FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1995
Commission File Number 0-14299
SECOM GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 87-0410875
(State or other jurisdiction of (I.R.S. Employer I.D. Number)
incorporation or organization)
46035 GRAND RIVER AVENUE 48154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (810-305-9410)
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 requirement 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 close of the period covered by this report.
TITLE OF CLASS NUMBER OF SHARES OUTSTANDING
Common Stock 4,259,500
(par value $.10 per share)
<PAGE>
SECOM GENERAL CORPORATION
FORM 10-Q
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 1
Consolidated Statements of Operations 3
Consolidated Statements of Cash Flows 4
Notes to Interim Consolidated Financial Statements 5
Item 2. Management's Discussion & Analysis of Financial Condition
and Results of Operations 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SECOM GENERAL CORPORATION
Consolidated Balance Sheets
ASSETS
JUN 30 1995 SEP 30 1994
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 44,000 $ 9,300
Accounts receivable, net 5,065,400 4,277,200
Other receivables 637,700 386,000
Inventories 4,541,800 4,070,000
Prepaids 322,100 366,200
Deferred tax asset 264,000 280,000
----------- -----------
TOTAL CURRENT ASSETS $10,875,000 $ 9,388,700
Property, plant & equipment, net 14,465,200 15,728,800
Cost in excess of net assets acquired 2,088,300 2,527,700
Other assets 530,200 181,200
----------- -----------
TOTAL ASSETS $27,958,700 $27,826,400
=========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SECOM GENERAL CORPORATION
Consolidated Balance Sheets (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
JUN 30 1995 SEP 30 1994
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Bank line of credit $ 3,913,900 $ 3,565,700
Current maturities of long term obligations 1,821,900 1,691,000
Trade accounts payable 2,580,800 2,628,400
Accrued expenses 1,582,600 1,184,100
------------ ------------
TOTAL CURRENT LIABILITIES $ 9,899,200 $ 9,069,200
Long term obligations, net of current maturities 4,983,600 7,089,300
Deferred tax liabilities 1,565,700 1,778,100
Other liabilities 11,300 53,100
------------ ------------
TOTAL LIABILITIES $ 16,459,800 $ 17,989,700
============ ============
Stockholders' equity common stock, $.10 par
value 10,000,000 shares authorized:
June 30, 1995 - 4,259,500 shares
September 30, 1994 - 3,700,500 shares 425,900 370,100
Additional paid-in capital 16,496,100 15,666,900
Accumulated deficit (5,423,100) (6,200,300)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 11,498,900 9,836,700
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,958,700 $ 27,826,400
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SECOM GENERAL CORPORATION
Consolidated Statements of Operations
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Jun 30 1995 Jun 30 1994 Jun 30 1995 Jun 30 1994
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 9,915,400 $ 8,244,400 $ 28,076,100 $ 24,056,200
COST OF SALES 7,577,200 6,490,500 22,381,800 18,907,200
------------ ------------ ------------ ------------
GROSS PROFIT 2,338,200 1,753,900 5,694,300 5,149,000
GENERAL AND ADMINISTRATIVE EXPENSES 1,416,000 1,293,700 4,140,700 3,646,700
------------ ------------ ------------ ------------
OPERATING INCOME 922,200 460,200 1,553,600 1,502,300
OTHER INCOME (EXPENSE)
Interest (302,100) (238,600) (871,300) (681,400)
Miscellaneous (75,100) 129,700 (21,600) 228,500
------------ ------------ ------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 545,000 351,300 660,700 1,049,400
PROVISION FOR (BENEFIT FROM) INCOME TAXES (80,000) (41,900) (117,200) 222,000
------------ ------------ ------------ ------------
NET INCOME $ 625,000 $ 393,200 $ 777,900 $ 827,400
============ ============ ============ ============
EARNINGS PER COMMON SHARE $ 0.14 $ 0.10 $ 0.18 $ 0.22
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 4,329,200 4,023,200 4,195,300 3,699,100
<FN>
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SECOM GENERAL CORPORATION
STATEMENTS OF CASH FLOWS
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Jun 30 1995 Jun 30 1994 Jun 30 1995 Jun 30 1994
