<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 THE QUARTER ENDED JUNE 30, 1996
Commission File Number 0-2762
MAXCO, INC.
(Exact Name of Registrant as Specified in its Charter)
Michigan 38-1792842
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1118 Centennial Way
Lansing, Michigan 48917
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (517) 321-3130
Indicate by check mark whether the registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding twelve months and (2) has
been subject to the filing requirements for at least the past 90 days.
Yes x No
--- ---
Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
----- ----------------------------
Common Stock 4,244,942 shares
<PAGE> 2
PART I
FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
MAXCO, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
---------------------------
(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 439 $ 819
Accounts and notes receivable, less allowance of
$372,000 in 1996 ($357,000 at March 31, 1996) 17,216 11,498
Inventories--Note 2 6,474 5,309
Prepaid expenses and other 243 428
Net current assets of discontinued business--Note 2 23,672 25,036
-------- --------
TOTAL CURRENT ASSETS 48,044 43,090
MARKETABLE SECURITIES - LONG TERM - NOTE 3 18,026 15,419
PROPERTY AND EQUIPMENT
Land 517 497
Buildings 8,862 8,892
Machinery, equipment, and fixtures 16,435 15,938
-------- --------
25,814 25,327
Allowances for depreciation (11,389) (10,837)
-------- --------
14,425 14,490
OTHER ASSETS
Investments 3,040 3,056
Notes and contracts receivable and other 1,032 1,093
Intangibles 2,252 2,255
Net non-current assets of discontinued business--Note 2 8,694 6,629
-------- --------
15,018 13,033
-------- --------
$ 95,513 $ 86,032
======== ========
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
--------------------------
(in thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 226 $ 236
Accounts payable 11,792 7,444
Employee compensation 1,076 1,087
Taxes, interest, and other liabilities 773 942
Current maturities of long-term obligations 2,607 2,827
-------- --------
TOTAL CURRENT LIABILITIES 16,474 12,536
LONG-TERM OBLIGATIONS, less current maturities--Note 4 30,986 28,594
DEFERRED INCOME TAXES 9,363 8,476
INTERESTS OF MINORITY HOLDERS IN
DISCONTINUED BUSINESS 10,534 10,304
STOCKHOLDERS' EQUITY
Preferred stock:
Series Two: 12% cumulative redeemable, convertible,
$50 par value; 18,000 shares issued 900 900
Series Three: 10% cumulative redeemable, $60 face
value; 16,050 shares issued and outstanding 754 754
Common stock, $1 par value; 10,000,000 shares
authorized, 4,244,942 issued shares (4,227,442 at 4,245 4,227
March 31, 1996)
Additional paid-in capital 702 686
Net unrealized gain on marketable securities 7,013 5,294
Retained earnings 14,542 14,261
-------- --------
28,156 26,122
-------- --------
$ 95,513 $ 86,032
======== ========
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS
MAXCO, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended June 30,
1996 1995
(Unaudited) (Unaudited)
------------- --------------
(in thousands, except per share data)
<S> <C> <C>
Net sales $ 23,730 $ 23,026
Costs and expenses:
Cost of sales and operating expenses 19,692 19,170
Selling, general and administrative 3,024 3,232
Depreciation and amortization 582 503
--------- ---------
23,298 22,905
--------- ---------
OPERATING EARNINGS 432 121
Other income (expense)
Interest income 4 4
Interest expense (649) (547)
--------- ---------
LOSS FROM CONTINUING OPERATIONS
BEFORE FEDERAL INCOME TAXES (213) (422)
Federal income tax benefit (75) (151)
--------- ----------
LOSS FROM CONTINUING OPERATIONS (138) (271)
Income from discontinued business--Note 5 470 627
--------- ----------
NET INCOME 332 356
Less preferred stock dividend and other (51) (51)
--------- ---------
NET INCOME APPLICABLE
TO COMMON STOCK $ 281 $ 305
========= =========
NET INCOME (LOSS) PER COMMON SHARE--Primary
Continuing operations $ (.04) $ (.07)
Discontinued business .10 .14
--------- ---------
.06 $ .07
========= =========
Weighted average number of shares of common stock
and common stock equivalents outstanding 4,357 4,399
========= =========
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONDENSED)
MAXCO, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
