FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1996
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 (IRS Employer ID Number)
incorporation or organization)
46035 GRAND RIVER AVENUE 48374
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(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 4,791,700
(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 2
Consolidated Statements of Cash Flows 3
Notes to Interim Consolidated Financial Statements 4
Item 2. Management's Discussion & Analysis of Financial Condition
and Results of Operations 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
<TABLE>
<CAPTION>
ASSETS
JUN 30 1996 SEP 30 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 56,200 $ 13,700
Accounts receivable, net 4,311,900 4,484,800
Other receivables 64,400 320,600
Inventories 4,471,400 3,935,700
Prepaids 569,600 727,800
Deferred tax asset 703,800 542,700
----------- -----------
TOTAL CURRENT ASSETS $10,177,300 $10,025,300
Cash restricted for machinery & equipment 3,000,000 0
Property, plant & equipment, net 16,343,900 14,583,600
Cost in excess of net assets acquired 2,013,400 2,071,300
Other assets 311,600 266,900
----------- -----------
TOTAL ASSETS $31,846,200 $26,947,100
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
JUN 30 1996 SEP 30 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Bank line of credit 3,776,300
Current maturities of long term obligations 1,545,900 1,857,100
Trade accounts payable 2,369,200 2,065,500
Accrued expenses 911,600 1,197,100
----------- -----------
TOTAL CURRENT LIABILITIES 4,826,700 8,896,000
Long term obligations, net of current maturities 12,389,400 4,621,700
Deferred tax liabilities 1,518,900 1,518,900
----------- -----------
TOTAL LIABILITIES 18,735,000 15,036,600
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Stockholders' equity common stock, $.10 par
value 10,000,000 shares authorized:
June 30, 1996 - 4,791,700 shares
September 30, 1995 - 4,276,200 shares 479,200 427,600
Additional paid-in capital 17,443,900 16,478,900
Accumulated deficit (4,811,900) (4,996,000)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 13,111,200 11,910,500
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 31,846,200 26,947,100
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Jun 30 1996 Jun 30 1995 Jun 30 1996 Jun 30 1995
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 8,253,900 $ 9,915,400 $ 23,042,900 $ 28,076,100
COST OF SALES 6,448,500 7,577,200 18,370,300 22,381,800
------------ ------------ ------------ ------------
GROSS PROFIT 1,805,400 2,338,200 4,672,600 5,694,300
GENERAL AND ADMINISTRATIVE EXPENSES 1,457,900 1,416,000 3,800,400 4,140,700
------------ ------------ ------------ ------------
INCOME 347,500 922,200 872,200 1,553,600
OTHER INCOME (EXPENSE)
Interest (199,800) (302,100) (602,000) (871,300)
Miscellaneous (95,600) (75,100) 9,900 (21,600)
------------ ------------ ------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 52,100 545,000 280,100 660,700
INCOME TAX EXPENSE (BENEFIT) 11,600 (80,000) 94,800 (117,200)
------------ ------------ ------------ ------------
NET INCOME $ 40,500 $ 625,000 $ 185,300 $ 777,900
============ ============ ============ ============
EARNINGS PER COMMON SHARE
Income $ 0.01 $ 0.14 $ 0.04 $ 0.18
------------ ------------ ------------ ------------
NET INCOME $ 0.01 $ 0.14 $ 0.04 $ 0.18
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 4,879,300 4,329,200 4,742,400 4,195,300
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Jun 30 1996 Jun 30 1995 Jun 30 1996 Jun 30 1995
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from operations $ 40,500 $ 625,000 $ 185,300 $ 777,900
Adjustments to reconcile net income to
net cash used in operations:
Depreciation and amortization 479,100 396,900 1,462,400 1,402,400
Writedown of Triple Tool goodwill 309,700 309,700
(Benefit) from deferred taxes (117,300) (80,000) (161,100) (117,200)
Increase in allowance for doubtful accounts 27,000 112,100 11,000 127,100
(Gain) loss on sales of assets 88,500 (312,200) 77,300 (320,600)
Stock issuances to 401(k) plan 54,700
Other noncash expenses 83,200 84,600 83,200 128,900
Changes in assets and liabilities that
provided (used) cash:
Accounts and other receivables (503,700) (541,300) 225,600 (1,222,100)
Inventories (91,800) 382,200 (535,700) (471,800)
Prepaids 25,300 48,200 (68,300) 79,800
Other assets (142,200) 15,900 (142,200) 0
