- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 29, 1996 or
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______________ to _______________
COMMISSION FILE NUMBER 0-16059
JASON INCORPORATED
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1756840
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
411 EAST WISCONSIN AVENUE, SUITE 2500, MILWAUKEE, WI 53202
(Address of principal executive offices)
(414) 277-9300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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
--- ---
On March 29, 1996 there were outstanding 20,139,673 shares of the Registrant's
$.10 par value common stock.
JASON INCORPORATED
FORM 10-Q
MARCH 29, 1996
INDEX
-----
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Statements of Income for the Three Months
Ended March 29, 1996 and March 31, 1995 ...................... 3
Balance Sheets as at March 29, 1996 and
December 29, 1995 ............................................ 4
Statements of Cash Flows for the Three Months
Ended March 29, 1996 and March 31, 1995 ..................... 5
Notes to Financial Statements .................................. 6-7
Management's Discussion and Analysis of
Results of Operations and Financial Condition ................ 8-10
PART II. OTHER INFORMATION
Item 1 Legal Proceedings ....................................... 10
Item 2 Changes in Securities ................................... 10
Item 3 Defaults Upon Senior Securities ......................... 10
Item 4 Submission of Matters to a Vote of
Security Holders ..................................... 10
Item 5 Other Information ....................................... 10
Item 6 (a) Exhibits ........................................... 10
(b) Reports on Form 8-K ................................ 10
Signatures ..................................................... 11
<TABLE>
<CAPTION>
JASON INCORPORATED
STATEMENTS OF INCOME
(Dollars In Thousands, Except Earnings Per Share)
-------------------------------------------------
FOR THE THREE MONTHS ENDED
-------------------------------
MARCH 29, MARCH 31,
1996 1995
--------- ---------
(UNAUDITED)
-----------
<S> <C> <C>
NET SALES $ 104,631 $ 108,666
COST OF SALES 83,173 84,754
-------- --------
Gross Profit 21,458 23,912
SELLING AND ADMINISTRATIVE EXPENSES 14,724 15,442
-------- --------
Operating Income 6,734 8,470
INTEREST EXPENSE 2,382 2,428
OTHER (INCOME) EXPENSE (70) 162
-------- --------
Income Before Income Taxes 4,422 5,880
PROVISION FOR INCOME TAXES 1,813 2,464
-------- --------
NET INCOME $ 2,609 $ 3,416
======== ========
NET INCOME PER SHARE $ 0.13 $ 0.17
======== ========
AVERAGE SHARES OUTSTANDING 20,515,000 20,618,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
JASON INCORPORATED
BALANCE SHEETS
(Dollars in Thousands)
----------------------
MARCH 29, DECEMBER 29,
1996 1995
----------- ------------
(Unaudited)
ASSETS -----------
- - ------
<S> <C> <C>
Current Assets
Cash $ 2,232 $ 1,890
Accounts Receivable 57,252 54,819
Inventories (Note 3) 34,358 35,602
Costs And Earnings In Excess Of
Billings On Uncompleted Contracts 12,991 9,999
Deferred Income Taxes 8,045 8,045
Other Current Assets 4,347 4,179
------- -------
Total Current Assets 119,225 114,534
------- -------
Property, Plant and Equipment
Cost 130,484 124,322
Less - Accumulated Depreciation (58,293) (55,512)
-------- --------
Net Property, Plant and Equipment 72,191 68,810
------- -------
Intangible Assets 92,846 94,171
Other Assets 1,872 2,012
------- -------
$ 286,134 $ 279,527
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities
Current Portion of Long-Term Debt $ 3,267 $ 3,386
Accounts Payable 28,102 27,361
Accrued Compensation & Employee Benefits 9,791 12,553
Accrued Warranty 3,466 3,289
Accrued Interest 2,246 1,275
Accrued Income Taxes 983 1,968
Other Current Liabilities 6,938 8,037
Billings In Excess Of Costs And 0 0
Earnings On Uncompleted Contracts 9,129 8,995
------- -------
Total Current Liabilities 63,922 66,864
Revolving Loan 32,775 27,010
Other Long-Term Debt 83,057 83,057
Deferred Income Taxes 9,694 8,062
Other Long-Term Liabilities 1,972 2,448
Postemployment & Postretirement Health
And Other Benefits 5,891 5,868
------- -------
Total Liabilities 197,311 193,309
------- -------
Commitments and Contingencies --- ---
SHAREHOLDERS' EQUITY
- - --------------------
Common Stock & Additional