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from operations $ 625,000 $ 393,200 $ 777,900 $ 827,400
Adjustments to reconcile net income to
net cash used in operations:
Depreciation and amortization 244,600 492,500 1,300,100 1,514,600
Writedown of Triple Tool goodwill 309,700 309,700
Provision for (benefit from) deferred taxes (80,000) (41,900) (117,200) 222,000
Increase (decrease) in allowance for doubtful 112,100 (64,600) 127,100 (228,000)
accounts
(Gain) loss on sales of assets (312,200) 2,400 (320,600) 14,600
Stock issuances to 401(k) plan 0 22,500 54,700 78,500
Other noncash expenses 84,600 128,900
Changes in assets and liabilities that
provided (used) cash:
Accounts and other receivables (541,300) (63,900) (1,222,100) (123,900)
Inventories 382,200 (605,300) (471,800) (1,247,200)
Prepaids 48,200 189,700 79,800 20,800
Other assets 52,800 52,100 36,900 8,000
Accounts payable (512,100) 169,500 22,400 (584,600)
Accrued liabilities (21,900) (34,000) 274,700 (103,100)
Other liabilities 25,000 (118,200) (401,800)
Net cash provided (used) by discontinued
operations 123,800 (157,000) 89,800 458,300
----------- ----------- ----------- -----------
Net cash provided by operating activities 230,800 237,000 1,070,300 455,600
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the disposal of property,
plant & equipment 860,500 11,200 862,500 144,200
Collections on notes receivable 7,200 18,900
Capital expenditures (439,300) (260,500) (1,005,300) (593,200)
Net cash used by discontinued operations 22,000 122,000
----------- ----------- ----------- -----------
Net cash provided (used) in investing activities 421,200 (220,100) (142,800) (308,100)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in bank line of credit (195,900) 388,800 348,200 (459,500)
Proceeds from long-term notes payable 37,500 99,100 231,300 2,179,100
Refund of restricted cash to bondholders (700,000)
Other issuances of common stock 18,400 176,900
Payments on long-term notes payable (743,800) (458,300) (1,389,200) (810,200)
Payments on capital lease obligations (24,400) (68,800) (83,100) (182,500)
Net cash used by discontinued operations (483,300)
----------- ----------- ----------- -----------
Net cash used in financing activities (926,600) (20,800) (892,800) (279,500)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 35,100 (3,900) 34,700 (132,000)
CASH, BEGINNING OF PERIOD 8,900 20,800 9,300 148,900
----------- ----------- ----------- -----------
CASH, END OF PERIOD $ 44,000 $ 16,900 $ 44,000 $ 16,900
=========== =========== =========== ===========
OTHER CASH FLOW INFORMATION - INTEREST PAID $ 298,900 $ 237,600 $ 826,000 $ 680,800
=========== =========== =========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
SECOM GENERAL CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The consolidated financial statements included herein have been prepared by
Secom General Corporation (the "Company") without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in the consolidated financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate
so that the information presented is not misleading. In the opinion of
management, the financial statements as of June 30, 1995 reflect all
adjustments (normal recurring accruals) which are necessary to present a fair
statement of the results for the period then ended. These financial statements
should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's 10-K for the fiscal
year ended September 30, 1994.
BUSINESS
The Company is a publicly-traded holding company with five wholly-owned
subsidiaries that operate in two business segments:
METAL PARTS FORMING
o Uniflow Corporation ("Uniflow")
TOOLING
o Form Flow, Inc. ("Form Flow")
o L&H Die, Inc. ("L&H Die")
o Micanol, Inc. ("Micanol")
o Triple Tool, Inc. ("Triple Tool")
PRINCIPLES OF CONSOLIDATION
The interim consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions are eliminated.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior period balances for
comparative purposes.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined by
the first-in, first-out (FIFO) method.
EARNINGS PER SHARE
The earnings per share of common stock is computed by dividing net income by
the weighted average number of common shares and common equivalent shares
(primarily warrants and options to purchase common stock).
