FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
________________________
For the quarterly period ended September 30, 1994
Commission File No. 1-8684
Excel Industries, Inc.
(Exact name of registrant as specified in its charter)
Indiana 35-1551685
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1120 North Main Street, Elkhart, IN 46514
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 264-2131
Indicate by an "X" 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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At September 30, 1994, there were outstanding 10,788,865
common shares, no par value.
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EXCEL INDUSTRIES, INC.
Index
Page No.
PART I Financial Information
Consolidated Balance Sheets -
September 30, 1994 and December 31, 1993 1
Consolidated Statements of Income -
Three Months Ended September 30, 1994 and 1993
Nine Months Ended September 30, 1994 and 1993 2
Consolidated Statements of Shareholders' Equity
Nine Months Ended September 30, 1994 and 1993 3
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1994 and 1993 4
Notes to Consolidated Financial Statements 5-7
Management's Discussion and Analysis of
Financial Condition and Results of Operation 8-9
PART II Other Information 10
Signatures 11
Financial Data Schedule Exhibit 27
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EXCEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(amounts in thousands)
September 30, December 31,
1994 1993
ASSETS
Current assets
Cash and cash equivalents $ 13,728 $ 6,767
Marketable securities 36,261 39,786
Accounts receivable 90,339 70,653
Customer tooling to be billed 13,374 9,161
Inventories 35,425 29,867
Prepaid expenses 3,682 6,113
Total current assets 192,809 162,347
Property, plant and equipment,
less accumulated depreciation of
(1994 - $61,245; 1993 - $53,773) 59,832 49,746
Other assets 16,446 17,223
$269,087 $229,316
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 66,512 $ 46,983
Accrued liabilities 24,229 19,050
Current portion of debt 1,392 1,553
Total current liabilities 92,133 67,586
Long-term debt 33,905 35,094
Other long-term liabilities 21,664 20,200
Commitments and contingent liabilities -- --
Shareholders' equity
Preferred shares - no par value,
1,000 shares authorized,
none issued -- --
Common shares - authorized 20,000
shares without par value;
issued 1994 - 10,969;
1993 - 10,575 94,766 87,537
Retained earnings 30,188 19,615
Unrecognized pension actuarial
losses, net of tax (716) (716)
124,238 106,436
Less treasury shares,
at cost - 180 (2,853) --
Total shareholders' equity 121,385 106,436
$269,087 $229,316
NOTE: The balance sheet at December 31, 1993 has been derived
from the audited financial statements at that date.
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PAGE
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EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(thousands, except per share amounts)
Three Months Ended
September 30,
1994 1993
Net sales $144,060 $114,888
Cost of goods sold 131,304 104,873
Gross profit 12,756 10,015
Selling, administrative and engineering expenses 7,948 7,098
Operating income 4,808 2,917
Other income and (expense):
Interest expense (875) (824)
Other income, net 581 614
Income before income taxes 4,514 2,707
Provision for taxes on income 1,670 1,057
Net income $ 2,844 $ 1,650
Net income per share:
Primary $ 0.26 $ 0.16
Fully diluted $ 0.25 $ 0.16
Cash dividends per share $ 0.09 $ 0.08
Nine Months Ended
September 30,
Net sales $457,754 $381,103
Cost of goods sold 411,212 340,749
Gross profit 46,542 40,354
Selling, administrative and engineering expenses 23,948 23,350
Operating income 22,594 17,004
Other income and (expense):
Interest expense (2,558) (2,575)
Other income, net 1,247 1,378
Income before income taxes 21,283 15,807
Provision for taxes on income 7,875 6,244
Net income $ 13,408 $ 9,563
Net income per share:
Primary $ 1.24 $ 0.96
Fully diluted $ 1.13 $ 0.89
Cash dividends per share $ 0.26 $ 0.22
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PAGE
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EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(in thousands of dollars)
UNRECOGNIZED
PENSION
COMMON TREASURY RETAINED ACTUARIAL
SHARES SHARES EARNINGS LOSSES TOTAL
