<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED COMMISSION FILE NO. 0-3134
JUNE 30, 1997
PARK-OHIO INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 34-6520107
- ----------------------------------------- -----------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
23000 EUCLID AVENUE, CLEVELAND, OHIO 44117
- ----------------------------------------- -----------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 216/692-7200
Indicate by check mark whether the registrant:
<TABLE>
<S> <C>
(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 twelve 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 [ ]
</TABLE>
Number of shares outstanding of registrant's Common Stock, par value $1.00
per share, as of July 31, 1997: 11,147,463 including 187,500 shares held in
escrow.
The Exhibit Index is located on page 14.
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<PAGE> 2
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated condensed balance sheets -- June 30, 1997 and December 31, 1996
Consolidated condensed statements of income -- Six months and three months ended
June 30, 1997 and 1996
Consolidated condensed statements of cash flows -- Six months ended June 30, 1997
and 1996
Notes to consolidated condensed financial statements -- June 30, 1997
Independent accountants' review report
Item 2. Management's Discussion
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
EXHIBIT INDEX
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
3
<PAGE> 4
CONSOLIDATED CONDENSED BALANCE SHEETS
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30 DECEMBER 31
1997 1996
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents......................................... $ 5,358 $ 4,659
Accounts receivable, less allowances for doubtful accounts of
$1,354 at June 30, 1997 and $1,048 at December 31, 1996........ 68,804 58,764
Inventories....................................................... 86,252 83,758
Deferred taxes.................................................... 3,000 3,000
Other current assets.............................................. 9,341 5,718
--------- --------
Total Current Assets...................................... 172,755 155,899
Property, Plant and Equipment....................................... 118,225 106,862
Less accumulated depreciation..................................... 56,677 53,054
--------- --------
61,548 53,808
Other Assets
Excess purchase price over net assets acquired, net............... 48,445 40,305
Deferred taxes.................................................... 13,100 14,100
Other............................................................. 25,247 18,798
--------- --------
$ 321,095 $282,910
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable............................................ $ 33,954 $ 28,545
Accrued expenses.................................................. 20,815 20,695
Current portion of long-term liabilities.......................... 6,934 6,936
--------- --------
Total Current Liabilities................................. 61,703 56,176
Long-Term Liabilities, less current portion
Long-term debt.................................................... 81,903 55,571
Other postretirement benefits..................................... 27,794 28,442
Other............................................................. 4,903 4,788
--------- --------
114,600 88,801
Convertible Senior Subordinated Debentures.......................... 21,125 22,235
Shareholders' Equity
Capital stock, par value $1 a share:
Serial Preferred Stock......................................... -0- -0-
Common Stock................................................... 10,960 10,433
Additional paid-in capital........................................ 53,871 49,337
Retained earnings................................................. 62,979 57,703
Treasury stock, at cost........................................... (4,143) (1,775)
--------- --------
123,667 115,698
--------- --------
$ 321,095 $282,910
========= ========
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See notes to consolidated condensed financial statements.
4
<PAGE> 5
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
(Dollars in thousands -- except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- ---------------------
1997 1996 1997 1996
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................................ $103,785 $90,693 $197,591 $181,547
Cost of products sold............................ 86,965 75,262 165,728 150,587
-------- ------- -------- --------
Gross profit................................... 16,820 15,431 31,863 30,960
Selling, general and administrative expenses..... 10,044 9,360 19,906 18,832
-------- ------- -------- --------
Operating income............................... 6,776 6,071 11,957 12,128
Interest expense................................. 1,857 1,959 3,480 3,851
-------- ------- -------- --------
Income from continuing operations before income
taxes....................................... 4,919 4,112 8,477 8,277
Income taxes..................................... 1,884 1,562 3,200 3,145
-------- ------- -------- --------
Income from continuing operations.............. 3,035 2,550 5,277 5,132
Income from discontinued operations, net of
tax............................................ -0- 1,326 -0- 2,825
-------- ------- -------- --------
Net Income............................. $ 3,035 $ 3,876 $ 5,277 $ 7,957
======== ======= ======== ========
Per common share:
Continuing operations.......................... $ .28 $ .23 $ .48 $ .46
Discontinued operations........................ -0- .12 -0- .26
-------- ------- -------- --------
Net income..................................... $ .28 $ .35 $ .48 $ .72
======== ======= ======== ========
