<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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: 0-20416
EAGLE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3384361
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Two North Riverside Plaza
Chicago, Illinois 60606
(Address of Principal Executive Office)
(312) 906-8700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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, 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 Registrant's classes
of common stock, as of the latest practicable date.
1,860,000 shares of Common Stock as of May 5, 1995
<PAGE>
EAGLE INDUSTRIES, INC.
FORM 10-Q
MARCH 31, 1995
INDEX
PART I. Financial Information:
Item 1.Financial Statements
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Income
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2.Management's Discussion and Analysis
of Financial Condition and Results of Operations
PART II. Other Information:
Item 6.Exhibits and Reports on Form 8-K
<PAGE>
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
MARCH 31, DECEMBER 31,
1995 1994
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 24.2 $ 31.1
Accounts receivable, net 23.8 29.4
Inventories, net 148.5 126.5
Other current assets 60.4 76.6
Net assets of discontinued
operations 9.7 9.8
Total current assets 266.6 273.4
Property, plant and equipment,
net 184.3 184.9
Goodwill 287.8 290.0
Other long-term assets 120.7 119.7
Total assets $ 859.4 $ 868.0
LIABILITIES AND STOCKHOLDER'S
EQUITY
Current liabilities:
Current portion long-term debt $ 25.9 $ 24.7
Accounts payable 80.1 64.8
Accrued liabilities 69.5 84.2
Total current liabilities 175.5 173.7
Senior subordinated notes 160.5 180.4
Other long-term debt 183.8 186.6
Accrued employee benefit
obligations 74.0 73.6
Other long-term liabilities 94.1 90.2
Total liabilities 687.9 704.5
STOCKHOLDER'S EQUITY:
Common stock ---- ----
Additional paid-in capital 188.7 188.7
Retained deficit (14.4) (21.7)
Cumulative translation
adjustments 2.3 1.6
Pension liability adjustment (5.1) (5.1)
Total stockholder's equity 171.5 163.5
Total liabilities and
stockholder's equity $ 859.4 $ 868.0
The accompanying notes are an integral part of
these condensed consolidated financial statements.
<PAGE>
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS)
(UNAUDITED)
QUARTER ENDED
MARCH 31,
1995 1994
(RESTATED)
Net sales $ 251.1 $ 226.2
Cost of sales 198.4 180.5
Gross earnings 52.7 45.7
Selling and administrative expenses 31.5 32.4
Goodwill amortization 2.2 2.2
Operating income 19.0 11.1
Net interest expense 7.7 12.0
Income (loss) from continuing
operations before income taxes 11.3 (0.9)
Provision for income taxes from
continuing operations 4.0 0.1
Income (loss) from continuing
operations 7.3 (1.0)
Discontinued Operations:
Reversal of net loss from
discontinued operations
subsequently retained ---- 2.1
Income before extraordinary item 7.3 1.1
Extraordinary net loss from early
retirement of debt ---- (16.6)
Net income (loss) $ 7.3 $ (15.5)
The accompanying notes are an integral part of
these condensed consolidated financial statements.
<PAGE>
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
QUARTER ENDED
MARCH 31,
1995 1994
(RESTATED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $ 7.3 $ (1.0)
Adjustments to reconcile income (loss)
from continuing operations
to net cash flow used in operations:
Depreciation 6.9 6.5
Amortization 2.9 3.2
Accretion of discount on
subordinated debt 4.7 5.2
Proceeds from sale of accounts
receivable ---- 110.3
Cash effects of changes in other
working capital balances, accrued
employee benefit obligations, and other
long-term liabilities (excluding the
effects of dispositions of businesses) 5.7 (16.9)
Net cash flow from continuing
operations 27.5 107.3
Net cash flow used in discontinued
operations (0.9) (5.3)
Net cash flow from operating
activities 26.6 102.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6.3) (4.3)
Other (1.9) (0.8)
Net cash flow used in investing
activities (8.2) (5.1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of senior subordinated notes (23.6) ----
Repayment of senior subordinated debt ---- (234.1)
Repayment of senior credit facilities ---- (221.1)
Capital contribution ---- 50.0
Proceeds from new credit facility ---- 325.0
Payments on long-term debt (2.7) (0.3)
Net borrowings (payments) on credit
facilities 1.0 (17.4)
Net cash flow used in financing
activities (25.3) (97.9)
CHANGE IN CASH AND CASH EQUIVALENTS (6.9) (1.0)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 31.1 4.8
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 24.2 $ 3.8
The accompanying notes are an integral part of
these condensed consolidated financial statements.
