<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
June 30, 1995 0-17362
---------------------- ---------------------
For the Quarter Ended Commission File Number
BLISS & LAUGHLIN INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-2607304
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
281 EAST 155TH STREET - HARVEY, ILLINOIS 60426
(Address of Principal Executive Offices)
Registrant's Telephone Number (708) 333-1220
NOT APPLICABLE
(Former name, former address and 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 (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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value 3,969,518 Shares
Class Outstanding at July 31, 1995
<PAGE>
BLISS & LAUGHLIN INDUSTRIES INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements -
Consolidated Balance Sheets
as of June 30, 1995(Unaudited)
and September 30, 1994 3
Consolidated Statements of Income
for Three Months and Nine Months Ended
June 30, 1995 and 1994 (Unaudited) 4
Consolidated Statements of Cash Flows
for the Nine Months Ended June 30, 1995
and 1994 (Unaudited) 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II. OTHER INFORMATION:
Items 1-6 Not Applicable
2
<PAGE>
BLISS & LAUGHLIN INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1995 AND SEPTEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS June 30, 1995 September 30, 1994
- ------ ------------- ------------------
(Unaudited)
----------
<S> <C> <C>
CURRENT ASSETS:
Cash & Cash Equivalents $ 1,852 $ 926
Accounts Receivable, Net 22,039 18,466
Inventories ( Note 2) 32,270 27,255
Prepaid Expenses & Other 774 837
---------- ----------
TOTAL CURRENT ASSETS $ 56,935 $ 47,484
---------- ----------
PROPERTY, PLANT & EQUIPMENT, at cost $ 31,296 $ 29,875
Less - Accumulated Depreciation (14,375) (13,032)
---------- ----------
PROPERTY, PLANT & EQUIPMENT, NET $ 16,921 $ 16,843
---------- ----------
OTHER ASSETS $ 3,365 $ 3,412
---------- ----------
$ 77,221 $ 67,739
---------- ----------
---------- ----------
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
CURRENT LIABILITIES:
Revolving Credit (Note 3) $ 18,500 $ 16,550
Accounts Payable 15,312 13,965
Accounts Payable - Stelco 1,890 1,203
Accrued Liabilities 5,017 4,530
Income Taxes Payable 1,134 799
---------- ----------
TOTAL CURRENT LIABILITIES $ 41,853 $ 37,047
NON-CURRENT RETIREMENT BENEFITS LIABILITY $ 1,948 $ 1,959
DEFERRED INCOME TAXES $ 402 $ 411
LONG TERM DEBT (Note 4) $ 3,600 $ 3,600
STOCKHOLDERS EQUITY: (Note 5)
Common Stock, Par Value $.01 Authorized
6,000,000 Shares; Issued & Outstanding
3,969,518 At June 30, 1995 and
September 30, 1994 $ 40 $ 40
Preferred Stock, $1.00 Par Value;
1,500,000 Shares Authorized
No Shares Outstanding in 1995 and 1994
Additional Paid-In Capital, Common Stock 25,229 25,229
Retained Earnings 5,835 971
Cumulative Translation Adjustment (1,686) (1,518)
---------- ----------
TOTAL STOCKHOLDERS EQUITY $ 29,418 $ 24,722
---------- ----------
$ 77,221 $ 67,739
---------- ----------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
3
<PAGE>
BLISS & LAUGHLIN INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30 JUNE 30
1995 1994 1995 1994
---- ---- ---- ----
RESTATED
--------
<S> <C> <C> <C> <C>
NET SALES $43,871 $40,685 $131,912 $113,860
COST OF SALES 37,883 36,767 114,662 103,339
--------- --------- --------- ---------
GROSS PROFIT $ 5,988 $ 3,918 $17,250 $10,521
SELLING EXPENSES 702 726 2,065 1,994
ADMINISTRATIVE EXPENSES 1,888 1,957 7,247 5,891
--------- --------- --------- ---------
OPERATING INCOME $ 3,398 $ 1,235 $ 7,938 $ 2,636
INTEREST EXPENSE, NET (393) (339) (1,184) (896)
OTHER INCOME, NET 0 2 1 2
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES $ 3,005 $ 898 $ 6,755 $ 1,742
INCOME TAX (PROVISION) (1,122) (313) (1,892) (650)
--------- --------- --------- ---------
NET INCOME BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE $ 1,883 $ 585 $ 4,863 $ 1,092
