<PAGE> 1
Page 1 of 19
INDEX TO EXHIBITS - Page 16 of 18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 quarterly period ended NOVEMBER 30, 1998
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 0-14057
[MET-COIL LOGO]
MET-COIL SYSTEMS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
DELAWARE 42-1027215
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer No.)
5486 SIXTH STREET SW, CEDAR RAPIDS, IA 52404
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 319-363-6566
</TABLE>
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Indicate by check mark 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
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: As of January 6, 1999, there
were 3,204,273 shares of common stock, par value .01 per share.
<PAGE> 2
Page 2 of 19
MET-COIL SYSTEMS CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
PAGE
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets, November 30, 1998
(Unaudited) and May 31, 1998.................................................................................3
Unaudited Consolidated Condensed Statements of Operations,
Three Months and Six Months Ended November 30, 1998 and 1997.....................................................4
Unaudited Consolidated Condensed Statements of Comprehensive Income,
Three Months and Six Months Ended November 30, 1998 and 1997.....................................................5
Unaudited Consolidated Condensed Statements of Cash Flows,
Six Months Ended November 30, 1998 and 1997......................................................................6
Notes to Consolidated Condensed Financial Statements (Unaudited)................................................7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ...............................................................11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........................................12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS .....................................................................................14
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS..............................................................14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES........................................................................14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...................................................14
ITEM 5. OTHER INFORMATION..................................................................................... 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................................... 14
INDEX TO EXHIBITS................................................................................................. 16
Exhibit 27 - Financial Statement Schedule .................................................................... 17
Exhibit 99 - Press Release Dated December 22, 1998 ........................................................... 18
</TABLE>
<PAGE> 3
Page 3 of 19
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MET-COIL SYSTEMS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except shares) November 30, 1998 May 31, 1998
(Unaudited) (Note)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash $ 401 $ 24
Trade receivables, net 6,802 4,574
Inventories 10,132 8,283
Prepaid expenses and other 673 1,254
Deferred income taxes 1,667 1,129
---------------------------------------------------------------------------------------------------------------------
Total current assets 19,675 15,264
Property and equipment, net 3,787 3,448
Investments and other assets 410 650
Intangibles, net 1,838 2,060
Deferred income taxes 78 40
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 25,788 $ 21,462
=====================================================================================================================
Current liabilities
Revolving line of credit $ 2,690 $ 1,689
Current maturities of long-term debt 2,151 2,464
Accounts payable and accrued liabilities 4,465 3,953
Customer deposits 3,754 2,686
---------------------------------------------------------------------------------------------------------------------
Total current liabilities 13,060 10,792
Long-term debt 4,296 4,924
Other 1,417 647
Preferred stock, convertible and redeemable at $13 per share 4,666 4,456
Stockholders' equity (deficit):
Common stock, $.01 par value, authorized 10,000,000 shares; 32 32
November 30, 1998 issued 3,232,968; May 31, 1998 issued 3,196,447
Additional paid-in capital 16,441 16,312
Accumulated deficit (13,820) (15,382)
Other comprehensive income, foreign currency
translation adjustment (50) (65)
Common stock in treasury, at cost (254) (254)
---------------------------------------------------------------------------------------------------------------------
Stockholders' equity (deficit) 2,349 643
---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 25,788 $ 21,462
=====================================================================================================================
</TABLE>
Note: Condensed from audited financial statements
See Notes to Consolidated Condensed Financial Statements
<PAGE> 4
Page 4 of 19
MET-COIL SYSTEMS CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1998 1997 1998 1997
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $ 11,636 $ 12,444 $ 22,041 $ 22,898