MAXCO, INC. AND SUBSIDIARIES
Three Months Ended June 30,
1996 1995
---------------------------
(Unaudited) (Unaudited)
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 332 $ 356
Income from Discontinued Business (470) (627)
-------- -------
Loss from Continuing Operations (138) (271)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 539 459
Amortization 43 44
Changes in operating assets and liabilities:
Accounts receivable (5,718) (4,794)
Inventories (1,165) (1,258)
Prepaid expenses and other 184 72
Accounts payable and other current liabilities 4,158 3,439
-------- -------
NET CASH USED IN OPERATING ACTIVITIES (2,097) (2,309)
INVESTING ACTIVITIES
Purchases of property and equipment (475) (825)
Other 37 (12)
-------- -------
NET CASH USED IN INVESTING ACTIVITIES (438) (837)
FINANCING ACTIVITIES
Proceeds from long-term obligations 2,923 3,754
Repayments on long-term obligations and notes payable (751) (320)
Proceeds from exercise of stock options 34 10
Acquisition and retirement of common stock (164)
Dividends paid on preferred stock (51) (51)
-------- ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,155 3,229
-------- ------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (380) 83
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 819 891
-------- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 439 $ 974
======== ======
</TABLE>
See notes to consolidated financial statements
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAXCO, INC. AND SUBSIDIARIES
JUNE 30, 1996
NOTE 1 - Basis of Presentation and Significant Accounting Policies
The accompanying unaudited, condensed, consolidated 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 notes 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 of the results of the interim periods covered have
been included. For further information, refer to the consolidated financial
statements and notes thereto included in Maxco's annual report on Form 10-K
for the year ended March 31, 1996.
The results of operations for the interim periods presented are not
necessarily indicative of the results for the full year. The effect of stock
options and potential conversion of redeemable convertible preferred stock
was anti-dilutive for the quarter ended June 30, 1996.
Effective April 1, 1996, the Company adopted FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
presented and the undiscounted cash flows estimated to be generated by those
assets are less than the assets carrying amount. This statement also
addresses the accounting for long-lived assets that are expected to be
disposed. The effect of adopting FASB Statement No. 121 was not material.
NOTE 2 - Inventories
The major classes of inventories, at the dates indicated were as follows:
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
----------- ---------
(Unaudited)
(In Thousands)
<S> <C> <C>
Raw materials $ 1,550 $ 1,449
Finished goods and
work in progress 2,209 2,281
Purchased products
for resale 2,715 1,579
------- -------
$ 6,474 $ 5,309
------- -------
</TABLE>
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAXCO, INC. AND SUBSIDIARIES
NOTE 3 - Marketable Securities
At June 30, 1996, Maxco owned 1,737,405 shares of Medar's common stock
(aggregate market value of $18.0 million) representing approximately 19.7% of
Medar's total common stock outstanding. The Company classifies its
marketable securities as securities available for sale under FASB 115,
Accounting for Certain Investments in Debt and Equity Securities.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported as a separate component of
stockholders' equity. Application of this method resulted in an unrealized
gain net of deferred tax of approximately $7.0 million and $5.3 million being
reported as part of stockholders' equity at June 30, 1996 and March 31, 1996,
respectively.
NOTE 4 - Long-Term Debt
Maxco's revolving credit agreement allows Maxco to borrow up to $24.0 million
at June 30, 1996, with limitations based on the value of certain assets. At
June 30, 1996, $3.7 million was available under this agreement. As a result
of the sale of FinishMaster on July 9, 1996, Maxco's revolving line of credit
was reduced to zero at that date and the agreement was amended to allow Maxco
to borrow up to $14.0 million.