NOTE 2. TRIPLE TOOL
In May 1995, the Company completed its downsizing of Triple Tool by the sale
of $725,800 (net book value) of equipment, the lease of $342,000 (net book
value) of equipment and the retention of $341,100 (net book value) of
equipment. The Company recorded a gain of $312,200 on the sale of equipment,
while it also recorded a $309,700 writedown of goodwill in connection with the
downsizing. Triple Tool's remaining operations, primarily electro-diode
machining (EDM), was moved to Romulus, Michigan in June 1995 to space shared
by the Company's Form Flow unit.
For the year ended September 30, 1994, sales and operating losses from Triple
Tool were $2,499,900 and ($50,200), respectively, while for the nine months
ended June 30, 1995 sales and operating losses were $1,600,000 and ($378,600),
respectively.
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<PAGE>
NOTE 3. INVENTORIES
Inventories at June 30, 1995 and September 30, 1994 are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, 1995 SEPT. 30, 1994
------------- --------------
<S> <C> <C>
Raw materials $ 673,900 $ 639,000
Work-in-process 2,294,900 2,203,000
Finished goods 1,573,000 1,228,000
---------- ----------
$4,541,800 $4,070,000
========== ==========
</TABLE>
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at their respective depreciable lives are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
Classification June 30, 1995 Sept. 30, 1994 Life
-------------- ------------- -------------- ----
<S> <C> <C> <C>
Machinery $14,295 $15,393 2 to 20 years
Buildings and improvements 4,616 4,459 3 to 30 years
Land 540 540 n/a
Furniture and fixtures 471 475 5 to 7 years
Vehicles 262 185 3 years
Construction in progress 180 41 n/a
------- -------
Total $20,364 $21,093
Accumulated depreciation (5,899) (5,364)
------- -------
Net property, plant and equipment $14,465 $15,729
======= =======
</TABLE>
NOTE 5. LONG TERM DEBT AND LINE OF CREDIT
Long term debt consists of real estate mortgages, equipment term notes and
bonds, equipment capital leases and subordinated loans. Scheduled principal
payments due for the next year are approximately $1.8 million.
In addition to long term debt, the Company and its subsidiaries have a $4.5
million bank line of credit collateralized by all accounts receivable and
inventories. Borrowings on the line ($3.91 million and $3.57 million at June
30, 1995 and September 30, 1994, respectively) are limited to stated
percentages of receivables and inventories and are due on demand. The interest
rate on the line is the prime rate plus 1.5%.
In December 1993, the Company received $1 million by issuing a subordinated
note payable. In November 1994, the note was extinguished in connection with
the exercise of a stock warrant.
NOTE 6. RELATED PARTY TRANSACTIONS
In November 1994, Manubusiness Opportunities, Inc. ("MOI") exercised a stock
warrant to acquire 500,000 shares of common stock at $2.00 per share. The
exercise consideration was made in conjunction with the extinguishment of a $1
million note that was due from the Company to MOI. For additional information
about the Company's relationship with MOI, refer to the Company's Form 10-K
for the year ended September 30, 1994.
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
The Company operates in two segments: Metal Parts Forming and Tooling. A third
segment (plastic molded products) was discontinued in fiscal 1993 and the
operating assets of that segment were sold in November 1993.
Consolidated sales for the quarter were $9,915,400 compared to sales of
$8,244,400 in the same quarter of the prior year, as sales increased 18.2%
in the Metal Parts Forming segment (Uniflow) and 16.4% in the Tooling
segment. For the nine month year-to-date period, consolidated sales were
$28,076,100 compared to $24,056,200 for the same period last year, an
increase of 16.7%. The higher sales for the comparable periods are
generally due to higher customer order volume; although, some of the sales
increase for Metal Parts Forming was due to a catch-up of production
orders that were past due. Tooling management expects incoming sales order
volume to continue steady for at least the next few months. Uniflow
management expects incoming orders to remain steady through December 1995;
it also believes that it could receive various new orders quoted recently
that would increase sales by over 10% within a few months.