Cost of goods sold 9,008 9,606 16,768 17,634
Operating expenses 1,530 1,618 3,209 3,309
-------------------------------------------------------------------------------------------------------------------
Operating income 1,098 1,220 2,064 1,955
Interest expense, net 254 447 547 842
Other expense, net 40 111 111 274
-------------------------------------------------------------------------------------------------------------------
Income before income taxes 804 662 1,406 839
Income tax credits, net 209 0 474 0
-------------------------------------------------------------------------------------------------------------------
Net income $ 1,013 $ 662 $ 1,880 $ 839
Preferred stock dividends and accretion 160 160 320 320
-------------------------------------------------------------------------------------------------------------------
Net income applicable to
common stock $ 853 $ 502 $ 1,560 $ 519
===================================================================================================================
Earnings per common share:
Basic $ 0.27 $ 0.15 $ 0.49 $ 0.16
Diluted $ 0.23 $ 0.15 $ 0.43 $ 0.16
Weighted average common shares:
Basic 3,153 3,110 3,153 3,126
Diluted 4,335 3,191 4,335 3,207
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE> 5
Page 5 of 19
MET-COIL SYSTEMS CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1998 1997 1998 1997
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net income $ 1,013 $ 662 $ 1,880 $ 839
Other comprehensive income, net of tax:
Foreign currency translation adjustment 10 7 15 7
--------- ---------- --------- ----------
Comprehensive income $ 1,023 $ 669 $ 1,895 $ 846
========= ========== ========= ==========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE> 6
Page 6 of 19
MET-COIL SYSTEMS CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
November 30,
1998 1997
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,880 $ 839
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation 468 496
Amortization of intangibles and deferred finance charges 222 215
Accretion of discount on debt 187 203
Write-down of property held for sale 0 80
Undistributed loss of affiliate 230 138
Deferred income taxes (576) 0
--------------------------------------------------------------------------------------------------------------------
2,411 1,971
Changes in assets and liabilities:
Trade receivables (2,228) (408)
Notes and other receivables 0 50
Inventories (1,849) (239)
Investments, prepaid expenses and other assets 606 (203)
Accounts payable, accrued liabilities and other liabilities 1,282 422
Customer deposits 1,068 (376)
--------------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities 1,290 1,217
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from note receivable-related party 0 750
Proceeds from sale of assets 0 920
Purchase of property and equipment (807) (510)
--------------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (807) 1,160
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving line of credit 1,001 587
Repayments of long-term debt (1,128) (2,904)
Dividends on preferred stock (108) (108)
Repurchase of treasury stock 0 (152)
Issuance of common stock 129 60
--------------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities (106) (2,517)
--------------------------------------------------------------------------------------------------------------------
CASH
Increase (decrease) 377 (140)
Beginning balance 24 594
--------------------------------------------------------------------------------------------------------------------
Ending balance $ 401 $ 454
====================================================================================================================
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE> 7
Page 7 of 19
MET-COIL SYSTEMS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. PRESENTATION OF FINANCIAL INFORMATION
The unaudited consolidated condensed financial statements have
been prepared by the Company in accordance with the instructions for
Securities and Exchange Commission's Form 10-Q and do not include all
of the information and footnotes required by generally accepted
accounting principles for audited financial statements. The unaudited
consolidated condensed financial statements include the accounts of the
Company and its subsidiaries. All material intercompany items and
transactions have been eliminated in the consolidation. In the
preparation of the unaudited amounts, all adjustments (consisting
solely of normal recurring adjustments) have been made which are, in
the opinion of management, necessary for a fair statement of the
results for the interim periods. The results for the interim periods
are not necessarily indicative of the results of operations that may be
expected for the year. It is suggested that the unaudited consolidated
condensed financial statements contained herein be read in conjunction
with the consolidated statements and notes included in the Company's
Annual Report on Form 10-K for the year ended May 31, 1998.
Risks and Uncertainties:
The preparation of the Company's financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Recent Accounting Pronouncements:
In June 1997, the Financial Accounting Standards Board
("FASB") issued Statement No. 130 "Reporting Comprehensive Income",
which was effective for years beginning after December 15, 1997.
