SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-19580
INDUSTRIAL HOLDINGS, INC.
(exact name of registrant as specified in its charter)
TEXAS 76-0289495
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7135 ARDMORE, HOUSTON, TEXAS 77054 (ADDRESS OF
PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(713) 747-1025
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (i) 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 (ii) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
At May 11, 1998, there were 9,325,276 shares of Common Stock outstanding.
<PAGE>
INDUSTRIAL HOLDINGS, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets at March 31, 1998 and
December 31, 1997 1
Consolidated Statement of Income for the Three Months
ended March 31, 1998 and 1997 2
Consolidated Statement of Cash Flows for the Three
Months ended March 31, 1998 and 1997 3
Notes to Consolidated Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities (no response required)
Item 3. Defaults upon Senior Securities
(no response required)
Item 4. Submission of Matters to a Vote of
Security Holders (no response required)
Item 5. Other Information (no response required)
Item 6. Exhibits and reports on Form 8-K 11
Item 15. Recent Sales of Unregistered Securities 11
</TABLE>
<PAGE>
INDUSTRIAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, DECEMBER 31,
---------- ------------
1998 1997
---- ----
ASSETS
Current assets:
Cash and equivalents ......................... $ 6,834,789 $ 682,522
Accounts receivable - trade, net ............. 19,369,189 15,518,882
Inventories .................................. 19,536,193 18,231,298
Employee advances ............................ 58,823 58,823
Notes receivable, current portion ............ 4,473,081 1,303,859
Other current assets ......................... 950,586 928,156
----------- -----------
Total current assets ..................... 51,222,661 36,723,540
Property and equipment, net .......................... 27,348,577 24,838,205
Notes receivable, less current portion ............... 2,505,720 1,634,014
Other assets ......................................... 2,264,328 1,398,382
Goodwill and other, net .............................. 16,059,816 12,285,252
----------- -----------
Total assets ............................... $99,401,102 $76,879,393
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable ................................ $17,457,742 $14,493,459
Accounts payable - trade ..................... 8,779,295 8,361,443
Accrued expenses and other ................... 5,283,268 3,806,621
Current portion of long-term debt ............ 3,046,395 2,929,867
----------- -----------
Total current liabilities ............... 34,566,700 29,591,390
Long-term debt, less current portion ................. 11,803,404 11,655,769
Deferred compensation payable, less current portion .. 235,551 241,778
Deferred income taxes payable ........................ 3,025,981 3,024,413
----------- -----------
Total liabilities ...................... 49,631,636 44,513,350
----------- -----------
Commitments and contingencies Shareholders' equity:
Preferred stock $.01 par value, 7,500,000 shares
authorized, no shares issued or outstanding
Common stock $.01 par value, 50,000,000
shares authorized, 9,159,258 and 7,460,496
shares issued and outstanding, respectively .... 91,593 74,605
Additional paid-in capital ........................ 43,036,015 26,923,298
Retained earnings ................................. 6,641,858 5,368,140
----------- -----------
Total shareholders' equity ........... 49,769,466 32,366,043
=========== ===========
Total liabilities and shareholders'
equity............................ $99,401,102 $76,879,393
=========== ===========
See notes to consolidated financial statements
1
<PAGE>
INDUSTRIAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
---- ----
Sales ............................................ $ 32,317,348 $ 23,201,154
Cost of sales .................................... 24,060,378 17,186,000
------------ ------------
Gross profit ..................................... 8,256,970 6,015,154
Selling, general and administrative expenses ..... 5,872,734 4,393,807
------------ ------------
Income from operations ........................... 2,384,236 1,621,347
------------ ------------
Other income (expense):
Interest expense ............................ (580,164) (545,047)
Interest income ............................. 153,496 53,488
Other income, net .......................... 171,565 9,135
------------ ------------
Total other income (expense) ......... (255,103) (482,424)
------------ ------------
Income before income taxes ....................... 2,129,133 1,138,923
Provision for income taxes ....................... 855,415 420,506
------------ ------------
Net income ....................................... $ 1,273,718 $ 718,417