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - - 813
--------- --------- --------- ---------
NET INCOME $ 1,883 $ 585 $ 4,863 $ 1,905
--------- --------- --------- ---------
--------- --------- --------- ---------
PER SHARE DATA
- --------------
NET INCOME BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE $ .47 $ .15 $ 1.22 $ .28
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - - .20
--------- --------- --------- ---------
NET INCOME $ .47 $ .15 $ 1.22 $ .48
--------- --------- --------- ---------
--------- --------- --------- ---------
AVERAGE SHARES OUTSTANDING 3,969,500 3,969,500 3,969,500 3,969,500
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
4
<PAGE>
BLISS & LAUGHLIN INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES: (RESTATED)
--------
<S> <C> <C>
Net Income $ 4,863 $ 1,905
Adjustments to Reconcile Net Income to net cash
provided by operating activities-
Depreciation 1,371 1,173
Gain on Sale of Equipment (2) (2)
Provision For Losses on Accounts Receivable 117 93
Increase (Decrease) In Prepaid Pension Benefit (7) (9)
(Increase) Decrease in Current Assets -
Accounts Receivable (3,765) (491)
Inventories (5,162) 317
Prepaid Expenses 63 (61)
(Increase) Decrease in Other Assets 32 87
Increase (Decrease) in Current Liabilities-
Accounts Payable 2,032 (957)
Accrued Liabilities 500 978
Income Taxes Payable 345 (148)
Increase (Decrease) in Non-Current Retirement Benefit (11) (17)
Increase (Decrease) in Deferred Income Taxes 0 (524)
------- -------
Net Cash Provided by (Used For) Operating Activities $ 376 $ 2,344
------- -------
------- -------
CASH FLOWS FORM INVESTING ACTIVITIES:
Proceeds from Sale of Equipment $ 2 $ 2
Property, Plant & Equipment Additions $(1,542) $(1,440)
------- -------
Net Cash Used For Investing Activities $(1,540) $(1,438)
------- -------
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Net Borrowing (Payments) Under Revolving Credit Agreement $ 1,950 $ (300)
------- -------
Net Cash Provided by (used in) Financing Activities $ 1,950 $ (300)
------- -------
------- -------
EFFECT OF EXCHANGE RATE CHANGES $ 140 $ (13)
------- -------
------- -------
NET INCREASE (DECREASE) IN CASH & CASH
EQUIVALENTS $ 926 $ 593
CASH AND CASH EQUIVALENT, Beginning of Period $ 926 $ 827
------- -------
CASH & CASH EQUIVALENT, End of Period $ 1,852 $ 1,420
------- -------
------- -------
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THESE STATEMENTS.
5
<PAGE>
BLISS & LAUGHLIN INDUSTRIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND SEPTEMBER 30, 1994
(UNAUDITED)
(1) CONSOLIDATED FINANCIAL STATEMENTS:
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate and make the information presented not misleading.
It is suggested that these condensed consolidated financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's Annual Report on Form 10-K.
In the opinion of management, all adjustments consisting of normal
recurring adjustments necessary to present fairly the consolidated financial
position of Bliss & Laughlin Industries Inc. and Subsidiaries as of June 30,
1995, and the consolidated results of operations and consolidated statements of
cash flows for the nine months then ended, have been included. The results of
operations for this period are not necessarily indicative of the operating
results for a full year.
Inventories for Bliss & Laughlin Steel Company ("BLSC"), a subsidiary of
Bliss & Laughlin Industries Inc., are valued at LIFO. Because the inventory
value determination under the LIFO method can only be made at the end of each
year based on the inventory levels and costs at that point, interim LIFO
determinations must necessarily be based upon management's estimates of expected
year-end inventory levels and costs. Since future estimates of inventory levels
and prices are subject to many forces beyond the control of management, interim
financial results are subject to final year-end LIFO inventory adjustments.
