<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 April 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-21964
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SHILOH INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 51-0347683
- --------------------------------- -----------------------------------
State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Suite 350, 1013 Centre Road, Wilmington, Delaware 19805
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(Address of principal executive offices - zip code)
(302) 998-0592
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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
------ -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
- -------------------------------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Number of shares of Common Stock outstanding as of June 6, 1997 was 13,038,763
shares.
1
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SHILOH INDUSTRIES, INC.
-----------------------
INDEX
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Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet 3
Consolidated Statement of Income 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
Item 4 . Submission of Matters to a Vote of Security-Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
2
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PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SHILOH INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
April 30, October 31,
1997 1996
------------ ------------
ASSETS
- ------
<S> <C> <C>
Cash and cash equivalents $ 2,301,440 $ 1,721,152
Accounts receivable 43,922,141 33,115,765
Inventory 27,287,334 18,626,492
Deferred income taxes 1,034,092 1,034,092
Prepaid expenses 4,416,912 3,573,160
------------ ------------
Total current assets 78,961,919 58,070,661
------------ ------------
Property, plant and equipment, net 150,163,222 122,293,375
Goodwill 7,885,885 615,318
Other long-term assets 3,657,644 26,029,671
------------ ------------
Total assets $240,668,670 $207,009,025
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ 14,640,754 $ 9,719,528
Short-term debt 1,500,000 2,500,000
Accrued income taxes 3,677,076 1,412,499
Other accrued expenses 10,546,700 9,625,343
------------ ------------
Total current liabilities 30,364,530 23,257,370
------------ ------------
Long-term debt 66,650,000 50,433,352
Deferred income taxes 7,161,027 7,161,027
------------ ------------
Total liabilities 104,175,557 80,851,749
------------ ------------
Stockholders' equity
Common stock 130,387 130,116
Paid-in capital 38,743,406 38,375,152
Retained earnings 97,619,320 87,652,008
------------ ------------
Total stockholders' equity 136,493,113 126,157,276
------------ ------------
Commitments and contingent liabilities -- --
Total liabilities and stockholders' equity $240,668,670 $207,009,025
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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<TABLE>
<CAPTION>
SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three months ended April 30, Six Months ended April 30,
---------------------------- ---------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $70,689,021 $ 58,044,758 $135,256,520 $ 109,583,900
Cost of sales 55,587,229 46,775,206 107,577,497 88,307,968
------------ ------------- ------------ -------------
Gross Profit 15,101,792 11,269,552 27,679,023 21,275,932
Selling, general and administrative expenses 6,115,932 3,870,429 11,441,195 7,687,088
------------ ------------- ------------- --------------
Operating income 8,985,860 7,399,123 16,237,828 13,588,844
Interest expense 564,948 -- 741,695 165,948
Interest income 31,640 2,290 55,801 53,832
Minority interest 103,479 -- 198,760 --
Other income, net 25,514 2,957 197,004 10,368
------------ ------------ ------------- --------------
Income from continuing operations before
income taxes 8,581,545 7,404,370 15,947,698 13,487,096
Provision for income taxes 3,144,418 2,860,183 5,980,387 5,203,322
------------ ------------- ------------- --------------
Income from continuing operations 5,437,127 4,544,187 9,967,311 8,283,774
Loss from discontinued operations, net of
income taxes -- (3,205) -- (379,311)
Loss on sale of discontinued operations, net of
income taxes -- (10,197,972) -- (10,197,972)
------------ ------------- ----------- --------------
Net income (loss) $ 5,437,127 $ (5,656,990) $ 9,967,311 $ (2,293,509)
============ ============= ============= ==============
Earnings per share:
Income per share from continuing operations $.42 $.35 $.77 $.64
Loss per share from discontinued operations -- ( .00) -- ( .03)
Loss per share on sale of discontinued
operations -- ( .78) -- ( .78)
----- ----- ----- -----
Net income (loss) per share $.42 ($.43) $.77 ($.17)
===== ===== ===== =====
Weighted average number of common shares: 13,038,763 13,011,663 13,025,288 13,011,663
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended April 30,
--------------------------
1997 1996
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ 9,967,311 $ (2,293,509)
Adjustments to reconcile net income from continuing operations to net cash
provided by operating activities:
Depreciation and amortization 4,921,697 3,556,962
Discontinued operations -- 10,197,972
Minority interest (198,760) --
Loss (gain) on sale of assets (39,090) --
Changes in operating assets and liabilities net of effects of
business acquired:
Accounts receivable (5,200,951) (1,831,272)
Inventories (2,585,918) 702,905
Prepaids and other assets (491,993) (57,308)
Payables and accruals 2,197,379 597,849
Accrued income taxes 2,335,003 (132,589)
------------ ------------
Net cash provided by continuing operations 10,904,678 10,741,010
Discontinued operations - noncash charges
and working capital changes -- (725,020)
------------ ------------
Net cash provided by operating activities 10,904,678 10,015,990
------------ ------------
Cash Flows From Investing Activities:
Capital expenditures (22,825,748) (14,738,708)
Proceeds from sale of assets 171,877 --
Acquisition of business (3,185,267) --
------------ ------------
Net cash used in investing activities (25,839,138) (14,738,708)
------------ ------------
Cash Flows From Financing Activities:
Proceeds from short-term borrowings 13,500,000 6,000,000
Repayments of short-term borrowings (14,500,000) (6,000,000)
Proceeds from long-term borrowings 16,250,000 12,306,073
Repayments of long-term borrowings (33,352) (9,975,000)
Issuance of common stock 298,100 --
------------ ------------
Net cash provided by financing activities 15,514,748 2,331,073
------------ ------------
Net increase (decrease) in cash and cash equivalents 580,288 (2,391,645)
Cash and cash equivalents at beginning of period 1,721,152 2,391,645
------------ ------------
Cash and cash equivalents at end of period $ 2,301,440 $ 0
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
SHILOH INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - Basis of Presentation and Business
- -------------------------------------------
The condensed consolidated financial statements have been prepared
by Shiloh Industries, Inc. (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. The information
furnished in the condensed consolidated financial statements includes normal
recurring adjustments and reflects all adjustments which are, in the opinion of
management, necessary for a fair presentation of such financial statements.
