FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended DECEMBER 27, 1997
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 1-7737
ARROW AUTOMOTIVE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1449115
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer I.D. No.)
3 SPEEN STREET, FRAMINGHAM, MASSACHUSETTS 01701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 872-3711
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2,873,083 shares of the
Company's Common Stock ($.10 par value) were outstanding as of February 4,
1998.
ARROW AUTOMOTIVE INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page NUMBER
<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited):
Condensed Balance Sheets -
December 27, 1997 and June 28, 3
1997.....................................
Condensed Statements of Operations - Three Months Ended
December 27, 1997 and December 28, 4
1996...........................
Condensed Statements of Operations - Six Months Ended
December 27, 1997 and December 28, 5
1996...........................
Condensed Statements of Cash Flows - Six Months Ended
December 27, 1997 and December 28, 6
1996...........................
Notes to Condensed Financial 7 - 8
Statements.................................
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of 9 - 13
Operations.......................................
PART II OTHER INFORMATION
ITEM 1. Legal 14
Proceedings......................................................................
ITEM 2. Changes in Securities and Use of 14
Proceeds...............................
ITEM 3. Default upon Senior 14
Securities...................................................
ITEM 4. Submission of Matters to a Vote of Security 14
Holders..................
ITEM 5. Other 14
Information........................................................................
ITEM 6. Exhibits and Reports on Form 8- 14
K..............................................
SIGNATURES .................................................................................................... 15
</TABLE>
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<PAGE>
PART I - ITEM 1 -- FINANCIAL INFORMATION
ARROW AUTOMOTIVE INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS December 27, 1997 June 28,
1997
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 201,637 $ 240,291
Accounts receivable, less allowances 13,360,600 12,538,853
Inventories 33,246,012 30,920,184
Prepaid expenses and other current assets 1,755,358 1,705,746
TOTAL CURRENT ASSETS 48,563,607 45,405,074
PROPERTY, PLANT AND EQUIPMENT 34,109,706 33,989,146
Less allowances for depreciation 22,897,604 22,362,518
11,212,102 11,626,628
OTHER ASSETS 2,499,288 2,300,956
TOTAL ASSETS $ 62,274,997 $ 59,332,658
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of advances under revolving
line of credit $ 1,536,741 $ 3,836,680
Accounts payable 11,267,788 8,523,743
Cash overdrafts 2,088,181 764,113
Other current liabilities 4,694,311 4,864,374
Current portion of long-term debt 1,165,539 1,166,111
TOTAL CURRENT LIABILITIES 20,752,560 19,155,021
LONG-TERM DEBT 19,451,553 16,819,166
OTHER NONCURRENT LIABILITIES 3,436,105 3,315,105
STOCKHOLDERS' EQUITY
Common stock 296,887 296,887
Other stockholders' equity 18,787,216 20,195,803
Less cost of common stock in treasury 449,324 449,324
TOTAL STOCKHOLDERS' EQUITY 18,634,779 20,043,366
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 62,274,997 $ 59,332,658
</TABLE>
See accompanying notes to the condensed financial statements.
ARROW AUTOMOTIVE INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
<TABLE>
<CAPTION>
December 27, 1997 December 28, 1996
<S> <C> <C> <C> <C>
Net sales $ 20,207,665 $ 21,230,177
Cost and expenses:
Cost of products sold 16,153,434 17,018,945
Selling, administrative and general 5,011,074 5,061,826
Interest 569,038 564,442
21,733,546 22,645,213
Loss before income taxes (1,525,881) (1,415,036)
Benefit from income taxes (395,900)
NET LOSS $ (1,525,881) $ (1,019,136)
Average number of shares used to calculate
basic and diluted loss per share 2,873,083 2,873,083
NET LOSS PER BASIC AND DILUTED SHARE $(0.53) $(0.35)
</TABLE>
See accompanying notes to the condensed financial statements.