Statement No. 130 establishes standards for reporting comprehensive
income in financial statements. Comprehensive income is defined as the
change in equity of a business enterprise during a period, resulting
from transactions and other events and circumstances from non-owner
sources. In compliance with the new standard, the Company has included
an Unaudited Consolidated Condensed Statement of Comprehensive Income
herein.
<PAGE> 8
Page 8 of 19
MET-COIL SYSTEMS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED), CONTINUED
Recent Accounting Pronouncements, continued:
In June 1997, the FASB issued Statement No. 131 "Disclosures
About Segments of an Enterprise and Related Information", which was
effective for years beginning after December 15, 1997. Statement No.
131 redefines how operating segments are determined and requires
disclosure of certain financial and descriptive information about a
company's operating segments. The Company operates in one business
segment and therefore, has determined that no changes in the Company's
reporting structure will result from this standard.
NOTE 2. INVENTORIES
The composition of the inventories, using the FIFO method,
which approximates replacement cost, is as follows:
<TABLE>
<CAPTION>
(in thousands) November 30, May 31,
1998 1998
--------------- --------------
<S> <C> <C>
Raw materials and parts $ 7,439 $ 6,558
Work in process 3,855 2,734
Finished goods and supplies 225 378
--------------- --------------
11,519 9,670
Reduction to LIFO basis (1,387) (1,387)
--------------- --------------
$ 10,132 $ 8,283
=============== ==============
</TABLE>
NOTE 3. DEBT
Revolving Line of Credit:
At November 30, 1998 the Company had a revolving credit
agreement with two insurance companies under which it may borrow up to
$3,500,000. Borrowings are limited pursuant to a borrowing base formula
(calculated based on certain percentages of eligible trade receivables
and inventories), bear interest at 11.5% and require payment of certain
fees. Under this line, which expires April 30, 1999, outstanding
borrowings as of November 30, 1998 were $2,690,000.
Long-Term Debt:
At November 30, 1998 the Company had $2.9 million of senior
notes with two insurance companies. The senior notes mature in December
2000. Interest is at 11.5%, payable monthly. The notes are repayable in
monthly payments of $141,250 plus interest.
For additional information concerning the Company's loan
agreements and accompanying terms and restrictions see Note 4 to
Financial Statements in the Company's Annual Report on Form 10-K for
the year ended May 31, 1998 herein incorporated by reference thereto.
<PAGE> 9
Page 9 of 19
MET-COIL SYSTEMS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED), CONTINUED
NOTE 4. SUPPLEMENTAL CASH FLOW DATA
<TABLE>
<CAPTION>
Six Months Ended
November 30,
1998 1997
-------------- --------------
<S> <C> <C>
Cash payment for:
Interest $ 285 $ 571
Income tax $ 26 $ 0
Preferred stock accretion included
with preferred stock dividends $ 210 $ 212
</TABLE>
<PAGE> 10
Page 10 of 19
MET-COIL SYSTEMS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED), CONTINUED
NOTE 5. EARNINGS PER SHARE
In compliance with Statement of Financial Accounting Standard ("SFAS") No.