<PAGE>
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements
of Eagle Industries, Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments
considered necessary, consisting only of normal recurring adjustments
are included for fair presentation. Operating results for the quarter
ended March 31, 1995 are not necessarily indicative of results that may
be expected for the full year. Quarterly information for the period
ended March 31, 1994 has been restated for businesses reported as
discontinued operations at December 31, 1994. The unaudited Condensed
Consolidated Financial Statements for the quarters ended March 31, 1995
and 1994 should be read in conjunction with the audited Consolidated
Financial Statements of the Company for the year ended December 31, 1994
contained in its Annual Report on Form 10-K.
(2) INVENTORIES
Inventories consist of the following (in millions):
MARCH 31, DECEMBER 31,
1995 1994
(UNAUDITED)
Raw materials and supplies $ 48.6 $ 46.4
Work in process 30.2 25.2
Finished goods 69.7 54.9
$ 148.5 $ 126.5
(3) LONG-TERM DEBT
Components of other long-term debt are as follows (in millions):
MARCH 31, DECEMBER 31,
1995 1994
(UNAUDITED)
Eagle Industrial Credit
Facility $ 87.0 $ 89.5
Falcon Credit Facility 116.0 112.5
Other 6.7 9.3
209.7 211.3
Less current portion (25.9) (24.7)
Total other long-term debt $ 183.8 $ 186.6
The Company and its subsidiaries complied with all covenants of their
respective debt agreements at March 31, 1995. In connection with an
acquisition by one of the Company's subsidiaries, the term loan portion
of the Falcon Credit Facility was increased by $10 million. In
addition, the expiration date of this credit facility was extended to
March 31, 2001. For a more detailed description of all of the Company's
credit facilities, please refer to the Company's December 31, 1994
report on Form 10-K.
During the three months ended March 31, 1995, the Company retired $34.5
million face value ($24.6 million accreted value) of its senior
subordinated notes.
<PAGE>
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following is a discussion of the results of operations of Eagle
Industries, Inc. (the "Company") and subsidiaries for the quarter ended
March 31, 1995 as compared to the quarter ended March 31, 1994 and
should be read in conjunction with the Condensed Consolidated Financial
Statements included herein and the Company's Annual Report on Form 10-K
for the year ended December 31, 1994 and the audited Consolidated
Financial Statements of the Company for the year ended December 31, 1994
included therein.
The following table shows net sales and operating income by business
group (in millions):
NET SALES OPERATING INCOME
QUARTER ENDED QUARTER ENDED
MARCH 31, MARCH 31,
1995 1994 1995 1994
Building Products Group $ 112.9 $ 100.5 $ 13.8 $ 12.5
Electrical Products Group 69.7 66.6 7.0 0.8
Automotive Products Group 45.2 40.9 2.0 1.6
Corporate Expenses and Other 23.3 18.2 (3.8) (3.8)
Total $ 251.1 $ 226.2 $ 19.0 $ 11.1
NET SALES
Net sales of $251.1 million for the first quarter of 1995 were $24.9
million or 11.0% higher than net sales for the first quarter of 1994.
This increase was primarily due to increased volume in most of the
Company's businesses, partially offset by decreases at Lapp.
Net sales of $112.9 million for the Building Products Group were $12.4
million or 12.3% higher than net sales for the 1994 period. This
increase was primarily due to increased volume as well as improved
pricing.
Net sales of $69.7 million for the Electrical Products Group were $3.1
million or 4.7% higher than net sales for the 1994 period. This
increase was primarily due to increased volume and, to a lesser extent,
improved pricing at Elastimold and Hendrix due to continued improvement
in the economy as well as new products at Elastimold. These increases
were partially offset by decreased volume at Lapp due to the
restructuring of its porcelain operations and the sale of its polymer
product line in 1994.
