SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1997 Commission File Number 33-24317
JORDAN INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
Illinois 36-3598114
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ArborLake Centre, Suite 550 60015
1751 Lake Cook Road, (Zip Code)
Deerfield, Illinois
(Address of Principal Executive Offices)
Registrant's telephone number, including Area Code:
(847) 945-5591
Former name, former address and former fiscal year, if changed since last
report: Not applicable.
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 twelve (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 ninety (90) days.
Yes X No
The aggregate market value of voting stock held by non-affiliates of the
Registrant is not determinable as such shares were privately placed and there is
currently no public market for such shares.
The number of shares outstanding of Registrant's Common Stock as of
August 14, 1997: 98,501.0004
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PAGE 2
FORM 10-Q QUARTERLY REPORT
JORDAN INDUSTRIES, INC.
INDEX
Part I. Page No.
Financial Information
Condensed Consolidated Balance Sheets
at June 30, 1997, and December 31, 1996 3
Condensed Consolidated Statements of Operations
for the Second Quarter and Six Months Ended
June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1997
and 1996 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
Part II.
Other Information 22
Signatures 23
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
June 30, December 31,
1997 1996
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 30,887 $ 32,797
Accounts receivable - net 107,122 89,301
Inventories 111,372 108,132
Prepaid expenses and other current
assets 13,876 9,703
Total Current Assets 263,257 239,933
Property, plant and equipment - net 100,079 111,040
Investments in and advances to affiliates 13,924 14,222
Goodwill - net 306,106 266,436
Other assets 48,566 50,254
Total Assets $731,932 $681,885
LIABILITIES AND NET CAPITAL DEFICIENCY
Current Liabilities:
Notes payable - line of credit $ - $ 856
Accounts payable 49,905 47,036
Accrued liabilities 51,179 57,910
Advance deposits 8,166 1,900
Current portion of long-term debt 8,530 8,752
Total Current Liabilities 117,780 116,454
Long-term debt 744,465 687,936
Other non-current liabilities 9,732 3,572
Deferred income taxes 491 1,444
Minority interest 4,013 885
Preferred stock 1,515 1,875
Net Capital Deficiency:
Common stock 1 1
Additional paid-in capital 2,117 2,557
Note receivable from shareholders (1,230) (1,460)
Cumulative translation (179) 1,404
Accumulated deficit (146,773) (132,783)
Total Net Capital Deficiency (146,064) (130,281)
Total Liabilities and Net Capital
Deficiency $731,932 $681,885
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
SIX MONTHS ENDED
SECOND QUARTER June 30,
1997 1996 1997 1996
Net sales $173,346 $146,478 $324,889 $267,220
Cost of sales, excluding
depreciation 107,367 89,950 203,059 164,053
Selling, general and administra-
tive expenses, excluding deprecia-
tion 34,707 34,730 67,802 64,743
Depreciation 4,651 4,596 9,027 8,660
Amortization of goodwill and other
intangibles 3,654 2,748 6,906 5,156
Stock appreciation rights expense 15,418 150 15,418 300
Management fees and other 348 1,230 1,500 2,103
Operating income 7,201 13,074 21,177 22,205
Other (income) and expenses:
Interest expense 19,199 14,985 37,775 28,975
Interest income (894) (660) (1,606) (1,344)
Gain on sale of subsidiary and
other (18,275) - (18,012) -
Total other expenses 30 14,325 18,157 27,631
Income (loss) before income taxes,
minority interest, equity in
investee, and extraordinary items 7,171 (1,251) 3,020 (5,426)
Provision for income taxes 923 2,359 1,200 1,244
Income (loss) before minority
interest, equity in investee,
and extraordinary items 6,248 (3,610) 1,820 (6,670)
Minority interest 376 (310) 764 (1,086)
Equity in investee 3,383 - 4,168 -
Income (Loss) before extraordinary
items 2,489 (3,300) (3,112) (5,584)
Extraordinary items 9,044 - 9,363 -
Net loss $ (6,555) $(3,300)$(12,475)$ (5,584)
See accompanying notes to condensed consolidated financial statements.
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PAGE 5
JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
SIX MONTHS ENDED
June 30,
1997 1996
Cash flows from operating activities:
Net loss $(12,475) $(5,584)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 15,813 13,816
Provision for (benefit from) deferred
income taxes 163 (1,143)
Amortization of deferred financing fees 1,864 1,525
Minority interest 764 (1,086)
Non-cash interest 6,776 5,822
Equity in investee 4,168 -
Extraordinary item 9,363 -
Gain on sale of subsidiary (18,508) -
Changes in operating assets and
liabilities net of effects from acquisitions:
Increase in current assets (13,328) (3,723)
Decrease in current liabilities (3,199) (2,796)
Increase in non-current assets (6,000) (5,111)
Increase in non-current liabilities 3,630 429
Net cash (used in) provided by operating
activities (10,969) 2,149
Cash flows from investing activities:
Net proceeds from sale of a subsidiary 35,218 -
Capital expenditures (5,758) (9,612)
Advances to affiliates (1,335) (5,264)
Acquisition of subsidiaries (70,913) (82,450)
Cash acquired in purchase of subsidiaries 456 1,390
Acquisitions of minority interests and other - (144)
Other (446) 2
Net cash used in investing activities (42,778) (96,078)
Cash flows from financing activities:
Proceeds from Motors and Gears, Inc. common
stock issuance 1,100 -
Repayment of long-term debt (5,263) (5,958)
Proceeds from revolving credit facilities, net 56,000 38,079
Proceeds from debt issuance - MK Holdings, Inc. - 20,000
Proceeds from debt issuance - SPL Holdings, Inc. - 13,000
Net cash provided by financing activities 51,837 65,121
Net decrease in cash and cash equivalents (1,910) (28,808)
Cash and cash equivalents at beginning of period 32,797 41,253
Cash and cash equivalents at end of period $ 30,887 $12,445
Cash paid during the period for:
Interest $ 28,262 $20,984
Income taxes, net $ 2,642 $ 1,471
Non-cash investing activities:
Capital leases $ 1,257 $ 344
Seller notes issued in acquisitions $ 1,500 $ 3,000
See accompanying notes to condensed consolidated financial statements.
