<PAGE> 1
Page 1 of 18
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 FEBRUARY 28, 1999
----------------------
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 APPEARS HERE]
MET-COIL SYSTEMS CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
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
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 March 31, 1999, there
were 3,549,258 shares of common stock, par value .01 per share, outstanding.
<PAGE> 2
Page 13 of 18
MET-COIL SYSTEMS CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
PAGE
----
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Consolidated Condensed Balance Sheets, February 28, 1999
(Unaudited) and May 31, 1998...............................................................................3
Unaudited Consolidated Condensed Statements of Operations,
Three Months and Nine Months Ended February 28, 1999 and 1998..............................................4
Unaudited Consolidated Condensed Statements of Comprehensive Income,
Three Months and Nine Months Ended February 28, 1999 and 1998..............................................5
Unaudited Consolidated Condensed Statements of Cash Flows,
Nine Months Ended February 28, 1999 and 1998...............................................................6
Notes to Consolidated Condensed Financial Statements (Unaudited)
February 28, 1999..........................................................................................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.............................................13
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 Data Schedule ........................................................................17
Exhibit 99 - Press Release Dated March 31, 1999 .............................................................18
</TABLE>
<PAGE> 3
Page 3 of 18
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MET-COIL SYSTEMS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except shares) February 28, 1999 May 31, 1998
(Unaudited) (Note)
=========================================================================================================
<S> <C> <C>
Current assets
Cash $ 274 $ 24
Trade receivables, net 5,204 4,574
Inventories 10,268 8,283
Prepaid expenses and other 1,220 1,254
Deferred income taxes 1,941 1,129
- ---------------------------------------------------------------------------------------------------------
Total current assets 18,907 15,264
Property and equipment, net 3,872 3,448
Property held for sale 1,154 0
Investments and other assets 312 650
Intangibles, net 1,748 2,060
Deferred income taxes 255 40
- ---------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 26,248 $ 21,462
=========================================================================================================
Current liabilities
Revolving line of credit $ 2,830 $ 1,689
Current maturities of long-term debt 2,758 2,464
Accounts payable and accrued liabilities 4,388 3,953
Customer deposits 3,815 2,686
- ---------------------------------------------------------------------------------------------------------
Total current liabilities 13,791 10,792
Long-term debt 3,382 4,924
Other 871 647
Preferred stock, convertible and redeemable at $13 per share 3,758 4,456
Stockholders' equity
Common stock, $.01 par value, authorized 10,000,000 shares: 35 32
February 28, 1999 issued 3,542,706; 1998 issued 3,196,447
Additional paid-in capital 17,685 16,312
Accumulated deficit (12,995) (15,382)
Other comprehensive income, foreign currency
translation adjustment (25) (65)
Common stock in treasury, at cost (254) (254)
- ---------------------------------------------------------------------------------------------------------
Stockholders' equity 4,446 643
- ---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,248 $ 21,462
=========================================================================================================
</TABLE>
Note: Condensed from audited financial statements
See Notes to Consolidated Condensed Financial Statements
<PAGE> 4
Page 4 of 18
MET-COIL SYSTEMS CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 28,
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $10,293 $11,032 $32,334 $33,931
Cost of goods sold 7,858 8,684 24,626 26,318
Operating expenses 1,475 1,463 4,684 4,772
- ---------------------------------------------------------------------------------------------------
Operating income 960 885 3,024 2,841
Interest expense, net 255 362 802 1,204
Other expense, net 182 86 293 361
- ---------------------------------------------------------------------------------------------------
Income before income taxes 523 437 1,929 1,276
Income tax credits, net 336 0 810 0
- ---------------------------------------------------------------------------------------------------
Net income $ 859 $ 437 $ 2,739 $ 1,276
Preferred stock dividends and accretion 35 160 355 480
- ---------------------------------------------------------------------------------------------------
Net income applicable to
common stock $ 824 $ 277 $ 2,384 $ 796
===================================================================================================