128, "Earnings Per Share", which was issued in February 1997, the Company has
changed its method of computing earnings per share. The prior periods presented
has been restated to conform with the new requirements which exclude
contingently issuable shares and the dilutive effect of stock options from the
number of weighted average shares used in the computation of basic earnings per
share. The effect of SFAS No. 128 on diluted earnings per share is immaterial
compared to previously disclosed fully diluted earnings per share. Basic and
diluted earnings per share are calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income available to common
stockholders - basic $853 $502 $1,560 $519
=========== =========== =========== ===========
Weighted average shares
outstanding - basic 3,153 3,110 3,153 3,126
=========== =========== =========== ===========
Basic earnings per share 0.27 0.15 0.49 0.16
=========== =========== =========== ===========
Diluted earnings per share:
Net income available to common
stockholders - basic $853 $502 $1,560 $519
Effect of preferred stock dividends
and accretion 160 0 320 0
Net income available to common
stockholders - diluted $1,013 $502 $1,880 $519
=========== =========== =========== ===========
Weighted avg. shares outstanding-basic 3,153 3,110 3,153 3,126
Effect of dilutive securities:
Stock options granted 96 81 96 81
Convertible preferred stock 1,086 0 1,086 0
Weighted average shares
outstanding - diluted 4,335 3,191 4,335 3,207
=========== =========== =========== ===========
Diluted earnings per share 0.23 0.15 0.43 0.16
=========== =========== =========== ===========
Number of antidilutive shares excluded from
calculation above:
Options 120 130 120 130
=========== =========== =========== ===========
Redeemable preferred stock 0 1,086 0 1,086
=========== =========== =========== ===========
</TABLE>
<PAGE> 11
Page 11 of 19
MET-COIL SYSTEMS CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain of the statements contained in this report may be
forward-looking statements. Forward-looking statements include estimates and
statements regarding plans, objectives and expectations of the Company and its
management. Examples of certain forward-looking statements are the Company's
estimates of the cost, timing and effect of its Year 2000 compliance efforts and
the Company's expectations regarding its ability to meet future funding
obligations. Although the company believes that the expectations reflected in
all such forward-looking statements are based upon reasonable assumptions, it
can give no assurance that its expectations will be achieved. Such
forward-looking statements involve risks and uncertainties which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks and uncertainties
include, among other things, the effect of economic conditions, the impact of
competition, availability of capital, supply constraints or difficulties, the
effect of the Company's accounting policies and the effect of regulatory and
legal developments.
FISCAL 1999 - SECOND QUARTER AND SIX MONTH RESULTS OF OPERATIONS
Revenues for the second quarter ended November 30, 1998 were $11.6
million compared to $12.4 million for the same period last year. The gross
margin and operating margin were relatively stable compared to the prior year
period. However, net interest expense for the quarter was reduced by 43% from
the prior year period to $254,000 due to lower levels of outstanding debt. In
addition, the Company realized net income tax credits of $209,000 relating to a
reduction in the Company's deferred tax asset valuation allowance. As a result,
net income increased 53% from the prior year period to $1.0 million, or $.23
diluted earnings per share, from $662,000 or $.15 diluted earnings per share
for the second quarter of last year.
Revenues for the six months ended November 30, 1998 were $22.0 million,
compared to $22.9 million for the same period last year. Due to lower materials
costs for the product being manufactured, the gross margin improved from 23.0%
for the prior year period to 23.9%. Net interest expense for the six month
period was reduced by 35% from the prior year period to $547,000 due to lower
levels of outstanding debt and the Company realized net income tax credits of
$474,000. Net income increased 124% from the prior year period to $1.9 million,
or $.43 diluted earnings per share, for the prior year. Compared to $839,000 or
$.16 diluted earnings per share.
The Company's order backlog at November 30, 1998 is $16.0 million,
compared to $14.4 million one year ago.
<PAGE> 12
Page 12 of 19
LIQUIDITY AND CAPITAL RESOURCES
Financial Review:
At November 30, 1998, current assets exceeded current liabilities by
$6.6 million and the Company had approximately $800,000 available to borrow
under its revolving credit agreement.
Cash Flows and Commitments:
In September 1998 all regularly scheduled dividends were paid on the
Company's preferred stock. The Company has not paid quarterly common stock
dividends due to loan covenants, which prohibit the payment of common stock
dividends. It is uncertain when, and if, the Company will pay common stock
dividends in the future.
The Company's preferred stock is convertible into three shares of
common stock at any time at the option of the holder or may be redeemed after
December 31, 1998. Either the Company or the holder of the Company's preferred
stock may redeem the stock at a redemption price of $13 per share, plus any
accumulated unpaid dividends. Once redeemed, the Company has the option to make
cash payments equal to 10% of the value and 12 equal monthly payments, including
10% annual interest. These payments may be deferred if the payments would cause
the Company to be in default under the terms of its senior indebtedness.
