<PAGE> 1
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 28, 1997 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)
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<S><C>
WISCONSIN 39-1756840
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
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 28, 1997 there were outstanding 20,159,573 shares of the Registrant's
$.10 par value common stock.
Page 1 of 10
<PAGE> 2
JASON INCORPORATED
FORM 10-Q
MARCH 28, 1997
INDEX
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<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
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<S> <C>
Statements of Income for the Three Months
Ended March 28, 1997 and March 29, 1996 ......................... 3
Balance Sheets as at March 28, 1997 and
December 27, 1996 ............................................... 4
Statements of Cash Flows for the Three Months
Ended March 28, 1997 and March 29, 1996 ......................... 5
Notes to Financial Statements ...................................... 6
Management's Discussion and Analysis of
Results of Operations and Financial Condition ................... 7-9
PART II. OTHER INFORMATION
Item 1 Legal Proceedings .......................................... 9
Item 2 Changes in Securities ...................................... 9
Item 3 Defaults Upon Senior Securities ............................ 9
Item 4 Submission of Matters to a Vote of
Security Holders ......................................... 9
Item 5 Other Information .......................................... 9
Item 6 (a) Exhibits .............................................. 9
(b) Reports on Form 8-K ................................... 9
Signatures ......................................................... 10
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Page 2 of 10
<PAGE> 3
JASON INCORPORATED
STATEMENTS OF INCOME
(Dollars In Thousands, Except Earnings Per Share)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-------------------------------------
MARCH 28, MARCH 29,
1997 1996
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(UNAUDITED)
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<S> <C> <C>
NET SALES $ 125,227 $ 104,631
COST OF SALES 102,055 83,173
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Gross Profit 23,172 21,458
SELLING AND ADMINISTRATIVE EXPENSES 17,055 14,724
------------- -------------
Operating Income 6,117 6,734
INTEREST EXPENSE 2,706 2,382
OTHER (INCOME) EXPENSE (253) (70)
------------- -------------
Income Before Income Taxes 3,664 4,422
PROVISION FOR INCOME TAXES 1,429 1,813
------------- -------------
NET INCOME $ 2,235 $ 2,609
============= =============
NET INCOME PER SHARE $ 0.11 $ 0.13
============= =============
AVERAGE SHARES OUTSTANDING 20,521,000 20,515,000
============= =============
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Page 3 of 10
<PAGE> 4
JASON INCORPORATED
BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
MARCH 28, DECEMBER 27,
1997 1996
------------ ------------
(Unaudited)
------------
<S> <C> <C>
ASSETS
- ------
Current Assets
Cash And Cash Equivalents $ 1,487 $ 2,978
Accounts Receivable - Net 74,825 61,483
Inventories (Note 2) 36,936 37,839
Costs And Earnings In Excess Of
Billings On Uncompleted Contracts 14,408 21,626
Income Taxes Receivable --- 2,250
Deferred Income Taxes 7,795 7,795
Other Current Assets 5,742 6,029
------------ ------------
Total Current Assets 141,193 140,000
------------ ------------
Property, Plant and Equipment
Cost 157,453 158,057
Less - Accumulated Depreciation (68,814) (66,624)
------------ ------------
Net Property, Plant and Equipment 88,639 91,433
------------ ------------
Intangible Assets - Net 88,955 89,876
Other Assets 1,740 1,817
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$ 320,527 $ 323,126
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Current Portion of Long-Term Debt $ 3,917 $ 3,917
Accounts Payable 31,863 31,397
Accrued Compensation & Employee Benefits 11,071 13,050
Accrued Warranty 4,375 4,434
Accrued Interest 2,367 1,580
Accrued Income Taxes 1,429 ---
Other Current Liabilities 9,840 10,015
Billings In Excess Of Costs And
Earnings On Uncompleted Contracts 13,829 9,570
------------ ------------
Total Current Liabilities 78,691 73,963
Revolving Loan 35,000 42,190
Other Long-Term Debt 91,040 92,277
Deferred Income Taxes 8,808 8,544
Other Long-Term Liabilities 3,878 4,903
Postemployment & Postretirement Health
And Other Benefits 6,033 5,985
------------ ------------
Total Liabilities 223,450 227,862
------------ ------------
Commitments and Contingencies --- ---
SHAREHOLDERS' EQUITY
- --------------------
Common Stock & Additional
Contributed Capital 34,687 34,687
Retained Earnings 62,858 60,623
Foreign Currency Translation Adjustment (468) (46)
------------ ------------
Total Shareholders' Equity 97,077 95,264
------------ ------------
$ 320,527 $ 323,126
============ ============
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Page 4 of 10
<PAGE> 5
JASON INCORPORATED
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
For The Three Months Ended
------------------------------
MARCH 28, MARCH 29,
1997 1996
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(UNAUDITED)
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,235 $ 2,609
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities:
Depreciation 3,733 3,053
Amortization 1,239 1,467
Deferred Income Taxes 264 1,632
Increase (Decrease) In Cash, Excluding Effects Of