Contributed Capital 34,619 34,535
Retained Earnings 54,366 51,757
Foreign Currency Translation Adjustment (162) (74)
------- -------
Total Shareholders' Equity 88,823 86,218
------- -------
$ 286,134 $ 279,527
======= =======
</TABLE>
<TABLE>
<CAPTION>
JASON INCORPORATED
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
For The Three Months Ended
----------------------------------
MARCH 29, MARCH 31,
1996 1995
-------- ---------
(UNAUDITED)
-----------
CASH FLOWS FROM OPERATING ACTIVITIES
- - ------------------------------------
<S> <C> <C>
Net Income $ 2,609 $ 3,416
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities:
Depreciation 3,053 3,299
Amortization 1,467 1,520
Deferred Income Taxes 1,632 1,786
Increase (Decrease) In Cash, Excluding Effects Of
Acquisitions, Due To Changes In:
Accounts Receivable (2,433) (731)
Inventories 1,244 (350)
Cost And Earnings In Excess Of Billings
On Uncompleted Contracts (2,992) (5,496)
Other Current Assets (168) 2,618
Other Assets (2) 1,182
Accounts Payable 741 4,616
Accrued Compensation & Employee Benefits (2,762) (1,802)
Accrued Warranty 177 (114)
Accrued Interest 971 1,077
Accrued Income Taxes (985) (285)
Billings In Excess Of Costs And Earnings
On Uncompleted Contracts 134 704
Other Liabilities (1,552) (355)
------- --------
Total Adjustments (1,475) 7,669
-------- --------
Net Cash Provided By Operations 1,134 11,085
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition Of Net Assets --- (45,123)
Acquisition Of Property, Plant And Equipment (6,453) (3,612)
Disposal Of Property, Plant And Equipment - Net 19 13
Other Net (88) 143
-------- ----------
Net Cash Used For Investing Activities (6,522) (48,579)
-------- ----------
Net Cash Used Before Financing Activities (5,388) (37,494)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Revolving Loan 34,945 59,953
Repayments Of Revolving Loan (29,180) (39,673)
Repayments Of Other Long Term Debt (119) (707)
Proceeds From Convertible Notes --- 17,057
Issuance Of Common Stock - Net 84 ---
-------- ----------
Net Cash Provided By Financing Activities 5,730 36,630
-------- --------
Net Increase (Decrease) In Cash 342 (864)
Cash Beginning of Period 1,890 1,069
-------- --------
Cash End of Period $ 2,232 $ 205
======== ========
Cash Paid For:
Interest 1,422 1,355
Income Taxes 1,198 963
</TABLE>
JASON INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF FINANCIAL STATEMENTS
The Company operates in three primary business segments: power generation
products, motor vehicle products, and industrial products. Power generation
products include the design and manufacture of silencing equipment, waste heat
recovery boilers, and other auxiliary equipment for the gas turbine and other
industries and the design and fabrication of electromagnetic shielding products
for medical and other electronic equipment applications. Motor vehicle products
include the manufacture and marketing of nonwoven needled fiber insulation,
mastic insulation, dielectric padding and other interior trim products primarily
for the automotive industry but also for furniture and industrial uses, plus
seating products for motorcycles, construction, agricultural and lawn/turf care
equipment. Industrial products include the manufacture and marketing of
industrial brushes, buffing wheels and compound used by manufacturers to finish
a wide variety of manufactured products, plus the manufacture and marketing of
precision components such as precision stampings, wire form components and
expanded metal products.
The financial statements at March 29, 1996 and March 31, 1995 and for the three
month periods then ended are unaudited, however, in the opinion of management,
all adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of the financial position at these dates and the results of
operations and cash flows for these periods have been included. The results for
the three month period ended March 29, 1996 are not necessarily indicative of
the results that may be expected for the full year or any other interim period.
Earnings per share are computed using the weighted average number of common and
common equivalent shares outstanding during the period. The weighted average
number of common and common equivalent shares outstanding during the first
quarters of 1996 and 1995 amounted to 20,515,000 and 20,618,000, respectively.