Common shares used in the computation............ 10,953 11,112 10,972 11,002
======== ======= ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE> 6
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
(Dollars in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
---------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................................... $ 5,277 $ 7,957
Adjustments to reconcile net income to net cash provided (used) by
continuing operations:
Discontinued operations......................................... -0- (2,825)
Depreciation and amortization................................... 4,622 4,271
Deferred income taxes........................................... 1,000 2,500
-------- --------
10,899 11,903
Changes in operating assets and liabilities of continuing operations
excluding acquisitions of businesses:
Accounts receivable............................................. (8,086) (10,351)
Inventories and other current assets............................ (3,243) 4,087
Accounts payable and accrued expenses........................... 2,799 (9,286)
Other........................................................... (5,081) (4,025)
-------- --------
Net Cash Used by Continuing Operations....................... (2,712) (7,672)
Net Cash Provided by Discontinued Operations................. -0- 4,932
-------- --------
Net Cash Used by Operations................................ (2,712) (2,740)
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net...................... (5,221) (6,199)
Cost of acquisitions, net of cash acquired........................... (13,917) -0-
Investments.......................................................... (1,323) -0-
Other................................................................ 231 -0-
-------- --------
Net Cash Used by Investing Activities........................ (20,230) (6,199)
FINANCING ACTIVITIES
Proceeds from bank arrangements for acquisitions..................... 13,900 -0-
Proceeds from bank arrangements for operations....................... 15,100 9,500
Payments on debt..................................................... (3,777) (1,766)
Purchase of treasury stock........................................... (2,369) -0-
Issuance of common stock under stock option plan..................... 787 55
-------- --------
Net Cash Provided by Financing Activities.................... 23,641 7,789
-------- --------
Increase (Decrease) in Cash and Cash Equivalents................ 699 (1,150)
Cash and Cash Equivalents at Beginning of Period................ 4,659 2,662
-------- --------
Cash and Cash Equivalents at End of Period...................... $ 5,358 $ 1,512
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
6
<PAGE> 7
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
(Dollars in thousands -- except per share data)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated 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 Article
10 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 a fair presentation have
been included. Operating results for the three and six-month periods ended June
30, 1997 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
NOTE B -- SALE OF BENNETT INDUSTRIES
On July 31, 1996, the Company completed the sale of substantially all of
the assets of Bennett Industries, Inc. ("Bennett"), a wholly-owned subsidiary
which manufactured plastic containers, to North America Packaging Corporation,
an indirect wholly-owned subsidiary of Southcorp Holdings Limited, an Australian
company, for $50.8 million in cash, resulting in a pretax gain of $13.8 million
recognized in the third quarter of 1996. The results of operations and changes
in cash flows for Bennett for the three and six-month periods ended June 30,
1996 have been classified as discontinued operations. Interest expense has been
allocated to discontinued operations based on the ratio of net assets
discontinued to the total net assets of the consolidated entity plus
consolidated debt.
Summary operating results of the discontinued operations, excluding the
above gain on sale, for the three and six-month periods ended June 30, 1996 were
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1996
------------------ ----------------
<S> <C> <C>
Sales............................................. $ 21,733 $ 41,551
Costs and expenses................................ 19,619 37,021
-------- --------
Income from discontinued operations before income
taxes........................................... 2,114 4,530
Income taxes...................................... 788 1,705
-------- --------
Net income from discontinued operations........... $ 1,326 $ 2,825
======== ========
</TABLE>
NOTE C -- INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996
------- -----------
<S> <C> <C>
In process and finished goods................................. $63,373 $60,587
Raw materials and supplies.................................... 22,879 23,171
------- -------
$86,252 $83,758
======= =======
</TABLE>
7
<PAGE> 8
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
NOTE D -- FINANCING ARRANGEMENTS
In June, 1997 the Company amended its credit agreement with a group of five
banks increasing its credit availability by $50 million to $170 million and
extended its maturity date to March 31, 2001.
NOTE E -- SHAREHOLDERS' EQUITY
Capital stock consists of the following:
Serial Preferred Stock:
Authorized -- 632,470 shares; none issued
Common Stock:
Authorized -- 20,000,000 shares
Issued and outstanding -- 10,959,962 shares at June 30, 1997 and
10,432,998 at December 31, 1996. The increase in outstanding
shares results from the issuance of 152,000 common shares upon
the exercise of stock options and 375,000 common shares issued
pursuant to the earn-out provisions related to the acquisition of
General Aluminum Mfg. Company.