Acquisitions, Due To Changes In:
Accounts Receivable (13,519) (2,433)
Inventories 691 1,244
Costs And Earnings In Excess Of Billings
On Uncompleted Contracts 7,218 (2,992)
Other Current Assets 2,519 (168)
Other Assets (241) (2)
Accounts Payable 393 741
Accrued Compensation & Employee Benefits (2,043) (2,762)
Accrued Warranty (59) 177
Accrued Interest 775 971
Accrued Income Taxes 1,429 (985)
Billings In Excess Of Costs And Earnings
On Uncompleted Contracts 4,259 134
Other Liabilities (1,376) (1,552)
----------- -----------
Total Adjustments 5,282 (1,475)
----------- -----------
Net Cash Provided By Operations 7,517 1,134
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition Of Property, Plant And Equipment (2,533) (6,453)
Disposal Of Property, Plant And Equipment - Net 5 19
Other, Net 343 (88)
----------- -----------
Net Cash Used For Investing Activities (2,185) (6,522)
----------- -----------
Net Cash (Used) Provided Before Financing Activities 5,332 (5,388)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Revolving Loan 29,225 34,945
Repayments Of Revolving Loan (36,415) (29,180)
Proceeds From (Repayments Of) Other Long-Term Debt 367 (119)
Issuance Of Common Stock - Net --- 84
----------- -----------
Net Cash Provided By (Used For) Financing Activities (6,823) 5,730
----------- -----------
Net Increase (Decrease) In Cash (1,491) 342
Cash Beginning of Period 2,978 1,890
----------- -----------
Cash End of Period $ 1,487 $ 2,232
=========== ===========
Cash Paid For:
Interest 1,990 1,422
Income Taxes (Refunded) Paid (2,507) 1,198
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Page 5 of 10
<PAGE> 6
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 needled nonwoven 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 28, 1997 and March 29, 1996 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 28, 1997 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 1997 and 1996 amounted to 20,521,000 and 20,515,000, respectively.
Shares issuable under employee stock option plans are included in the earnings
per share computations for all periods presented.
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market and
consisted of the following (in thousands of dollars):
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<CAPTION>
MARCH 28, DECEMBER 27,
1997 1996
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(Unaudited)
<S> <C> <C>
Raw materials $18,970 $18,588
Work in process 5,727 4,898
Finished goods 12,239 14,353
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$36,936 $37,839
============= ==================
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Page 6 of 10
<PAGE> 7
JASON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Three months ended March 28, 1997 compared to the three months ended March 29,
1996:
Sales for the three months ended March 28, 1997 increased by 20% from
$104,631,000 for the three months ended March 29, 1996 to $125,227,000. Sales
of power generation products increased by 27% from $31,771,000 to $40,412,000.
Sales of motor vehicle products increased by 28% from $38,758,000 to
$49,431,000. Sales of industrial products increased by 4% from $34,102,000 to
$35,384,000.
The higher power generation sales for the first quarter of 1997 compared to
last year were a result of a higher power generation backlog at the beginning
of 1997 which was $80 million compared to $69 million a year earlier.
Bookings in the first quarter of $30 million compared to $53 million in the
first quarter of 1996. Sales in the first quarter of $40 million compared to
$32 million in the first quarter of 1996 leaving a backlog at the end of the
first quarter of 1997 of $70 million compared to $90 million a year ago.
The large increase in the Company's motor vehicle products sales was the result
of increases in both the automotive products business and the seating business.
Automotive product sales include $3 million of sales for Suroflex, the
European manufacturer of automotive insulation products acquired in the fourth
quarter of 1996. Excluding Suroflex, automotive product sales increased by
19%. This was the result of the U.S. automobile industry building 7% more
vehicles in the first quarter of 1997 than it did last year as well as greater
content per vehicle which is a result of improved sales of the Company's
Marabond(R) moldable insulation product and the start up of new thermoformed
door insert programs. Also, the 17 day strike at General Motors in March 1996
reduced vehicle production for the first quarter of 1996. The U.S. automotive
industry has announced a production schedule for the second quarter of 1997
that is 3% above the production level in the second quarter of 1996. Dealer
inventories are down to 63 days compared to 64 days at the end of the first
quarter of 1996. 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. The Company's seating products business was up 15% in the first
quarter of 1997 compared to the prior year. This was primarily the result of
an increase in Harley-Davidson original equipment and parts and accessories
business as well as an increase in the Company's content per motorcycle
produced.
The increase in Industrial products sales in the first quarter of 1997 compared
with last year was primarily a result of an increase in the Osborn brush
business. The JacksonLea buff and compound business and the components business
were up slightly.
Operating income declined in the first quarter of 1997 from $6,734,000 in the
first quarter of 1996 to $6,117,000.
