FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
__________________________________
For The Quarterly Period Ended April 1, 1995
Commission File No. 1-8684
Excel Industries, Inc.
(Exact name of registrant as specified in its charter)
Indiana 35-1551685
(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
1120 North Main Street, Elkhart, Indiana 46514
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:(219) 264-2131
Indicate by "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 April 1, 1995, there were outstanding 10,679,524 common
shares, no par value.
<PAGE>
EXCEL INDUSTRIES, INC.
Index
Page No.
PART I Financial Information
Consolidated Balance Sheets -
April 1, 1995 and December 31, 1994 1
Consolidated Statements of Income -
Quarter Ended April 1, 1995 and
March 31, 1994 2
Consolidated Statements of Shareholders'
Equity -
Quarter Ended April 1, 1995 and
March 31, 1994 3
Consolidated Statements of Cash Flows -
Quarter Ended April 1, 1995 and
March 31, 1994 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 Schedules Exhibit 27
<PAGE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of dollars)
April 1, December 31,
1995 1994
____ ____
ASSETS
Current assets
Cash and cash equivalents $ 1,207 $ 175
Marketable securities 42,034 39,520
Accounts receivable 94,945 78,420
Customer tooling to be billed 20,633 16,015
Inventories 35,021 33,576
Prepaid expenses 6,007 8,434
________ ________
Total current assets 199,847 176,140
Property, plant and equipment,
less accumulated depreciation of
(1995 - $61,603; 1994 - $62,405) 62,942 62,876
Other assets 15,436 15,614
________ ________
$278,225 $254,630
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 67,486 $ 52,459
Accrued liabilities 29,953 26,178
Current portion of debt 1,283 1,358
________ ________
Total current liabilities 98,722 79,995
Long-term debt 33,403 33,578
Other long-term liabilities 18,444 18,414
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 1995 - 10,980;
1994 - 10,974 94,901 94,831
Retained earnings 37,935 32,854
Unrecognized pension actuarial
losses, net of tax (587) (587)
Treasury shares, at cost,
1995 - 300; 1994 - 290 (4,593) (4,455)
________ ________
Total shareholders' equity 127,656 122,643
________ ________
$278,225 $254,630
======== ========
NOTE: The balance sheet at December 31, 1994 has been derived
from the audited financial statements at that date.
<PAGE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(thousands, except per share amounts)
Quarter Ended
April 1, March 31,
1995 1994
____ ____
Net sales $161,989 $151,972
Cost of goods sold 144,976 135,475
________ ________
Gross profit 17,013 16,497
Selling, administrative and
engineering expenses 8,393 7,844
________ ________
Operating income 8,620 8,653
Other income (expense):
Interest expense (835) (839)
Disposal of Canadian facility 1,582 --
Other income, net 563 341
________ ________
Income before income taxes 9,930 8,155
Provision for taxes on income 3,674 3,017
________ ________
Net income $ 6,256 $ 5,138
======== ========
Net income per share:
Primary $ .59 $ 0.48
Fully diluted $ .52 $ 0.44
Cash dividends per share $ .11 $ 0.08
======== ========
<PAGE>
<TABLE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE QUARTER ENDED APRIL 1, 1995 AND MARCH 31, 1994
(in thousands of dollars)
<CAPTION>
UNRECOGNIZED
PENSION
COMMON RETAINED ACTUARIAL TREASURY
SHARES EARNINGS LOSSES SHARES TOTAL
______ ________ _________ _________ _____
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $94,831 $32,854 $(587) $(4,455) $122,643
Net income 6,256 6,256
Dividends (1,175) (1,175)
Purchase of 9,900 treasury
shares (138) (138)
Shares issued under employee
stock purchase plan 70 70
_______ _______ _____ _______ ________
Balance at April 1, 1995 $94,901 $37,935 $(587) $(4,593) $127,656
======= ======= ===== ======= ========
Balance at December 31, 1993 $87,537 $19,615 $(716) -- $106,436
Net income 5,138 5,138
Dividends (877) (877)
Issuance of 380,000
common shares 7,059 7,059
Shares issued under employee
stock purchase plan 55 55
_______ _______ _____ _______ ________
Balance at March 31, 1994 $94,651 $23,876 $(716) $ -- $117,811
======= ======= ===== ======= ========
</TABLE>
<PAGE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
Quarter Ended
April 1, March 31,
1995 1994
____ ____
Cash flows from operating activities
Net income $ 6,256 $ 5,138
________ ________
Adjustments to reconcile net income
to net cash from operating activities:
Gain on disposal of Canadian facility (1,582) --
Depreciation and amortization 3,658 3,016
Deferred income taxes and other 452 1,041
Changes in current assets and
liabilities:
Accounts receivable and other (16,173) (13,677)
Inventories and customer tooling (7,068) (2,073)
Accounts payable and accrued
liabilities 21,455 9,316
________ ________
Total adjustments 742 (2,377)
________ ________
Net cash provided by operating
activities 6,998 2,761
________ ________
Cash flows from investing activities
Purchase of property, plant and
equipment (6,349) (5,580)
Investment in marketable securities (4,430) (33)
Proceeds from disposal of Canadian
facility 6,306 --
________ ________
Net cash used for investing activities (4,473) (5,613)
________ ________
Cash flows from financing activities
Issuance of common shares 70 7,114
Maturities of long-term debt (250) (457)
Dividends (1,175) (877)
Purchase of treasury shares (138) --
________ ________
Net cash from (for) financing
activities (1,493) 5,780
________ ________
Net change in cash and cash equivalents 1,032 2,928
Cash and cash equivalents at beginning of
year 175 6,767
________ ________
Cash and cash equivalents at end of first
quarter $ 1,207 $ 9,695
======== ========
<PAGE>
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. Effective December 31, 1994,
the accounting periods were changed to end on the Saturday
closest to the calendar quarter end so that each quarter has
thirteen weeks of activity.