NOTE F -- NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of
common shares outstanding and assumes the exercise of outstanding dilutive stock
options and the issuance of certain additional shares subject to earn-out
provisions. On a fully diluted basis, both net income and common shares
outstanding are adjusted to assume the conversion of the convertible senior
subordinated debentures. Fully diluted earnings per share were as follows for
the three and six-month periods ended June 30, 1997 and June 30, 1996,
respectively.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Continuing operations....................... $ .27 $ .23 $ .47 $ .46
Discontinued operations..................... -0- .11 -0- .23
------- ------- ------- -------
Net Income.................................. $ .27 $ .34 $ .47 $ .69
======= ======= ======= =======
Common shares used in the computation....... 12,200 12,263 12,215 12,243
======= ======= ======= =======
</TABLE>
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share", which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary earnings per share and fully diluted earnings per share for the three
and six month periods ended June 30, 1997 and June 30, 1996 is not expected to
be material.
NOTE G -- SUBSEQUENT EVENT
On August 1, 1997, the Company acquired substantially all of the shares of
Arden Industrial Products, Inc. ("Arden") for cash of approximately $44,000,000.
The transaction will be accounted for as a purchase. Arden is headquartered in
Vadnais Heights, Minnesota and is a national distributor of specialty and
standard fasteners to the industrial market and will be included in the
Company's logistics segment.
8
<PAGE> 9
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
The following is the estimated value of the net assets of Arden as of June
30, 1997:
<TABLE>
<S> <C>
Cash....................................................................... $ 2,146
Accounts receivable........................................................ 10,881
Inventories................................................................ 18,944
Property, plant and equipment.............................................. 4,596
Excess purchase price over net assets acquired............................. 18,499
Other assets............................................................... 1,941
Trade accounts payable..................................................... (4,534)
Accrued expenses........................................................... (3,449)
Long-term liabilities...................................................... (5,024)
-------
Total estimated cost of acquisition.............................. $44,000
=======
</TABLE>
The following unaudited pro forma results of operations assume the
acquisition occurred on January 1, 1996. These pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of
the results of operations which actually would have resulted had the acquisition
occurred on the date indicated, or which may result in the future.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
---------------------
1997 1996
-------- --------
<S> <C> <C>
Net Sales...................................................... $241,769 $228,190
Gross profit................................................... 44,154 44,378
Income from continuing operations.............................. 4,391 4,321
Income from continuing operations per common share............. $ .40 $ .39
======== ========
</TABLE>
9
<PAGE> 10
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders
Park-Ohio Industries, Inc.
We have reviewed the accompanying consolidated condensed balance sheet of
Park-Ohio Industries, Inc. and subsidiaries as of June 30, 1997, and the related
consolidated condensed statements of income for the three-months and the
six-months ended June 30, 1997 and 1996, and the consolidated condensed
statements of cash flows for the six-month periods ended June 30, 1997 and 1996.
These financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical financial
data, and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, which will be performed for the full
year with the objective of expressing an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated condensed financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Park-Ohio Industries, Inc. and
subsidiaries as of December 31, 1996, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then ended, not
presented herein, and in our report dated February 17, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated condensed balance
sheet as of December 31, 1996, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
August 4, 1997
10
<PAGE> 11
MANAGEMENT'S DISCUSSION
RESULTS OF OPERATIONS
FIRST HALF 1997 VERSUS FIRST HALF 1996
On August 1, 1997, the Company acquired substantially all of the shares of
Arden Industrial Products, Inc. ("Arden") for approximately $44 million in cash.
The transaction will be accounted for as a purchase. Arden will be included in
the Company's logistics segment. (See Note G to Consolidated Condensed Financial
Statements included herein.)
On July 31, 1996, the Company completed the sale of substantially all of
the assets of Bennett Industries, Inc., a wholly-owned subsidiary of the
Company, which manufactured plastic containers, to North America Packaging
Corporation, an indirect wholly-owned subsidiary of Southcorp Holdings Limited,
an Australian company, for $50.8 million in cash, resulting in a pre-tax gain of
$13.8 million recognized in the third quarter of 1996. The results of operations
and changes in cash flows of Bennett for the three and six month periods ended
June 30, 1996, have been classified as discontinued operations. (See Note B to
Consolidated Condensed Financial Statements included herein.)