Operating income for the power generation products segment declined from
$866,000 in the first quarter of 1996 to $400,000. The decline in operating
income is the result of industry price level pressures and a less profitable
product mix which included new products such as inlet filters and complex
equipment packages.
Page 7 of 10
<PAGE> 8
Operating income for the motor vehicle products segment improved from
$3,885,000 in the first quarter of 1996 to $4,646,000 due primarily to higher
volume in both the automotive and seating businesses, as mentioned above.
Operating income for the industrial products segment declined from $2,435,000
in the first quarter of 1996 to $1,815,000. This decrease in operating income
was a result of higher material costs and a mix of lower margin products.
Corporate expenses for the first quarter of 1997 were $744,000 compared to
$452,000 last year. This increase is primarily due to a increase in management
incentive compensation.
Interest expense increased in the first quarter of 1997 from $2,382,000 in the
first quarter of 1996 to $2,706,000 due to higher average domestic debt levels
plus the Suroflex debt in 1997. The increase in other income in the first
quarter of 1997 compared to last year is primarily a result of lower deferred
financing cost amortization.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128
replaces primary earnings per share ("EPS") with basic EPS, which excludes
dilution, and requires presentation of both basic and diluted EPS on the face
of the income statement. Diluted EPS is computed similarly to the current
fully diluted EPS. SFAS 128 is effective for financial statements issued for
periods ending after December_15, 1997, and requires restatement of all
prior-period EPS data presented. The adoption of this statement is not
expected to materially affect either future or prior-period EPS.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1997, 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 28, 1997, the Company had
available unused borrowing capacity of $43,608,000 under its bank revolving loan
facility. During the first quarter of 1996, the Company also satisfied the
capital requirements of its operations with internally generated funds.
During the first quarter of 1997, working capital decreased by $3,535,000 from
$66,037,000 at December 27, 1996, to $62,502,000 at March 28, 1997. This
decrease was primarily a result of higher customer progress payments on
projects in process in power generation. During the first quarter of 1997, the
Company generated $7,517,000 in cash from operations. The Company anticipates
generating additional cash flow from operations during the balance of the year.
In the first quarter of 1997 and 1996, the Company made capital expenditures of
$2,533,000 and $6,453,000, respectively. The major first quarter 1997
expenditures were in the motor vehicle products segment for equipment at
Milsco, Janesville Products and Sackner to support new programs and to improve
efficiency and in the industrial products segment for equipment at Osborn,
JacksonLea and Koller to support new programs at those locations. The major
first quarter 1996 expenditures were in the motor vehicle segment for equipment
to support new Marabond(R) programs at Janesville Products and for plant and
office additions to support an increased level of business at Milsco.
Capital expenditures for 1997 are anticipated to approximate $15.0 million. No
significant commitments are outstanding as of March 28, 1997.
Page 8 of 10
<PAGE> 9
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.
FORWARD LOOKING STATEMENTS
This report contains certain statements as to the Company's belief, expectation
or anticipation regarding future developments. Such statements constitute
forward-looking statements and are subject to certain risks and uncertainties
that could cause actual future results and developments to differ materially
from those currently projected. Such risks and uncertainties include, but are
not limited to, changes in auto maker production schedules, delays in customer
delivery requirements and general economic conditions in the Company's market
segments.
PART II
OTHER INFORMATION
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ITEM 1 Legal Proceedings - None
ITEM 2 Changes in Securities - None
ITEM 3 Defaults Upon Senior Securities - None
ITEM 4 Submission of Matters to a vote of Security Holders - None
ITEM 5 Other information - None
ITEM 6 (a) Financial Data Schedule
(b) Reports on Form 8-K - None
</TABLE>
Page 9 of 10
<PAGE> 10
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)
Page 10 of 10
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JASON
INCORPORATED CONSOLIDATED BALANCE SHEET AT MARCH 28,1997, AND CONSOLIDATED
INCOME STATEMENT FOR THE THREE MONTH PERIOD ENDED MARCH 28, 1997. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000813471
<NAME> JASON INCORPORATED
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-START> DEC-28-1996
<PERIOD-END> MAR-28-1997
<CASH> 1487
<SECURITIES> 0
<RECEIVABLES> 74825
<ALLOWANCES> 0<F1>
<INVENTORY> 36936
<CURRENT-ASSETS> 141193
<PP&E> 157453
<DEPRECIATION> 68814
<TOTAL-ASSETS> 320527
<CURRENT-LIABILITIES> 78691
<BONDS> 126040<F2>
0
0
<COMMON> 34687
<OTHER-SE> 62390
<TOTAL-LIABILITY-AND-EQUITY> 320527
<SALES> 125227
<TOTAL-REVENUES> 125227
<CGS> 102055
<TOTAL-COSTS> 102055
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2706
<INCOME-PRETAX> 3664
<INCOME-TAX> 1429
<INCOME-CONTINUING> 2235
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2235
<EPS-PRIMARY> .11
<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>
