<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15836
REXWORKS INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 39-1406918
- -------------------------------------------------- --------------------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
445 West Oklahoma Avenue
Milwaukee, WI 53207
- --------------------------------------------------- ---------------------------------------------------
(Address of principal executive office) (Zip Code)
P.O. Box 2037
Milwaukee, WI 53201
- -------------------------------------------------- ---------------------------------------------------
(Mailing address of principal executive office) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: 414-747-7200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ___
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 12, 1995.
Common Stock, $0.12 par value: 1,884,332 shares
<PAGE> 2
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements.
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these interim financial statements be read
in conjunction with the financial statements for the years ended December 31,
1994 and 1993 and notes thereto, included in the Company's 1994 Form 10K.
<PAGE> 3
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
March 31 December 31
ASSETS 1995 1994
- ---------------------------------- --------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash $24,000 $10,000
Accounts receivable 8,614,000 7,752,000
Inventories 9,973,000 10,046,000
Other current assets 96,000 267,000
--------------- ---------------
Total current assets 18,707,000 18,075,000
--------------- ---------------
DEFERRED INCOME TAX BENEFIT 535,000 535,000
NONCOMPETE AGREEMENT 2,260,000 2,407,000
OTHER ASSETS 1,073,000 1,104,000
PROPERTY, PLANT AND EQUIPMENT:
Land 36,000 36,000
Buildings and land improvements 1,282,000 1,282,000
Machinery and equipment 5,612,000 5,481,000
--------------- ---------------
6,930,000 6,799,000
Less accumulated depreciation (4,179,000) (4,004,000)
--------------- ---------------
Net property, plant and equipment 2,751,000 2,795,000
--------------- ---------------
TOTAL ASSETS $25,326,000 $24,916,000
=============== ===============
</TABLE>
The accompanying notes to consolidated financial
statements are an integral part of these statements
<PAGE> 4
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
LIABILITIES AND March 31 December 31
STOCKHOLDERS' INVESTMENT 1995 1994
- ----------------------------------------------- --------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $2,950,000 $2,980,000
Accounts payable--trade 5,240,000 4,599,000
Accrued expenses:
Salaries, wages and other
compensation related benefits 628,000 980,000
Warranty claims 1,412,000 1,296,000
Product liability defense 1,659,000 1,550,000
Other 395,000 305,000
Deferred income taxes 207,000 207,000
Advances from customers 101,000 104,000
--------------- ---------------
Total current liabilities 12,592,000 12,021,000
--------------- ---------------
LONG-TERM DEBT 4,514,000 4,753,000
--------------- ---------------
Total liabilities 17,106,000 16,774,000
--------------- ---------------
STOCKHOLDERS' INVESTMENT:
Common stock, $.12 par value, 4,300,000
shares authorized, 1,886,668 and 1,858,021
shares issued and outstanding, respectively 226,000 223,000
Additional paid-in capital 6,995,000 6,936,000
Treasury stock (26,000) (26,000)
Retained earnings 1,025,000 1,009,000
--------------- ---------------
Total stockholders' investment 8,220,000 8,142,000
--------------- ---------------
TOTAL LIABILITIES AND STOCK-
HOLDERS' INVESTMENT $25,326,000 $24,916,000
=============== ===============
</TABLE>
The accompanying notes to consolidated financial
statements are an integral part of these statements.
<PAGE> 5
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Three months Three months
ended ended
Mar. 31, 1995 Mar. 31, 1994
--------------- ----------------
<S> <C> <C>
Net sales $13,718,000 $12,467,000
Cost of sales 10,762,000 9,848,000
--------------- ---------------
GROSS PROFIT 2,956,000 2,619,000
Selling, general and
administrative expenses 2,745,000 2,109,000
--------------- ---------------
INCOME FROM OPERATIONS 211,000 510,000
Interest expense (212,000) (165,000)
Other income 27,000 38,000
--------------- ---------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 26,000 383,000
Provision for income taxes 10,000 157,000
--------------- ---------------
NET INCOME 16,000 226,000
Retained earnings,
beginning of period 1,009,000 (152,000)
--------------- ---------------
RETAINED EARNINGS, END OF PERIOD $1,025,000 $74,000
--------------- ---------------
NET INCOME PER SHARE: $0.01 $0.11
--------------- ---------------
Weighted average number of common
shares outstanding 1,944,752 1,969,041
=============== ===============
</TABLE>
The accompanying notes to consolidated financial
statements are an integral part of these statements.
