UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q
For the period ended June 30, 1995
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)
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
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 July 24, 1995
Common Stock, $ .01 par value 5,381,396
Part I. FINANCIAL INFORMATION
National-Standard Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)
($000, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales $ 59,907 $ 52,534 $185,166 $ 162,827
Cost of sales 52,182 46,520 157,384 145,423
Gross profit 7,725 6,014 27,782 17,404
Selling and administrative
expenses 5,393 4,564 17,763 18,200
Operating income (loss) 2,332 1,450 10,019 (796)
Interest expense (1,412) (982) (4,218) (2,783)
Other income, net 197 209 204 413
Income (loss) 1,117 677 6,005 (3,166)
Income taxes 65 4 234 68
Net income (loss) $ 1,052 $ 673 $ 5,771 $ (3,234)
Income (loss) per share $ .19 $ .13 $ 1.05 $ (.60)
See accompanying notes to consolidated financial statements.
</TABLE>
National-Standard Company and Subsidiaries
Consolidated Balance Sheets
($000)
<TABLE>
<CAPTION>
June 30, 1995 September 30, 1994
Assets (Unaudited)
<S> <C> <C> <C> <C>
Current assets:
Cash $ 468 $ 378
Receivables, net 25,964 24,682
Inventories:
Raw material $ 10,686 $ 8,145
Work-in-process 14,501 14,400
Finished goods 3,792 28,979 2,601 25,146
Prepaid expenses 4,286 4,269
Other current assets 373 568
Total current assets $ 60,070 $ 55,043
Property, plant and equipment $146,161 $141,148
Less accumulated depreci-
ation 100,912 45,249 98,286 42,862
Other assets 9,889 10,780
$115,208 $ 108,685
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 29,361 $ 29,041
Employee compensation and
benefits 3,280 1,780
Accrued pension 115 115
Other accrued expenses 7,140 6,599
Current accrued postretirement
benefit cost 3,000 3,000
Notes payable to banks and current
portion of long-term debt 7,445 8,245
Total current liabilities $ 50,341 $ 48,780
Other long-term liabilities 5,718 5,818
Long-term debt 33,690 34,328
Accrued postretirement benefit
cost 48,025 48,025
Stockholders equity:
Common stock $ .01 par value.<PAGE>
Authorized 25,000,000 shares;
issued 5,386,894 and 5,376,526
shares, respectively $ 27,486 $ 27,384
Retained deficit (47,428) (53,199)
$(19,942) $(25,815)
Less: Foreign currency translation
adjustments 2,231 2,102
Unamortized value of
restricted stock 95 71
Treasury stock, at cost,
14,135 shares and 10,813
shares, respectively 104 84
Excess of additional pension
liability over unrecognized
prior service cost 194 (22,566) 194 (28,266)
$115,208 $ 108,685
See accompanying notes to consolidated financial statements.
</TABLE>
National-Standard Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
($000)
<TABLE>
<CAPTION>
Nine Months Ended
June 30
1995 1994
<S> <C> <C>
Net cash provided by operating activities $ 8,720 $(1,744)
Investing Activities:
Capital expenditures (7,167) (5,034)
Net cash used for investing activities (7,167) (5,034)
Financing Activities:
Proceeds from long-term financing arrangement 1,725 34,501
Debt repayments, net (3,212 (27,627)
Stock option proceeds 44 0
Other (20) 2
Net cash provided by (used for)
financing activities (1,463) 6,876
Net increase in cash 90 98
Beginning cash 378 339
Ending cash $ 468 $ 437
Supplemental Disclosures:
Interest paid $ 3,749 $ 3,196
Income taxes paid $ 219 $ 56
See accompanying notes to consolidated financial statements.
</TABLE>
National-Standard Company and Subsidiaries
Notes to Consolidated Financial Statements
1. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary for a fair statement of the
financial statements for the interim periods included herein have been
made.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in the 1994 National-Standard
Company Form 10-K, Annual Report, and this report should be read in
conjunction therewith.
2. The results of operations for the nine-month period ended June 30, 1995
are not necessarily indicative of the results to be expected for the
full year.