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PAGE 6
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
A. Organization
The unaudited condensed consolidated financial statements, which reflect all
adjustments that management believes necessary to present fairly the results
of interim operations, should be read in conjunction with the Notes to the
Consolidated Financial Statements (including the Summary of Significant
Accounting Policies) included in the Company's audited consolidated financial
statements for the year ended December 31, 1996, which are included in the
Company's Annual Report filed on Form 10-K for such year (the "1996 10-K").
Results of operations for the interim periods are not necessarily indicative
of annual results of operations.
B. Inventories
Inventories are summarized as follows:
June 30, December 31,
1997 1996
Raw materials $ 37,834 $26,682
Work in process 14,234 12,274
Finished goods 59,304 69,176
$111,372 $108,132
C. Notes receivable from affiliates and investment in affiliate
On January 21, 1997, Welcome Home filed for Chapter 11 bankruptcy protection
(see Note F). As a result of the Chapter 11 filing, the Company no longer
consolidates Welcome Home in its financial statements as of January 21, 1997,
the date of the filing. Receivables from Welcome Home owed to the Company
or its subsidiaries were $4,720 as of June 30, 1997.
On July 2, 1997, the Company received from Fannie May Holdings, Inc. ("Fannie
May"), $14,348 in exchange for the following investments held by the Company:
$5,500 aggregate principal amount of Subordinated Notes and $7,000 aggregate
principal amount of participation in outstanding term loans of Archibald
Candy Corporation, a wholly-owned subsidiary of Fannie May. The amount
received also included $1,573 of accrued interest and premium on the above
Subordinated Notes and term loans. On July 7, 1997, the Company received
$3,013 as a return of the $3,000 certificate of deposit held by the Company
as security for an obligation to purchase additional participation in the
above-mentioned term loans, plus $13 of accrued interest thereon.
On May 15, 1995, the Company purchased 75.6133 shares of Class A PIK
Preferred Stock of Fannie May at face value for $1,571. The Company also
acquired 151.28 shares of common stock of Fannie May (representing 15.1% of
the outstanding common stock of Fannie May on a fully diluted basis) for
$151. These shares of Fannie May Common Stock were purchased from the John
W. Jordan II Revocable Trust.
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PAGE 7
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
Fannie May's Chief Executive Officer is Mr. Quinn, and its stockholders
include Mr. Jordan, Mr. Quinn, Mr. Zalaznick, and Mr. Boucher, who are
directors and stockholders of the Company, as well as other partners,
principals and associates of The Jordan Company, who are also stockholders
of the Company. Fannie May, which is also known as "Fannie May Candies", is
a manufacturer and marketer of kitchen-fresh, high-end boxed chocolates
through its 375 company-owned retail stores and through specialty sales
channels.
D. Accounting for Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes, and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets
as of June 30, 1997 and December 31, 1996 are as follows:
June 30, Dec. 31,
1997 1996
Deferred tax liabilities
Tax over book depreciation $ 7,687 $ 7,346
Basis in subsidiary 798 798
LIFO reserve 147 147
Intercompany tax gain 2,500 2,500
Other 691 311
Total deferred tax liabilities 11,823 11,102
Deferred tax assets
NOL carryforwards 19,100 28,900
Stock Appreciation Rights Agreements 3,762 3,162
Accrued interest on discount debentures 13,362 12,262
Pension obligation 162 174
Vacation accrual 417 591
Uniform capitalization of inventory 586 472
Allowance for doubtful accounts 1,219 1,020
Capital lease obligations 296 343
Tax asset basis over book basis at
subsidiary 2,500 2,500
Other 167 248
Total deferred tax assets 41,571 49,672
Valuation allowance for deferred
tax assets (30,239) (40,014)
Net deferred tax assets 11,332 9,658
Net deferred tax assets $ 491 $ 1,444
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PAGE 8
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
E. Acquisition of subsidiaries
On January 8, 1997, Beemak, a subsidiary of the Company, purchased the net
assets of Arnon-Caine, Inc. ("ACI"), a designer and distributor of modular
storage systems primarily for sale to wholesale home centers and hardware
stores. ACI subcontracts its production to third party injection molders
located primarily in Southern California, which use materials and machines
similar to those used by Beemak. By early 1998, Beemak will serve as ACI's
primary supplier. The Company believes that the integration of ACI into
Beemak's operations will provide for future manufacturing cost savings as
well as synergistic marketing efforts.
The purchase price of $4,600, including costs incurred directly related to
the acquisition, was allocated to working capital of $300, property, plant
and equipment of $82, and excess purchase price over net identifiable assets
of $4,218. The acquisition was financed with cash.
On May 30, 1997, JTP Industries, a newly formed wholly-owned subsidiary of
the Company, purchased the assets of LoDan West, Inc. ("LoDan"), which
designs, engineers and manufactures high-quality custom electronic cable
assemblies, sub-assemblies and electro-mechanical assemblies for original
equipment manufacturers in the data and telecommunications markets of the
electronics industry.
The purchase price of $17,000, including estimated costs incurred directly
related to the transaction, was allocated to working capital of $5,066,
property, plant and equipment of $783, non-competition agreement of $250,
noncurrent assets of $41, and resulted in an excess purchase price over net
identifiable assets of $10,860. The acquisition was financed with cash.
On June 12, 1997, Motors and Gears Industries, Inc., through its newly formed
wholly-owned subsidiary, FIR Group Holdings, Inc. and its wholly-owned
subsidiaries, Motors and Gears Amsterdam, B.V. and FIR Group Holdings Italia,
SrL, purchased all of the common stock of the FIR Group Companies, consisting
of CIME S.p.A., SELIN S.p.A., and FIR S.p.A. The FIR Group Companies are
manufacturers of electric motors and pumps for niche applications such as
pumps for catering dishwashers, motors for industrial sewing machines, and
motors for industrial fans and ventilators.