Accounts payable 472,200 (512,100) 354,400 22,400
Accrued liabilities (2,700) (21,900) (285,500) 274,700
Other liabilities 25,000
Net cash provided by discontinued operations 109,600 123,800 158,600 89,800
----------- ----------- ----------- -----------
Net cash provided by operating activities 467,700 655,900 1,365,000 1,135,700
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the disposal of property,
plant & equipment 299,100 860,500 301,000 862,500
Collections on notes receivable 41,600 271,200
Capital expenditures (2,629,700) (554,700) (3,554,000) (1,070,700)
----------- ----------- ----------- -----------
Net cash provided (used) by investing activities (2,289,000) 305,800 (2,981,800) (208,200)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in bank line of credit (665,900) (195,900) (1,799,300) 348,200
Proceeds from long-term notes payable 380,000 37,500 1,138,100 231,300
Proceeds from refinancing 7,887,500 7,887,500
Proceeds from issuance of bonds 3,000,000 3,000,000
Proceeds from issuances of common stock 0 1,000,000
Principal payments due to refinancing (5,535,700) (5,535,700)
Retirements of common stock 0 0 (20,800)
Payments on long-term notes payable (286,300) (743,800) (962,000) (1,389,200)
Payments on capital lease obligations (11,700) (24,400) (48,500) (83,100)
----------- ----------- ----------- -----------
Net cash provided from (used) by financing activities 4,767,900 (926,600) 4,659,300 (892,800)
----------- ----------- ----------- -----------
NET INCREASE IN CASH & RESTRICTED CASH 2,946,600 35,100 3,042,500 34,700
CASH, BEGINNING OF PERIOD 109,600 8,900 13,700 9,300
----------- ----------- ----------- -----------
CASH & RESTRICTED CASH, END OF PERIOD $ 3,056,200 $ 44,000 $ 3,056,200 $ 44,000
=========== =========== =========== ===========
OTHER CASH FLOW INFORMATION - INTEREST PAID $ 217,500 $ 298,900 $ 643,200 $ 826,000
=========== =========== =========== ===========
</TABLE>
<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, 1996 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, 1995.
Business
The Company is a publicly traded holding company with four wholly owned
subsidiaries that operate in two business segments. In June 1995, the
Company's Triple Technologies subsidiary (formerly "Triple Tool," referred to
herein as "Triple") was downsized and moved into Form Flow's facilities.
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")
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.
-4-
<PAGE>
Inventories
Inventories are valued at the lower of cost or market. Cost is determined by
the first-in, first-out (FIFO) method.
Earnings (loss) per share
The earnings (loss) per share of common stock is computed by dividing net
income (loss) by the weighted average number of common shares and common
equivalent shares (primarily warrants and options to purchase common stock
that were outstanding during the periods presented).
NOTE 2. INVENTORIES
Inventories at June 30, 1996 and September 30, 1995 are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996 SEPT. 30, 1995
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<S> <C> <C>
Raw materials $ 592,100 $ 372,300
Work-in-process 1,934,900 1,796,800
Finished goods 1,944,400 1,766,600
---------- ----------
$4,471,400 $3,935,700
========== ==========
</TABLE>
NOTE 3. LONG TERM DEBT AND LINE OF CREDIT
Long term debt consists of real estate mortgages, equipment term notes,
industrial revenue bonds, equipment capital leases and subordinated loans.
Scheduled principal payments due for the next year are approximately $1.55
million.
Effective June 30, 1996, the Company and its subsidiaries secured a $4.0
million revolving bank line of credit collateralized by accounts receivable
and inventories. The revolver expires in June, 1999 and is subject to various
financial covenants. Borrowings under the revolver were $1.98 million at June
30, 1996 and are limited to stated percentages of receivables and inventories
and are due on demand. Generally, borrowings under the revolver will be at a
floating interest rate of 215 basis points over the LIBOR (5.59% at June 30,
1996). The Company also has an authorized $2 million line of credit available
from the same lender, supported by accounts receivable and inventories.
Previously, the Company had a $4.5 million bank line of credit in place (due
on demand) collateralized by accounts receivable and inventories, with a
floating interest rate of prime plus 1/4%.