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<PAGE>
ARROW AUTOMOTIVE INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED
<TABLE>
<CAPTION>
December 27, 1997 December 28, 1996
<S> <C> <C> <C> <C>
Net sales $ 44,548,917 $ 45,711,325
Cost and expenses:
Cost of products sold 34,984,456 36,045,923
Selling, administrative and general 9,755,794 9,714,244
Restructuring charge 1,200,000
Interest 1,217,253 1,108,491
45,957,503 48,068,658
Loss before income taxes (1,408,586) (2,357,333)
Benefit from income taxes (754,000)
NET LOSS $ (1,408,586) $ (1,603,333)
Average number of shares used to calculate
basic and diluted loss per share 2,873,083 2,873,083
NET LOSS PER BASIC AND DILUTED SHARE $(0.49) $(0.56)
</TABLE>
See accompanying notes to the condensed financial statements.
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<PAGE>
ARROW AUTOMOTIVE INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
<TABLE>
<CAPTION>
December 27, 1997 December 28, 1996
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net cash (used in) provided by
operating activities $ (143,492) $ 2,286,639
INVESTING ACTIVITIES
Net cash used in investing activities (227,038) (321,712)
FINANCING ACTIVITIES
Payment of long-term debt and capital
lease obligations (689,185) (687,715)
Decrease in advances under
revolving line of credit (2,299,939) (1,684,045)
Replacement financing proceeds 3,321,000 0
Net cash provided by (used in) financing
activities 331,876 (2,371,760)
DECREASE IN CASH AND EQUIVALENTS (38,654) (406,833)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
240,291 850,537
CASH AND EQUIVALENTS AT END OF PERIOD $ 201,637 $ 443,704
</TABLE>
See accompanying notes to the condensed financial statements.
ARROW AUTOMOTIVE INDUSTRIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
the fair presentation have been included. Operating results for the six month
period ended December 27, 1997 are not necessarily indicative of the results
that may be expected for the year ending June 27, 1998. For further
information, refer to the financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended June 28, 1997.
The balance sheet at June 28, 1997 has been derived from the audited financial
statements at that date.
NOTE B -- INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
December 27, 1997 June 28,
1997
<S> <C> <C> <C> <C>
Stated at cost on the first-in, first-out
(FIFO)
method:
Finished goods $ 12,165,932 $ 10,507,186
Work in process and materials 26,317,080 25,649,998
38,483,012 36,157,184
Less reserve required to state inventory on
the
last-in, first-out (LIFO) method (5,237,000) (5,237,000)
$ 33,246,012 $ 30,920,184
</TABLE>
NOTE C -- EARNINGS (LOSS) PER SHARE:
In the second quarter of fiscal year 1998, the Company adopted Statement
of Financial Accounting Standards No. 128 (SFAS 128), Earnings per Share. SFAS
128 requires disclosure of basic and diluted earnings per share. Diluted
earnings per share assumes the conversion of all diluted securities. The
adoption of SFAS 128 has no effect on the Company's earnings per share.
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<PAGE>
NOTE D -- RESTRUCTURING CHARGE
In fiscal 1997, the Company restructured its operations by closing its
Santa Maria, California production facility and transferring its manufacturing
operations formerly conducted at that facility to its remaining manufacturing
facilities. The action was taken to enhance profit margins by streamlining the
Company's productive capacity to better match its production requirements. As
a result, a $1.2 million restructuring charge was recorded in the first quarter
of fiscal 1997. For the 1997 fiscal year, the restructuring charge amounted to
$1.1 million, consisting of $413,000 of employee termination benefits and
$687,000 related to the facility closing and other expenses.
NOTE E -- LONG TERM DEBT
On October 7, 1997, the Company restructured its bank agreements via an
amendment. The new agreements consist of a $7,500,000 term loan and a $20
million revolving line of credit
The interest rate on amounts outstanding under the revolving line of
credit will change depending upon the achieved debt service coverage ratio and
can range from the lender's base rate to 1.50% over the lender's base rate.
The revolving credit loan maturity date is July 31, 2000.
Similarly, the interest rate on the replacement term loan on a given date
can range from 0.25% to 1.75% over the lender's base rate depending upon the
achieved debt service coverage ratio. The term loan has a maturity date of
July 31, 2000.