(2) INVENTORIES
Inventories for BLSC are valued at LIFO; inventories at Canadian Drawn
Steel Company Inc. ("CDSC") are valued at FIFO. Inventories include the
following amounts (In thousands):
<TABLE>
<CAPTION>
JUNE 30, 1995 SEPTEMBER 30, 1994
<S> <C> <C>
Raw Material $16,872 $14,188
Finished Goods 18,110 15,779
LIFO Reserve (2,712) (2,712)
------- -------
TOTAL INVENTORIES $32,270 $27,255
------- -------
------- -------
</TABLE>
The amount of inventory valued at LIFO at June 30, 1995 amounted to
$24,061,000 and represents 75% of total inventory.
6
<PAGE>
(3) FINANCING ARRANGEMENTS:
On December 9, 1994, the Company entered into an amendment to its revolving
credit agreement with The Northern Trust Company ("Northern") and LaSalle
National Bank (LaSalle) which provides up to $20,000,000 under a revolving
credit facility. The revolving credit facility is secured by the Company's
accounts receivable, inventories and certain equipment, excluding CDSC's
assets, and a first mortgage on the Company's Batavia, Illinois property.
Among other things, the restrictive covenants include limits on capital
expenditures and a minimum tangible net worth of at least $28,250,000 at
September 30, 1995. Additionally, a maximum ratio of total liabilities to
tangible net worth is limited to at least 1.8 to 1 at September 30, 1995.
Interest on the revolving credit facility is computed at the prime rate and/or
a LIBOR based rate at the option of the Company. Funds available but unused
bear interest at the rate of 1/2% per annum.
On April 28, 1995, the Company's CDSC subsidiary entered into an agreement
with NBD Bank, Canada, which provides up to $7,000,000 (U.S.) under a revolving
demand credit facility. The facility is unsecured; however, the agreement
contains a negative pledge clause. The restrictive covenants in the agreement
include a CDSC minimum tangible net worth, computed based on Canadian GAAP, of
$10,000,000 (Canadian); a maximum ratio of total liabilities to tangible net
worth of 1.2 to 1, and a minimum working capital of $3,000,000 (Canadian).
Interest rates for Canadian dollars are at the Canadian prime rate or the Bank's
cost of funds plus 1%. Interest rates for U.S. dollars are at the U.S. prime
rate or LIBOR based rates at the option of the Company.
During the first nine months of 1995, the amount of LIBOR loans outstanding
averaged $18,094,000 and had interest rates ranging from 6.125% to 7.625%. The
interest rate on LIBOR loans outstanding at June 30, 1995, ranged from 7.0625%
to 7.44%.
In accordance with the loan agreement between BLSC and the Development
Authority of Cartersville, Georgia, Northern has issued an irrevocable letter of
credit in the amount of $3,852,000. Of this total amount, $3,600,000 is
available to pay principal on the bonds and $252,000 is available to pay
interest when it becomes due. Northern has also issued a $775,000 irrevocable
letter of credit to support workers compensation insurance reserves.
At June 30, 1995 the available portion of all revolving credit facilities
after adjusting for outstanding letters of credit amounted to $3,873,000. In
the aggregate, $62,748,000 of assets are utilized to secure all borrowings.
(4) LONG TERM DEBT:
In December 1988, the Company secured $3,600,000 of borrowings by the
issuance of Tax Exempt Industrial Revenue Bonds through the Development
Authority of Cartersville, Georgia. The interest rate on the bonds is a weekly
interest rate representing the minimum rate of interest which, in the opinion of
the Remarketing Agent, would be necessary to sell the bonds in a secondary
market. The interest rate in the first nine months of fiscal year 1995 ranged
from 3.15% to 5.85%; the interest rate in effect at June 30, 1995 was 4.45%. To
retire the Bonds, the
7
<PAGE>
Company must fund a bond sinking fund starting in December 2009 and continuing
until December 2018, the final maturity date.
(5) STOCKHOLDERS' EQUITY:
On December 15, 1988, the Company sold 704,559 shares of common stock to
the public at $10.50 per share. On May 11, 1990, the Company sold 1,559,759
shares of common stock to Stelco Inc. for $12.00 per share. No dividends were
declared during the quarter.