Net income for the quarter ended June 30, 1995 was $625,000, or 14 cents per
share, compared to net income of $393,200, or 10 cents per share, for the same
quarter last year. The increase in net income is primarily attributable to
higher sales for both segments and improved cost control at Uniflow. Net
income for the nine months ended June 30, 1995 was $777,900 or 18 cents per
share, compared to $827,400, or 22 cents per share, for the same period last
year. The decrease in year-to-date net earnings is primarily the result of
operating losses recorded at the Triple Tool and Uniflow units in the quarter
ended December 31, 1994.
<TABLE>
<CAPTION>
SEGMENT REVIEW
METAL PARTS FORMING SEGMENT (UNIFLOW)
(in thousands)
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
6/30/95 6/30/94 6/30/95 6/30/94
-------------- -------------- -------------- --------------
Amount % Amount % Amount % Amount %
------ --- ----- --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 4,676 100.0 $ 3,956 100.0 $13,775 100.0 $11,953 100.0
Gross profit 970 20.7 433 10.9 1,795 13.0 1,381 11.6
Operating expense 529 11.3 341 8.6 1,480 10.7 991 8.3
Operating profit (1) 441 9.4 92 2.3 315 2.3 390 3.3
<FN>
(1) Before interest, bad debt and unallocated corporate overhead expense.
</TABLE>
The Metal Parts Forming segment is comprised of Uniflow Corporation, which
manufactures metal parts from tube, bar and coil using cold forging and cold
forming techniques. Primary parts manufactured are suspension ball joint
housings, transmission gear housings, wheel bolts and various OEM cold forged
and cold headed parts.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Uniflow's sales increased 18.2% for the quarter ended June 30, 1995 compared
to the prior year comparable quarter, primarily due to higher sales of
suspension ball joint housings, transmission shaft housings and truck wheel
studs. Sales orders for Uniflow's cold heading area were still low, as
capacity usage on three primary machines (acquired in 1992) continued at
approximately 30% for the current quarter and year-to-date period. Although
management is pursuing various sales opportunities for the cold heading area,
it is difficult to predict a time frame when sales will significantly increase
for parts manufactured from these machines. Management believes that it could
receive new production orders for the headers that would require delivery
dates in the March 1996 quarter. Uniflow's backlog, which typically extends
for a 3 - 4 month period, has remained steady; however, increasing
efficiencies in production have resulted in Uniflow catching up on orders that
were past-due, thereby creating additional machine time availability.
Additional emphasis is being placed on attaining new orders for the press and
header operations.
Uniflow's gross profit increased to 20.7% of sales compared to 10.9% for the
same quarter last year. The improved gross profit is primarily the result of
lower direct labor, production and material costs. Labor and production costs
were lower due to improved production scheduling and job preparation (tooling,
setup, etc.) and material costs were lower due to less scrap and better
quality control. The nine month comparative period gross profit improved for
the same reasons, although not as dramatically (13% of sales vs. 11.6%,
respectively) due to Uniflow's loss recorded in the quarter ended December 31,
1994.
Operating expense was 11.3% of sales for the current quarter compared to
8.6% of sales in the prior year quarter, while for the year to date
comparative period, operating expense as a percentage of sales was 10.7%
and 8.3%, respectively. The higher operating expense for the comparative
periods primarily reflects (1) the addition of management, engineering and
quality personnel to a level that management believes is necessary to
adequately manage and support Uniflow's current and prospective sales
order base and (2) the direct allocation of certain corporate expenses
that were previously not directly allocated, such as engineering support,
401(k) employer match expense and certain other miscellaneous business
expenses (insurances, telephone, etc.).
<TABLE>
<CAPTION>
TOOLING SEGMENT
(in thousands)
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
6/30/95 6/30/94 6/30/95 6/30/94
-------------- -------------- -------------- --------------
Amount % Amount % Amount % Amount %
------ --- ----- --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales (1) $ 5,653 100.0 $ 4,857 100.0 $15,908 100.0 $14,114 100.0
Gross profit 1,335 23.6 1,281 26.3 3,800 23.9 3,658 25.9
Operating expense 636 11.3 441 9.1 1,898 12.3 1,352 9.6
Operating profit (2) 699 12.4 840 17.2 1,902 12.0 2,306 16.3
<FN>
(1) includes intercompany activity.