The purchase price of $51.3 million, including costs directly related to the
transaction, was preliminarily allocated to working capital of $16.9 million,
property, plant, and equipment of $4.9 million, other long term liabilities
of $3.8 million, and resulted in an excess of purchase price over net
identifiable assets of $33.3 million. The cash was provided from borrowings
under the Motors and Gears Industries, Inc. Credit Agreement established on
November 7, 1996 among Motors and Gears Industries, Inc., various banks, and
Bankers Trust Company, as agent.
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PAGE 9
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
F. Welcome Home Chapter 11 Filing
On January 21, 1997, Welcome Home filed a voluntary petition for relief under
Chapter 11 ("Chapter 11") of title 11 of the United States code in the United
States Bankruptcy Court for the Southern District of New York ("Bankruptcy
Court"). In Chapter 11, Welcome Home will continue to manage its affairs and
operate its business as a debtor-in-possession while it develops a
reorganization plan that will restructure its operations and allow it to
emerge from Chapter 11. As a debtor-in-possession in Chapter 11, Welcome
Home may not engage in transactions outside of the ordinary course of
business without approval of the Bankruptcy Court.
Subsequent to the filing, Welcome Home reached an agreement with Fleet
Capital Corporation to provide secured debtor-in-possession financing in the
form of a credit facility. The credit facility provides for borrowings
dependent upon Welcome Home's level of inventory with maximum borrowings of
$12,750. The agreement grants a security interest in substantially all
assets. Advances under the facility bear interest at the prime rate plus
1.5%. The agreement will terminate on March 31, 1998.
As a result of Welcome Home's Chapter 11 filing, the Company no longer has
the ability to control the operations and financial affairs of Welcome Home.
Accordingly, the Company no longer consolidates Welcome Home in its financial
statements as of January 21, 1997, the date of the filing. For the period
ended January 21, 1997, the Company recorded a net loss of $1,195 related to
Welcome Home.
Cape Craftsmen, a consolidated subsidiary of the Company, would also be
adversely affected by a liquidation of Welcome Home. Currently 60.6% of
Cape's sales are to Welcome Home. Net assets included in the consolidated
financial statements are $5,408 which includes a $1,119 receivable from
Welcome Home.
G. Debenture Swap
On April 2, 1997, the Company privately placed approximately $214,036
aggregate principal amount of 11.75% Series A Senior Subordinated Discount
Debentures due 2009 (the "Series A Debentures"), at 56.52% of such principal
amount. The Series A Debentures are eligible for resale under Rule 144A of
the Securities Act of 1933, as amended (the "Securities Act"). The Company
placed the Series A Debentures to refinance substantially all of the $133,075
aggregate principal amount of its 11.75% Senior Subordinated Discount
Debentures due 2005. In addition, the Company will file a registration
statement under the Securities Act in connection with an offer to exchange
11.75% Series B Senior Subordinated Discount Debentures due 2009 for its
Series A Debentures. In conjunction with this transaction, the Company
recorded an extraordinary loss of $8,898 relating to the write-off of
deferred financing fees and the premium assessed on the new issue.
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PAGE 10
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
H. Payment of Stock Appreciation Rights
In March 1992, a subsidiary of the Company entered into an agreement with its
minority shareholders whereby the shareholders would exchange their common
stock, which amounted to a 24% interest, for 7% cumulative preferred stock,
covenants not to compete, and stock appreciation rights agreements. The
total consideration paid for this minority interest was $12,381.
Additionally, the former shareholders were granted stock appreciation rights
exercisable in full or in part on the occurrence of the disposition by merger
or otherwise, in one or more transactions of (a) more than 50% of the voting
power and/or value of the capital stock of the subsidiary or (b) all or
substantially all the business or assets of the subsidiary. The value of the
stock appreciation rights is based on the ultimate sales price of the stock
or assets of the subsidiary, and is essentially 15% of the ultimate sales
price of the stock or assets sold, less $15,625.
On April 10, 1997, the Company paid the former shareholders pursuant to an
agreement ("The Redemption Agreement"), as if the subsidiary was sold for
$110,000. The former shareholders received $9,438 in cash and a deferred
payment of $5,980 over five years including interest. The Redemption
Agreement also requires that the $1,875 of remaining preferred stock be
redeemed one year from the date of the agreement.
If at any time prior to April 30, 1998, the Company has received offering
proceeds from the registration of any shares of common stock of the
subsidiary (the "IPO"), the Company will pay the former shareholders an
additional $2,250.
If the Company has not received proceeds from the IPO, the former
shareholders will receive a special bonus of 25% of the subsidiary's 1997
gross profit (as defined) in excess of $30,000.
As consideration for the signing of the Redemption Agreement, the former
shareholders will receive total non-compete payments of $352 payable over the
next thirteen months.
I. Sale of Subsidiaries
On May 15, 1997, the Company sold its subsidiary, Hudson Lock, Inc.
("Hudson"), for approximately $39.1 million. Hudson is a leading designer,
manufacturer, and marketer of highly engineered medium-security custom and
specialty locks for original equipment manufacturer customers. A gain of
$18,508 is recorded in the income statement at June 30, 1997.
On July 31, 1997, the Company sold its subsidiary, Paw Print Mailing List
Services, Inc. ("Paw Print"), for approximately $12.5 million. Paw Print is
a value-added provider of direct mail services.