Based on the current market value of the Company's common stock, if
such market value remains at substantially current levels or above on or after
December 31, 1998, the Company expects that a portion of preferred stockholders
will convert their shares into three shares of common stock and another portion
will redeem their shares. The Company plans to finance the potential cash
outflow, if any, caused by redemption through cash flow from operations and, if
required, additional debt financing.
The Company may also be required to make prepayments under a January
1992 Settlement Agreement (a copy of the Settlement Agreement was previously
filed as an exhibit of the Annual Report on Form 10-K for the fiscal year ended
May 31, 1993). It is anticipated that funding of any such prepayment would be
from operating cash flows.
The Company was in compliance with all debt covenants contained in its
loan agreements as of November 30, 1998. Management of the Company believes that
amounts available from operating cash flows, funds available under its revolving
credit agreement and the Company's borrowing capacity will be sufficient to meet
its expected cash needs and capital expenditures for the fiscal year.
Year 2000
The Company has assessed and continues to assess the impact of the Year
2000 issue on its reporting systems and operations. The Year 2000 issue is the
result of computer programs which were written using two digits (rather than
four) to define the application year. As the Year 2000 approaches,
date-sensitive software could fail to process critical financial and operational
information correctly.
The Company has identified three major areas determined to be critical
for successful year 2000 compliance: (1) financial and information system
applications; (2) manufacturing applications; and (3) third-party relationships.
In the financial and information systems applications and manufacturing
applications, the Company expects to be compliant by early 1999. In the third
party area, the Company has contacted most of its suppliers and customers, most
of whom state that they intend to be Year 2000 compliant by the year 2000.
<PAGE> 13
Page 13 of 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The Company has assessed the risk of noncompliance and anticipates that
past and future expenditures to ensure that its computer systems are Year 2000
compliant, including testing of contingency plans by an independent consultant,
will not exceed $75,000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information for this item is not required until the year ending May 31,
1999.
<PAGE> 14
Page 14 of 19
MET-COIL SYSTEMS CORPORATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - See Legal Proceedings as included in the
Company's Annual Report on Form 10-K for the year ended May 31, 1998.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders on October 6, 1998, the
following actions were voted on:
1. Board of Directors
a. All nominees for election were elected as follows:
E. KEITH MOORE
Shares in favor Shares against/withheld
2,457,132 14,032
ROY J. CARVER, JR.
Shares in favor Shares against/withheld
2,460,722 12,432
b. Continuing in office:
James D. Heitt Michael J. Nonnenmann
Raymond H. Blakeman Gary M. Neal
2. Ratification of appointment of McGladrey & Pullen, LLP as
independent auditors.
Shares in favor Shares against/withheld
2,458,812 14,341
In the case of items one and two above, there were no abstentions or broker
nonvotes.
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS -- See Index to Exhibits included elsewhere herein.
(b) FORM 8-K -- No reports on Form 8-K were filed during the
second fiscal quarter.
<PAGE> 15
Page 15 of 19
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.
Date: January 6, 1999 Met-Coil Systems Corporation
/s/ Randall J. Stodola
------------------------------
Randall J. Stodola
Vice President, Controller and
Chief Accounting Officer
<PAGE> 16
Page 16 of 19
MET-COIL SYSTEMS CORPORATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ----------- ----
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the Registrant, as
amended -- incorporated by reference to Exhibit 3.2 of the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended November 30, 1987............................................
3.2 Amended and Restated Bylaws of the Registrant --
incorporated by reference to Exhibit 3.4 of the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
November 30, 1987..................................................
4 Private Placement Offering of convertible preferred stock dated
December 24, 1993 -- incorporated by reference to
Form 8-K filed May 27, 1994........................................
Private Placement Offering of convertible preferred stock dated
November 28, 1994 -- incorporated by reference to
Form 8-K filed March 10, 1995......................................