(2) before interest, bad debt and unallocated corporate overhead expense.
</TABLE>
The Tooling segment, comprised of Form Flow, L & H Die, Micanol and Triple
Tool, manufactures production tooling for the cold heading/forming industries.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Tooling sales increased 16.4% in the current quarter compared to the same
period last year, which was principally derived from increased sales at the
Form Flow and Micanol units. Overall, sales order volume for the Tooling
segment has remained strong, except for the Triple Tool unit. In May 1995, the
Company completed its downsizing of Triple Tool by the sale of $725,800 (net
book value) of equipment, the lease of $342,000 (net book value) of equipment
and the retention of $341,100 (net book value) of equipment. The Company
recorded a gain of $312,200 on the sale of equipment, while it also recorded a
$309,700 writedown of goodwill in connection with the downsizing. Management
believes that operating results will improve in its Tooling segment as a
result of the reduction in Triple Tool's operations, as losses from this unit
will be significantly reduced or eliminated due to its significantly lower
overhead, direct labor and equipment-related expense. For the year ended
September 30, 1994, sales and operating losses from Triple Tool were
$2,499,915 and ($50,200), respectively, while for the nine months ended June
30, 1995 sales and operating losses were $1,600,000 and ($378,600),
respectively. The Triple Tool downsizing will have a minimal effect on
consolidated sales, as it represented less than 10% of the total; furthermore,
management expects to utilize the remaining Triple Tool equipment at near
capacity from the retention of certain accounts and from the completion of
orders for the other Tooling units. In connection with the downsizing, Triple
Tool's remaining operation was moved in June 1995 into space leased by the
Company's Form Flow unit in Romulus, Michigan.
The gross profit percentage for the current quarter was 23.6% of sales
compared to 26.3% of sales in the same quarter last year. For the nine month
comparative periods, gross profit on sales was 23.9% vs. 25.9%. The decline in
gross profit for the comparative quarter and nine months was primarily
attributable to unfavorable results at the Triple Tool unit.
Operating expense was 11.3% of sales in the current quarter compared to 9.1%
in the same quarter last year, while for the nine month period operating
expense was 12.3% of sales compared to 9.6% for the nine month period last
year. The higher operating expense level for both comparative quarters
primarily reflects (1) higher personnel costs, (2) legal costs associated with
union negotiations at the Micanol unit, (3) higher than normal customer
related travel, and (4) the direct allocation of certain corporate expenses
that were previously not directly allocated, such as engineering support,
401(k) employer match expense and certain other miscellaneous business
expenses (insurances, telephone, etc.).
CORPORATE AND INTEREST EXPENSE
Unallocated corporate overhead was $251,800 for the quarter ended June 30,
1995 compared to $507,700 in the same prior year quarter. For the nine months
ended June 30, 1995, unallocated corporate overhead was $734,700 compared to
$1,311,500 in the same period last year. The lower corporate expense reflects
a reduction of personnel and other administrative costs as well as the
allocation of additional corporate expenses that are directly related to the
respective subsidiaries.
Interest expense for the quarter was $302,100 compared to $238,600 for the
same quarter last year. The higher interest cost reflects primarily reflects
higher interest rates for the comparative periods.
FEDERAL INCOME TAXES
The credit in the income tax provision for the current quarter and the lower
effective tax rate for the nine months ended June 30, 1995 are due to a
revision of the valuation allowance established for net operating tax loss
benefits. The revision is based on current and projected taxable income, which
indicates a higher realization of net operating tax loss benefits.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION AND LIQUIDITY
Net cash provided by operating activities was $540,500 in the current quarter,
which included $443,300 that was used by working capital items, principally
reflecting higher accounts receivable and paydowns in trade accounts payable,
offset by a reduction in inventories. Net cash of $237,000 was provided by
operating activities in the prior year comparative quarter, which was net of
$567,100 used by working capital items, as the Company had restored
inventories to normal operating levels that had been constrained in prior
periods due to cash flow problems. Also included in the current quarter cash
flow from operating activities is a gain of $312,200 realized from the sale of
Triple Tool equipment, offset by a writedown of $309,700 of goodwill
associated with Triple Tool. Net cash provided by operating activities also
included depreciation/amortization of $244,600 and $492,500 for the June 30,
1995 and 1994 quarters, respectively. The decline in depreciation/amortization
expense reflects a smaller base of machinery and equipment for the comparative
periods and certain tooling at Uniflow which has become fully depreciated.