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PAGE 11
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
J. Financial Recapitalization and Business Repositioning Plan
In November 1996, Motors and Gears Holdings, Inc. ("M&G"), through its
subsidiaries, acquired the business and assets of the Company's restricted
subsidiaries Imperial Electric Company, Scott Motors Company and Gear
Research Company, for $75.7 million in cash, assumption of approximately $5.0
million of liabilities, and an earnout based upon 50% of cumulative EBITDA
of the purchased businesses of Imperial, Scott and Gear over $50 million
during the five years following the purchase. As a result of this purchase,
the Company recognized $62.7 million of deferred gain at the time of purchase
for Federal income tax purposes, as adjusted for the value of the earnout,
once finally determined. This deferred gain will be reported as the M&G
group reports depreciation and amortization over approximately 15 years on
most of the step-up in basis of those purchased assets. As long as M&G
remains in the Company's affiliated group, the gain reported and the
depreciation on the step-up in basis should exactly offset each other. Upon
any future deconsolidation of M&G from the company's affiliated group for
Federal income tax purposes, any unreported gain would be fully reported and
subject to tax.
On May 16, 1997, the Company participated in a recapitalization of its
majority-owned subsidiary, M&G. In connection with the Recapitalization, M&G
issued 16,250 shares of M&G common stock (representing approximately 82.5%
of the outstanding shares of M&G common stock) to certain stockholders and
affiliates of the Company and M&G management for a total consideration of
$2.2 million (of which $1.1 million was paid in cash and $1.1 million was
paid through the delivery of 8% zero coupon notes due 2007). As a result of
the Recapitalization, certain of the Company's affiliates and M&G management
will own substantially all of the M&G common stock and the Company's
investment in M&G will be represented solely by the Cumulative Preferred
Stock of M&G (the "Junior Preferred Stock"), but not by any common stock of
M&G, which will be held by stockholders and affiliates of the Company and
management of M&G. The Company has obtained an independent opinion as to the
fairness, from a financial point of view, of the Recapitalization to the
Company and its public bondholders.
So long as the Company holds the M&G Junior Preferred Stock, the Company
expects to continue to consolidate M&G and its subsidiaries for financial
reporting purposes as subsidiaries of the Company. However, the Junior
Preferred Stock discontinues its participation in M&G's earnings on the fifth
anniversary of issuance. In addition, this financial consolidation and a
continuing Company investment in M&G will be discontinued upon the redemption
of the Junior Preferred Stock, or at such time as the Junior Preferred Stock
ceases to represent at least a majority of the voting power and a majority
share in the earnings of the relevant company. As long as the Junior
Preferred Stock is outstanding, the Company expects the vote test to be
satisfied. The value test depends on the relative values of the Junior
Preferred Stock and the common shares of M&G. The Junior Preferred Stock is
mandatorily redeemable upon certain events and is redeemable at the option
of M&G, in whole or in part, at any time.
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PAGE 12
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
The Company also expects to include the subsidiaries of M&G in its
consolidated group for Federal Income tax purposes. This consolidation would
be discontinued, however, upon the redemption of the Junior Preferred Stock,
which could result in recognition by the Company of substantial income tax
liabilities arising out of the Recapitalization. If such deconsolidation had
occurred at June 30, 1997, the Company believes that the amount of taxable
income to the Company attributable to M&G would have been approximately $58.0
million (or approximately $23.2 million of tax liabilities, assuming a 40%
combined Federal, state and local income tax rate). The Company currently
expects to offset these tax liabilities arising from deconsolidation by using
net income loss carryforwards (approximately $27.3 million at June 30, 1997),
and to pay any remaining liability with redemption proceeds from the Junior
Preferred Stock. Deconsolidation would also occur with respect to M&G if the
Junior Preferred Stock ceased to represent at least 80% of the voting power
and 80% of the combined stock value of the outstanding Junior Preferred Stock
and common stock of M&G. As long as the Junior Preferred Stock is
outstanding, the Company expects the vote test to be satisfied. The value
test depends on the relative values of the Junior Preferred Stock and common
stock. It is likely that by the fifth anniversary of their issuances, the
Junior Preferred Stock would cease to represent 80% of the relevant total
combined stock value. It is entirely possible, however, that the 80% value
test could fail well prior to the fifth anniversary after issuance. In the
event that deconsolidation occurs without a redemption of the Junior
Preferred Stock, the tax liabilities discussed above would be incurred
without the Company receiving the proceeds of the redemption.
On July 25, 1997, the Company recapitalized its investment in Jordan
Telecommunication Products, Inc. ("JTP") and JTP acquired the Company's
telecommunications and data communications products business from the Company
for total consideration of approximately $294.0 million, consisting of $264.0
million in cash, $10.0 million of assumed indebtedness and preferred stock,
and the issuance to the Company of $20.0 million aggregate liquidation
preference of JTP Junior Preferred Stock. The Company's stockholders and
affiliates and JTP management invested in and acquired the JTP common stock.
The JTP recapitalization transactions were subject to a fairness opinion
issued to the Company and its bondholders.
JTP financed the cash portion of this total consideration through JTP's
private placement of $190 million of JTP Senior Notes due 2007, $85 million
of cash proceeds of JTP Senior Discount Debentures due 2007, and $25 million
of JTP Senior Preferred Stock due 2009.
Pursuant to the plan, the Company privately placed $120 million of the
Company's Senior Notes due 2007, and used the net proceeds from this private
placement, as well as the net proceeds received by the Company in connection
with the JTP recapitalization, to repay approximately $78 million of bank
borrowings by the Company's subsidiaries under their credit agreements and
repurchased $272 million of the Company's 10 % Senior Notes due 2003
pursuant to a tender offer and related consent solicitation. The Company
also conducted a consent solicitation with regard to its 11 % Senior
Subordinated Discount debentures due 2009 in order to conform their covenant
<PAGE>
PAGE 13
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
structure to those in the Company's Senior Notes due 2007. As a result of
the Recapitalization, certain of the Company's affiliates and JTP management
will own substantially all of the JTP common stock. The Company's investment
in JTP will be represented solely by the Junior Preferred Stock, but not by
any common stock of JTP. The Company has obtained an independent opinion as
to the fairness, from a financial point of view, of the Recapitalization to
the Company and its public bondholders.