(6) STOCK OPTION PLANS:
Effective December 15, 1988 (the date of the initial public offering), the
Company established an Employees' Incentive Stock Option Plan ("ISOP") and a
nonstatutory Directors' Stock Option Plan ("DSOP"). A total of up to 130,000
and 65,000 shares of common stock of the Company are reserved for issuance upon
exercise of options under the ISOP and DSOP, respectively.
For both plans, any options granted to employees and directors become
exercisable on the first anniversary date of the grant date, and shall vest and
become exercisable over a four-year period from the grant date. Twenty-five
percent (25%) of the options become exercisable on each anniversary of the grant
date, and to the extent vested, shall be exercisable for a term of ten years
from the grant date.
Below is a summary of both plans as of June 30, 1995:
ISOP DSOP
---- ----
Outstanding October 1, 1994 97,000 45,000
Forfeitures (4,500) -
Outstanding June 30, 1995 92,500 45,000
Exercisable June 30, 1995 92,500 45,000
Available for Grant June 30, 1995 37,500 20,000
(7) INCOME TAXES:
Effective October 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 109: Accounting for Income
Taxes. This election required the Company to restate its results for the first
fiscal quarter ended December 31, 1993, resulting in additional income of
$813,000 or $.20 per share.
(8) TRANSLATION OF FOREIGN CURRENCIES:
All balance sheet asset and liability accounts of CDSC, a foreign
subsidiary, are translated into U.S. Dollars using the rates of exchange in
effect at the balance sheet date. Results of operations are translated using
the weighted average exchange rate during the period. Adjustments arising from
foreign currency translations are recorded in a separate component of
Stockholders' Equity, "Cumulative Translation Adjustment".
8
<PAGE>
BLISS & LAUGHLIN INDUSTRIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL:
The Company recorded net income of $1,883,000 in its third fiscal quarter
ended June 30, 1995 compared to net income of $586,000 in the same period last
year. The increased income is primarily attributable to higher volume,
increased sales prices and continuing cost control.
Net sales for the third fiscal quarter rose 8% on higher volume and
continued strong demand from the machinery and equipment market. Sales were
$43,871,000 compared with $40,685,000 a year earlier.
For the nine months ended June 30, 1995, net income was $4,863,000 compared
to net income before unusual items of $1,092,000 in the same period last year.
In the fourth quarter of fiscal 1994, the Company made an election,
effective as of October 1, 1993, to implement the provisions of Financial
Accounting Standards Board Number 109: Accounting for Income Taxes. This
election required the Company to restate its results for the first quarter of
its last fiscal year. The restatement resulted in additional income of
$813,000, or $.20 per share, for the cumulative effect of change in accounting
principle, and total income of $1,905,000, or $.48 per share, for the nine
months ended June 30, 1994.
Net sales for the nine months ended June 30, 1995 increased by 16% to
$131,912,000 from $113,860,000 for the same period in 1994.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED
JUNE 30, 1995
Net sales for the 1995 Third Quarter were $43,871,000 an increase of
$3,186,000, or 7.8% from the 1994 Third Quarter. The increase in net sales is
attributable to increased tonnage volume, amounting to $1,454,000 ($460,000
CDSC) and increased sales prices of $1,732,000 ($750,000 CDSC).
Cost of sales for the 1995 Third Quarter was $37,883,000, an increase of
$1,116,000 or 3.0% from the 1994 Third Quarter. The increase is primarily
attributable to the increase in volume. As a percentage of net sales, cost of
sales decreased by 4.0%. Gross margin increased in the 1995 Third Quarter
primarily due to higher sales prices as discussed above, lower labor and
overhead costs of $461,000 and increased volume of $256,000 ($61,000 CDSC).
Selling and administrative expense for the 1995 Third Quarter amounted to
$2,590,000, a decrease of $93,000 or 3.5% from the 1994 Third Quarter. As a
percentage of net sales, selling and administrative expense decreased to 5.9% in
the 1995 Third Quarter from 6.6% in the 1994 Third Quarter.
9
<PAGE>
Interest expense, net, increased in the 1995 Third Quarter by $54,000 or
15.9% from the 1994 Third Quarter. The increase is primarily attributable to
higher interest rates. Interest expense, net, as a percentage of net sales was
.9% in the 1995 Third Quarter, compared to .8% in the 1994 Third Quarter.