For the nine month comparative periods, net cash provided by operating
activities was $1,070,300 and $455,600, respectively. Working capital items
used ($1,190,300) and ($1,973,500) for the comparative nine month periods,
respectively. The current year use of cash by working capital items is
primarily the result of higher receivables (from higher sales) and more
inventories held for customers, while the prior year use of cash by working
capital items primarily reflected the return of various working capital items
to normal levels that had been constrained due to cash flow problems
experienced in 1993.
Net cash provided by investing activities was $421,200 in the current quarter,
which included $860,500 in gross proceeds from the sale of excess Triple Tool
equipment, offset by $439,300 of capital expenditures (primarily grinding
equipment for Form Flow and a hydraulic press for Uniflow.) The prior year
comparable quarter used ($220,100) in investing activities, which was
primarily support equipment and tooling for Uniflow. For the nine month
comparative periods cash used in investing activities was ($142,800) and
($308,100), respectively. The current nine month period included $1,005,300 in
capital expenditures, primarily grinding equipment for Form Flow and Micanol
and a new hydraulic press for Uniflow. The prior year nine month period
included capital expenditures of $593,200, principally support equipment and
tooling for Uniflow.
Net cash used in financing activities was ($926,600) in the current quarter,
which included scheduled principal payments on long term obligations of
$743,800 (of which $400,000 was an annual payment on Uniflow's Michigan
Strategic Fund Obligation Revenue Bonds) and a net paydown of $195,900 on the
line of credit. In the prior year's comparative quarter, cash used in
financing activities was ($20,800), which included a net increase of $388,800
on the line of credit, offset by $458,300 in payments on long term
obligations. The nine month period comparable net cash used in financing
activities was ($892,800) and ($279,500), respectively. In the current nine
month period, net cash provided by the line of credit was $348,200, while
payments on long term obligations were $1,472,300. In the prior year nine
month period, the Company received proceeds of $2.18 million from long term
debt, of which $1 million was from a subordinated note and $1.08 million from
Uniflow's bond financing. Also in the prior year, $483,300 of net cash was
used in discontinued operations (Tri-Tec Plastics).
In November 1994, Manubusiness Opportunities, Inc. ("MOI"), acquired 500,000
shares of common stock by exercising a stock warrant in conjunction with the
extinguishment of a $1 million note due from the Company to MOI. MOI is also a
related party (refer to the Company's Form 10-K for additional information
about MOI).
-10-
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As indicated in the Company's Form 10-K for the year ended September 30, 1994,
there is pending litigation between the Company and Larry McKnight, former
director and officer. Since the filing of the Form 10-K in December 1994,
there have been no further material developments to report concerning this
case.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not applicable.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SECOM GENERAL CORPORATION
(Registrant)
By: /s/ Robert A. Clemente Date: August 14, 1995
----------------------------
Robert A. Clemente
Chairman, President & CEO
By: /s/ David J. Marczak Date: August 14, 1995
-------------------------
David J. Marczak
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> $ 44,000
<SECURITIES> 0
<RECEIVABLES> 5,269,900
<ALLOWANCES> (204,500)
<INVENTORY> 4,541,800
<CURRENT-ASSETS> 10,875,000
<PP&E> 20,363,700
<DEPRECIATION> (5,898,500)
<TOTAL-ASSETS> 27,958,700
<CURRENT-LIABILITIES> 9,899,200
<BONDS> 0
<COMMON> 425,900
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 27,958,700
<SALES> 28,076,100
<TOTAL-REVENUES> 28,076,100
<CGS> 22,381,800
<TOTAL-COSTS> 26,522,500
<OTHER-EXPENSES> 21,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 871,300
<INCOME-PRETAX> 660,700
<INCOME-TAX> (117,200)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 777,900
<EPS-PRIMARY> 0
<EPS-DILUTED> 0.18
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