Earnings per common share:
Basic $ 0.24 $ 0.09 $ 0.71 $ 0.25
Diluted $ 0.19 $ 0.09 $ 0.62 $ 0.25
Weighted average common shares:
Basic 3,431 3,117 3,376 3,123
Diluted 4,452 3,194 4,397 3,192
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE> 5
Page 5 of 18
MET-COIL SYSTEMS CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 28,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $859 $437 $2,739 $1,276
Other comprehensive income, net of tax:
Foreign currency translation adjustment 25 (6) 40 1
- --------------------------------------------------------------------------------------------------
Comprehensive income $884 $431 $2,779 $1,277
==================================================================================================
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE> 6
Page 6 of 18
MET-COIL SYSTEMS CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
February 28,
1999 1998
===============================================================================================================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,739 $ 1,276
Adjustments to reconcile net income to net cash flows from operating
activities:
Depreciation 729 698
Amortization of intangibles and deferred finance charges 312 323
Accretion of discount on debt 278 303
Write-down of property held for sale 0 80
Undistributed loss of affiliate 340 226
Deferred income taxes (1,027) 0
- ---------------------------------------------------------------------------------------------------------------
3,371 2,906
Changes in assets and liabilities:
Trade receivables (630) (1,785)
Notes and other receivables 0 50
Inventories (1,985) 495
Investments, prepaid expenses and other assets 32 (303)
Accounts payable, accrued liabilities and other liabilities 699 1,084
Customer deposits 1,129 (378)
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities 2,616 2,069
- ---------------------------------------------------------------------------------------------------------------
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 (1,153) (695)
Purchase of property held for sale (454) 0
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (1,607) 975
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving line of credit 1,141 521
Repayments of long-term debt (2,226) (4,294)
Borrowings on long-term debt 0 500
Dividends on preferred stock (108) (108)
Repurchase of treasury stock 0 (152)
Issuance of common stock 434 65
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities (759) (3,468)
- ---------------------------------------------------------------------------------------------------------------
CASH
Increase (decrease) 250 (424)
Beginning balance 24 594
- ---------------------------------------------------------------------------------------------------------------
Ending balance $ 274 $ 170
===============================================================================================================
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE> 7
Page 7 of 18
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 18
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) February 28, May 31,
1999 1998
----------- ----------
<S> <C> <C>
Raw materials and parts $ 6,796 $ 6,558
Work in process 4,630 2,734
Finished goods and supplies 229 378
-------- --------
11,655 9,670
Reduction to LIFO basis (1,387) (1,387)
-------- --------
$ 10,268 $ 8,283
======== ========
</TABLE>
NOTE 3. DEBT
Revolving Line of Credit:
At February 28, 1999 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 February 28, 1999 were $2,830,000.
The Company has entered into an agreement with its current
lenders to extend the maturity date of the revolving line of credit
from April 30, 1999 to December 31, 2000, which corresponds with the
long-term debt maturity date. Negotiation of the exact terms of the
extension is currently in process.
Long-Term Debt:
At February 28, 1999 the Company had $2.5 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.
<PAGE> 9
Page 9 of 18
MET-COIL SYSTEMS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED), CONTINUED
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.
In January 1999 the Company entered into a Settlement Agreement
to resume ownership of a parcel of land for $1,154,000 which was
previously sold to a director of the Company in May 1997. The land has
been affected, to a small degree, by an environmental matter on the
Company's adjacent land. This environmental matter was caused by a
vendor who has been financially responsible for clean-up costs. The
original Real Estate Sales Contract Agreement contained an
environmental indemnification clause. Because of the timing involved
with the remediation plan that is in place, it was determined that it
would be best for the Company to resume ownership of the land and
market the land after remediation has been completed. A reserve for the
remediation costs is included in current liabilities.
The Company executed a promissory note for $700,000, and paid
$454,000 in cash. The note is to be paid in monthly installments of
$100,000, plus interest at an annual rate of 9%, from May through
November, 1999.