3. Earnings Per Share - Earnings per share are based on the average number
of shares of common stock outstanding during the year plus common stock
equivalents for the dilutive effect of shares of common stock issuable
upon the exercise of certain stock options. Common shares and common
stock equivalents used in calculating earnings per share for the three
months ended June 30, 1995 and 1994 were 5,535,537 and 5,365,673,
respectively. Common shares and common stock equivalents used in
calculating earnings per share for the nine months ended June 30, 1995
and 1994 were 5,490,031 and 5,364,864, respectively.
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 nine-month periods ended June 30, 1995
increased 14.0% and 13.7%, respectively, over the same periods last year.
Gross margin percentages were 12.9% and 15.0%, respectively, for the
current three- and nine-month periods compared to 11.4% and 10.7%,
respectively, for the same periods last year.
The Company continues to experience an increase in demand for most of its
product lines. Sales of air bag inflator filtration products for the
three- and nine-month periods increased approximately 22% and 34%,
respectively, over the same periods last year. The Company's weld wire
product lines also experienced a 15% and 22% growth over the same time
periods. Last year the Company took a $4.9 million charge to earnings, as
reflected in the first quarter of 1994 selling and administrative expenses,
for costs associated with the close of the Columbiana facility and
relocation of a portion of its bead and hose wire production capacity to
other National-Standard facilities. Also included in the prior year first
nine months' loss was $3.6 million of strike related costs associated with
the Columbiana facility.
The current quarter was adversely affected by the temporary shutdown of the
Stillwater, Oklahoma bead and weld wire facility as a result of enforcement
actions taken by the City of Stillwater in April. The shutdown resulted in
lost sales during the third quarter of approximately $1.5 million, with a
corresponding impact on earnings of approximately $0.35 million. Model
year changeover, inventory realignments at major customers, and a slight
softening in automotive related sales also limited the quarter's results.
Operations in the United Kingdom had a loss of $0.2 million in the current
three-month period and a loss of $1.4 million in the current nine-month
period compared to a loss of $0.2 million and breakeven for the same
periods last year. Included in the $1.4 million loss was $0.3 million for
redundancy and severance pay for the planned reduction in administrative
personnel and $0.1 million for the write-off of idle equipment.
Interest expense of $1.4 million and $4.2 million, respectively, in the
current three- and nine-month periods increased 43.8% and 51.6%,
respectively, over the same periods last year, due to the combined effect
of higher interest rates and a higher level of average borrowings.
The Company remains in an operating loss carryforward position in the
United States, Canada, and the United Kingdom. Income tax expense on
current income was substantially offset by a portion of these
carryforwards.
Liquidity and Capital Resources
Total bank borrowings decreased $1.5 million in the nine-month period.
During 1994, the Company entered into a long-term financing arrangement to
provide up to $45.0 million in revolving credit facilities, term loans and
a line of credit for future capital expenditures. The loans mature in
October 1996 and are fully secured by the Company's assets.
The Company believes adequate funding is in place to fund future growth and
meet the growing demand for its products.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
(27) - Financial Data Schedule.
(b) There were no reports on Form 8-K filed for the three months
ended June 30, 1995.
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 August 4, 1995 /s/ M. B. Savitske
M. B. Savitske
President and Chief Executive Officer
Date August 4, 1995 /s/ W. D. Grafer
W. D. Grafer
Vice President, Finance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains third quarter summary financial information extracted
from National-Standard Company's 1995 third quarter Form 10-Q and is qualified
in its entirety by reference to such Form 10-Q filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 468
<SECURITIES> 0
<RECEIVABLES> 26,394
<ALLOWANCES> 430
<INVENTORY> 28,979
<CURRENT-ASSETS> 60,070
<PP&E> 146,161
<DEPRECIATION> 100,912
<TOTAL-ASSETS> 115,208
<CURRENT-LIABILITIES> 50,341
<BONDS> 0
<COMMON> 27,486
0
0
<OTHER-SE> (50,052)
<TOTAL-LIABILITY-AND-EQUITY> 115,208
<SALES> 185,166
<TOTAL-REVENUES> 185,166
<CGS> 157,384
<TOTAL-COSTS> 157,384
<OTHER-EXPENSES> (204)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,218
<INCOME-PRETAX> 6,005
<INCOME-TAX> 234
<INCOME-CONTINUING> 5,771
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,771
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