Note 2 - Marketable Securities:
Marketable securities represent investments with maturities
generally longer than 90 days which are classified as "available
for sale" securities in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
Note 3 - Inventories:
Inventories consist of the following: (in thousands of
dollars)
April 1, December 31,
1995 1994
____ ____
Raw materials $20,742 $21,301
Work in process and
finished goods 15,041 13,037
LIFO Reserve (762) (762)
_______ _______
$35,021 $33,576
======= =======
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)
Quarter Ended
April 1, March 31,
1995 1994
____ ____
Primary 10,680 10,605
Fully diluted 12,951 12,875
<PAGE>
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 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. 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. It has also asked the Company for
information about contamination at other sites. The Company
believes it either has no liability as a responsible party or
that adequate provisions have been recorded for any costs to be
incurred.
<PAGE>
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 April 1, 1995 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.
Note 6 - Common Shares
At April 1, 1995, there were options outstanding for 250,000
shares at an average exercise price of $18.125 under the 1994
stock compensation plan. On April 20, 1995, those options were
cancelled and new options for a total of 278,500 shares were
granted at an exercise price of $12.375. Also at April 1, 1995,
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.
Note 7 - Disposal of Canadian facility
Included in income is a gain on the disposition of Excel
Metalcraft, Ltd., located in Aurora, Ontario in the amount of
$1,582,000 which amounts to 9 cents per share after income taxes.
This gain includes the return to profits of $970,000 of the
restructuring reserve which was created in 1992. The final phase
of the restructuring has now been completed with the sale of the
shares of Metalcraft.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition:
The Consolidated Statement of Cash Flow for the quarter ended
April 1, 1995 reflects the sale of Excel Metalcraft, Ltd. Cash
flow from operations totalled $7.0 million. Investment in
receivables, inventories and tooling increased $23.2 million due
to higher level of sales. This increase was substantially offset
by an increase of $21.5 million in trade accounts payable and
accruals. Capital expenditures in the first quarter totalled
$6.3 million and the capital expenditure budget for the year
totals $24 million.
Cash and short-term marketable securities amounted to $43.2
million at April 1, 1995, an increase of $3.5 million from
December 31, 1994.
Material Changes in Results of Operations:
Quarter Ended April 1, 1995 Compared to
Quarter Ended March 31, 1994
Sales in the first quarter of 1995 increased 7% or $10.0 million
to $162.0 million from the $152.0 million in 1994. The increased
sales occurred primarily in automotive original equipment
products as production and sales of light vehicles in North
America remained strong. Even though our largest customer (Ford
Motor Company) had only a 1.7% increase in 1995 production
compared to 1994, overall first quarter production of light
vehicles totalled approximately 3.9 million units, an increase of
5% over the year ago first quarter.
Gross profit was $17.0 million in the current quarter or 10.5% of
sales and compares with gross profit of $16.5 million or 10.9% of
sales in the first quarter of 1994. The increase in gross profit
in the quarter is due to the increase in sales. The decline in
gross profit as a percent of sales results primarily from a
shortfall of cost reductions against productivity commitments and
a change in product mix.
Selling, administrative and engineering expenses totalled $8.4
million in the first quarter compared to $7.8 million in the 1994
first quarter. The increase was due to increased consulting fees
(KAIZEN and employee empowerment programs) and increased
personnel costs.
Interest expense totalled $835,000 in 1995 and compares with
$839,000 in the year ago first quarter.
Other income of $563,000, which is primarily interest income on
marketable debt securities, was higher than the $341,000 for the
1994 first quarter due mainly to improved interest rates.
<PAGE>
Included in income is a gain on the disposition of Excel
Metalcraft, Ltd., located in Aurora, Ontario in the amount of
$1,582,000 which amounts to 9 cents per share after income taxes.
This gain includes the return to profits of $970,000 of the
restructuring reserve which was created in 1992. The final phase
of the restructuring has now been completed with the sale of the
shares of Metalcraft.
Provision for taxes on income was at an effective rate of 37% for
both 1995 and 1994.
<PAGE>
PART II. OTHER INFORMATION
All items in Part II are either not applicable or answerable in
the negative.
<PAGE>
SIGNATURES
Pursuant to the requirement 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: May 11, 1995 s/ James J. Lohman
Chairman and
Chief Executive Officer
Date: May 11, 1995 s/ Joseph A. Robinson
Secretary/Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-01-1995
<CASH> 1,207
<SECURITIES> 42,034
<RECEIVABLES> 95,798
<ALLOWANCES> 853
<INVENTORY> 35,021
<CURRENT-ASSETS> 199,847
<PP&E> 124,545
<DEPRECIATION> 61,603
<TOTAL-ASSETS> 278,225
<CURRENT-LIABILITIES> 98,722
<BONDS> 0
<COMMON> 94,901
0
0
<OTHER-SE> 32,755
<TOTAL-LIABILITY-AND-EQUITY> 278,225
<SALES> 161,989
<TOTAL-REVENUES> 161,989
<CGS> 144,976
<TOTAL-COSTS> 144,976
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 835
<INCOME-PRETAX> 9,930
<INCOME-TAX> 3,674
<INCOME-CONTINUING> 6,256
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,256
<EPS-PRIMARY> .59
<EPS-DILUTED> .52
</TABLE>