Balance at December 31, 1993 $87,537 $ 0 $19,615 $(716) $106,436
Net income 13,408 13,408
Dividends (2,835) (2,835)
Purchase of 180,300
treasury shares (2,853) (2,853)
Issuance of 380,000
common shares 7,032 7,032
Stock options exercised 27 27
Shares issued under employee
stock purchase plan 170 170
Balance at September 30, 1994 $94,766 $(2,853) $30,188 $(716) $121,385
Balance at December 31, 1992 $57,282 $ 0 $10,346 $(598) $ 67,030
Net income 9,563 9,563
Dividends (2,325) (2,325)
Issuance of 2,000,000
Common Shares 30,019 30,019
Stock options exercised 51 51
Shares issued under employee
stock purchase plan 135 0 135
Balance at September 30, 1993 $87,487 $ 0 $17,584 $(598) $104,473
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PAGE
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EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
Nine Months Ended
September 30,
1994 1993
Cash flows from operating activities
Net income $ 13,408 $ 9,563
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation and amortization 9,396 8,194
Deferred income taxes and other 1,541 3,133
Changes in current assets and liabilities
Accounts receivable and other (17,255) (14,951)
Inventories and customer tooling (9,771) ( 7,818)
Investment in marketable securities 3,525 (45,783)
Accounts payable and accrued
liabilities 24,708 8,016
Total adjustments 12,144 (49,209)
Net cash provided by (used for)
operating activities 25,552 (39,646)
Cash flows from investing activities
Purchase of property, plant and equipment (19,299) (13,663)
Other 517 (451)
Net cash used for investing activities (18,782) (14,114)
Cash flows from financing activities
Issuance of common stock 7,229 30,205
Maturities of long-term debt (1,350) (1,756)
Issuance of long-term debt -- 481
Dividends (2,835) (2,325)
Purchase of treasury shares (2,853) --
Net cash from financing activities 191 26,605
Net change in cash and cash equivalents 6,961 (27,155)
Cash and cash equivalents at beginning of year 6,767 27,510
Cash and cash equivalents at end of third
quarter $ 13,728 $ 355
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EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation:
The financial statements have been prepared from the unaudited
financial records of the Company. In the opinion of management, the
financial statements include all adjustments consisting only of normal
recurring adjustments necessary for a fair presentation of the results
of operations and financial position for the interim periods.
Note 2 - Marketable Securities:
Marketable securities consist of U.S. Government securities, tax-
free municipal securities and municipal fund par value preferred
shares and are classified as trading securities in accordance with FAS
115. Certain amounts for 1993 have been reclassified to conform to
the 1994 classification.
Note 3 - Inventories:
Inventories consist of the following: (in thousands)
September 30, December 31,
1994 1993
Raw materials $21,376 $17,948
Work in process and
finished goods 14,508 12,378
LIFO reserve (459) (459)
$35,425 $29,867
Note 4 - Net Income per Share:
Primary net income per share is computed using the weighted
average number of shares outstanding during the period. In computing
fully diluted earnings per share, the conversion of the Company's 10%
Convertible Subordinated Notes is also assumed except when the effect
of the conversion is anti-dilutive. Shares used to compute net income
per share data are as follows (amounts in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Primary 10,919 10,565 10,828 9,972
Fully-diluted 13,189 12,836 13,099 12,242
Note 5 - Contingencies
A chemical cleaning compound, trichlorethylene ("TCE"), has been
found in the soil and groundwater on the Company's property in
Elkhart, Indiana, and in 1981, TCE was found in a well field of the
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City of Elkhart in close proximity to the Company's facility. The
Company has been named as one of nine potentially responsible parties
(PRPs) in the contamination of this site.
The United States Environmental Protection Agency (EPA) and the
Indiana Department of Environmental Management (IDEM) have conducted a
preliminary investigation and evaluation of the site and have
undertaken temporary remedial action in the nature of air-stripping
towers.