So long as the Company holds the Junior Preferred Stock, the Company expects
to continue to consolidate JTP and its subsidiaries for financial reporting
purposes as subsidiaries of the Company. However, the Junior Preferred Stock
discontinues its participation in JTP's earnings on the fifth anniversary of
issuance. In addition, this financial consolidation and any continuing
Company investment in JTP will be discontinued upon the redemption of the
Junior Preferred Stock, or at such time as the Junior Preferred Stock ceases
to represent at least a majority of the voting power and a majority share in
the earnings of the relevant company. As long as the Junior Preferred Stock
is outstanding, the Company expects the vote test to be satisfied. The value
test depends on the relative values of the Junior Preferred Stock and the
common shares of JTP. The Junior Preferred Stock is mandatorily redeemable
at the option of JTP, in whole or in part, at any time.
The Company also expects to include the subsidiaries of JTP in its
consolidated group for Federal income tax purposes. This consolidation would
be discontinued, however, upon the redemption of the Junior Preferred Stock,
which could result in recognition by the Company of substantial income tax
liabilities arising out of the Recapitalization. If such deconsolidation had
occurred at June 30, 1997, the Company believes that the amount of taxable
income to the Company attributed to JTP would have been approximately $125.0
million (or approximately $50.0 million of tax liabilities, assuming a 40%
combined Federal, state and local income tax rate). The Company currently
expects to offset these tax liabilities arising from deconsolidation by using
net income loss carryforwards (approximately $27.3 million at June 30, 1997),
and to pay any remaining liability with redemption proceeds from the Junior
Preferred Stock. Deconsolidation would also occur with respect to JTP if the
Junior Preferred Stock ceased to represent at least 80% of the voting power
and 80% of the combined stock value of the outstanding Junior Preferred Stock
and common stock. It is likely that by the fifth anniversary of their
issuances, the Junior Preferred Stock would cease to represent 80% of the
relevant total combined stock value. It is entirely possible, however, that
the 80% value test could fail well prior to the fifth anniversary after
issuance. In the event that deconsolidation occurs without a redemption of
the Junior Preferred Stock, the tax liabilities discussed above would be
incurred without the Company receiving the proceeds of a redemption.
<PAGE>
PAGE 14
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
K. Preferred Stock
In April 1997, the Company entered into an agreement ("The Redemption
Agreement") with certain former shareholders of a subsidiary. Pursuant to
The Redemption Agreement, the Company is required to redeem $1,875 of
remaining preferred stock one year from the date of the agreement. At June
30, 1997, the preferred stock is classified as an accrued liability.
In May 1997, Motors and Gears Holdings, Inc., a majority-owned subsidiary of
the Company, issued $1.5 million of senior, non-voting 8% cumulative
preferred stock to its minority shareholders.
The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the 1996 10-K, the financial statements and the related notes
thereto which are included elsewhere in this quarterly report.
<PAGE>
PAGE 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
Results of Operations
Summarized below are the net sales, operating income and operating margins
(as defined) for each of the Company's business segments for the second
quarter and six months ended June 30, 1997 and 1996. Acquisitions are
included from the date of acquisition. This discussion reviews the foregoing
segment data and certain of the consolidated financial data for the Company.
SIX MONTHS ENDED
SECOND QUARTER June 30,
1997 1996 1997 1996
Net Sales:
Specialty Printing and Labeling $ 31,305 $28,735 $ 54,521 $ 45,679
Motors and Gears 34,999 31,491 66,518 59,578
Telecommunications Products 60,336 27,126 107,802 51,589
Welcome Home (c) - 18,736 2,456 31,219
Consumer and Industrial Products 46,706 40,390 93,592 79,155
Total $173,346 $146,478 $324,889 $267,220
Operating Income (a):
Specialty Printing and Labeling $ 3,433 $ 2,799 $ 3,810 $ 2,048
Motors and Gears 8,163 7,035 15,256 13,811
Telecommunications Products (6,364) 4,888 86 9,947
Welcome Home (c) - (1,884) (1,107) (4,914)
Consumer and Industrial Products 6,971 5,134 12,913 10,422
Total $12,203 $17,972 $30,958 $ 31,314
Operating Margins (b):
Specialty Printing and Labeling 11.0% 9.7% 7.0% 4.5%
Motors and Gears 23.3 22.3 22.9 23.2
Telecommunications Products (10.5) 18.0 - 19.3
Welcome Home (c) - (10.1) (45.1) (15.7)
Consumer and Industrial Products 14.9 12.7 13.8 13.2
Consolidated (a) 7.0 12.3 9.5 11.7
(a) Before corporate overhead of $5,002 and $4,898 for the second quarter
ended June 30, 1997 and 1996, respectively and $9,781 and $9,109 for
the six months ended June 30, 1997 and 1996, respectively.
(b) Operating margin is operating income divided by net sales.
(c) For the period from January 1, 1997 to January 21, 1997, the date of
the Chapter 11 filing. See Footnote F.
<PAGE>
PAGE 16
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Specialty Printing and Labeling. As of June 30, 1997, the Specialty Printing
and Labeling group consisted of SPAI, Valmark, Pamco, and Seaboard.
For the second quarter and first six months of 1997, net sales increased $2.6
million or 8.9% and $8.8 million or 19.4%, respectively, over the same
periods last year. The second quarter increase is due to the acquisition of
Seaboard (May 31, 1996), $1.5 million, increased sales of screen print,
rollstock, and membrane switches at Valmark, $.1 million each, respectively,
increased label sales at Pamco, $.2 million, and higher sales of ad specialty
products at SPAI, $.8 million. Partially offsetting these increases were
lower sales of calendars and school annuals at SPAI, $.3 million. The
increase in net sales for the first six months of 1997 is due to the
acquisition of Seaboard, $8.3 million, higher sales of screen print, $.4
million, rollstock, $.4 million, and membrane switches, $.3 million, higher
label sales at Pamco, $.1 million, and increased sales of ad specialty
products at SPAI, $.7 million. Partially offsetting these six month
increases were lower sales of shrouds to Apple at Valmark, $.8 million, and
decreased sales of calendars and school annuals at SPAI, $.5 million. The
sales gains for both periods at Valmark reflect management's success in
expanding the company's customer base, while the gains at SPAI reflect growth
in the corporate programs segment of the ad specialty business.