============ ============
Basic earnings per share ......................... $ .15 $ .12
Diluted earnings per share ....................... $ .14 $ .10
Weighted average number of common shares
outstanding ................................... 8,696,767 6,159,186
Weighted average number of common shares
outstanding plus potential dilutive common
shares ........................................ 9,238,549 7,080,415
See notes to consolidated financial statements
2
<PAGE>
INDUSTRIAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
1998 1997
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income ...................................... $ 1,273,718 $ 718,417
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................. 849,150 578,405
Deferred income tax provision .................. 1,568 32,723
Deferred compensation paid ..................... (6,227) (25,802)
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable and employee advances ... (2,587,452) (798,968)
Inventories ................................. 1,741,981 (314,650)
Notes receivable ............................ (3,935,229) 14,643
Other assets ................................ (407,125) (300,126)
Accounts payable ............................ (569,106) 161,803
Accrued expenses ............................ 1,040,516 132,345
------------ -----------
Net cash provided (used)
by operating activities .............. (2,598,206) 198,790
Cash flows from investing activities:
Purchase of property and equipment ................. (3,907,096) (675,254)
Purchase of subsidiaries, net of cash .............. (1,292,661) (1,734,841)
------------ -----------
Net cash used by investing activities ..... (5,199,757) (2,410,095)
------------ -----------
Cash flows from financing activities:
Net borrowing under revolving line of credit ....... 2,964,284 262,795
Proceeds from long-term debt ....................... 1,760,900 754,958
Principal payments on notes payable,
long-term debt and capital lease obligations ... (2,384,659) (1,477,896)
Proceeds from issuance of common stock ............. 11,609,705 709,071
Repurchase of common stock by an acquired company .. -- (358,389)
------------ -----------
Net cash provided (used) by financing activities 13,950,230 (109,461)
------------ -----------
Net increase (decrease) in cash and equivalents ...... 6,152,267 (2,320,766)
Cash and equivalents, beginning of period ............ 682,522 3,171,889
------------ -----------
Cash and equivalents, end of period .................. $ 6,834,789 $ 851,123
============ ===========
Non-cash financing activities:
Debt converted to equity .................... $ -- 360,000
Cash paid for:
Interest .................................... $ 600,808 $ 460,887
Income taxes ................................ $ 545,000 $ 165,000
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
INDUSTRIAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
NOTE A BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. These financial
statements include the accounts of Industrial Holdings, Inc. and its
subsidiaries (the "Company"). All significant intercompany balances
have been eliminated in consolidation. Operating results for the
three months ended March 31, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31,
1998. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1997.
NOTE B INVENTORY
Inventory consists of the following:
March 31 December 31
1998 1997
Raw materials $ 3,823,360 $ 3,142,217
Finished goods 11,504,041 11,264,361
Other 4,208,792 3,824,720
------------ ------------
$ 19,536,193 $18,231,298
============ ===========
NOTE C INVESTMENT IN LIMITED PARTNERSHIP
In connection with the acquisition of Philform, the Company
contributed certain equipment as well as Philform's operating
activities to a limited partnership in exchange for a 49%
interest in that limited partnership. The Company's investment in
the limited partnership of $723,295 is included in the balance
sheet in other assets. The Company's equity in the earnings of
the limited partnership was $273,295 for the three months ended
March 31, 1998 and is included in other income.
4
<PAGE>
NOTE D RECLASSIFICATION
Certain amounts have been reclassified from previous periods to
conform to the current presentation.
NOTE E ACCOUNTING FOR STOCK-BASED COMPENSATION
Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 123 "Accounting of Stock-based
Compensation" ("SFAS No. 123"), and elected to continue to follow
Accounting Principles Board Opinion No. 25 to measure employee
stock compensation cost. Had compensation expense been determined
using the fair value method of accounting as set forth in SFAS
No. 123, net income and basic and diluted earnings per share
would have been $1,164,754 and $.13 and $.13 and $657,056 and
$.11 and $.09 for the three months ended March 31, 1998 and 1997,
respectively.