NOTE 4. SUPPLEMENTAL CASH FLOW DATA
<TABLE>
<CAPTION>
Nine Months Ended
February 28,
(In thousands) 1999 1998
------ ----
<S> <C> <C>
CASH PAYMENT FOR:
Interest $402 $799
Income tax $217 $ 0
NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES:
Preferred stock accretion included
with preferred stock dividends $244 $312
Increase in property held for sale $700 $ 0
Increase in long-term debt $700 $ 0
Conversion of redeemable preferred stock into common stock $942 $ 0
</TABLE>
<PAGE> 10
Page 10 of 18
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
have 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 Nine Months Ended
February 28, February 28,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income available to common
stockholders - basic $ 824 $ 277 $2,384 $ 796
====== ======= ====== ======
Weighted average shares
outstanding - basic 3,431 3,117 3,376 3,123
====== ======= ====== ======
Basic earnings per share $ 0.24 $ 0.09 $ 0.71 $ 0.25
====== ======= ====== ======
Diluted earnings per share:
Net income available to common
stockholders - basic $ 824 $ 277 $2,384 $ 796
Effect of preferred stock dividends
and accretion 35 160 355 480
------ ------- ------ ------
Net income available to common
stockolders - diluted $ 859 $ 437 $2,739 $1,276
====== ======= ====== ======
Weighted avg. shares outstanding-basic 3,431 3,117 3,376 3,123
Effect of dilutive securities:
Stock options granted 152 77 152 69
Convertible preferred stock 869 0 869 0
------ ------- ------ ------
Weighted average shares
outstanding - diluted 4,452 3,194 4,397 3,192
====== ======= ====== ======
Diluted earnings per share $ 0.19 $ 0.09 $ 0.62 $ 0.25
====== ======= ====== ======
Number of antidilutive shares
excluded from calculation above:
Options 2 130 2 130
====== ======= ====== ======
Redeemable preferred stock 0 1,086 0 1,086
====== ======= ====== ======
</TABLE>
<PAGE> 11
Page 11 of 18
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 - THIRD QUARTER AND NINE MONTH RESULTS OF OPERATIONS
Revenues for the third quarter were $10.3 million compared to $11.0
million one year ago. Met-Coil Systems Corporation reported third quarter income
before income taxes of $523,000, compared to $437,000 last year, which
represents a 20% increase. With income tax credits and preferred stock
accretion, net income applicable to common stock was $824,000 or $.19 diluted
earnings per share. This compares to $277,000, or $.09 diluted earnings per
share in the third quarter of fiscal 1998.
Year-to-date revenues were $32.3 million compared to $33.9 million for
the prior year period. However, order backlog at February 28, 1999 was $18
million, an improvement of $4 million over backlog one year ago. Last year's
revenues included a surge in sales of the Company's plasma cutting machines
which occurred when a competitor discontinued business. Those revenues have
returned to historic levels this year. Gross margin has improved from 22.4% to
23.8% due to continuing efforts to control material costs.
Income before income taxes for the nine months ended February 28, 1999
was $1.9 million, up from $1.3 million last year. With income tax credits and
preferred stock accretion, net income applicable to common stock was $2.4
million or $.62 diluted earnings per share compared to $796,000 or $.25 diluted
earnings per share one year ago.
Interest expense for the nine months fell by $402,000, due to lower
levels of outstanding debt, which we continue to paydown. The Company has
recognized net income tax credits of $810,000 in the first nine months of fiscal
1999. Income tax credits relate to a reduction in the Company's deferred tax
asset valuation allowance.
<PAGE> 12
Page 12 of 18
LIQUIDITY AND CAPITAL RESOURCES
Financial Review, Cash Flows and Commitments:
Funds from operations were used to pay all regularly scheduled
dividends on the Company's preferred stock in March 1999. 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 and became redeemable 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.
The number of preferred shares converted or redeemed depends on the
current market value of the Company's common stock. Approximately 80,000 shares
of preferred stock have been converted as of February 28, 1999. The Company
plans to finance the potential cash outflow, if any, caused by redemptions
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 February 28, 1999. 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 mid 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 18
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 review of contingency plans by an independent consultant,
will not exceed $75,000.