Shares issuable under employee stock option plans are included in the earnings
per share computations for all periods presented.
NOTE 2 - ACQUISITIONS
On January 3, 1995, the Company completed the acquisition of Milsco
Manufacturing company for $45.5 million, including acquisition costs. Milsco is
a designer and manufacturer of seating for motorcycles, construction equipment,
agricultural equipment and lawn/turf care equipment.
The aforementioned acquisition has been accounted for using the purchase method
and, as such, the operating results have been included in the Company's
financial statements since the acquisition date.
NOTE 3 - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market and
consisted of the following (in thousands of dollars):
MARCH 29, DECEMBER 29,
1996 1995
--------- ------------
(Unaudited)
Raw materials $16,735 $18,134
Work in process 5,171 4,519
Finished goods 12,452 12,949
------- -------
$34,358 $35,602
======= =======
JASON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Three months ended March 29, 1996 compared to the three months ended March 31,
1995:
Sales for the three months ended March 29, 1996 decreased by 4% from
$108,666,000 for the three months ended March 31, 1995 to $104,631,000. Sales
of power generation products decreased by 9% from $34,977,000 to $31,771,000.
Sales of motor vehicle products decreased by 2% from $39,451,000 to $38,758,000.
Sales of industrial products were $34,102,000 which was about the same as last
year's first quarter sales of $34,238,000.
The lower power generation sales for the first quarter of 1996 compared to last
year was a result of a lower power generation backlog at the beginning of 1996
which was $69 million compared to $74 million a year earlier. Bookings in the
first quarter of $53 million were up 33% compared to $40 million in the first
quarter of 1995. Sales in the first quarter of $32 million compared to $35
million in the first quarter of 1995 leaving a backlog at the end of the first
quarter of 1996 of $90 million compared to $79 million a year ago. With the
significant increase in bookings in the first quarter of 1996 compared to last
year and the higher ending backlog, management believes sales for the remainder
of the year will exceed that of last year.
The lower motor vehicle products sales was a result of the U.S. automobile
industry building 13% fewer vehicles in the first quarter of 1996 than they did
last year. However, sales of the Company's automotive products declined only 9%
due to a greater content per vehicle which is a result of improved sales of the
Company's Marabond moldable insulation product. The 17 day strike at General
Motors in March 1996 was a major factor in the reduction in vehicle production
and the Company's sales in the first quarter. The U.S. automotive industry has
announced a production schedule for the second quarter of 1996 that is about the
same as the production level in the second quarter of 1995. Dealer inventories
are down to 64 days compared to 72 days at the end of the first quarter of 1995
to 64 days. Whether or not the industry will build the number of units called
for in the schedule depends on retail vehicle sales during the second quarter.
Industrial products sales in the first quarter of 1996 were about the same as
last year with the Osborn brush and JacksonLea buff and compound businesses up
slightly and the Koller expanded metal, wire form, stamped components and
assembled products operations down slightly. With the improvement in the
economy, it is expected that sales for the industrial products segment for the
second quarter will be up compared to the prior year.
Operating income declined in the first quarter of 1996 from $8,470,000 in the
first quarter of 1995 to $6,734,000.
Operating income for the power generation products segment declined from
$2,516,000 in the first quarter of 1995 to $866,000. The decline in operating
income is the result of lower volume and a less profitable product mix which
included start up costs associated with the Company's new inlet filter product
line.
Operating income for the motor vehicle products segment declined from $4,401,000
in the first quarter of 1995 to $3,885,000 due primarily to lower volume which
was due in large part to the GM strike. This was partially offset by improved
operating income at Milsco which generated higher sales of original equipment
and parts and accessories items for Harley-Davidson as well as higher sales of
lawn and turf care and agricultural equipment.
Operating income for the industrial products segment improved from $2,124,000 in
the first quarter of 1995 to $2,435,000. This increase in operating income was
a result of an improvement in sales volume at Osborn and JacksonLea and lower
material costs at Koller.
Corporate expenses for the first quarter of 1996 were $452,000 compared to
$571,000 last year. This decrease is primarily due to a decrease in management
incentive compensation.
Interest expense declined slightly in the first quarter of 1996 from $2,428,000
in the first quarter of 1995 to $2,382,000 due to slightly lower interest rates.