For the second quarter and first six months of 1997, operating income
increased $.6 million or 22.7% and $1.8 million or 86.0%, respectively, over
the same periods last year. The second quarter increase is due to the
acquisition of Seaboard, $.3 million, and higher operating income at SPAI,
$.4 million. Partially offsetting these increases was decreased operating
income at Pamco, $.3 million. The six month increase in operating income is
due to the acquisition of Seaboard, $1.5 million, and higher operating income
at SPAI, $.6 million. Partially offsetting these increases was lower
operating income at Pamco, $.5 million. For both periods, the improved
operating income at SPAI is attributed to higher sales and lower operating
costs, primarily medical insurance and commissions. The decreased operating
income at Pamco is due to an increase in plant overhead stemming from the
Company's facility expansion in December 1996.
For the second quarter and first six months of 1997, the operating margin
increased to 11.0% and 7.0%, respectively, from 9.7% and 4.5% for the same
periods last year, respectively. The improvement is due to the acquisition
of Seaboard, which contributes a significant portion of the group's operating
income and operates at an inherently higher margin than the other companies
in the group.
Motors and Gears. As of June 30, 1997, the Motors and Gears group consisted
of Imperial, Scott, Gear, Merkle-Korff, and FIR. Effective January 1997,
Colman Motor Products became a fully integrated division of Merkle-Korff.
For the second quarter and first half of 1997, net sales increased $3.5
million or 11.1% and $6.9 million or 11.7%, respectively, as compared with
the same periods last year. Net sales of sub-fractional motors for the
second quarter and first half of 1997 increased 20% and 28%, respectively.
The strong growth in sub-fractional motors is primarily attributed to the
<PAGE>
PAGE 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
acquisition of Colman Motor Products on March 8, 1996, as well as continued
strength in the vending and appliance markets. Gears and gear box sales for
the second quarter and first half increased 21% and 17%, respectively,
primarily as a result of strong sales of planetary gears in the floor care
market. These increases were partially offset by reduced sales in
fractional/integral motors, 10% and 20% for the second quarter and first
half, respectively. These decreases reflect the stronger than normal sales
in the first and second quarters of 1996, principally due to a substantial
reduction in the backlog of orders for floor care motors that existed at the
end of 1995.
Operating income increased $1.1 million or 16.0% and $1.4 million or 10.5%
for the second quarter and first half, respectively, as compared with the
same periods last year. The increase in operating income is primarily due
to increased sales for the second quarter and first half over the same
periods in 1996.
Operating margins increased from 22.3% to 23.3% for the second quarter 1997,
while margins decreased slightly for the first six months of 1997, from 23.2%
to 22.9%.
Telecommunication Products. As of June 30, 1997, the Telecommunications
Products group consisted of Dura-Line, AIM, Cambridge, Johnson, Diversified,
Viewsonics, Vitelec, Bond, Northern, and LoDan.
For the second quarter and first six months of 1997, net sales increased
$33.2 million or 122.4% and $56.2 million or 109.0%, respectively, over the
same periods last year. The second quarter sales increase is due to the
acquisitions of Viewsonics, Vitelec, Bond, Northern, and LoDan, all of which
were acquired after the second quarter of 1996, and Diversified which was
acquired near the end of June 1996. Combined, these acquisitions accounted
for approximately $22.8 million or 68.7% of the increase in sales. The
remainder of the sales increase is due to higher domestic and international
sales of Dura-Line's Innerduct products, $4.9 million and $6.2 million,
respectively. For the six months ended June 30, 1997, acquisitions accounted
for $43.2 million or 76.9% of the increase in sales. The remainder of the
sales increase is due to higher domestic and international sales of Dura-Line's
Innerduct products, $5.4 million and $7.9 million, respectively.
For the second quarter and first six months of 1997, operating income
decreased $11.3 million or 230.0% and $9.9 million or 99.1%, respectively,
over the same periods last year. This decrease was primarily due to an
increase in SAR expense of $15.3 million and $15.1 million for the second
quarter and first six months of 1997, respectively. The increase in SAR
expense is due to a $15.4 million charge in April 1997 relating to the
company's acquisition of Dura-Line in 1988 (see Footnote H). Excluding the
increase in SAR expense, operating income would have increased $4.0 million
or 82.8% and $5.2 million or 52.7% for the second quarter and first six
months of 1997, respectively. For the quarter, the increase in operating
income (excluding SAR expense) was primarily due to the acquisitions, which
added $3.0 million, and increased operating income at Dura-Line of $1.5
million, both of which were partially offset by decreases at AIM and Johnson
of $.5 million and $.1 million, respectively. For the six months ended June
<PAGE>
PAGE 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
30, 1997, the increase in operating income (excluding SAR expense) was
primarily due to the acquisitions, which contributed $5.8 million. Partially
offsetting the increase were decreases at AIM and Johnson of $.6 million and
$.1 million, respectively. Excluding the SAR expense, operating margins
would have decreased from 18.6% to 14.8% and from 19.9% to 14.1% for the
second quarter and first six months of 1997, respectively. These declines
are due to international expansion costs at Dura-Line, primarily under-
absorbed overhead related to the start-ups of China and Mexico and
international market development costs for new facilities in China, Mexico,
Malaysia, India and Spain, none of which were incurred in 1996. This decline
is also a function of the lower inherent operating margins of the acquired
businesses, which averaged 12.1% and 12.3% for the second quarter and first
six months of 1997.