The amendment resulted in $3,321,000 of incremental cash proceeds of the
replacement term loan over the outstanding balance of the prior term loan. The
Company's obligations under these agreements continue to be secured by
substantially all of its assets.
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<PAGE>
PART 1
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto. All forward looking statements
contained in the following discussion and analysis and elsewhere in this report
are qualified in their entirety by the cautionary statement appearing at the
end of the discussion and analysis.
INDUSTRY CHANGE
The distribution sector within the automotive aftermarket is undergoing
rapid consolidation, resulting in fewer and larger distributors. The Company,
founded in 1929, is one of the nation's largest remanufacturers of automotive
parts. For most of the Company's history, the automotive aftermarket was
structured in a three step distribution system with:
1. MANUFACTURERS (SUCH AS ARROW) SELLING TO WAREHOUSE DISTRIBUTORS
("WDS"),
2. WDS SELLING TO JOBBERS,
3. JOBBERS SELLING TO REPAIR SHOPS, SERVICE STATIONS, AUTO DEALERS AND
VEHICLE OWNERS.
CHANGES IN THE TRADITIONAL DISTRIBUTION STRUCTURE WHICH BEGAN A DECADE AGO
HAVE ACCELERATED IN RECENT YEARS. RETAIL CHAINS HAVE EMERGED AS MAJOR
DISTRIBUTORS OF AUTOMOTIVE AFTERMARKET PRODUCTS AND HAVE MADE SUCCESSFUL
INROADS INTO PRODUCT DISTRIBUTION PREVIOUSLY DOMINATED BY THE TRADITIONAL WD.
WDS ARE EXPANDING VERTICALLY THROUGH THE ACQUISITION OF JOBBER STORES AND
BECOMING MORE LIKE THEIR RETAIL COUNTERPARTS IN THE INDUSTRY. MANY JOBBER
STORES HAVE CLOSED DUE TO THE EXTREME COMPETITION IN THE AUTOMOTIVE
AFTERMARKET, SHRINKING THE CUSTOMER BASE OF TRADITIONAL WDS. PROGRAM BUYING
GROUPS, WHICH BEGAN AS WD MEMBERSHIP ORGANIZATIONS, ARE BECOMING A MORE
POWERFUL VOICE FOR THEIR MEMBER WAREHOUSES BY ENCOURAGING MEMBERS TO MAXIMIZE
THEIR COLLECTIVE BUYING POWER THROUGH THE USE OF PREFERRED VENDORS. AS A
RESULT OF THE COMPETITIVE PRESSURES CREATED BY THESE CHANGES IN THE AUTOMOTIVE
AFTERMARKET, ALL DISTRIBUTORS HAVE BECOME EXTREMELY PRICE SENSITIVE, EXERTING
CONSIDERABLE PRESSURE ON VENDORS FOR COMPETITIVE PRICING.
MANAGEMENT'S PLAN
In times of change, opportunities exist. The Company has taken and
continues to take steps to reduce costs inherent in its structure and better
position itself in the marketplace. The Company's strategic changes to reduce
operating costs have included:
<circle> STREAMLINING OF MANUFACTURING PROCESSES,
<circle> CONSOLIDATION OF ADMINISTRATIVE FUNCTIONS,
<circle> ELIMINATION OF REDUNDANT PRODUCTION CAPACITY WITH THE CLOSURE OF
ITS CALIFORNIA PLANT,
<circle> CONSOLIDATION OF THE PRODUCTION OF SEVERAL PRODUCT LINES
PREVIOUSLY MANUFACTURED AT MULTIPLE LOCATIONS TO A SINGLE PLANT,
<circle> IMPLEMENTATION OF PROGRAMS TO LOWER THE COST OF WARRANTY RETURNS
INCLUDING IMPROVING INSTALLATION INSTRUCTIONS, EDUCATION PROGRAMS FOR
INSTALLERS AND IMPROVING SYSTEMS FOR IDENTIFYING AND RE-USING NON-
DEFECTIVE WARRANTY RETURNS,
<circle> OUTSOURCING ITS CARBURETOR AND RACK AND PINION PRODUCTION,
<circle> IMPLEMENTING CHANGES TO ITS INVENTORY MANAGEMENT SYSTEMS IN ORDER
TO REDUCE ITS INVESTMENT IN INVENTORY WHILE REMAINING RESPONSIVE TO
CUSTOMERS' DEMAND.
