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 March 30, 1996
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 (a) 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 perior 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 9, 1996, there were outstanding 10,708,320 common
shares, no par value.<PAGE>
<PAGE> EXCEL INDUSTRIES, INC.
Index
Page No.
PART I Financial Information
Consolidated Balance Sheets -
March 30, 1996 and December 30, 1995 1
Consolidated Statements of Income -
Quarter Ended March 30, 1996 and
April 1, 1995 2
Consolidated Statements of Shareholders'
Equity -
Quarter Ended March 30, 1996 and
April 1, 1995 3
Consolidated Statements of Cash Flows -
Quarter Ended March 30, 1996 and
April 1, 1995 4
Notes to Consolidated Financial Statements 5-8
Management's Discussion and Analysis of
Financial Condition and Results of Operation 9-10
PART II Other Information 11
Signatures 12
Financial Data Schedules Exhibit 27<PAGE>
<PAGE> 1
<TABLE> EXCEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of dollars)
<CAPTION>
March 30, December 30,
1996 1995
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments $ 622 $ 391
Marketable securities 49,230 37,416
Accounts receivable 92,621 85,751
Customer tooling to be billed 19,700 26,090
Inventories 24,109 27,298
Prepaid expenses 5,616 7,018
Total current assets 191,898 183,964
Property, plant and equipment,
less accumulated depreciation of
(1996 - $73,537; 1995 - $70,536) 72,100 68,997
Other assets 16,688 16,557
$280,686 $269,518
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 62,413 $ 57,811
Accrued liabilities 28,139 25,536
Current portion of debt 9,166 9,164
Total current liabilities 99,718 92,511
Long-term debt 23,816 24,021
Other long-term liabilities 19,064 18,669
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 1996-11,008, 1995-11,003 95,224 95,157
Retained earnings 48,116 44,412
Minimum pension liability
adjustment, net of tax (659) (659)
Treasury shares, at cost,
300 shares (4,593) (4,593)
Total shareholders' equity 138,088 134,317
$280,686 $269,518
</TABLE>
NOTE: The balance sheet at December 30, 1995 has been derived
from the audited financial statements at that date.<PAGE>
<PAGE> 2
<TABLE> EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(thousands, except per share amounts)
<CAPTION>
Quarter Ended
March 30, April 1,
1996 1995
<S> <C> <C>
Net sales $150,607 $161,989
Cost of goods sold 134,704 144,976
Gross profit 15,903 17,013
Selling, administrative and
engineering expenses 7,923 8,393
Operating income 7,980 8,620
Other income (expense):
Interest expense (809) (835)
Disposal of Canadian facility -- 1,582
Other income, net 400 563
Income before income taxes 7,571 9,930
Provision for taxes on income 2,688 3,674
Net income $ 4,883 $ 6,256
Net income per share:
Primary $ .46 $ .59
Fully diluted $ .41 $ .52
Cash dividends per share $ .11 $ .11
/TABLE
<PAGE>
<PAGE> 3 EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE QUARTER ENDED MARCH 30, 1996 AND APRIL 1, 1995
(in thousands of dollars)
<TABLE>
<CAPTION> MINIMUM
PENSION
COMMON RETAINED LIABILITY TREASURY
SHARES EARNINGS ADJUSTMENT SHARES TOTAL
<S> <C> <C> <C> <C>
Balance at 12/30/95$95,157$44,412 $(659) $(4,593) $134,317
Net income 4,883 4,883
Dividends (1,179) (1,179)
Shares issued under
employee stock
purchase plan 67 67
Balance at 3/30/96$95,224$48,116 $(659) $(4,593) $138,088
Balance at 12/31/94$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 4/1/95$94,901 $37,935 $(587) $(4,593) $127,656
/TABLE
<PAGE>
<PAGE> 4
<TABLE> EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
<CAPTION>
Quarter Ended
March 30, April 1,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net income $ 4,883 $ 6,256
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation and amortization 4,077 3,658
Deferred income taxes and other 196 452
Gain on disposal of Canadian facility -- (1,582)
Changes in current assets and
liabilities:
Accounts receivable and other (5,468) (16,173)
Inventories and customer tooling 9,579 (7,068)
Accounts payable and accrued
liabilities 7,205 21,455
Total adjustments 15,589 742
Net cash provided by operating
activities 20,472 6,998
Cash flows from investing activities
Purchase of property, plant and
equipment (7,112) (6,349)
Investment in marketable securities (11,814) (4,430)