NOTE 5 - DISCONTINUED BUSINESS
On July 9, 1996, Maxco completed an agreement to sell its 4,045,000 shares
(67 percent interest) of FinishMaster, Inc. and for Maxco to enter into an
agreement not to compete for a total consideration of $62.6 million. More
than 90 percent of the total consideration was in cash, including an initial
payment on the non-compete agreement, with the balance payable over the five
year term of the non-compete agreement. The price was negotiated by the
parties based on their evaluation of the intrinsic value of the FinishMaster
operation. The transaction closed on July 9, 1996.
Maxco will report a gain related to this transaction in its second quarter
ending September 30, 1996 of approximately $23 million net of tax or $5.00
per share. Maxco has not formulated plans for the use of the net proceeds
from this transaction.
As a result of the agreement to sell FinishMaster, the results of operations
for FinishMaster have been reported separately as discontinued operations in
the consolidated statements of operations. Consolidated financial statements
for the quarter ended June 30, 1995, have been restated to conform to the
current presentation. Selected operating results for FinishMaster are
presented in the following table:
<TABLE>
<CAPTION>
Three Months Ended June 30,
1996 1995
---------------------
(in thousands)
<S> <C> <C>
Net Sales $ 33,149 $ 23,485
Cost and expenses 32,074 22,046
-------- --------
Income before income taxes 1,075 1,439
Income tax expense 376 507
-------- --------
Net income 699 932
Minority interest in net earnings
of discontinued business (229) (305)
-------- --------
Total income from discontinued business $ 470 $ 627
======== ========
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MAXCO, INC. AND SUBSIDIARIES
JUNE 30, 1996
MATERIAL CHANGES IN FINANCIAL CONDITION
Net cash used in operating and investing activities was the primary reason that
cash and cash equivalents decreased by $380,000 during the quarter. The cash
was consumed during the quarter by increases in accounts receivable, inventory,
and other working capital items.
Cash was also used in investing activities during the quarter for the purchase
of property and equipment. Additional long-term debt issued under Maxco's
revolving line of credit, was the primary reason long-term debt increased $2.4
million since year end.
On July 9, 1996, Maxco completed an agreement to sell its 67 percent interest
in FinishMaster, Inc. The agreement calls for Maxco to sell its 4,045,000
shares of FinishMaster and for Maxco to enter into an agreement not to compete
for a total consideration of $62.6 million. More than 90 percent of the total
consideration was in cash, including an initial payment on the non-compete
agreement, with the balance payable over the five year term of the non-compete
agreement.
Maxco will report a gain related to this transaction in its second quarter
ending September 30, 1996, of approximately $23 million net of tax or $5.00 per
share. Maxco has not formulated plans for the use of the net proceeds from
this transaction.
As a result of the sale of Maxco's interest in FinishMaster, the Company
retired its outstanding balance on its revolving line of credit. The credit
agreement was subsequently amended to allow Maxco to borrow up to $14.0
million.
The Company believes that its current financial resources, together with cash
generated from operations, its available resources under its line of credit,
and the cash generated from the sale of FinishMaster will be adequate to meet
cash requirements for the next year.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MAXCO, INC. AND SUBSIDIARIES
(CONTINUED)
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 Compared to 1995
Net sales from continuing operations increased to $23.7 million compared to
$23.0 million in last year's first quarter. First quarter results reflect a
loss from continuing operations of $138,000 compared to a loss of $271,000 for
the comparable period in 1995. Net income was $332,000 or $.06 per share
compared to last year's $356,000 or $.07 per share.
The sales growth for the three months ended June 30, 1996 was primarily
attributable to the construction supplies group and Wright Plastic Products.
Sales increased $.6 million at Maxco's construction supplies businesses as a
result of higher demand in the Wisconsin market area. Sales at Wright Plastics
improved due to production on new sales contracts.
The loss from continuing operations was reduced from the prior year comparable
period due to an improvement in operating earnings at Wright Plastics,
primarily as a result of the increase in sales and an improvement in gross
margin percentage at this unit.
A reduction in the sales level at Akemi, coupled with a lower gross margin
percentage in the current year, caused this unit, however to experience a
$300,000 higher operating loss in 1996 compared to the first quarter of 1995.