<PAGE> 6
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, 1995 March 31, 1994
- ----------------------------------------------- --------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $16,000 $226,000
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 358,000 310,000
Provision for deferred income taxes 10,000 157,000
Changes in assets and liabilities:
(Increase) in accounts receivable (862,000) (1,741,000)
(Increase) decrease in inventories 73,000 (371,000)
Decrease in other current assets 171,000 148,000
Net increase in accounts payable, accrued
expenses and advances from customers 601,000 717,000
--------------- ---------------
Net cash provided by (used for) operating activities 367,000 (554,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (146,000) (126,000)
--------------- ---------------
Net cash (used for) investing activities (146,000) (126,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under
line-of-credit agreement (269,000) 691,000
Noncompete liability principal payments 0 (41,000)
Exercise of stock options 62,000 30,000
--------------- ---------------
Net cash provided by (used for) financing activities (207,000) 680,000
--------------- ---------------
Net increase in cash 14,000 0
CASH AT BEGINNING OF YEAR 10,000 10,000
--------------- ---------------
CASH AT END OF QUARTER $24,000 $10,000
=============== ===============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $173,000 $267,000
Income taxes paid 10,000 0
</TABLE>
The accompanying notes to consolidated financial
statements are an integral part of these statements.
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995 AND 1994
(1) In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) which were necessary to a fair statement of the
results of the interim periods have been included in the preceding
financial statements. However, the results of operations for the three
month period ended March 31, 1995 are not necessarily indicative of
results to be expected for the year. Certain items, including income
taxes, LIFO charges and various other accruals are included in these
statements based on current estimates for the entire year.
(2) Inventories
Substantially all inventories are stated at cost which does not exceed
market, determined on the last-in, first-out (LIFO) basis. Inventory
amounts as of March 31, 1995 and December 31, 1994 are as follows:
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
---------------- ----------------
<S> <C> <C>
At lower of cost (FIFO) or market:
Raw materials $299,000 $ 335,000
Work-in-process and components 5,176,000 6,035,000
Finished goods 6,480,000 5,649,000
----------- ------------
11,955,000 12,019,000
Excess of FIFO over LIFO cost (1,982,000) (1,973,000)
------------ -------------
Total inventories at LIFO $9,973,000 $10,046,000
=========== ============
</TABLE>
(3) Debt as of March 31, 1995 and December 31, 1994 is as follows:
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
-------------- --------------
<S> <C> <C>
Borrowings under line-of-credit agreement $6,076,000 $6,345,000
Liability for noncompete payments to be
made to Norkot's sole shareholder 1,388,000 1,388,000
Less: Current portion (2,950,000) (2,980,000)
----------- -----------
Long term portion of debt $4,514,000 $4,753,000
=========== ===========
</TABLE>
<PAGE> 8
(4) Legal Proceedings
Product liability claims against the Company arise from time to time in the
ordinary course of business. As explained more fully in the Company's 1994
Form 10K, Rexworks is self-insured against product liability claims,
because, in the opinion of management, the premiums the Company would pay
for insurance are not justified by the Company's historical loss
experience. The Company is currently party to a number of legal
proceedings involving product liability claims in a number of states,
some of which involve significant claims. These proceedings are now
pending before courts in various stages or are in discovery stages. In
most instances, pending claims allege the Company produced faulty product
which led to injury. The Company generally denies liability and intends to
vigorously defend these proceedings.