The tax provision in the 1995 Third Quarter was $1,122,000, compared to
$313,000 in the 1994 Third Quarter. The tax provision in the 1994 Third Quarter
consists primarily of a provision for foreign taxes because the domestic income
tax provision was offset by the expected utilization of a net operating loss
carryforward. The final amount of the carryforward was used in the 1995 Second
Quarter.
Net income of $1,883,000 in the 1995 Third Quarter compares to a net income
of $585,000 in the 1994 Third Quarter. The increase in net income is primarily
attributable to higher gross margins due to higher sell prices, higher tonnage
volume and lower operating costs offset in part by higher interest costs and a
higher tax provision.
RESULTS OF OPERATIONS:
NINE MONTHS ENDED
JUNE 30, 1995
Net sales for the first nine months of 1995 were $131,912,000, an increase
of $18,052,000, or 15.9% from the 1994 first nine months. The increase in net
sales is attributable to increased tonnage volume, amounting to $13,094,000
($3,619,000 CDSC) and increased sales prices of $4,958,000 ($1,898,000 CDSC).
Cost of sales for the first nine months of 1995 was $114,662,000, an
increase of $11,323,000 or 11.0% from the 1994 first nine months. The increase
is primarily attributable to the increase in volume. As a percentage of net
sales, cost of sales decreased by 3.9%. Gross margin increased in the first
nine months of 1995 primarily due to higher sales prices as discussed above,
increased volume contributing $1,884,000 ($436,000 CDSC), lower labor and
overhead cost of $1,196,000 ($375,000 CDSC) offset by higher material cost of
$1,940,000 ($1,355,000 CDSC).
Selling and administrative expense for the first nine months of 1995
amounted to $9,312,000, an increase of $1,427,000 or 18.1% from the first nine
months in 1994. The increase is primarily attributable to wages and benefits of
$1,168,000, of which $1,147,000 was for profit sharing and management
supplemental incentive compensation. As a percentage of net sales, selling and
administrative expense increased to 7.1% in the first nine months of 1995 from
6.9% in the first nine months of 1994.
Interest expense, net, increased in the first nine months of 1995 by
$288,000, or 32.1% from the first nine months of 1994. The increase is
primarily attributable to higher interest rates. Interest expense, net, as a
percentage of net sales was .9% in the first nine months of 1995 compared to .8%
in the first nine months of 1994.
10
<PAGE>
The tax provision in the first nine months of 1995 amounted to $1,892,000
compared to $650,000 in the first nine months of 1994. The tax provision in the
first nine months of 1994 consists primarily of a provision for foreign taxes
because the domestic income tax provision was offset by the utilization of a net
operating loss carryforward. The final amount of the net operating loss
carryforward was used in the 1995 Second Quarter.
Net income of $4,863,000 for the first nine months of 1995 compared to net
income of $1,905,000 for the first nine months of 1994. Included in the 1994
nine months income is a one-time credit of $813,000 for adoption of SFAS No.
109: Accounting for Income Taxes. The increase in income before change in
accounting principle is primarily attributable to higher gross margins due to
increased tonnage volume and higher sell prices, offset in part by higher
selling and administrative costs and higher interest cost.
LIQUIDITY AND CAPITAL RESOURCES:
Working Capital at June 30, 1995 was $15,082,000 compared to $10,437,000 at
September 30, 1994. The increase is primarily attributable to net income.
On December 9, 1994, the Company entered into an amendment to its revolving
credit agreement with Northern and LaSalle which provides up to $20,000,000
under a revolving credit facility. The revolving credit facility is secured by
the Company's accounts receivable, inventories and certain equipment, excluding
CDSC's assets, and a first mortgage on the Company's Batavia, Illinois property.
Among other things, the restrictive covenants include limits on capital
expenditures and a minimum tangible net worth of at least $28,250,000 at
September 30, 1995. Additionally, a maximum ratio of total liabilities to
tangible net worth is limited to at least 1.8 to 1 at September 30, 1995.