NOTE F NEW ACCOUNTING PRONOUNCEMENTS
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, Reporting Comprehensive
Income. Comprehensive income is a more inclusive financial
reporting methodology that includes disclosure of certain
financial information that historically has not been recognized
in the presentation of net income. SFAS No. 130 requires the
reporting of comprehensive income in addition to net income from
operations. For the three months ended March 31, 1998 and 1997,
the Company had no items of comprehensive income, and as a result
the Company's reported net income was the same as comprehensive
income.
In February 1998, the Financial Accounting Standards Board
("FASB") issued SFAS No. 132, Employer's Disclosures about
Pensions and Other Postretirement Benefits, which revises certain
disclosure requirements of the employer, and is effective for
fiscal years beginning after December 15, 1998. Management is
evaluating what, if any, additional disclosures may be required
upon the implementation of SFAS No. 132.
In March 1998, the Accounting Standards Executive Committee
("AcSEC") of the American Institute of Certified Public
Accountants ("AICPA") reached a consensus on Statement of
Position ("SOP") No. 98-1, Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use, which provides
guidance on accounting for the costs of computer software. SOP
No. 98-1 is effective for the fiscal years beginning after
December 15, 1998. Management is evaluating what, if any, impact
this SOP will have on the Company upon implementation.
5
<PAGE>
In April 1998, the AcSEC of the AICPA reached a consensus on SOP
NO. 98-5, Reporting on the Costs of Start-Up Activities, which
provides that the costs of such activities be expensed as
incurred. SOP NO. 98-5 is effective for fiscal years beginning
after December 15, 1998. Management is evaluating what, if any,
impact this SOP will have on the Company upon implementation.
In March 1998, the Emerging Issues Task Force ("EITF") of the
FASB reached a consensus on Issue No. 97-11, Accounting for the
Internal Costs Relating to Real Estate Property Acquisitions,
which requires that internal costs of identifying and acquiring
operating properties be expensed as incurred. Management is
currently evaluating the impact this EITF, which was effective
for transactions on or after March 20, 1998, will have on the
Company.
NOTE G ACQUISITIONS
Effective February 1, 1998, the Company acquired Philform, Inc.
("Philform") along with certain leased operating assets (the
"Equipment") for 419,773 shares of the Company's common stock
valued at $4,520,000. Simultaneously, Philform contributed the
Equipment and its activities to OF Acquisition L.P., a limited
partnership (the "Partnership"), in exchange for a 49% limited
partnership interest. Philform manufactures and sells forming and
fastening systems primarily to the automotive industry. After the
acquisition, the business and operations previously conducted by
Philform are conducted by the Partnership. This acquisition has
been accounted for by the purchase method of accounting and,
accordingly, assets and liabilities have been recorded at their
estimated fair values at the date of acquisition. The final
purchase price allocation of Philform is subject to certain
adjustments relating to the appraised value of assets and certain
other accruals. The results of operations of Philform have been
included in the consolidated financial statements from the date
of acquisition.
In March 1998, the Company acquired all of the outstanding
capital stock of WHIR Acquisition, Inc., doing business as
Ameritech Fastener Manufacturing, Inc. ("Ameritech") for 124,000
shares of the Company's common stock, upon merger of a wholly
owned subsidiary of the Company with and into Ameritech, with
Ameritech being the surviving corporation (the "Ameritech
Merger"). As a result, Ameritech became a wholly owned subsidiary
of the Company. Ameritech, located in Houston, Texas,
manufactures fasteners for sale to the aerospace, automotive,
petroleum and petrochemical industries.
In March 1998, the Company acquired all of the outstanding common
stock of GHX, Incorporated ("GHX") for 693,878 shares of the
Company's common stock, upon merger of a wholly owned subsidiary
of the Company with and into GHX, with GHX being the surviving
corporation (the "GHX Merger"). As a result, GHX became a
6
<PAGE>
wholly owned subsidiary of the Company. GHX, located in Houston,
Texas, fabricates and distributes industrial gaskets and molded
rubber products and distributes industrial packing, hose,
fittings and high temperature textiles to customers in the
petrochemical industries.