Welcome Home. For the second quarter and first six months of 1997, net sales
decreased $18.7 million or 100% and $28.8 million or 92.1%, respectively,
over the same periods last year. For the second quarter ended June 30, 1997,
the operating loss decreased $1.9 million or 100%, and for the first six
months of 1997, the operating loss decreased $3.8 million or 77.5%. These
fluctuations are the direct result of Welcome Home's Chapter 11 bankruptcy
filing on January 21, 1997 (See Note E). As a result of the filing, the
Company no longer has the ability to control the operations and financial
affairs of the company. Accordingly, the results of operations of Welcome
Home from January 21, 1997 to June 30, 1997, are not included in the
consolidated results of the Company.
Consumer and Industrial Products. As of June 30, 1997, the Consumer and
Industrial Products group consisted of DACCO, Sate-Lite, Riverside, Parsons,
Beemak, Cape, and Paw Print.
For the second quarter and first six months of 1997, net sales increased $6.3
million or 15.6% and $14.4 million or 18.2%, respectively, over the same
periods last year. The second quarter increase is due to the acquisitions
of Cape and Paw Print in the second half of 1996 and Arnon-Caine (by Beemak)
in January 1997 (See Footnote E). These companies contributed $2.5 million,
$3.9 million, and $.9 million to net sales, respectively, in the second
quarter. Further contributing to the rise in second quarter net sales were
increased sales of aircraft parts at Parsons, $2.3 million, of which $1.5
million is attributed to Boeing. Partially offsetting these increases in
second quarter net sales were decreased sales of rebuilt converters at DACCO,
$.4 million, lower sales at Hudson of $1.4 million due primarily to the sale
of the company on May 15, 1997 (see Footnote I), and lower sales of religious
books and bibles at Riverside, $1.6 million. The increase in net sales for
the first six months of 1997 is driven by the acquisitions of Cape, $3.3
million, Paw Print, $8.2 million, and Arnon-Caine, $1.8 million,
respectively, plus higher sales of aircraft parts at Parsons, $4.3 million,
of which $3.7 million is attributed to Boeing. Partially offsetting the
above six month sales increases were lower sales of rebuilt converters and
other hard parts at DACCO, $1.0 million, decreased sales of truck and auto
emergency warning triangles at Sate-Lite, $.3 million, lower sales of bibles
and religious books at Riverside, $1.3 million, and lower sales at Hudson of
$.6 million due to the sale of the company. The decrease in net sales for
<PAGE>
PAGE 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
the second quarter and first six months at Riverside stems from a decrease
in the lower margin contract distribution business, as management is focusing
on the company's higher margin publishing and distribution lines.
For the second quarter and first six months of 1997, operating income
increased $1.8 million or 35.8% and $2.5 million or 23.9%, respectively, over
the same periods last year. The second quarter increase is due to the
acquisitions of Paw Print and Arnon-Caine, which contributed $.6 million and
$.3 million to operating income, respectively, higher operating income at
Parsons of $1.1 million, and increased operating income at Beemak (excluding
Arnon-Caine), $.4 million. Partially offsetting these increases were lower
operating income at DACCO and Riverside, $.3 million and $.2 million,
respectively, and decreased operating income of $.4 million at Hudson
primarily due to the sale of the company. The increase in operating income
for the first six months of 1997 is driven by the acquisitions of Paw Print
and Arnon-Caine, which contributed $1.1 million and $.6 million to operating
income, respectively, increased operating income at Parsons of $1.7 million,
and increased operating income at Beemak (excluding Arnon-Caine), $.4
million. Further, Hudson added an additional $.1 million to operating income
as a higher gross margin and lower depreciation expense more than compensated
for the decrease in sales due to the divestiture of the company. Partially
offsetting the above six month increases in operating income were lower
operating results at DACCO, $1.1 million, Sate-Lite, $.3 million, and
Riverside, $.2 million. For both the second quarter and first six months,
operating income improved at Parsons due to higher sales and an improved
gross margin and operating income improved at Beemak due to lower inventory
write-downs. The decreases for the second quarter and first six months
experienced at DACCO were due to lower sales, higher material prices, and
higher selling costs, while the decrease for the first six months experienced
by Sate-Lite was due primarily to higher compensation costs. The decrease
in operating income for the second quarter and first six months at Riverside
was due to higher amortization of software installation costs. Riverside
picked up $.1 million in gross profit in the first six months as a result of
management's concentration on higher margin business.
For the second quarter and first six months of 1997, the consolidated
operating margin increased to 14.9% and 13.8%, respectively, from 12.7% and
13.2%, respectively, in the same periods last year. The improved margin in
the second quarter of 1997 is due to a better gross margin, flat depreciation
expense on increased sales, and lower inventory write-offs. The same holds
true for the first six months of 1997, but higher amortization expense at
Riverside and additional amortization expense due to the acquisitions led to
a lesser improvement.
Consolidated Results: (See Condensed Consolidated Statements of Operations.)
For the second quarter and first six months of 1997, consolidated net sales
increased $26.9 million or 18.3% and $57.7 million or 21.6%, respectively,
over the same periods last year. The increase for both periods was primarily
due to the acquisition of Seaboard in the Specialty Printing and Labeling
group, Cape, Paw Print, and Arnon-Caine in the Consumer and Industrial
Products group, Colman Motor Products in the Motors and Gears group, and
<PAGE>
PAGE 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Diversified, Viewsonics, Vitelec, Bond, Northern, and LoDan in the
Telecommunications Products group, increased sales of ad specialty products
at SPAI, increased sales of gears and gear boxes at Gear, increased domestic
and international sales of Innerduct at Dura-Line, and higher sales of
aircraft parts to Boeing at Parsons. Partially offsetting the above sales
increases were lower sales of shrouds to Apple at Valmark, lower calendar and
school annual sales at SPAI, decreased sales of fractional and integral
motors at Imperial and Scott, and lower sales at Welcome Home stemming from
the company's deconsolidation effective January 21, 1997 (see footnote F).