Proceeds from disposal of Canadian
facility -- 6,306
Net cash used for investing activities (18,926) (4,473)
Cash flows from financing activities
Issuance of common shares 67 70
Maturities of long-term debt (203) (250)
Dividends (1,179) (1,175)
Purchase of treasury shares -- (138)
Net cash for financing activities (1,315) (1,493)
Net change in cash and short-term investment 231 1,032
Cash and short-term investments at beginning
of year 391 175
Cash and short-term investments at end of
first quarter $ 622 $ 1,207
/TABLE
<PAGE>
<PAGE> 5 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 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)
<TABLE>
<CAPTION>
March 30, December 30,
1996 1995
<S> <C> <C>
Raw materials $14,761 $16,911
Work in process and
finished goods 10,104 11,143
LIFO Reserve (756) (756)
$24,109 $27,298
</TABLE>
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)
<TABLE>
<CAPTION>
Quarter Ended
March 30, April 1,
1996 1995
<S> <C> <C>
Primary 10,707 10,680
Fully diluted 12,978 12,951
</TABLE>
<PAGE> 6
Note 5 - Contingencies
A chemical cleaning compound, trichloroethylene (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.
<PAGE>
<PAGE> 7
The EPA has also named the Company as a PRP for costs at three
other disposal sites. The remedial investigations and
feasibility studies have been completed, and the results of those
studies forwarded to the EPA. The studies indicated a range of
viable remedial approaches, but agreement has not yet been
reached with the EPA on the final remediation approach.
Furthermore, the PRPs for these sites have not reached an
agreement on the allocation of costs between the PRPs. The
Company believes it either has no liability as a responsible
party or that adequate provisions have been recorded for current
estimates of the Company's liability and estimated legal costs
associated with the settlement of these claims. It is reasonably
possible that the Company's recorded estimate of its obligation
may change in the near term.
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 March 30, 1996 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 March 30, 1996, there were options outstanding for 252,500
shares at an average exercise price of $12.375 under the 1994
stock compensation plan. Also at March 30, 1996, there were
options outstanding for 8,250 shares at an average exercise price
of $5.227 under the Incentive Stock Option Plan approved by
shareholders in 1984.
Note 7 - Disposal of Canadian facility
Included in the first quarter of 1995 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 was completed with the sale
of the shares of Metalcraft.
Note 8 - Subsequent Event
On April 3, 1996, the Company completed the purchase of all of
the outstanding common shares of Anderson Industries, Inc.
(Anderson) for approximately $61,000,000 including five-year
warrants for 381,000 shares of Excel common stock exercisable at
$13.25 per share and expenses of the transaction. The Company
also assumed approximately $85 million of Anderson's debt. On
April 1, 1996, the Company entered into a $120,000,000 Credit
Agreement to facilitate the completion of this acquisition.
<PAGE> 8
Anderson, located in Rockford, Illinois, is a holding company
whose main asset is Atwood Industries, Inc. Atwood Industries
manufactures products for the automotive, manufactured housing
and recreational vehicle industries and is headquartered in
Rockford, Illinois.<PAGE>
<PAGE> 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition:
Cash flow from operations totalled $20.5 million for the quarter
ended March 30, 1996 which was in part attributed to the
completion of customer tooling projects and the concerted effort
to reduce inventories. Capital expenditures in the first quarter
totalled $7.1 million of the total budgeted $23.6 million for the
year.
Cash and short-term marketable securities amounted to
$49.9 million at March 30, 1996, an increase of $12.0 million
from December 30, 1995.
Material Changes in Results of Operations:
Quarter Ended March 30, 1996 Compared to
Quarter Ended April 1, 1995
Sales in the first quarter of 1996 decreased 7% or $11.4 million
to $150.6 million from the $162.0 million in 1995. The decrease
in sales occurred primarily in passenger car products as
production and sales of light vehicles in North America declined.
