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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 March 31, 1994
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)
Indiana 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
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
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.
Title of Each Class Shares Outstanding at April 28, 1994
Common Stock, $ .01 par value 5,365,638
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Part I. FINANCIAL INFORMATION
National-Standard Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)
($000, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $ 58,051 $ 55,905 $110,293 $106,846
Cost of sales 51,918 48,384 98,903 93,441
Gross profit 6,133 7,521 11,390 13,405
Selling and administrative expenses 4,702 5,681 13,636 10,506
Operating income (loss) 1,431 1,840 (2,246) 2,899
Interest expense (902) (1,054) (1,801) (2,100)
Other income (expense), net 113 (206) 204 (111)
Income (loss) before income taxes
and effect of accounting change 642 580 (3,843) 688
Income taxes 31 17 64 17
Net income (loss) before effect
of accounting change 611 563 (3,907) 671
Effect of accounting change - - - (48,676)
Net loss $ 611 $ 563 $ (3,907) $(48,005)
Income (loss) per share before effect
of accounting change $ .11 $ .11 $ (.73) $ .14
Loss per share $ .11 $ .11 $ (.73) $ (9.97)
Dividends per share $ 0.00 $ 0.00 $ 0.00 $ 0.00
Average shares outstanding 5,367,064 5,223,642 5,364,455 4,813,437
See accompanying notes to financial statements.
</TABLE>
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National-Standard Company and Subsidiaries
Consolidated Balance Sheets
($000)
<TABLE>
<CAPTION>
<S> March 31, 1994 September 30, 1993
Assets (Unaudited)
Current assets: <C> <C> <C> <C>
Cash $ 4,815 $ 339
Receivables, net 23,349 24,842
Inventories:
Raw material $ 9,426 $ 8,977
Work-in-process 12,323 13,896
Finished goods 1,509 1,688
Supplies 1,512 24,770 58 24,619
Prepaid expenses 3,899 3,477
Other current assets 733 627
Total current assets $ 57,566 $ 53,904
Property, plant and equipment $148,894 $148,798
Less accumulated depreciation 110,024 38,870 107,239 41,559
Other assets 9,384 8,513
$105,820 $103,976
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 31,751 $ 31,342
Employee compensation and benefits 2,662 2,073
Accrued pension 262 106
Other accrued expenses 10,195 7,278
Current accrued postretirement benefit cost 4,150 4,150
Notes payable to banks and current portion
of long-term debt 35,190 8,994
Total current liabilities $ 84,210 $ 53,943
Other long-term liabilities 5,316 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 (52,482) (48,574)
$(25,482) $(21,642)
Less: Foreign currency translation
adjustments 2,773 2,425
Note receivable ESOP common stock - 17
Unamortized value of restricted stock 92 42
Treasury stock, at cost, 10,388 shares 79 67
Excess of additional pension liability over
unrecognized prior service cost 634 (29,060) 634 (24,827)
$105,820 $103,976
See accompanying notes to financial statements.
</TABLE>
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National-Standard Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
($000)
<TABLE>
<CAPTION>
Six Months Ended
March 31
<S> <C> <C>
Net cash provided by operating activities $ 4,356 $ 3,974
Investing Activities:
Capital expenditures (2,147) (1,397)
Proceeds from sales of operations - 2,037
Net cash provided by (used for)
investing activities (2,147) 640
Financing Activities:
Increase (decrease) in debt 2,262 (5,181)
Other 5 559
Net cash used for financing activities 2,267 (4,622)
Net increase (decrease) in cash 4,476 (8)
Beginning cash 339 1,417
Ending cash $ 4,815 $ 1,409
Supplemental Disclosures:
Interest paid $ 1,070 $ 1,403
Income taxes paid $ 55 $ -
See accompanying notes to financial statements.
</TABLE>
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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 six-month period ended March 31, 1994
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 six-month period
ended March 31, 1993 have been restated to reflect the effect of the
change in the accounting method.
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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 and six months ended March 31, 1994 increased 3.8%
and 3.2%, respectively, over the same periods last year. Gross margin
percentages were 10.6% and 10.3%, respectively, for the current three- and
six-month periods compared to 13.5% and 12.5%, respectively, for the same
periods last year.
The Company continues to experience an increase in demand for most of its
product lines. Continued strengthening in the air bag and rechargeable
battery materials business resulted in six-month sales of these products
increasing 50% over the comparable period last year. Wire sales and gross
margins for the current three- and six-month periods continue to be 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 $1.1 million and $2.6 million in the current three- and
six-month periods, respectively. The Company announced during the first
quarter that it anticipates the Columbiana facility will close by June 1994.
The facility continues to operate with supervisory personnel and replacement
workers. The Company has taken a $4.9 million charge to earnings, as
reflected in the 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 a loss of $0.1 million in the current three-
month period and income of $0.2 million in the current six-month period
compared to losses of $0.1 million and $0.4 million for the same periods 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 and $1.8 million, respectively, in the
current three- and six-month periods decreased by 14.4% and 14.2%,
respectively, from the same periods 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 increased $2.2 million in the six-month period as the
Company utilized its additional domestic term loan availability.
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.
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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 March 31, 1994.
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 May 9, 1994 /s/ M. B. Savitske
M. B. Savitske
President and Chief Executive Officer
Date May 9, 1994 /s/ W. D. Grafer
W. D. Grafer
Vice President, Finance
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