CONCURRENTLY WITH THE COST REDUCTION EFFORTS, THE COMPANY VIEWS ITS
ABILITY TO ACHIEVE PROFITABLE OPERATIONS AS ALSO DEPENDENT ON INCREASING SALES
VOLUME. WE HAVE IMPLEMENTED AGGRESSIVE AND FOCUSED EFFORTS THROUGHOUT THE
SALES ORGANIZATION TO PURSUE PROSPECTIVE CUSTOMERS TO INCREASE SALES BY THE
ACQUISITION OF NEW BUSINESS.
ON JANUARY 2, 1998, THE COMPANY ANNOUNCED ITS ENGAGEMENT OF AN INVESTMENT
BANKING FIRM, ADVEST INC., TO ACT AS ITS EXCLUSIVE FINANCIAL ADVISOR TO
IDENTIFY AND INVESTIGATE STRATEGIC OPPORTUNITIES FOR THE COMPANY. THIS ACTION
IS A CAREFULLY CONSIDERED RESPONSE TO THE CHALLENGES FACING THE COMPANY TO
MAXIMIZE THE VALUE OF ITS SHAREHOLDERS' INVESTMENT. STRATEGIC OPPORTUNITIES
UNDER CONSIDERATION INCLUDE, WITHOUT LIMITATION, CO-MANUFACTURING ARRANGEMENTS,
DISTRIBUTION AGREEMENTS AND/OR OTHER JOINT VENTURE OR CORPORATE PARTNERING
OPPORTUNITIES, AS WELL AS POSSIBLE MERGER CANDIDATES OR A SALE OF THE COMPANY.
OPERATIONS
SALES
Net sales for the second quarter of fiscal 1998 of $20,208,000 declined
$1,022,000 or 4.82% compared to net sales for the comparable period in fiscal
1997. Unit sales for the second quarter in the current fiscal year were down
12.1% compared to the second quarter of the prior fiscal year. For the six
months ended December 27, 1997, net sales of $44,549,000 were down 2.54% from
net sales of the first six months in the prior fiscal year. Unit sales for the
first six months in the current fiscal year were down 9.8% from unit sales of
the same period in fiscal 1997.
While sales to the Company's two largest customers have increased,
overall sales have declined. The sales decline is primarily related to reduced
demand from our traditional WD customers and to a lesser extent to the loss of
customers. The decline in unit sales did not translate into a similar decline
in net sales dollars because of two factors. First, the current fiscal year
periods have had a greater percentage of higher-dollar, electrical product
sales than the same periods in fiscal 1997. Second, customer returns as a
percentage of gross sales were lower in the current fiscal year compared to
fiscal 1997. Customer returns are for re-usable "cores" (our basic raw
material), warranty and stock adjustments received in the normal course of
business. The returns are deducted from gross sales in calculating net sales.
Gross sales declined 6.4% for the comparative 1998 and 1997 second quarter
periods and declined 5.0% for the respective six month periods.
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GROSS MARGIN
The Company's gross margin percentage for the second quarter of fiscal
1998 was 20.1%, compared to the gross margin percentage for the corresponding
period last fiscal year of 19.8%. For the six months ended December 27, 1997,
the gross margin percentage was 21.5% compared to a 21.1% gross margin for the
same period of the prior year. The cost of goods sold in the second quarter of
the prior fiscal year included non-recurring period costs of $580,000 related
to the closing of the California manufacturing facility. The gross margin
before the impact of these costs would have been 22.5% and 22.4% for the second
quarter and the first six months of fiscal 1997, respectively.
