standard facilities.
International operations had income of $0.3 million in the current three-month
period compared to a loss of $0.3 million for the same period last year.
Operations in the United Kingdom continue to be scaled back to match current
levels of market demand for the Company's products served from the United
Kingdom, and results have begun to reflect this activity.
Interest expense of $0.9 million in the current three-month period decreased
by 14.1% from the same period last year, due to the combined effect of lower
interest rates and the lower level of borrowing.
The Company remains in an operating loss carryforward position in the United
States, Canada, and the United Kingdom and is unable to recognize a tax
benefit on losses, except to the extent it can offset tax expense on
current income.
LIQUIDITY AND CAPITAL RESOURCES
Total bank borrowings decreased $1.3 million during the quarter. Of this
decrease, $0.1 million was due to exchange rate fluctuations and $1.2 million
resulted from scheduled payments funded by improved operations.
During fiscal 1993 and 1992, the Company's lenders periodically suspended the
effectiveness of certain covenants.
The Company's lenders have amended and extended the Company's credit
agreements until October 1, 1994. The amended agreements require
maintenance of minimum net income levels through October 1, 1994, as well
as compliance with certain other conditions, and provide for maximum
borrowing levels based on a percentage of qualified accounts receivable
and inventory.
The Company will continue to pursue cost reduction activities in both its
domestic and international operations, including personnel reductions and
costs associated with administering its employee benefit programs.
Form 551a.wp - 7 -
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. None.
(b) There were no reports on Form 8-K filed for the three months
ended December 31, 1993.
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.
NATIONAL-STANDARD COMPANY
Registrant
Date February 4, 1994 /s/ M. B. Savitske
-------------------------------------
M. B. Savitske
President and Chief Executive Officer
Date February 4, 1994 /s/ W. D. Grafer
-------------------------------------
W. D. Grafer
Vice President, Finance
02\10\94\02422\011\1010QWJQ.002
Form 551a.wp - 8 -