The increase in interest expense was primarily due to increased borrowings
under the company's line of credit and borrowings for recently completed
capital improvements at Akemi and Wisconsin Wire & Steel.
9
<PAGE> 10
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
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
3 Restated Articles of Incorporation and By-laws are hereby incorporated
by reference from Form S-4 dated November 4, 1991 (File No. 33-43855).
4.1 Resolution establishing Series Two Preferred Shares is hereby
incorporated by reference from Form S-4 dated November 4, 1991
(File No. 33-43855).
4.2 Resolution establishing Series Three Preferred Shares is hereby
incorporated by reference from Form S-4 dated November 4, 1991
(File No. 33-43855).
10.1 Incentive stock option plan adopted August 15, 1983, including the
amendment (approved by shareholders August 25, 1987) to increase the
authorized shares on which options may be granted by two hundred fifty
thousand (250,000), up to five hundred thousand (500,000) shares of the
common stock of the company is hereby incorporated by reference from
the registrant's annual report on Form 10-K for the fiscal year ended
March 31, 1988.
10.3 Amended and restated loan agreement between Comerica Bank and Maxco,
Inc. dated as of October 31, 1994 is hereby incorporated by reference
from registrant's Form 10-K dated June 13, 1995.
10.4 First amendment to the amended and restated loan agreement between
Comerica Bank and Maxco, Inc., dated as of May 9, 1995 is hereby
incorporated by reference from registrants Form 10-K dated
June 13, 1995.
10
<PAGE> 11
10.5 Second amendment to the amended and restated loan agreement between
Comerica Bank and Maxco, Inc., dated as of September 8, 1995, is
hereby incorporated by reference from registrants Form 10-Q dated
November 10, 1995.
10.6 Third amendment to the amended and restated loan agreement between
Comerica Bank and Maxco, Inc., dated as of May 15, 1996, is hereby
incorporated by reference from registrants Form 10-K dated June 18,
1996.
10.7* Fourth amendment to amended and restated loan agreement dated as of
July 9, 1996.
11* Statement Re: Computation of Per Share Earnings
27* Financial Data Schedule
No reports on Form 8-K were filed during the quarter.
*Filed herewith
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.
MAXCO, INC.
Date August 9, 1996 /s/ VINCENT SHUNSKY
------------------ -----------------------------------
Vincent Shunsky, Vice President-Finance
and Treasurer (Principal Financial and
Accounting Officer)
11
<PAGE> 12
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
10.7 Fourth amendment to amended and restated loan agreement dated
as of July 9, 1996.
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.7
FOURTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the "Fourth
Amendment") dated as of the 9th day of July, 1996, by and among Maxco, Inc.,
a Michigan Corporation (hereinafter referred to as the "Borrower"), and
Comerica Bank (formerly known as Comerica Bank-Detroit), a Michigan banking
corporation (hereinafter referred to as the "Bank").
W I T N E S S E T H
WHEREAS, Borrower and Bank entered into a certain Amended and Restated
Loan Agreement dated October 31, 1994, as amended by First Amendment to Amended
and Restated Loan Agreement dated May 9th, 1995; as further amended by Second
Amendment to Amended and Restated Loan Agreement dated September 8, 1995; and,
as further amended by Third Amendment to Amended and Restated Loan Agreement
dated May 15, 1996 (the "Agreement");
WHEREAS, Borrower desires to decrease the Commitment Amount from
$24,000,000 to $14,000,000 and modify certain other terms and conditions of the
Agreement; and
WHEREAS, the Borrower and the Bank desire to amend certain of the
covenants set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Borrower and the Bank hereby agree as follows:
1. In Sub-Section 1.1 of Section 1 of the Agreement, the following
definitions are hereby deleted in their entirety and replaced by the following
or added entirely:
"Borrowing Base" shall mean the sum of 75 percent of the
aggregate outstanding principal balance of the Borrower's and the
Guarantors' Eligible Accounts, less the aggregate amounts of
Letters of Credit then outstanding.