The mergers with Ameritech and GHX (together, the "Merger
Companies") were accounted for as poolings-of-interests and
accordingly, the consolidated financial statements for periods
prior to the combination were restated to include the results of
operations of the Merger Companies. Sales and net income for the
three months ended March 31, 1997 previously reported by the
separate companies and the combined amounts presented in the
accompanying consolidated financial statements are as follows:
Industrial Merger Combined
HOLDINGS, INC. COMPANIES COMPANIES
-------------- --------- ---------
(000's omitted)
Sales $ 17,304 $ 5,897 $23,201
========= ======== =======
Net income $ 518 $ 200 $ 718
========= ======== =======
Earnings per share:
Basic $ .10 $ .12
Diluted $ .09 $ .10
NOTE H SUBSEQUENT EVENT
In April 1998, the Company acquired all of the outstanding
capital stock of Moores Pump and Supply, Inc. ("Moores"), upon
merger of a wholly owned subsidiary of the Company with and into
Moores, with Moores being the surviving corporation (the "Moores
Merger"). As a result, Moores became a wholly owned subsidiary of
the Company. Moores, located in Lafayette, Louisiana, is a
supplier and servicer of pumps and packers to the energy
industry, as well as provides fabrication, repair and machine
shop services to its customers. The merger with Moores was
accounted for as a pooling of interests. On a pro forma basis
sales, net income and earnings per share for the combined
companies for the quarters ended March 31 would be as follows:
1998 1997
---- ----
Sales $37,707 $27,222
======= ========
Net income $ 1,224 $ 861
======= ========
Earnings per share:
Basic $ .12 $ .11
Diluted $ .11 $ .10
7
<PAGE>
PART I
FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Industrial Holdings, Inc., operates three segments (i) the
Fastener Manufacturing and Sales Segment comprised of Landreth
Engineering Company ("Landreth"), American Rivet Company, Inc.
("American"), Connecticut Rivet ("CRivet"), Ameritech and
Philform which manufacture industrial metal fasteners for sale
primarily to manufacturers in the furniture, home appliance and
automotive industries, LSS-Lone Star-Houston, Inc. ("Lone Star"),
WALKER BOLT Manufacturing Co. ("WALKER") and GHX which
manufacture industrial metal fasteners and fabricate and
distribute gaskets, hose, fittings and other products primarily
to the petrochemical and chemical refining and energy industries,
and the Energy Products and Services Division comprised of; (ii)
the Valve and Supplies Sales Segment which includes Pipeline
Valve Specialty, Inc. ("PVS"), Manifold Valve Services, Inc.
("MVS"), Rogers Equipment ("Rogers") and Industrial Municipal
Supply ("IMSCO") which remanufacture and sell pipeline valves,
high pressure valves and industrial valves and distribute other
products primarily to the petrochemical, chemical and petroleum
refining industries, the pipeline transportation and storage
industries and energy industries; and (iii) the Machine Sales and
Service Segment comprised of The Rex Group ("REX") which sells
new and used machine tools, provides machine moving services and
international export crating services.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS
ENDED MARCH 31, 1997.
SALES. On a consolidated basis, sales increased $9,116,194 or 39%
for the three months ended March 31, 1998 compared to the three
months ended March 31, 1997.
Fastener Segment sales increased 33% for the three months ended
March 31, 1998 compared to the three months ended March 31, 1997.
Of this increase, 60% was attributable to growth through the
acquisitions of Lone Star in February 1997 and Walker in November
1997 and the inclusion of a full quarter of operating results of
these acquisitions in the three months ended March 31, 1998. The
remainder of the increase is attributable to internal growth
primarily as the result of improved economic conditions in the
energy sector.
8
<PAGE>
Valve Segment sales increased 109% for the three months ended
March 31, 1998 compared to the three months ended March 31, 1997.
Of this increase, 74% is attributable to growth through the
acquisition of MVS in March 1997 and Rogers in August 1997 and
the inclusion of a full quarter of operating results of these
acquisitions in the three months ended March 31, 1998. The
remainder of the increase is attributable to internal growth
primarily as the result of improved economic conditions in the
energy sector.