-5-
<PAGE>
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 1996 and September 30, 1995 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1996 Sept. 30, 1995 Life
------------- -------------- ----
<S> <C> <C> <C>
Machinery $14,777 $14,581 2 to 20 years
Buildings and improvements 5,060 4,714 3 to 30 years
Land 572 540 n/a
Furniture and fixtures 505 478 5 to 7 years
Vehicles 248 263 3 years
Construction in progress/other 2,335 236 n/a
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Total 23,496 20,812
Accumulated depreciation (7,152) (6,228)
------- -------
Net property, plant and equipment $16,344 $14,584
======= =======
</TABLE>
NOTE 5. RELATED PARTY TRANSACTIONS
In November 1995, Manubusiness Opportunities, Inc. ("MOI") exercised a stock
warrant to acquire 500,000 shares of common stock at $2.00 per share, for a
total of $1 million cash paid to the Company.
Subsequent to June 30, 1996, MOI exercised its final warrant, acquiring an
additional 500,000 shares in exchange for $1 million. An independent committee
created and empowered by the Company's Board of Directors authorized a
reduction in the warrant exercise price to the then current market price
of approximately $2.00 per share from $3.00 per share.
For additional information about the Company's relationship with MOI, refer to
the Company's Form 10-K for the year ended September 30, 1995.
-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. The
Metal Parts Forming Segment manufactures cold headed and cold forged parts,
while the Tooling Segment provides production tooling for the cold heading
industry.
Consolidated net sales for the quarter were $8,253,900, compared to $9,915,400
in the same quarter of the prior year, for a decrease of 16.8%. For the nine
month year-to-date period, consolidated net sales were $23,042,900 compared to
$28,076,100 for the same period last year, for a decrease of 17.9%. The
quarter and nine month sales decreases were largely the result of (1) lower
sales at Uniflow, where in the prior year comparative periods sales were
higher due to a significant catch-up of past-due orders and higher order
volume for aftermarket truck wheel bolts and suspension ball joint housings,
and (2) lower sales at Form Flow, L&H Die and Micanol along with the
downsizing of Triple, which was moved to Form Flow in June 1995.
Net income for the quarter ended June 30, 1996 was $40,500, or one cent per
share, compared to net income of $625,000, or 14 cents per share, for the same
quarter last year. The decrease in net income was primarily attributable to
(1) the lower sales volume within both business segments, as discussed above,
(2) start-up costs to put in place production equipment and systems for the
new transmission parts business at Uniflow and, (3) the write-off of debt
issuance costs associated with the early payoff of term debt through the
Company's debt refinancing. Net income for the nine months ended June 30, 1996
was $185,300 or 4 cents per share, compared to $777,900 or 18 cents per share,
for the same period last year.
Segment Review
<TABLE>
<CAPTION>
Metal Parts Forming (Uniflow)
(in thousands)
Three Months Ended Nine Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
---------------- ---------------- --------------- ----------------
Amount % Amount % Amount % Amount %
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 4,048 100.0 $ 4,676 100.0 $ 10,912 100.0 $ 13,775 100.0
Gross profit 540 13.3 970 20.7 1,344 12.3 1,795 13.0
Operating expense 602 14.9 529 11.3 1,435 13.2 1,480 10.7
Operating profit (1) (62) (1.5) 441 9.4 (91) (0.8) 315 2.3
<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 steel tube, bar and coil using cold forging and
forming techniques. Uniflow's primary parts are truck wheel bolts, automotive
suspension parts, automotive transmission shafts and various cold headed parts
for OEMs.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Uniflow's sales decreased 13.4% in the quarter, compared to the prior year
quarter, while for the nine month comparative period sales decreased 20.8%.
The decrease in sales for the quarter and nine month period primarily reflect
(1) lower order volume for Uniflow's aftermarket truck wheel bolt and
suspension ball joint housings, (2) a catch-up of orders that were past
due on delivery in the prior periods and, (3) the General Motors
strike earlier in the year, which accounted for a small portion of the sales
decrease. The decrease in Uniflow's aftermarket component parts business is
attributable to an overall slowness in the trucking aftermarket business, the
loss of specific accounts by Uniflow's customers and the resourcing of various
parts to competitors of Uniflow by other customers. To make up for the lower
order volume, Uniflow is aggressively seeking new business for its cold
heading and cold forging parts forming capacity. Most significantly,
management is seeking additional transmission shaft business, which it
believes it will procure and be in production within three months. Additional
transmission shaft production could utilize significant available hydraulic
press capacity, as sales for these parts could exceed $8 million annually.
Uniflow has already set-up a new machining department in anticipation of
receiving new orders for these parts. Uniflow will begin delivery of airbag
housings in the quarter ending September 30, 1996, although volume is
anticipated to be less than $300,000 for that quarter. Previously, the Company
announced an order to manufacture approximately $30 million of starter motor
shafts over six years for an automotive supplier, with production scheduled to
begin in May, 1997.