The cost of goods sold for the second quarter of fiscal 1998 included
additional material and labor costs related to the consolidation of the
production of a product line to a single plant. Additional personnel were
employed at the Company's Arkansas facility and their training began during the
second quarter of fiscal 1998 in anticipation of the shut down of production of
the effected product line at the Company's South Carolina facility. Production
inefficiencies resulted from the use of inexperienced personnel. Also, during
the second quarter of fiscal 1998, the Company experienced unfavorable pricing
on higher than expected material purchases. The higher level of material
spending was due to two factors. Unusually large customer orders built late in
the second quarter of fiscal 1998 which were shipped on schedule in the third
quarter. Secondly, there was a buildup of inventory to meet customer demand
during the transition of product line consolidation. The unfavorable effects
of material and labor costs are reflected in the second quarter's lower gross
margin. The Company further anticipates that the margins for the third quarter
will be adversely effected by the continued higher labor costs related to the
product line consolidation which will continue throughout the third quarter of
fiscal 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expenses in the second quarter and
first six months of fiscal 1998 were $5,011,000 (24.8% of net sales) and
$9,750,000 (21.9% of net sales), respectively. Selling, general and
administrative expenses in the second quarter and first six months of fiscal
1997 were $5,062,000 (23.8% of net sales) and $9,714,000 (21.3% of net sales),
respectively. The expenses for the second quarter of the prior fiscal year
included non-recurring period costs related to the closing of the California
facility of $300,000. Selling, general and administrative expenses were
adversely impacted by higher employee benefit costs during the second quarter
of the current fiscal year.
INTEREST
Interest expense was $569,000 for the second quarter of fiscal 1998.
Interest expense for the same period in the prior fiscal year was $564,000.
The second quarter of fiscal 1998 had higher borrowing levels at lower interest
rates, compared to the second quarter of fiscal 1997. For the six months ended
December 27, 1997, interest expense of $1,217,000 increased $109,000 or 9.8%
over the same period last fiscal year. The higher interest expense in the
first six months of fiscal 1998 is due to higher interest rates in the current
first quarter (incurred prior to the Company's refinancing, which took place on
October 7, 1997), and higher borrowing levels compared to the same period last
fiscal year.
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<PAGE>
TAX PROVISION
The Company has not recorded an income tax benefit in the current fiscal
year or quarter. In the prior fiscal year, the Company recorded an income tax
benefit which was realized with the carryback of the 1997 net operating loss.
Net operating loss carryforwards can be carried forward to fiscal year 2013.
OPERATING RESULTS
Operations during the second quarter of fiscal 1998 resulted in a net loss
of $1,526,000 compared to a net loss of $1,019,000 for the second quarter of
fiscal 1997. The six months ended December 27, 1997, resulted in a net loss of
$1,409,000 compared to a net loss of $1,603,000 for the comparable period in
the prior fiscal year. The operating results for fiscal 1997 included a first
quarter restructuring charge relating to the closure of the Company's
California production facility of $864,000 (pretax charge of $1,200,000) and
non-recurring period costs related to the closure of $641,000 (pretax expenses
of $890,000) incurred primarily in the second quarter.
CAPITAL RESOURCES
Net cash of $143,000 was used by operating activities during the six
months ended December 27, 1997, compared to net cash provided by operations of
$2,287,000 during the first six months of the prior fiscal year. Increased
inventory of $2,326,000 and the increase in accounts receivable of $883,000
used cash from operations. Cash was provided by the increase in trade payables
and cash overdrafts of $3,649,896. The decline in accounts receivable is
related to lower sales in the second quarter of the current fiscal year. Trade
payables increased due to higher spending levels in the second quarter of
fiscal 1998 as well as the lengthening of payment terms on certain older
balances. The increase in inventory is due to the additional finished goods
required to support customer demand during the consolidation of product line
production discussed previously, as well as requirements to fill certain large
orders shipped in January, 1998.