In early 1992, the EPA issued a Unilateral Order under Section
106 of the Comprehensive Environmental Response, Compensation and
Liability Act which required the Company and other PRPs to undertake
remedial work. The Company and the other PRPs have reached an
agreement regarding the funding of groundwater monitoring and the
operation of the air-strippers as required by the Unilateral Order.
The Company was required to install and operate a soil vapor
extraction system to remove TCE from the Company's property. As of
February 1, 1994, the Company has installed and is operating the
equipment pursuant to the Unilateral Order. In addition, the EPA and
IDEM have asserted a claim for reimbursement of their investigatory
costs and the costs of installing and operating the air-strippers on
the municipal well field (the EPA Costs). On February 22, 1993, the
United States filed a lawsuit in the United States District Court for
the Northern District of Indiana against eight of the PRPs, including
the Company. On July 20, 1993, IDEM joined in the lawsuit. The
lawsuit seeks recovery of the costs of enforcement, prejudgment
interest and an amount in excess of $6.8 million, which represents
costs incurred to date by the EPA and IDEM, and a declaration that the
eight defendant PRPs are liable for any future costs incurred by the
EPA and IDEM in connection with the site.
The Company does not believe the annual cost to the Company of
monitoring groundwater and operating the soil vapor extraction system
and the air-strippers will be material. Each of the PRPs, including
the Company, is jointly and severally liable for the entire amount of
the EPA Costs. Certain PRPs, including the Company, are currently
attempting to negotiate an agreed upon allocation of such liability.
The Company believes that adequate provisions have been recorded for
its costs and its anticipated share of EPA Costs and that its cash on
hand, unused lines of credit or cash from operations are sufficient to
fund any required expenditures.
The EPA has also named the Company as a PRP for costs at three
other disposal sites. The Company believes it has recorded adequate
provisions for any costs to be incurred for these sites.
There are claims and pending legal proceedings against the
Company and its subsidiaries with respect to taxes, workers'
compensation, warranties and other matters arising out of the ordinary
conduct of the business. The ultimate result of these claims and
proceedings at September 30, 1994 is not determinable, but, in the
opinion of management, adequate provision for anticipated costs has
been made or insurance coverage exists to cover such costs.
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Note 6 - Share Ownership
On March 24, 1994, Ford Motor Company and Ford Motor Company Fund
disposed of their combined 24% ownership in the Company through a
secondary public offering.
Note 7 - Common Shares
On May 5, 1994, the shareholders approved a new 1994 Stock
Compensation Plan (the "Plan"). The Plan reserves 500,000 common
shares for issuance to officers, other key employees and non-employee
directors. The Plan provides that options may be granted at not less
than fair market value and if not exercised, expire 10 years from the
date of grant. At September 30, 1994, there were options outstanding
for 274,000 shares at an average exercise price of $18.125.
At September 30, 1994, there were options outstanding for 15,750
shares at an average exercise price of $6.364 under the Incentive
Stock Option Plan approved by shareholders in 1984.
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PAGE
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition:
Cash flow from operations totalled $25.6 million in the nine months
ended September 30, 1994. Investment in receivables and inventories
increased $27.0 million due to higher sales levels. This increase was
partially offset by an increase of $24.7 million in trade accounts
payable and accruals. Capital expenditures in the first nine months
totalled $19.3 million and dividends paid and treasury shares
purchased totalled $5.7 million.
The Company received $7.2 million from the sale of common shares in
connection with the sale of shares by Ford. Cash and short-term
marketable securities amounted to $50.0 million at September 30, 1994,
an increase of $3.4 million from December 31, 1993.
Material Changes in Results of Operations:
Three Months Ended September 30, 1994 Compared to
Three Months Ended September 30, 1993
Sales in the third quarter of 1994 increased 25% or $29.2 million to
$144.1 million from the $114.9 million in 1993. The increased sales
occurred primarily in automotive original equipment products.
Production of light vehicles in North America was up 15% in the
quarter and sales from new programs including roll-up glass for Ford
Motor Company's F-series trucks, Explorer, Econoline and Mustang
account for the majority of the increase.