Machine Segment sales increased 18% for the three months ended
March 31, 1998 compared to the three months ended March 31, 1997
as REX was able to secure inventory from its primary vendor for
sale and delivery to its customers.
COST OF SALES. Cost of sales increased $6,874,378 or 40% for the
three months ended March 31, 1998 compared to the three months
ended March 31, 1997.
Fastener Segment cost of sales increased 35% primarily as a
result of the increase in sales described above.
Valve Segment cost of sales increased 125% as a result of the
increase in sales described above coupled with a reduction in
high margin service revenues in the three months ended March 31,
1998 compared to the three months ended March 31, 1997.
Machine Segment cost of sales increased 13% as a result of the
increase in sales described above. Gross margins improved as the
sales increases covered more fixed costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general
and administrative expenses increased $1,478,927 or 34% for the
three months ended March 31, 1998 compared to the three months
ended March 31, 1997.
Fastener Segment selling, general and administrative expense
increased 31% primarily as a result of the increases in sales
described above.
Valve Segment selling, general and administrative expenses
increased 74% primarily as a result of the increases in sales
described above.
Machine Segment selling, general and administrative expenses
increased 17% primarily as a result of the increases in sales
described above.
INTEREST EXPENSE. Interest expense increased $35,117 or 6% for
the three months ended March 31, 1998 compared to the three
months ended March 31, 1997, primarily as a result of a $3.2
million net increase in interest bearing debt. Debt was
9
<PAGE>
incurred to finance acquisitions but these increases in debt were
offset by reductions in debt as $2.96 million of 12% notes were
converted to equity in 1997.
OTHER INCOME. Other income for the three months ended March 31,
1998, includes $273,295 of equity in income of the Partnership.
INCOME TAXES. The Company's effective tax rate was 40% for the
three months ended March 31, 1998 compared to 37% for the three
months ended March 31, 1997. The higher effective tax rate is
attributable to the inclusion of non-deductible amortization of
goodwill as a result of acquisitions.
LIQUIDITY AND CAPITAL RESOURCES. At March 31, 1998, the Company
had cash of $6,834,789 and additional borrowing capacity under
its line of credit of $4,957,075. The Company's operations used
cash of $2,598,206 during the three months ended March 31, 1998
compared to providing cash of $198,790 during the three months
ended March 31, 1997. This change was primarily attributable to
increases in accounts and notes receivable.
Investing activities used cash of $5,199,757 for the three months
ended March 31, 1998 compared to $2,410,095 for the three months
ended March 31, 1997. This increased use of cash was primarily
attributable to the acquisition of Philform and purchases of
property and equipment.
Financing activities provided cash of $13,950,230 for the three
months ended March 31, 1998 compared to using cash of $109,461
for the three months ended March 31, 1997. This change is due to
an increase in proceeds received from the issuance of common
stock as well as increased borrowings under the line of credit.
In January 1998, the Company completed an offer (the "Offer") to
the holders of its Class B Warrants to exchange each Class B
Warrant and $10 cash for one share of Common Stock, one Class W
Warrant and one Class D Warrant. The holders of Class B Warrants
tendered their warrants. The Company received net proceeds of
$10,845,000 after deducting $190,000 of expenses incurred in
connection with the Offer.
At March 31, 1998, the Company had working capital of
$16,655,961, long-term debt of $11,803,404 and shareholders'
equity of $49,769,466. The Company anticipates that its operating
cash needs for fiscal 1998 can be met with cash generated from
operations, borrowings under its credit facilities with Comerica
Bank-Texas, and private placements of securities. However, any
acquisition of companies in connection with the Company's
acquisition strategy will require additional financing, which
likely would include a combination of debt and equity financing.
10
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is involved in litigation arising in the ordinary course of
its business. In the opinion of management, the ultimate liability, if
any, as a result of these matters will not have a material adverse
effect on the Company's consolidated financial condition or results of
operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Earnings per Share
(b) Reports on Form 8-K
On January 19, 1998, the Company filed a Report on Form 8-K announcing
the completion on January 19, 1998 of its offer to the Class B
Warrantholders. On February 11, 1998, the Company amended its Report on
Form 8-K to report the extension of the expiration date on the Class C
Warrants to January 14, 2000.