Net cash was used in investing activities of $227,000 and $322,000 in the
first six months of fiscal 1998 and 1997, respectively. Cash of $332,000 was
provided by financing activities in the six months of fiscal 1998 compared to
cash used of $2,372,000 used by financing activities in the same period of last
fiscal year. On October 7, 1997, the Company restructured its bank agreements
via amendment. $3,321,000 of incremental cash proceeds became available over
the outstanding balance of the replaced credit agreements. Payment agreements
have been established with most of the Company's vendors to work off older
payable balances while maintaining adequate cash flow for current operations.
A majority of the Company's vendors have worked with the Company through the
lengthening of payment terms while the Company's organizational structure is
streamlined to reduce operating costs.
In the third quarter of fiscal 1998, the Company received $1,100,000 from
the carryback of the fiscal 1997 net tax operating loss. Also, agreement has
been reached regarding the sale of the Company's California property, which is
expected to be completed in the third quarter of fiscal 1998. Of the
anticipated proceeds, $2,000,000 will reduce the term note to the Company's
banks, as required by our debt agreements. The remaining net proceeds (which
are anticipated to approximate $500,000) will increase working capital.
The Company believes that based upon its current operating forecast, its
existing cash balance, cash generated from operations combined with its
borrowing ability under its financing agreements and vendor payment agreements,
the Company will have sufficient funds to meet its cash requirements for
operations and other obligations over the next twelve months.
CAUTIONARY STATEMENT
All statements in the foregoing discussion and analysis which are not
historical fact are forward looking statements. In connection with the " Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company is providing the following cautionary statement to identify some (but
not necessarily all) of the important factors that could cause its actual
results to differ materially from those anticipated in any forward looking
statements made in this report or otherwise by or on behalf of the Company.
Actual results of the Company may differ from those anticipated in any
forward looking statement made by or on behalf of the Company due to the
following factors, among other risks and uncertainties affecting the Company's
business: lack of availability to the Company of adequate funding sources and
cash from operations; reduced product demand; a change in product sales mix
between electrical or mechanical products; the loss of or a material reduction
in orders from either of the Company's two largest customers or other material
loss of business; deterioration of vendor relationships adversely impacting
material supplies; month-to-month volatility in sales volumes or customer
returns which can result in additional labor and operating costs; new business
acquisition costs; unseasonably mild weather patterns, the impact of inflation,
and the various other factors identified in the discussion appearing under the
heading "Industry Change and Outlook" above and elsewhere in this report.
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<PAGE>
ARROW AUTOMOTIVE INDUSTRIES, INC.
<TABLE>
<CAPTION>
PART II OTHER INFORMATION
<S> <C> <C> <C>
ITEM 1. Legal Proceedings.
None.
ITEM 2. Changes in Securities and
Uses of Proceeds.
None.
ITEM 3. Default 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
Exhibit 27 Financial Data Schedule
B. Report on Form 8-K
Dated January 2, 1998 Filed on January 14, 1998
</TABLE>
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ARROW AUTOMOTIVE INDUSTRIES, INC.
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.
<TABLE>
<CAPTION>
ARROW AUTOMOTIVE INDUSTRIES, INC.
(Registrant)
<S> <C>
February 10, 1998 /s/ Jim L. Osment
Jim L. Osment
President and Chief Executive Officer
February 10, 1998 /s/ James F. Fagan
James F. Fagan
Executive Vice President, Treasurer
and Chief Financial Officer
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and statement of operations, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-END> DEC-27-1997
<CASH> 202
<SECURITIES> 0
<RECEIVABLES> 13,929
<ALLOWANCES> 568
<INVENTORY> 33,246
<CURRENT-ASSETS> 48,563
<PP&E> 34,110
<DEPRECIATION> 22,898
<TOTAL-ASSETS> 62,275
<CURRENT-LIABILITIES> 20,753
<BONDS> 19,452
0
0
<COMMON> 297
<OTHER-SE> 18,338
<TOTAL-LIABILITY-AND-EQUITY> 62,275
<SALES> 44,549
<TOTAL-REVENUES> 44,549
<CGS> 34,985
<TOTAL-COSTS> 34,985
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,217
<INCOME-PRETAX> (1,409)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,409)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,409)
<EPS-PRIMARY> (0.49)
<EPS-DILUTED> (0.49)
</TABLE>