Gross profit was $12.8 million in the current quarter or 8.9% of sales
and compares with gross profit of $10.0 million or 8.7% of sales in
1993's third quarter. The increase in gross profit percentage and
dollars results from higher sales volumes which more than offset the
start-up costs on new products and productivity commitments under
long-term contracts.
Selling, administrative and engineering expenses totalled $7.9 million
in the third quarter up from $7.1 million in the 1993 third quarter.
The change includes increased personnel costs for research,
engineering and development and an increase in incentive compensation.
Interest expense totalled $875,000 in 1994 which compares to $824,000
in the year ago third quarter.
Other income of $581,000 consists primarily of interest income on
marketable securities, which compares to other income of $614,000 in
the 1993 third quarter.
Provision for taxes on income was at an effective rate of 37% as
compared to 39% in 1993. The decline in the overall effective rate
results from reduction in effective state income tax rates.
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PAGE
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Material Changes in Results of Operations:
Nine Months Ended September 30, 1994 Compared to
Nine Months Ended September 30, 1993
Sales in the first nine months of 1994 increased 20% or $76.7 million
to $457.8 as compared to $381.1 million in 1993. Sales of automotive
original equipment accounts for $68 million of the increase while
sales to mass transit, RV and heavy trucks account for the remainder.
Light vehicle production in the first nine months of 1994 totaled 11.1
million units as compared with 9.8 million units in 1993 or an
increase of 13%. Automotive sales increased overall approximately 20%
resulting from increased production and sales of new programs such as
Dodge Ram trucks and Ford Motor Company's F-series trucks, Explorer,
and Mustang.
Gross profit was $46.5 million year-to-date in 1994 or 10.2% of sales
compared to $40.4 million or 10.6% of sales in the first nine months
of 1993. The decline in gross profit as a percentage of sales results
from a shortfall of cost reductions to offset productivity commitments
under long-term sales contracts, an increase in roll-up glass sales on
new programs which carry lower value added and start-up costs
associated with new programs.
Selling, administrative and engineering expenses totalled $23.9
million in the first nine months which was comparable with the $23.4
million in the 1993 first nine months. Offsetting a reduction in the
provision for doubtful accounts and deferred compensation costs were
increased personnel costs for research, engineering and development
and increased depreciation for engineering computer equipment.
Interest expense totalled $2,558,000 in 1994 and compares with
$2,575,000 in the year ago period.
Other income of $1,247,000 consists primarily of interest income on
marketable securities less $200,000 for Excel's share of operating
losses arising from production startup costs in the Brazilian joint
ventures. This compares to other income of $1,378,000 in the 1993
period.
Provision for taxes on income was at an effective rate of 37% as
compared to 39.5% in 1993. The decline in the overall effective rate
results from reduction in effective state rates.
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PAGE
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PART II
OTHER INFORMATION
All items in Part II are either not applicable or answerable in the
negative.
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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 hereunto duly authorized.
EXCEL INDUSTRIES, INC.
(Registrant)
Date: November 15, 1994 s/ James J. Lohman
James J. Lohman
Chairman and
Chief Executive Officer
Date: November 15, 1994 s/ Joseph A. Robinson
Joseph A. Robinson
Secretary/Treasurer and
Chief Financial Officer
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<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 13,728
<SECURITIES> 36,261
<RECEIVABLES> 91,136
<ALLOWANCES> 797
<INVENTORY> 35,425
<CURRENT-ASSETS> 192,809
<PP&E> 121,077
<DEPRECIATION> 61,245
<TOTAL-ASSETS> 269,087
<CURRENT-LIABILITIES> 92,133
<BONDS> 0
<COMMON> 94,766
0
0
<OTHER-SE> 26,619
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<SALES> 457,754
<TOTAL-REVENUES> 457,754
<CGS> 411,212
<TOTAL-COSTS> 411,212
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,247
<INCOME-PRETAX> 21,283
<INCOME-TAX> 7,875
<INCOME-CONTINUING> 13,408
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 13,408
<EPS-PRIMARY> 1.24
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