On February 19, 1998, the Company filed a Report on Form 8-K announcing
the acquisition of Philform, Inc. ("Philform") along with certain
leased operating assets. On February 20, 1998, the Company amended its
Report on Form 8-K extending the time required to file the financial
statements and related required pro forma financial information for
Philform. On March 31, 1998, the Company filed the required financial
statements and pro forma financial information for Philform.
On April 15, 1998, the Company filed a Report on Form 8-K announcing
its merger with Ameritech Fastener Manufacturing, Inc.
On April 15, 1998, the Company filed a Report on Form 8-K announcing
its merger with GHX, Incorporated.
On April 16, 1998, the Company filed a Report on Form 8-K announcing
its merger with Moores Pump and Supply, Inc.
Item 15. Recent Sales of Unregistered Securities
In February 1998, the Company issued 375,692 shares of Common Stock
valued at $4,070,000 to the shareholders of Philform, Inc. ("Philform")
in exchange for all the outstanding capital stock of Philform.
11
<PAGE>
In February 1998, the Company issued 44,081 shares of Common Stock
valued at $450,000 to SMS Industries, Inc. in exchange for an interest
in equipment.
In March 1998, in connection with the merger of a wholly owned
subsidiary of the Company with Ameritech Fastener Manufacturing, Inc.
("Ameritech"), the Company exchanged 124,000 shares of Common Stock for
the outstanding common stock of Ameritech held by the shareholders of
Ameritech.
In March 1998, in connection with the merger of a wholly owned
subsidiary of the Company with GHX, Incorporated ("GHX"), the Company
exchanged 693,878 shares of Common Stock for the outstanding common
stock of GHX held by the shareholders of GHX.
In April 1998, in connection with the merger of a wholly owned
subsidiary of the Company with Moores Pump and Supply, Inc. ("Moores"),
the Company exchanged 1,600,000 shares of Common Stock for the
outstanding common stock of Moores held by the shareholders of Moores.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant, Industrial Holdings, Inc., has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
INDUSTRIAL HOLDINGS, INC.
Date: May 14, 1998 By: /s/CHRISTINE A. SMITH
------------------------
Christine A. Smith,
Chief Financial Officer and
Vice President
12
<PAGE>
INDUSTRIAL HOLDINGS, INC.
EARNINGS PER SHARE
MARCH 31, 1998
(thousands of dollars, except per share data)
THREE MONTHS
ENDED MARCH 31
1998 1997
---- ----
Net income $ 1,274 $ 718
===== =====
Basic earnings per share
Weighted average common shares
outstanding 8,697 6,159
====== ======
Basic earnings per share $ .15 $ .12
======= =======
Diluted earnings per share
Weighted average common
shares outstanding 8,697 6,159
Shares issuable from assumed
conversion of common stock
options and warrants granted 542 921
------ ------
Weighted average common shares
outstanding, as adjusted 9,239 7,080
====== ======
Diluted earnings per share $ .14 $ .10
======= =======
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 6,834,789
<SECURITIES> 0
<RECEIVABLES> 19,369,189
<ALLOWANCES> 0
<INVENTORY> 19,536,193
<CURRENT-ASSETS> 51,222,661
<PP&E> 27,348,577
<DEPRECIATION> 0
<TOTAL-ASSETS> 99,401,102
<CURRENT-LIABILITIES> 34,566,700
<BONDS> 0
0
0
<COMMON> 91,593
<OTHER-SE> 49,677,873
<TOTAL-LIABILITY-AND-EQUITY> 99,401,102
<SALES> 32,317,348
<TOTAL-REVENUES> 32,317,348
<CGS> 24,060,378
<TOTAL-COSTS> 24,060,378
<OTHER-EXPENSES> 5,872,734
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 580,164
<INCOME-PRETAX> 2,129,133
<INCOME-TAX> 855,415
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<NET-INCOME> 1,273,718
<EPS-PRIMARY> .15
<EPS-DILUTED> .14
</TABLE>