Net sales from continuing operations increased by $16.0 million or 9% in
the first half of 1997 from the corresponding period of the prior year. Of the
total increase of $16.0 million, 60% relates to the logistics segment, which was
internally generated, while the remainder pertains to the manufactured products
segment. For the manufactured products segment, this increase was from
internally generated sales and acquisitions completed in 1997.
Gross profit from continuing operations increased by $903 thousand in the
current period as compared to the first half of 1996. This increase was a result
of the increased logistics sales and the acquisitions made in the manufactured
products segment. Consolidated gross margins were 16% of sales in the current
period versus 17% in the first half of 1996.
Selling, general and administrative costs from continuing operations
increased by $1.1 million to $19.9 million from $18.8 million in the first half
of 1996. The increase in costs is primarily related to increased sales for the
period. As a percentage of sales, consolidated selling, general and
administrative costs accounted for 10.1% of the sales dollar in the current
period compared to 10.4% in the corresponding period of the prior year.
Interest expense from continuing operations decreased by $371 thousand in
the current period due to lower levels of debt outstanding during the period.
Average debt outstanding for the period decreased by $27.6 million from $123.7
million in 1996 to $96.1 million in 1997. The decrease principally resulted from
applying the net proceeds from the Bennett disposition to outstanding bank debt
partially offset by borrowings in 1997 for financing and investing activities.
Interest rates were approximately the same in both periods.
At December 31, 1996, subsidiaries of the Company had net operating loss
carryforwards for tax purposes of approximately $15.0 million, subject to
certain limitations which expire in 2001 to 2007.
SECOND QUARTER 1997 VERSUS SECOND QUARTER 1996
Net sales from continuing operations increased by $13.1 million or 14% in
the second quarter of 1997 from the corresponding period of the prior year. This
increase was largely the result of internally generated sales (74%), primarily
in the logistics segment, and the remainder related to acquisitions made in the
manufactured products segment in 1997.
Gross profit from continuing operations increased by $1.4 million in the
current period as compared to the second quarter of 1996. This increase was a
result of the sales increase of $13.1 million including the acquisitions made in
the manufactured products segment. Consolidated gross margins were 16% of sales
in the current period versus 17% in the second quarter of 1996.
Selling, general and administrative costs from continuing operations
increased by $684 thousand to $10.0 million from $9.4 million in the second
quarter of 1996. The increase in costs is primarily related to
11
<PAGE> 12
increased sales for the period. As a percentage of sales, consolidated selling,
general and administrative costs accounted for 9.7% of the sales dollar in the
current period compared to 10.3% in the corresponding period of the prior year.
The reduction in interest expense from continuing operations in the current
period was due to lower levels of debt outstanding during the period. Average
debt outstanding for the period decreased by $23.5 million from $126.6 million
in 1996 to $103.1 million in 1997. The decrease principally results from
applying the net proceeds from the Bennett disposition to outstanding bank debt
partially offset by borrowings in 1997 for financing and investing activities.
Interest rates were approximately the same in both periods.
LIQUIDITY AND SOURCES OF CAPITAL
Current financial resources (working capital and available bank borrowing
arrangements) and anticipated funds from continuing operations are expected to
be adequate to meet current cash requirements, including capital expenditures.
The Company's recent growth has largely been fueled by acquisitions. In the
event additional capital resources are needed for other opportunities in the
near future, the Company believes adequate financing is either in place or would
be available. In June, 1997, the Company increased its credit availability with
its group of five banks by $50 million to $170 million, for the purposes of
acquiring Arden. As of August 1, 1997, the Company had $122.5 million
outstanding under its credit agreement with the banks.
During the six-month period ended June 30, 1997, the Company generated
$10.9 million from continuing operations before changes in operating assets and
liabilities. After giving effect to the use of $13.6 million in the operating
accounts, the Company used $2.7 million for operating activities. During the
period, the Company invested $5.2 million in capital expenditures and $15.2
million for acquisitions and investments. During the period, the Company bought
179,946 shares of its common stock in the open market for $2.4 million. As of
June 30, 1997, the Company has 306,171 shares of its common stock in the
treasury. In addition, the Company purchased in the open market $1.1 million of
its convertible senior subordinated debentures. These activities were funded by
a net increase in bank borrowings of $26.3 million.