10 Material contracts -- incorporated by reference to
Form 10-K filed August 31, 1998....................................
27 Financial Data Schedule............................................ 16
99 Press Release dated December 22, 1998.............................. 17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1
<CASH> 316
<SECURITIES> 0
<RECEIVABLES> 6,854
<ALLOWANCES> 52
<INVENTORY> 10,132
<CURRENT-ASSETS> 19,675
<PP&E> 16,767
<DEPRECIATION> 12,980
<TOTAL-ASSETS> 25,788
<CURRENT-LIABILITIES> 13,060
<BONDS> 0
4,666
0
<COMMON> 16,473
<OTHER-SE> 14,124
<TOTAL-LIABILITY-AND-EQUITY> 25,788
<SALES> 22,271
<TOTAL-REVENUES> 22,041
<CGS> 16,768
<TOTAL-COSTS> 20,635
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 547
<INCOME-PRETAX> 1,406
<INCOME-TAX> 474
<INCOME-CONTINUING> 1,880
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,880
<EPS-PRIMARY> .49
<EPS-DILUTED> .43
</TABLE>
<PAGE> 1
EXHIBIT 99
IMMEDIATELY TAMMY HUBACEK
MET-COIL SYSTEMS CORPORATION
INTRODUCES NEW PRODUCT,
REPORTS PROFIT THROUGH SECOND QUARTER
CEDAR RAPIDS, IA - DECEMBER 22, 1998 - Met-Coil Systems Corporation (METS), a
supplier of advanced sheet metal forming equipment, fabricating equipment and
glass processing technologies for the global market, announces the introduction
of a new product and a profitable second quarter.
LAUNCH OF NEW PRODUCT
Met-Coil continues to develop and launch innovative, new products to broaden its
product line and capitalize on opportunities in new markets. This is evidenced
by the recent introduction of an automated screen rolling machine to the window
fabrication industry. With the unique ability to automatically and accurately
insert splines into tracks on window or door screens, the Screen Express(TM) and
its potential patents has the ability to revolutionize the industry by
automating what has, up until now, been a costly, inefficient and manual
process.
"In addition to the obvious efficiency advantage, the machine will also reduce
laborious, repetitive motion which can cause health risks for employees and
manufacturers", reports James Heitt, President and Chief Operating officer of
Met-Coil. The Company will begin shipments of the new product in it's third
quarter.
SECOND QUARTER RESULTS AND SIX-MONTH PERFORMANCE
Due to lower materials cost for the products being manufactured, gross margin
and net income have improved for second quarter and the first half of fiscal
1999 compared to the same period last year. Net income for the quarter ended
November 30, 1998 was $1.0 million or $.23 diluted earnings per share (which
included income tax credits of $235,000) compared to net income of $662,000 or
$.15 diluted earnings per share for the second quarter of last year. Net income
for the six months ended November 30, 1998 was $1.9 million or $.43 diluted
earnings per share. A year ago, net income for six months was $839,000 or $.16
diluted earnings per share.
Continued
<PAGE> 2
MET-COIL SYSTEMS CORPORATION / PAGE 2
Revenues for the quarter ended November 30,1998 were $11.6 million compared to
$12.4 million for the same period last year. For the six months ended November
30, 1998 revenues were $22.0 million, compared to $22.9 million last year.
Company-wide order backlog at the end of second quarter was nearly $16.0
million, compared to $14.4 million one year ago. In the first half of the fiscal
year, the Company has reduced it's long term debt by $600,000.
Met-Coil is headquartered in Cedar Rapids, Iowa. Its operating units and
affiliates include Iowa Precision Industries, Inc. also in Cedar Rapids;
Met-Coil Ltd., Ayase, Japan; and The Lockformer Company and Met-Coil Ltd.-USA,
both in Lisle, Illinois. The Company markets its machinery and metal fabrication
systems primarily through a worldwide distributor network.
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