Other income in the first quarter of 1996 represents royalty income from foreign
licensees of the Company's finishing products plus income from foreign joint
ventures offset by deferred financing cost amortization. Other expense in the
first quarter of 1995 represents deferred financing cost amortization and peso
devaluation losses, partially offset by royalty income.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1996, the Company satisfied the capital requirements
of its operations with internally generated funds. For the foreseeable future,
the Company believes it will generate funds from operations to meet the capital
requirements of its existing operations. As of March 29, 1996, the Company had
available unused borrowing capacity of $54,262,000 under its bank revolving loan
facility.
During the first quarter of 1995, the Company also satisfied the capital
requirements of its operations with internally generated funds. In the first
quarter of 1995, the purchase price for Milsco amounting to $45.5 million was
financed by an extension of the Company's bank revolving loan facility and $17
million of proceeds from the issuance of convertible notes to several of the
former shareholders of Milsco. In May 1995, the Company completed a $20 million
private debt placement with an insurance company, the proceeds of which were
used to pay down the revolving loan. The revolving loan commitment was then
reduced from $115 million to $95 million.
During the first quarter of 1996, working capital increased by $7,633,000 from
$47,670,000 at December 29, 1995 to $55,303,000 at March 29, 1996. This
increase was a result of strong bookings in the first quarter, particularly in
power generation, requiring an increase in working capital for new jobs in
progress. During the first quarter of 1996, the Company generated $1,134,000 in
cash from operations. The Company anticipates generating additional cash flow
from operations during the balance of the year.
In the first quarter of 1996 and 1995, the Company made capital expenditures of
$6,453,000 and $3,612,000, respectively. The major first quarter 1996
expenditures were in the motor vehicle segment for equipment to support new
Marabond programs at Janesville Products and for plant and office additions to
support an increased level of business at Milsco. The major first quarter 1995
expenditures were in the motor vehicle products segment for equipment at
Janesville Products to support new molded Marabond programs and to improve
efficiency and at Koller, Milsco and Sackner to support new programs at those
locations. Capital expenditures for 1996 are anticipated to approximate $22.0
million. No significant commitments are outstanding as of March 29, 1996.
SEASONALITY
U.S. auto makers traditionally shut down for the annual model changeover in the
third quarter. In addition, adjustments to production schedules are made
throughout the year based on retail auto sales and the level of dealer
inventories. These seasonal patterns affect the Company's motor vehicle
products operations most significantly but also have somewhat of an impact on
industrial products due to the effect on automotive suppliers which use the
Company's precision components and finishing products.
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:
On April 24, 1996, the Board of Directors appointed Mark Train
President of the Company. Vincent Martin remains Chairman and
Chief Executive Officer.
ITEM 6 (a) Exhibits - None
(b) Reports on Form 8-K - 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.
JASON INCORPORATED (Registrant)
by ________________________
Mark Train
President
(Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Jason
Incorporated's consolidated balance sheet at March 29, 1996 and consolidated
statements of income for the three month period ended March 29, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000813471
<NAME> JASON INCORPORATED
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1996
<PERIOD-START> DEC-30-1995
<PERIOD-END> MAR-29-1996
<CASH> 2232
<SECURITIES> 0
<RECEIVABLES> 57252
<ALLOWANCES> 0<F1>
<INVENTORY> 34358
<CURRENT-ASSETS> 119225
<PP&E> 130484
<DEPRECIATION> 58293
<TOTAL-ASSETS> 286134
<CURRENT-LIABILITIES> 63922
<BONDS> 115832<F2>
0
0
<COMMON> 34619
<OTHER-SE> 54204
<TOTAL-LIABILITY-AND-EQUITY> 286134
<SALES> 104631
<TOTAL-REVENUES> 104631
<CGS> 83173
<TOTAL-COSTS> 83173
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2382
<INCOME-PRETAX> 4422
<INCOME-TAX> 1813
<INCOME-CONTINUING> 2609
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2609
<EPS-PRIMARY> .13
<EPS-DILUTED> 0<F3>
<FN>
<F1>Company presents receivables on a net basis in compliance with Article 10
Regulation S-X.
<F2>Includes all non-current portion of debt obligations.
<F3>Not Reported.
</FN>
</TABLE>