For the second quarter and first six months of 1997, consolidated operating
income decreased $5.9 million or 44.9% and $1.0 million or 4.6%, respectively
over the same periods last year. The decrease in operating income for both
periods is primarily due to SAR expense at Dura-Line, which increased $15.3
million and $15.1 million for the second quarter and first six months of
1997, respectively, over the same periods last year. Excluding the SAR
expense, operating income would have increased $9.4 million or 71.1% and
$14.1 million or 62.6%, respectively. These increases are primarily
attributed to the above-mentioned acquisitions, higher operating income at
SPAI, increased operating income at both Parsons and Beemak, and a lower
operating loss at Welcome due to the company's deconsolidation effective
January 21, 1997. Partially offsetting these increases in operating income
were decreased operating income at Pamco, lower operating income at Aim and
Johnson, and decreased operating income at Dacco. Excluding SAR expense,
consolidated operating margins improved to 13.0% and 11.2% for the second
quarter and first six months of 1997, respectively, from 9.0% and 8.4% for
the same periods last year, respectively.
Interest expense increased $4.2 million or 28.1% and $8.8 million or 30.4%
for the second quarter and first six months of 1997, respectively, over the
same periods last year. The increase is due to higher revolver borrowings
at JII, Inc. and outstanding senior debt at Motors and Gears, Inc., which was
issued in the fourth quarter of 1996. Interest income increased $.2 million
or 35.5% and $.3 million or 19.5% for the second quarter and first six months
of 1997, respectively, over the same periods last year.
Liquidity and Capital Resources. The Company had $145.5 million in working
capital at June 30, 1997, compared to $123.5 million at the end of 1996.
This represents an increase of $22.0 million or 17.8%. The increase is due
to higher net trade receivables, increased inventory, increased
prepaids/other, lower short-term debt and current portion of long-term debt,
and lower accrued liabilities. These increases were partially offset by
higher accounts payable, higher advance deposits, and a lower cash balance.
The Company's net cash provided by operating activities decreased $13.1
million for the six months ended June 30, 1997, versus the same period in
1996. The decrease is due to a higher net loss, $6.9 million, a higher
increase in current assets, $9.6 million, a higher decrease in current
liabilities, $.4 million, a higher increase in non-current assets, $.9
million, and a gain on the sale of a subsidiary exclusive to 1997, $18.5
million. Partially offsetting the above decreases are increased depreciation
and amortization, $2.0 million, increased provision for deferred income
<PAGE>
PAGE 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
taxes, $1.3 million, higher amortization of deferred financing fees, $.3
million, increased minority interest, $1.9 million, increased non-cash
interest, $.9 million, equity in investee and extraordinary items exclusive
to 1997, $4.2 million and $9.2 million, respectively, and a higher increase
in non-current liabilities, $3.2 million.
The Company's net cash used in investing activities decreased $53.3 million
for the six months ended June 30, 1997, versus the same period in 1996. The
decrease is due to net proceeds received from the sale of a subsidiary in
1997, $35.2 million, lower capital expenditures, $3.8 million, lower advances
to affiliates, $3.9 million, lower acquisition of subsidiaries, $11.5
million, and lower acquisitions of minority interests, $.1 million. These
decreases are partially offset by lower cash acquired in the purchase of
subsidiaries, $.9 million, and lower other, $.5 million.
The Company's net cash provided by financing activities decreased $13.3
million for the six months ended June 30, 1997, versus the same period in
1996. The decrease is due to lower proceeds from debt issuance, $33.0
million, which is partially offset by proceeds received from the issuance of
common stock in 1997, $1.1 million, lower repayment of long-term debt, $.7
million, and higher revolver borrowings, $17.9 million.
Management believes that the Company's cash on hand and anticipated funds
from operations will be sufficient to cover its working capital, capital
expenditures, debt service requirements and other fixed charge obligations
for at least the next 12 months. At August 14, 1997, the Company has
available under revolving credit agreements $75 million at JII, Inc., $110
million at JTP Industries, Inc., and $37 million at Motors and Gears
Industries, Inc.
<PAGE>
PAGE 22
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
None
Item 6. Exhibits and Reports on Form 8-K
April 2, 1997 - Jordan Industries, Inc. privately placed
approximately $214 million aggregate principal amount of
11.75% Series A Senior Subordinated Discount Debentures
due 2009 at 56.52% of such principal amount.
May 16, 1997 - Jordan Industries, Inc. participated in a
recapitalization of its majority-owned subsidiary, Motors
and Gears Holdings, Inc.
27. EDGAR Financial Data Schedule
<PAGE>
PAGE 23
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.
JORDAN INDUSTRIES, INC.
August 14, 1997 By: /s/ Thomas C. Spielberger
Thomas C. Spielberger
Vice President, Controller
and Principal Accounting Officer
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<ARTICLE> 5
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 30,887
<SECURITIES> 0
<RECEIVABLES> 109,918
<ALLOWANCES> (2,796)
<INVENTORY> 111,372
<CURRENT-ASSETS> 263,257
<PP&E> 174,688
<DEPRECIATION> (74,609)
<TOTAL-ASSETS> 731,932
<CURRENT-LIABILITIES> 117,780
<BONDS> 399,507
0
1,515
<COMMON> 1
<OTHER-SE> (146,065)
<TOTAL-LIABILITY-AND-EQUITY> 731,932
<SALES> 324,889
<TOTAL-REVENUES> 324,889
<CGS> 203,059
<TOTAL-COSTS> 203,059
<OTHER-EXPENSES> 81,035
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,775
<INCOME-PRETAX> 3,020
<INCOME-TAX> 1,200
<INCOME-CONTINUING> (3,112)
<DISCONTINUED> 0
<EXTRAORDINARY> 9,363
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<NET-INCOME> (12,475)
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