Uniflow's gross profit for the quarter decreased to 13.3% of sales compared to
20.7% for the same quarter last year. The lower quarterly gross profit
primarily reflects the lower sales volume as well as increased direct labor
and other costs resulting from the moving and reorganization of equipment
among Uniflow's three facilities. For the nine month period, the gross profit
was 12.3% of sales compared to 13.0% in the prior year period.
Operating expense was 14.9% of sales for the quarter, compared to 11.3% of
sales in the prior year quarter. For the nine month comparative period,
operating expense was 13.2% of sales and 10.7% of sales, respectively. The
higher operating expense percentages in the current periods compared to the
same periods last year was due primarily to the lower sales volume, the
write-off of $83,000 in prepaid equipment finance charges (associated with a
debt refinancing) and increased personnel added to the engineering department.
<TABLE>
<CAPTION>
Tooling Segment
(in thousands)
Three Months Ended Nine Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
---------------- ---------------- --------------- ----------------
Amount % Amount % Amount % Amount %
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 4,610 100.0 $ 5,653 100.0 $13,584 100.0 $15,908 100.0
Gross profit 1,188 25.8 1,335 23.6 3,175 23.4 3,800 23.9
Operating expense 613 13.3 636 11.4 1,779 13.1 1,898 11.9
Operating profit (1) 575 12.5 699 12.4 1,396 10.3 1,902 12.0
<FN>
(1) Includes intercompany activity.
(2) Before interest, bad debt and unallocated corporate overhead expense.
</TABLE>
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
The Tooling Segment, comprised of Form Flow, L & H Die and Micanol,
manufacture production tooling for the cold heading/forming industry. In June
1995, the Segment's Triple Technologies subsidiary (formerly "Triple Tool,"
referred to herein as "Triple") was downsized and moved into Form Flow's
facilities.
The Tooling Segment's sales decreased 18.5% compared to the same quarter
last year, while for the nine month comparative period, sales decreased 14.6%.
The current periods sales decreases were principally due to lower incoming
orders and the downsizing of Triple. Management expects order volume to
remain consistent with current levels for the coming months.
The Tooling Segment's gross profit percentage was 25.8% of sales in the
quarter, compared to 23.6% of sales in the same quarter last year. The higher
quarterly gross profit percentage primarily reflects more efficient processing
of orders at Form Flow and L&H Die. For the nine month comparative periods,
gross profit was 23.4% of sales vs. 23.9% of sales.
The Tooling Segment's operating expense was 13.3% of sales in the current
quarter and 13.1% in the current nine month period, compared to 11.4% and
11.9%, in the same quarter and nine month period last year, respectively.
The higher operating expense percentages for the current periods primarily
reflects the lower sales volume.
Corporate, Interest and Miscellaneous
Unallocated corporate overhead (included in general and administrative
expenses) was $245,300 for the quarter, compared to $251,800 in the same prior
year quarter. For the nine month period, unallocated corporate expense was
$594,600 compared to $734,700 for the same period last year. The lower
corporate expense reflects a reduction in personnel and other administrative
costs.
Interest expense for the quarter was $199,800 compared to $302,100 for the
same quarter last year. For the nine months year-to-date, interest expense was
$602,000 vs. $871,300 for the same period last year. The lower interest
expense reflects lower interest rates and reduced borrowings for the
comparative periods.
Miscellaneous expense of $95,600 for the quarter principally consisted of loss
on equipment disposals and accounts receivable write-offs.
FINANCIAL CONDITION AND LIQUIDITY
During the quarter, the Company completed a major refinancing of its secured
debt and obtained commitments for other debt financing in the near future, as
discussed below. Also, subsequent to June 30, 1996, Manubusiness
Opportunities, Inc. ("MOI") agreed to exercise its final stock purchase
warrant, providing the Company with an additional $1,000,000 in liquidity in
exchange for 500,000 shares of common stock. The warrant exercise price was
reduced to the Company's market trading price of $2 per share from $3 per
share, as authorized by an independent committee of the Board of Directors.
Management believes that the equity infusion and debt refinancing
significantly improve the Company's liquidity and better position it to
successfully implement its significant business expansion in process at
Uniflow and within its Tooling operations.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Net cash provided by operating activities was $467,700 in the quarter,
compared to $655,900 in the prior year quarter. Depreciation and amortization
increased to $479,100 from $396,900 in the prior year quarter, reflecting
additional machinery and equipment and shorter lives on certain equipment.