Net sales of $45.2 million for the Automotive Products Group were $4.3
million or 10.6% higher than net sales for the 1994 period. This
increase was primarily due to increased volume at Denman and the
automotive parts distribution businesses as a result of increased market
penetration and geographic expansion.
Other net sales of $23.3 million were $5.1 million or 27.7% higher than
net sales for the 1994 period. This increase was primarily due to
shipments under a major order from British Airways at Burns.
GROSS EARNINGS
Gross earnings of $52.7 million were $7.0 million or 15.3% higher than
gross earnings for the 1994 period. This increase was primarily due to
the higher volume and, to a lesser extent, improved pricing in the 1995
period. Gross margin increased to 21.0% in 1995 from 20.2% in 1994
primarily due to improved pricing and, to a lesser extent, various cost
reduction programs.
OPERATING INCOME
Operating income of $19.0 million for the first quarter of 1995 was $7.9
million or 71.4% higher than in the 1994 period. This increase was
primarily due to the increased sales volume at most businesses, improved
pricing and various cost reduction programs.
Operating income of $13.8 million for the Building Products Group was
$1.3 million or 10.1% higher than in the 1994 period. This increase was
primarily due to the increased sales volume and improved pricing,
partially offset by increased raw materials costs.
Operating income of $7.0 million for the Electrical Products Group was
$6.2 million higher than in the 1994 period. This increase was
primarily due to the increased sales volume and improved results from
Elastimold's joint ventures. In addition, charges recorded in 1994
associated with the restructuring at Lapp also contributed to the
increase.
Operating income of $2.0 million for the Automotive Products Group was
$0.4 million or 28.3% higher than in the 1994 period. This increase was
primarily due to the increased volume.
INTEREST EXPENSE
Net interest expense was $7.7 million for the quarter ended March 31,
1995 compared to $12.0 million for the comparable 1994 period, a
decrease of $4.3 million or 35.8%. This decrease was primarily due to
the overall decrease in the level of debt coupled with the decrease in
interest rates associated with the refinancing which was completed on
January 31, 1994.
PROVISION FOR INCOME TAXES
The effective tax rate for the first quarter of 1995 and 1994 reflects
non-deductible expenses, primarily goodwill amortization and state and
non-U.S. income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically met its debt service, capital expenditure
requirements and operating needs through a combination of operating cash
flow and external financing. Excluding the effects of the initial
proceeds from the asset securitization program in the 1994 period, cash
flow from continuing operations activities was $27.5 million for the
three months ended March 31, 1995 compared to a use of $3.0 million in
the comparable 1994 period. The increase in 1995 was primarily due to
an increase in income and improved working capital management.
During the three months ended March 31, 1995, the Company retired $34.5
million ($24.6 million accreted value) of its senior subordinated notes
using available cash.
Management believes that cash flow from continuing operations along with
availability under its credit facilities will be sufficient to pay
interest on outstanding debt, meet current maturities, fund capital
expenditures and meet other operating needs. At March 31, 1995, $18.7
million and $19.0 million was available to borrow under the Eagle
Industrial and Falcon credit facilities, respectively.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
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.
EAGLE INDUSTRIES, INC.
By: /s/ SAM A. COTTONE
------------------
Sam A. Cottone
Senior Vice President and
Chief Financial Officer
Dated: May 12, 1995
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1995 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<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> 25
<ALLOWANCES> (1)
<INVENTORY> 148
<CURRENT-ASSETS> 267
<PP&E> 326
<DEPRECIATION> (142)
<TOTAL-ASSETS> 859
<CURRENT-LIABILITIES> 175
<BONDS> 344
<COMMON> 0
0
0
<OTHER-SE> 172
<TOTAL-LIABILITY-AND-EQUITY> 859
<SALES> 251
<TOTAL-REVENUES> 251
<CGS> 198
<TOTAL-COSTS> 198
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 11
<INCOME-TAX> 4
<INCOME-CONTINUING> 7
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