In the event that the Company and material third parties such as
suppliers and/or customers fail to become Year 2000 compliant, a likely worst
case scenario could bring about possible system failure or other interruption of
operations such as an inability to process transactions or engage in normal
business activities for a short time.
The Company is establishing contingency plans to address the
consequences of possible failure and will conduct orderly shutdown or scale back
of operations accordingly if a loss of certain services is experienced. This is
essentially the same process currently used for non-Year 2000 failures that
could occur.
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 18
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 - None
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 third fiscal
quarter.
<PAGE> 15
Page 15 of 18
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: March 31, 1999 Met-Coil Systems Corporation
/s/ Randall J. Stodola
--------------------------------------
Randall J. Stodola
Vice President, Controller and
Chief Accounting Officer
<PAGE> 16
Page 16 of 18
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............................................................ 17
99 Press Release dated March 31, 1999................................................. 18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE REGISTRANT COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED) FOR FEBRUARY 28, 1999 AND
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS
ENDED FEBRUARY 28, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 1
<SECURITIES> 274
<RECEIVABLES> 0
<ALLOWANCES> 5,204
<INVENTORY> 68
<CURRENT-ASSETS> 10,268
<PP&E> 18,907
<DEPRECIATION> 18,267
<TOTAL-ASSETS> 13,241
<CURRENT-LIABILITIES> 26,248
<BONDS> 13,791
0
17,685
<COMMON> 3,758
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,274
<SALES> 26,248
<TOTAL-REVENUES> 32,674
<CGS> 32,334
<TOTAL-COSTS> 24,626
<OTHER-EXPENSES> 29,310
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 802
<INCOME-PRETAX> 1,929
<INCOME-TAX> 810
<INCOME-CONTINUING> 2,387
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,387
<EPS-PRIMARY> .76
<EPS-DILUTED> .62
</TABLE>
<PAGE> 1
Page 18 of 18
EXHIBIT 99
IMMEDIATELY TAMMY HUBACEK
MET-COIL SYSTEMS CORPORATION
ANNOUNCES THIRD QUARTER NET EARNINGS UP 20%
CEDAR RAPIDS, IA - MARCH 31, 1999 - Met-Coil Systems Corporation (METS), a
supplier of advanced sheet metal forming equipment, fabricating equipment and
glass processing technologies for the global market, announces net income for
the third quarter and nine months ended February 28, 1999.
"Operations are strong and order entry remains solid", reports James
Heitt, President and Chief Operating Officer of Met-Coil. "We have been
successful in improving our performance, maintaining our market leadership and
introducing new products, all of which contribute to long-term shareholder
value".
THIRD QUARTER RESULTS AND NINE-MONTH PERFORMANCE
Revenues for the third quarter were $10.3 million compared to $11.0
million one year ago. Met-Coil Systems Corporation reported third quarter income
before income taxes of $523,000, compared to $437,000 last year, which
represents a 20% increase. With income tax credits and preferred stock
accretion, net income applicable to common stock was $824,000 or $.19 diluted
earnings per share. This compares to $277,000, or $.09 diluted earnings per
share in the third quarter of fiscal 1998.
Year-to-date revenues were $32.3 million compared to $33.9 million for
the prior year period. However, order backlog at February 28, 1999 was $18
million, an improvement of $4 million over backlog one year ago. Last year's
revenues included a surge in sales of the Company's plasma cutting machines
which occurred when a competitor discontinued business. Those revenues have
returned to historic levels this year. Gross margin has improved from 22.4% to
23.8% due to continuing efforts to control material costs.
Income before income taxes for the nine months ended February 28, 1999
was $1.9 million, up from $1.3 million last year. With income tax credits and
preferred stock accretion, net income applicable to common stock was $2.4
million or $.62 diluted earnings per share compared to $796,000 or $.25 diluted
earnings per share one year ago.
Interest expense for the nine months fell by $402,000, due to lower
levels of outstanding debt, which we continue to paydown. The Company has
recognized net income tax credits of $810,000 in the first nine months of fiscal
1999. Income tax credits relate to a reduction in the Company's deferred tax
asset valuation allowance.
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