REVIEW BY INDEPENDENT ACCOUNTANTS
The consolidated condensed financial statements as of June 30, 1997, and
for the three-month and six-month periods ended June 30, 1997 and 1996, have
been reviewed, prior to filing, by Ernst & Young LLP, the Company's independent
accountants, and their report is included herein.
12
<PAGE> 13
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders was held on May 22, 1997.
(b) Proxies for the annual meeting of shareholders were solicited pursuant
to Regulation 14 under the act; there was no solicitation in opposition to
management's nominees as listed in the proxy statement; and all of such nominees
were elected.
(c) The following matters were voted upon at the annual meeting of
shareholders:
Proposal to ratify the appointment of Ernst & Young LLP as independent
auditors for the current year ending December 31, 1997.
<TABLE>
<C> <S>
10,140,525 Affirmative votes
7,085 Negative votes
15,504 Abstentions
-0- Non votes
</TABLE>
Edward F. Crawford was elected a Director of the Company with 10,142,999
votes for election.
John J. Murray was elected a Director of the Company with 10,144,379 votes
for election. Since Mr. Murray has resigned as a Director, a vacancy shall be
held which may be filled by the Board of Directors if a qualified candidate is
identified.
James W. Wert was elected a Director of the Company with 9,948,544 votes
for election.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
<TABLE>
<C> <S>
(2) Agreement and Plan of Merger dated June 16, 1997, among Park-Ohio Industries,
Inc., PO Acquisition Corporation, and Arden Industrial Products, Inc.
(Incorporated herein by reference to Exhibit (c)(1) to Registrant's Schedule
14D-1 filed with the Commission on June 26, 1997).
(4) Fifth Amendment to the Credit Agreement, dated June 23, 1997, among Park-Ohio
Industries, Inc. and various financial institutions. (Incorporated herein by
reference to Exhibit (b)(3) to Registrant's Schedule 14D-1 filed with the
Commission on June 26, 1997).
(11) Computation of net income per common share
(15) Letter re: unaudited financial information
(27) Financial data schedule (Electronic Filing Only)
</TABLE>
The Company did not file any reports on Form 8-K during the three months
ended June 30, 1997. On August 11, 1997 the Company filed a Form 8-K regarding
the Company's acquisition of Arden Industrial Products, Inc. See Management's
discussion on page 11 herein.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PARK-OHIO INDUSTRIES, INC.
------------------------------------
(Registrant)
By /s/ J. S. WALKER
-----------------------------------
Name: J. S. Walker
Title: Vice President and Chief
Financial Officer
Dated August 14, 1997
---------------------------------
13
<PAGE> 14
EXHIBIT INDEX
QUARTERLY REPORT ON FORM 10-Q
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
FOR THE QUARTER ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
2 Agreement and Plan of Merger dated June 16, 1997, among Park-Ohio Industries, Inc.,
PO Acquisition Corporation, and Arden Industrial Products, Inc. (Incorporated
herein by reference to Exhibit (c)(1) to Registrant's Schedule 14D-1 filed with the
Commission on June 26, 1997).
4 Fifth Amendment to the Credit Agreement, dated June 23, 1997, among Park-Ohio
Industries, Inc. and various financial institutions. (Incorporated herein by
reference to Exhibit (b)(3) to Registrant's Schedule 14D-1 filed with the
Commission on June 26, 1997).