North American passenger car build was 18% lower than in last
year's first quarter, and light truck production declined 3%.
Our biggest customer, Ford Motor Company, lowered production of
the Taurus car 20%.
Gross profit was $15.9 million in the current quarter or 10.6% of
sales and compares with gross profit of $17.0 million or 10.5% of
sales in the first quarter of 1995. The increase in gross profit
in the quarter as a percent of sales is due to reductions in
manufacturing costs as a result of the previously instituted
Employee Empowerment and Kaizen programs.
Selling, administrative and engineering expenses totalled
$7.9 million in the first quarter, down from $8.4 million in the
1995 first quarter. The decrease was due to lower consulting
fees (Kaizen and Employee Empowerment programs) and accruals for
Management Incentive Programs.
Interest expense totalled $809,000 in 1996 and compares with
$835,000 in the year ago first quarter.
Other income of $400,000, which is primarily interest income on
marketable debt securities, was lower than the $563,000 for the
1995 first quarter which included gains on miscellaneous sales of
assets.
Included in the first quarter of 1995 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
<PAGE> 10
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 was completed with the sale
of the shares of Metalcraft.
Provision for taxes on income was at an effective rate of 35.5%
for 1996, down from 37% in 1995. The reduction was due to the
increase in investing in tax-free securities and the favorable
impact of establishing a large Foreign Sales Corporation (FSC) to
replace the existing small FSC.
On April 3, 1996, the Company completed the purchase of all of
the outstanding common shares of Anderson Industries, Inc.
(Anderson) for approximately $61,000,000 including five-year
warrants for 381,000 shares of Excel common stock exercisable at
$13.25 per share and expenses of the transaction. The Company
also assumed approximately $85 million of Anderson's debt. On
April 1, 1996 the Company entered into a $120,000,000 Credit
Agreement to facilitate the completion of this acquisition.
Anderson, located in Rockford, Illinois, is a holding company
whose main asset is Atwood Industries, Inc. Atwood Industries
manufactures products for the automotive, manufactured housing
and recreational vehicle industries and is headquartered in
Rockford, Illinois.<PAGE>
<PAGE> 11 PART II. OTHER INFORMATION
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
A. On December 21, 1995, the Registrant's Board of
Directors adopted a Shareholders' Rights Plan to
protect shareholders against unsolicited attempts to
acquire control of the Company. Form 8-A was filed
with the SEC on January 8, 1996.
B. On March 4, 1996, the Registrant signed a definitive
agreement to purchase all the common shares of Anderson
Industries, Inc. Form 8-K was filed with the SEC on
March 18, 1996.
ITEM 8. Financial Statements and Supplementary Data
On December 15, 1994, the Registrant's Board of
Directors changed its fiscal year from one ending on
December 31 to a 52-53 week fiscal year ending on the
Saturday nearest the end of each year. Form 8-K was
filed with the SEC on January 22, 1996.<PAGE>
<PAGE> 12 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 14, 1996 s/ James O. Futterknecht
Chairman, President and
Chief Executive Officer
Date: May 14, 1996 s/ Joseph A. Robinson
Secretary/Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 622
<SECURITIES> 49,230
<RECEIVABLES> 93,349
<ALLOWANCES> 728
<INVENTORY> 24,109
<CURRENT-ASSETS> 191,898
<PP&E> 145,637
<DEPRECIATION> 73,537
<TOTAL-ASSETS> 280,686
<CURRENT-LIABILITIES> 99,718
<BONDS> 0
0
0
<COMMON> 95,224
<OTHER-SE> 42,864
<TOTAL-LIABILITY-AND-EQUITY> 280,686
<SALES> 150,607
<TOTAL-REVENUES> 150,607
<CGS> 134,704
<TOTAL-COSTS> 142,627
<OTHER-EXPENSES> (400)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 809
<INCOME-PRETAX> 7,571
<INCOME-TAX> 2,688
<INCOME-CONTINUING> 4,883
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,883
<EPS-PRIMARY> .46
<EPS-DILUTED> .41
</TABLE>