Working capital items fluctuated, as accounts receivable declined $503,700 due
to the lower sales volume, while accounts payable increased $472,200 primarily
related to increased purchases of steel for Uniflow's anticipated start up in
transmission component part production. For the nine month comparative period,
net cash provided by operating activities was $1,365,000 and $1,135,700
respectively. The increase in net cash for the nine month comparative period
was principally the result of lower accounts receivable and higher accounts
payable.
Net cash used in investing activities was ($2,289,000) in the current quarter,
which included $2,629,700 in equipment purchases (including deposits on new
equipment), offset by the sale of equipment for $299,100. The equipment will
complete the secondary machining operations for the transmission shaft
production that is expected to be awarded from an automotive company. Initial
part delivery is expected to commence in September 1996. The prior year
comparative quarter provided $305,800 by investing activities, principally
cash from the sale of Triple equipment, offset by $554,700 in capital
expenditures. The comparative nine month periods used cash flow of
($2,981,800) and ($208,200), respectively, for investing activities.
In addition to capital expenditures during the current quarter, the
current nine month period also includes $495,000 in expenditures,
principally for costs added to a newly rebuilt forging press at Uniflow,
and the acquisition of a building adjacent to Form Flow for its die repair
program and electro-diode machining department. The prior year nine month
period includes various equipment purchases at the Tooling Segment and
Uniflow, offset by the sale of Triple equipment.
Net cash provided (used) by financing activities was $4,767,900 in the quarter
compared to ($926,600) in the prior year quarter. The current quarter included
proceeds of $3,000,000 from the issuance of industrial revenue bonds, which
will be used for the acquisition of equipment to manufacture transmission
shafts. The bonds amortize over six years with a fixed interest rate of 6.15%.
The Company also refinanced its existing secured long-term debt in June by
adding approximately $2.3 million to long term debt. This was accomplished with
a $2,887,500 mortgage on the Uniflow properties (15 amortization, 8.25% fixed
rate) and with a $5,000,000 equipment loan (floating rate at LIBOR plus 215
basis points). The new mortgage replaced an existing mortgage with a remaining
balance of $1,392,000 (floating rate of prime plus 1/2%, 15 year amortization
and balloon note that was due in 2001), while the new equipment note replaced
various equipment notes that totaled approximately $4,143,700 (interest rates
ranging from 6% to 11% and maturities ranging from 1996 to 2001). Also,
effective June 30, 1996, the Company obtained a three year revolving line of
credit from one of its primary lenders. The revolver provides for up to
$4,000,000 in borrowings based on accounts receivable and inventory levels. An
additional $2,000,000 in borrowing is also authorized under this arrangement
in the form of a short-term (due on demand) line of credit that would be
supported by requisite levels of accounts receivable and inventories. Prior to
June 30, 1996, the Company utilized a $4,500,000 short-term bank line of
credit supported by accounts receivable and inventories. The nine month
comparable net cash provided from (used in) financing activities was
$4,659,300 and ($892,800), respectively, with most activity accounted for in
the current and prior year comparable quarter.
-10-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
With respect to financing for new equipment on order for production of
Uniflow's starter motor shafts business, the Company has secured a commitment
for $4 million in industrial revenue bonds. Management expects to close on the
financing in late September 1996, while taking delivery of equipment in
November and December 1996. Production is tentatively scheduled for May 1997.
-11-
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
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.
-12-
<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 Dated: August 14, 1996
----------------------------
Robert A. Clemente
Chairman, President & CEO
By: /s/ David J. Marczak Dated: August 14, 1996
-------------------------
David J. Marczak
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> $ 56,200
<SECURITIES> 0
<RECEIVABLES> 4,416,400
<ALLOWANCES> (104,500)
<INVENTORY> 4,471,400
<CURRENT-ASSETS> 10,177,300
<PP&E> 23,495,900
<DEPRECIATION> (7,152,000)
<TOTAL-ASSETS> 31,846,200
<CURRENT-LIABILITIES> 4,826,700
<BONDS> 0
<COMMON> 479,200
0
0
<OTHER-SE> 12,632,000
<TOTAL-LIABILITY-AND-EQUITY> 31,846,200
<SALES> 23,042,900
<TOTAL-REVENUES> 23,042,900
<CGS> 18,370,300
<TOTAL-COSTS> 22,170,700
<OTHER-EXPENSES> (9,900)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 602,200
<INCOME-PRETAX> 280,100
<INCOME-TAX> 94,800
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 185,300
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.00
</TABLE>