Interest on the revolving credit facility is computed at the prime rate and/or a
London Interbank Offering Rate (LIBOR) based rate at the option of the Company.
Funds available but unused bear interest at the rate of 1/2% per annum.
On April 28, 1995, the Company's CDSC subsidiary entered into an agreement
with NBD Bank, Canada, which provides up to $7,000,000 (U.S.) under a revolving
demand credit facility. The facility is unsecured; however, the agreement
contains a negative pledge clause. The restrictive covenants in the agreement
include a CDSC minimum tangible net worth, computed based on Canadian GAAP, of
$10,000,000 (Canadian); a maximum ratio of total liabilities to tangible net
worth of 1.2 to 1, and a minimum working capital of $3,000,000 (Canadian).
Interest rates for Canadian dollars are at the Canadian prime rate or the Bank's
cost of funds plus 1%. Interest rates for U.S. dollars are at the U.S. prime
rate or LIBOR based rates.
In December 1988, BLSC secured $3,600,000 of borrowing by the issuance of
Tax Exempt Industrial Revenue Bonds through the Development Authority of
Cartersville, Georgia, to partially finance the construction and equipping of
the Cartersville plant. The interest rate on the bonds is a weekly interest
rate representing the minimum rate of interest which, in the opinion of the
Remarketing Agent, would be necessary to sell the bonds in a secondary market.
The Company must fund a bond sinking fund for purposes of retiring the bonds.
Principal payments of $300,000 are due on each December 1 beginning in the year
2009 and continuing through 2012. Payments of $400,000 are then due on each
December 1 through the year 2018.
11
<PAGE>
In accordance with the loan agreement between BLSC and the Development
Authority of Cartersville, Georgia, Northern has issued an irrevocable letter of
credit in the amount of $3,852,000. Of this total amount, $3,600,000 is
available to pay principal on the Bonds and $252,000 is available to pay
interest when it becomes due. Northern has also issued a $775,000 irrevocable
letter of credit to support workers compensation insurance reserves.
At June 30, 1995, the available portion of all revolving credit facilities
after adjusting for outstanding letters of credit amounted to $3,873,000. In
the aggregate, $62,748,000 of assets are utilized to secure all borrowings.
During the first nine months of 1995, capital expenditures amounted to
$1,542,000 ($169,000 CDSC) compared to $1,309,000 ($131,000 CDSC) in the first
nine months of 1994. The Company anticipates spending approximately $2,000,000
for the full 1995 fiscal year, compared to approximately $1,949,000 spent in the
1994 fiscal year. Of the expenditures, BLSC will spend approximately $1,786,000
($1,651,000 for machinery and equipment and $135,000 for information systems)
and CDSC will spend $214,000 for machinery and equipment.
The Company believes that existing working capital, funds from operations
and current and future borrowings will be adequate to meet its anticipated
capital requirements.
INFLATION:
The Company believes that inflation has not had a material adverse effect
on its results of operations. The Company has experienced increased costs of
hot rolled steel, energy, salaries and benefits and general and administrative
expenses, but, for the most part, has been able to either offset such increases
through productivity and efficiency gains or pass them through to its customers
by increasing sales prices of its products.
12
<PAGE>
BLISS & LAUGHLIN INDUSTRIES INC. AND SUBSIDIARIES
SIGNATURE
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.
BLISS & LAUGHLIN INDUSTRIES INC.
Date: AUGUST 11,1995 By: S/ GEORGE W. FLECK
--------------------------
George W. Fleck
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 1852
<SECURITIES> 0
<RECEIVABLES> 22039
<ALLOWANCES> 0
<INVENTORY> 32270
<CURRENT-ASSETS> 56935
<PP&E> 31296
<DEPRECIATION> 14375
<TOTAL-ASSETS> 77221
<CURRENT-LIABILITIES> 41853
<BONDS> 0
<COMMON> 40
0
0
<OTHER-SE> 29378
<TOTAL-LIABILITY-AND-EQUITY> 77221
<SALES> 131912
<TOTAL-REVENUES> 131912
<CGS> 114662
<TOTAL-COSTS> 114662
<OTHER-EXPENSES> 9312
<LOSS-PROVISION> 0
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</TABLE>