-1-
<PAGE> 2
"Commitment Amount" shall mean $14,000,000 (or such lesser
amount to which the Commitment Amount may be reduced by the
Borrower from time to time under Section 2.8.1 of this Agreement).
"Consolidated Funded Debt" shall mean, as of any applicable
date of determination, that portion of consolidated Debt which
consists of (a) indebtedness for borrowed money, including
indebtedness for borrowed money which is evidenced by notes, bonds,
debentures or other similar instruments or (b) obligations under
installment sales contracts or capital leases, less cash and cash
equivalents of Borrower and/or the Guarantors as of the applicable
date. For purposes of this Agreement, as applied to Borrower,
Consolidated Funded Debt shall be determined without using the
indebtedness and obligation data from Medar.
The term "Finishmaster" is hereby deleted.
The term "Finishmaster Loan Percentage" is hereby deleted.
"Securities" shall mean (i) all of the issued and outstanding
capital stock of the Subsidiaries and (ii) all of the shares of
capital stock of Medar owned by the Borrower or any Subsidiary.
2. The Revolving Credit Note dated October 31, 1994, (the "Note") in the
original face amount of Fourteen Million Dollars ($14,000,000), as amended by
the First Amendment to Amended and Restated Loan Agreement dated May 9th, 1995,
as replaced by a Revolving Credit Note dated September 8, 1995, as amended by
Third Amendment to Amended and Restated Loan Agreement dated May 15, 1996, is
hereby amended such that the face amount is Fourteen Million Dollars
($14,000,000), and the reference in the first paragraph of the Note is amended
to read Fourteen Million Dollars ($14,000,000).
3. Sub-Section 5.5 Section 5 is hereby deleted in its entirety and
replaced by the following:
5.5 Subsidiaries. The Guarantors are the only wholly owned
Subsidiaries of the Borrower. The Borrower also owns approximately 20%
of the capital stock of Medar, a 25% general partnership interest in CJF
and a 2% limited partnership interest in Riverview Associates.
4. Sub-Section 5.14 of Section 5 is hereby deleted in its entirety and
replaced by the following:
5.14 Margin Stock. Neither the Borrower nor any of the Subsidiaries
is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying
any "margin stock" within the meaning
2
<PAGE> 3
of Regulation U of the Board of Governors of the Federal Reserve System,
and no part of the proceeds of any loan hereunder will be used, directly or
indirectly, to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or for
any other purpose which might violate the provisions of Regulation G, T, U
or X of the said Board of Governors. The Borrower does not own any margin
stock other than the shares of capital stock of Medar pledged to the Bank
hereunder.
5. Sub-Section 5.19 of Section 5 is hereby deleted in its entirety and
replaced by the following:
5.19 Shares and Shareholders. The Borrower's entire authorized
capital stock consists of 10,000,000 shares of common stock, $1.00 par
value, and 100,000 shares of Preferred Stock, of which 18,000 shares of
Series Two Preferred Stock are issued and outstanding, and of which
16,219 shares of Series Three Preferred Stock are issued and outstanding.
The Guarantors' entire outstanding capital stock is owned both
beneficially and of record by the Borrower, and the Guarantors'
authorized and outstanding capital stock consists of the following:
<TABLE>
<CAPTION>
Authorized Outstanding
Guarantor: Capital Stock: Par Value: Capital Stock
--------- ------------- --------- -------------
<S> <C> <C> <C>
Akemi 50,000 $ 1.00 1,000
CMC ______ $ ____ ___
Ersco of Michigan, Inc. 50,000 $ 1.00 300
Pak-Sak 5,000 $ 10.00 3,768
Wisconsin Common 1,250 no par 290
Preferred 250 $100.00 250
</TABLE>
The Borrower owns 1,737,405 shares of the outstanding capital stock of
Medar, which constitutes approximately 20% of the aggregate outstanding
capital stock of Medar. Except as disclosed on Schedule 5.19, there are no
outstanding options, warrants or rights to purchase, nor any agreement for
the subscription, purchase or acquisition of, any shares of the capital
stock of the Borrower or any Subsidiary.