11 Computation of net income per common share
15 Letter re: unaudited financial information
27 Financial data schedule (Electronic filing only)
</TABLE>
14
<PAGE> 1
EXHIBIT 11
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(Dollars in thousands -- except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Income from continuing operations................... $ 3,035 $ 2,550 $ 5,277 $ 5,132
Amortization of imputed goodwill associated with the
earnout shares.................................... (21) (21) (42) (42)
------- ------- ------- -------
Income from continuing operations related to
shareholders of Common Stock (Primary)............ 3,014 2,529 5,235 5,090
Interest (net of income taxes) associated with
Convertible Senior Subordinated Debentures........ 241 264 491 528
------- ------- ------- -------
Income from continuing operations related to
shareholders of Common Stock (Fully diluted)...... $ 3,255 $ 2,793 $ 5,726 $ 5,618
======= ======= ======= =======
Discontinued operations............................. $ -0- $ 1,326 -0- $ 2,825
======= ======= ======= =======
Net income related to shareholders of Common Stock
(Primary)......................................... $ 3,014 $ 3,855 $ 5,235 $ 7,915
======= ======= ======= =======
Net income related to shareholders of Common Stock
(Fully diluted)................................... $ 3,255 $ 4,119 $ 5,726 $ 8,443
======= ======= ======= =======
PRIMARY COMPUTATION
Average shares outstanding during the period...... 10,608 10,407 10,603 10,405
Effect of General Aluminum Mfg. Company earnout
shares deemed to be issued..................... 188 188 188 188
Effect of dilutive stock options based on the
treasury stock method using the average market
price for the period........................... 157 517 181 409
------- ------- ------- -------
Shares used............................... 10,953 11,112 10,972 11,002
======= ======= ======= =======
Per share of Common Stock:
Continuing operations.......................... $ .28 $ .23 $ .48 .46
Discontinued operations........................ -0- .12 -0- .26
------- ------- ------- -------
Net income..................................... $ .28 $ .35 $ .48 .72
======= ======= ======= =======
FULLY DILUTED COMPUTATION
Average shares outstanding per primary computation
above.......................................... 10,953 11,112 10,972 11,002
Additional effect of dilutive stock options based
on the treasury stock method using the end of
period market price, if higher than the average
market price................................... 136 -0- 112 90
Effect of assuming conversion of the Convertible
Senior Subordinated Debentures................. 1,111 1,151 1,131 1,151
------- ------- ------- -------
Shares used............................... 12,200 12,263 12,215 12,243
======= ======= ======= =======
Per share of common stock:
Continuing operations............................. $ .27 $ .23 $ .47 $ .46
Discontinued operations........................... -0- .11 -0- .23
------- ------- ------- -------
Net income........................................ $ .27 .34 $ .47 $ .69
======= ======= ======= =======
</TABLE>
15
<PAGE> 1
EXHIBIT (15) LETTER RE: UNAUDITED FINANCIAL INFORMATION
Board of Directors and Shareholders
Park-Ohio Industries, Inc.
We are aware of the incorporation by reference in the following
Registration Statements of Park-Ohio Industries, Inc., for the registration of
its common stock, of our report dated August 4, 1997 relating to the unaudited
condensed consolidated interim financial statements of Park-Ohio Industries,
Inc. which are included in its Form 10-Q for the quarter ended June 30, 1997.
<TABLE>
<CAPTION>
REGISTRATION SHARES
STATEMENT DESCRIPTION REGISTERED
- -------------------- ------------------------------------------------------------ ---------
<S> <C> <C>
Form S-3 (33-86054) Convertible Senior Subordinated Debt 363,094
Form S-8 (33-64420) 1992 Stock Option Plan 350,000
Form S-8 (33-01047) Individual Account Retirement Plan 1,500,000
Form S-8 (333-28407) Amended and Restated 1992 Stock Option Plan and 1996 Non- 750,000
Employee Director Stock Option Plan
</TABLE>
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statement prepared or certified by accountants within
the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ ERNST & YOUNG LLP
August 14, 1997
Cleveland, Ohio
16
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000076282
<NAME> PARK-OHIO INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,358
<SECURITIES> 0
<RECEIVABLES> 68,804
<ALLOWANCES> 1,354
<INVENTORY> 86,252
<CURRENT-ASSETS> 172,755
<PP&E> 118,225
<DEPRECIATION> 56,677
<TOTAL-ASSETS> 322,095
<CURRENT-LIABILITIES> 62,703
<BONDS> 103,028
<COMMON> 10,960
0
0
<OTHER-SE> 112,707
<TOTAL-LIABILITY-AND-EQUITY> 322,095
<SALES> 197,591
<TOTAL-REVENUES> 197,591
<CGS> 165,728
<TOTAL-COSTS> 165,728
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,480
<INCOME-PRETAX> 8,477
<INCOME-TAX> 3,200
<INCOME-CONTINUING> 5,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,277
<EPS-PRIMARY> .48
<EPS-DILUTED> .47
</TABLE>