There is an inherent uncertainty as to the eventual resolution of unsettled
claims. However, in the opinion of management, based in part on advice
from its outside legal counsel, any costs, losses and settlements with
respect to existing claims in excess of established reserves will not have
a material impact on the Company's operating income or financial condition.
<PAGE> 9
PART 1. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
The following comments are provided to assist in the understanding of the
Company's operations as set forth in the consolidated financial statements.
ANALYSIS OF FINANCIAL CONDITION
Liquidity and Capitalization
Working capital and current ratio are financial measurements that provide an
indication of the Company's ability to meet its short-term obligations. This
data at March 31, 1995 and December 31, 1994 is as follows:
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
--------------- ----------------
<S> <C> <C>
Current Assets $18,707,000 $18,075,000
Current Liabilities 12,592,000 12,021,000
Working Capital 6,115,000 6,054,000
Current Ratio 1.5 1.5
</TABLE>
At March 31, 1995 the Company had $3,924,000 of borrowings available under its
line-of-credit facility. In management's opinion, anticipated future cash
generated from operations and the existing credit facility will be sufficient
to meet the Company's short and long term needs for working capital and
required capital additions.
RESULTS OF OPERATIONS
The First Quarter, 1995 Compared To The First Quarter, 1994
Net sales for the first quarter of 1995 increased $1,251,000 (10.0%) compared
to the first quarter of 1994 due to continued strong market demand for the
Company's Trashmaster landfill compactor product line, particularly the
Company's largest model, the 3-90C. In addition, the Company experienced
strong demand in its truck mounted concrete mixer product line.
Management anticipates soft market demand for its higher margin Trashmaster and
Maxigrind products during the remainder of 1995 and continued strong demand for
its lower margin truck mounted concrete mixers.
Gross profit increased $337,000 to $2,956,000 in the first quarter of 1995 from
the $2,619,000 reported in the first quarter of 1994. Gross profit as a
percentage of net sales increased to 21.5% compared to 21.0% for the first
quarter of 1994. During the fist quarter of 1995, a greater percentage of the
Company's sales were in the Company's lower margin products compared to the
first quarter of 1994. This change in sales mix was more than offset by
improved manufacturing productivity.
<PAGE> 10
Selling, general and administrative expenses increased $636,000 (30.2%) to
$2,745,000 for the three months ended March 31, 1995 compared to the same
period in 1994 due primarily to additional marketing, service, new product
introduction and engineering expenses. In addition, the Company incurred
higher warranty expenses.
Interest expense increased $47,000 (28.5%) during the three month period ended
March 31, 1995, compared to the same period in 1994 due to higher average
borrowings and interest rate increases.
<PAGE> 11
PART II. OTHER INFORMATION
NONE
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.
REXWORKS INC.
May 12, 1995 /s/ Thomas D. Lauerman
- --------------------------------- -------------------------------------
Date Thomas D. Lauerman
Vice President
and Chief Financial Officer
May 12, 1995 /s/ Michael C. Hadjinian
- --------------------------------- ---------------------------------------
Date Michael C. Hadjinian
President, Chairman and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 24
<SECURITIES> 0
<RECEIVABLES> 8,614
<ALLOWANCES> 0
<INVENTORY> 9,973
<CURRENT-ASSETS> 18,707
<PP&E> 6,930
<DEPRECIATION> 4,179
<TOTAL-ASSETS> 25,326
<CURRENT-LIABILITIES> 12,592
<BONDS> 4,514
<COMMON> 226
0
0
<OTHER-SE> 7,994
<TOTAL-LIABILITY-AND-EQUITY> 25,326
<SALES> 13,718
<TOTAL-REVENUES> 13,718
<CGS> 10,762
<TOTAL-COSTS> 10,762
<OTHER-EXPENSES> 2,745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212
<INCOME-PRETAX> 26
<INCOME-TAX> 10
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-PRIMARY> .01
<EPS-DILUTED> .00
</TABLE>