6. Sub-Sub-Section 6.1.4 of Sub-Section 6.1 of Section 6 is hereby deleted
in its entirety and replaced by the following:
6.1.4 Aging and Borrowing Base Certificate. Furnish to
the Bank (a) by Wednesday of each week (as of the end of the
prior week) (i) a report in such form as the Bank shall from
time to time require as to the Accounts of Borrower and the
Subsidiaries and (ii) a Borrowing Base Certificate confirming
that the aggregate unpaid principal amount of all Revolving
Loans does not exceed the lesser of the Commitment Amount
-3-
<PAGE> 4
or the Borrowing Base as then in effect (or, if such is not
the case, accompanied by a prepayment of the Revolving Credit
Note in accordance with Section 2.8.2 of this Agreement),
(b) by the 25th of each month (as of the end of the prior
month) (i) an aging of the Accounts of Borrower and the
Subsidiaries in a form satisfactory to the Bank and (ii) a
report in such form as the Bank shall from time to time
require as to the Inventory of the Borrower and the
Subsidiaries and (c) by the 30th day of each calendar
quarter (as of the end of the prior quarter) an aging of the
Accounts of Borrower and the Subsidiaries in a form
satisfactory to the Bank.
7. Sub-Sections 6.5, 6.7 and 6.8 of Section 6 are hereby deleted in their
entirety and each is replaced with the phrase "Intentionally Omitted."
8. Sub-Section 6.6 of Section 6 is hereby deleted in its entirety and
replaced by the following:
6.6 Maintain Consolidated Funded Debt to EBITDA. On a
Consolidated Basis, maintain the ratio of Consolidated Funded Debt
to earnings before interest, taxes, depreciation and amortization
(determined on a rolling four quarters basis) ("EBITDA") of not
more than 5.00 to 1.0.
9. The introductory paragraph and Sub-Section 7.1 of Section 7 are hereby
deleted in their entirety and replaced by the following:
From the date hereof until the later of the Termination Date or the
date when the principal of and interest on the Notes and other
Indebtedness is paid in full and the Bank's commitment hereunder
terminated, the Borrower covenants that and agrees that it will not, and
will not permit any Subsidiary to:
7.1 Dividends. Declare or pay any dividend (other than
dividends payable solely in shares of its capital stock) on, or
make any other distribution with respect to (whether by reduction
of capital or otherwise), any shares of its capital stock, except
that (i) dividends from any Subsidiary to the Borrower are
permitted, (ii) dividends of up to $110,000 annually on Borrower's
Series Two Preferred Stock are permitted, (iii) dividends of up to
$300,000 annually on the Borrower's Series Three Preferred Stock
are permitted.
10. Sub-Section 7.10 of Section 7 is hereby deleted in its entirety and
replaced by the following:
7.10 Acquire Securities. Purchase or hold beneficially any
stock or other securities of, or make any investment or acquire any
interest whatsoever in, any other person except for the common
stock of the Guarantors, Medar and the
-4-
<PAGE> 5
partnership interests in Riverview Associates and CJF, in each case
limited to the interest owned by the Borrower on the date of this
Agreement, and except for certificates of deposit with maturities of
one year or less of United States commercial banks with capital,
surplus and undivided profits in excess of $100,000,000, direct
obligations of the United States Government maturing within one year
from the date of acquisition thereof, and high grade commercial paper
and high grade fixed-income securities (e.g., corporate bonds).
11. Sub-Sections 7.14 and 7.15 of Section 7 are hereby deleted in their
entirety.
12. Paragraph 8.1.10 of Sub-Section 8.1 of Section 8 is hereby deleted in
its entirety.
13. Except as specifically modified hereby, the terms and conditions of
the Agreement and the Notes remain in full force and effect and the undersigned
hereby ratify and agrees to be bound by the terms of the Agreement as hereby
amended.
14. Neither the extension of this Fourth Amendment by the Bank, nor any
other act or omission by the Bank in connection herewith, shall be deemed a
waiver by the Bank of any default under the Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Fourth
Amendment to be executed by their duly authorized officers as of the day and
year first written above.
MAXCO, INC.
By Vincent Shunsky
------------------------------
Vincent Shunsky
Its Vice President
COMERICA BANK
By David G. Grantham
------------------------------
David G. Grantham
Its Vice President
-5-
<PAGE> 6
The Undersigned Guarantors hereby acknowledge and consent to the above
Fourth Amendment.
Akemi Plastics, Inc.
By Vincent Shunsky
-----------------------
Vincent Shunsky
Its Treasurer
Ersco of Michigan, Inc. Pak-Sak Industries, Inc.
By Vincent Shunsky By Vincent Shunsky
----------------------- -------------------------
Vincent Shunsky Vincent Shunsky
Its Treasurer Its Treasurer
Wisconsin Wire & Steel, Inc. CMC, Inc.
By Vincent Shunsky By Vincent Shunsky
----------------------- --------------------------
Vincent Shunsky Vincent Shunsky
Its Treasurer Its President
Pacer Tool & Mold, Inc.
By Vincent Shunsky
-----------------------
Vincent Shunsky
Its Treasurer
-6-
<PAGE> 1
MAXCO, INC.
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended June 30,
1996 1995
-------------------------
(In thousands except per share data)
NET INCOME FOR COMPUTATION
OF PER SHARE AMOUNTS
- ----------------------------------------------------------
<S> <C> <C>
Net income (loss) from continuing operations $ (138) $ (271)
Net income from discontinued operations 470 627
----------- ----------
Net income (loss) 332 356
Preferred stock series 2 dividend (27) (27)
Preferred stock series 3 dividend (24) (24)
Net Income (Loss) Attributable To Common Stock-Primary
Continuing operations (189) (322)
Discontinued operations 470 627
----------- ----------
281 305
=========== ==========
Net Income (Loss) Attributable To Common Stock-Fully
Diluted
Continuing operations (162) (295)
Discontinued operations 470 627
----------- ----------
308 332
=========== ==========
PRIMARY
- ----------------------------------------------------------
Average shares outstanding 4,233,184 4,281,596
Net effect of dilutive stock options--based on the
Treasury Stock Method using average market price 123,755 117,562
----------- ----------
TOTAL 4,356,939 4,399,158
Net income per share:
Continuing operations $ (.04) $ (.07)
Discontinued operations .10 .14
----------- ----------
$ .06 $ .07
=========== ==========
FULLY DILUTED
- ----------------------------------------------------------
Average shares outstanding 4,233,184 4,281,596
Net effect of dilutive stock options--based on the Treasury
Stock Method using the quarter-end market price if
higher than average market price 123,755 119,248
Assumed conversion of series two 12% cumulative
redeemable convertible preferred stock 231,840 231,840
----------- ----------
TOTAL 4,588,779 4,632,684
Net income per share:
Continuing operations $ (.03) $ (.07)
Discontinued operations .10 .14
----------- ----------
$ .07 $ .07
=========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) FORM
10-Q FOR THE QUARTER ENDED JUNE 30, 1996.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS
AND NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 439
<SECURITIES> 0
<RECEIVABLES> 17,588
<ALLOWANCES> (372)
<INVENTORY> 6,474
<CURRENT-ASSETS> 48,044
<PP&E> 25,814
<DEPRECIATION> (11,389)
<TOTAL-ASSETS> 95,513
<CURRENT-LIABILITIES> 16,474
<BONDS> 30,986
<COMMON> 4,245
0
1,654
<OTHER-SE> 22,257
<TOTAL-LIABILITY-AND-EQUITY> 95,513
<SALES> 23,730
<TOTAL-REVENUES> 23,730
<CGS> 19,692
<TOTAL-COSTS> 23,298
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 649
<INCOME-PRETAX> (213)
<INCOME-TAX> (75)
<INCOME-CONTINUING> (138)
<DISCONTINUED> 470
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 332
<EPS-PRIMARY> .06
<EPS-DILUTED> .07
</TABLE>