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
the Company believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these condensed consolidated
financial statements be read in conjunction with the audited financial
statements and the notes thereto included in the Company's 1996 Annual Report to
Shareholders.
Revenues and operating results for the six months ended April 30,
1997 are not necessarily indicative of the results to be expected for the full
year.
The Consolidated Statement of Income and Consolidated Statement of
Cash Flows for the period ending April 30, 1996 have been reclassified to
correspond to current presentation for discontinued operations (see Note 2 ).
NOTE 2 - Discontinued Operations
- --------------------------------
In May 1996, the Company entered into an agreement to sell the
stock of one of its subsidiaries, the Shafer Valve Company, to Bettis
Corporation for $13.2 million. The Company has accounted for this operation as a
discontinued operation effective April 30, 1996, the measurement date. Results
of operations and cash flows for 1996 have been reclassified for amounts
associated with the discontinued operation.
The sale of Shafer Valve was completed on July 9, 1996. The net
proceeds from the sale of the operation were used primarily to reduce debt.
NOTE 3 - Inventories:
- ---------------------
Inventories consist of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1997 1996
---- ----
<S> <C> <C>
Raw materials $ 15,710,581 $ 11,557,662
Work-in-process 7,146,052 2,797,698
Finished goods 5,664,622 5,475,054
------------ ------------
Total at average cost 28,521,255 19,830,414
LIFO reserve (1,233,921) (1,203,922)
------------ ------------
Total $ 27,287,334 $ 18,626,492
============ ============
</TABLE>
6
<PAGE> 7
NOTE 4 - Property, Plant and Equipment:
- ---------------------------------------
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1997 1996
---- ----
<S> <C> <C>
Land $ 3,901,473 $ 3,584,572
Buildings and improvements 64,967,996 48,916,332
Machinery and equipment 105,039,385 87,121,959
Furniture and fixtures 6,720,904 4,810,494
Construction in progress 26,478,192 30,787,858
------------- -------------
Total, at cost 207,107,950 175,221,215
Less: Accumulated depreciation (56,944,728) (52,927,840)
------------- -------------
Net property, plant and equipment $ 150,163,222 $ 122,293,375
============= =============
</TABLE>
NOTE 5 - Financing Arrangements:
- --------------------------------
Short-term debt consists of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1997 1996
---------------- ------------
<S> <C> <C>
Revolving credit loan - interest at 5.9000% at October 31, 1996 $ -- $2,500,000
Revolving credit loan - interest at 6.1875% at April 30, 1997 1,500,000 --
---------------- ----------
Total $ 1,500,000 $2,500,000
================ ==========
</TABLE>
7
<PAGE> 8
Long-term debt consists of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1997 1996
---- ----
<S> <C> <C>
Revolving credit loan - interest at 6.1875% at April 30, 1997 $37,250,000 $26,500,000
Revolving credit loan - interest at 6.1875% at April 30, 1997 24,000,000 18,500,000
Variable rate industrial development bond, secured by letter of
credit, weighted average interest rate at 3.7% payable on
February 1, 2010 5,400,000 5,433,352
----------- -----------
$66,650,000 $50,433,352
Less: current portion -- --
----------- -----------
Total $66,650,000 $50,433,352
=========== ===========
</TABLE>
Prior to January 31, 1997, the Company had a $30 million revolving credit
facility ("Facility") with KeyBank National Association ("KeyBank"). On January
31, 1997, the Company increased this Facility to $70 million.
Prior to February 24, 1997, the Company was acting as an 80% guarantor for a $23
million unsecured revolving credit facility ("SOM Facility") entered into by
Shiloh of Michigan with KeyBank. On February 24, 1997, the Company increased the
SOM Facility to $28 million and remains an 80% guarantor of the SOM Facility.
Certain of the debt agreements described above contain various restrictive
covenants which, among others things, require the Company's various operating
subsidiaries to maintain minimum net worth levels and financial ratios. The
agreements also place certain restrictions on additional indebtedness and
capital expenditures.
Amounts available under the Company's revolving credit facilities, including the
SOM facility, aggregated $42.3 million at April 30, 1997.
NOTE 6 - Other Information:
- ---------------------------
During the six months ended April 30, 1997 and 1996, cash payments for interest
amounted to $1,544,871 and $776,292, respectively, while cash payments, net of
refunds, for income taxes amounted to $3,645,384 and $5,061,784, respectively.
The Company's 1993 Key Employee Stock Incentive Plan, as amended, provides for
granting officers and employees of the Company options to acquire up to an
aggregate of 450,000 shares of the Company's Common Stock. To date, the Company
has granted options to certain officers and employees to purchase an aggregate
of 253,400 shares at prices ranging from $11.00 to $16.50 per share.
On January 29, 1996 the Company issued 27,100 shares of Common Stock as the
result of the exercise of stock options. As a result of such issuance of Common
Stock, the Company received proceeds of $298,100.
8
<PAGE> 9
NOTE 7 - Newly Issued Accounting Pronouncements:
- ------------------------------------------------
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), was issued. The
Company will adopt SFAS No. 123 in the year ending October 31, 1997. The Company
will continue to apply APB Opinion 25 in accounting for stock-based employee
compensation; however, the impact of the fair value based method described in
SFAS No. 123 will be presented in the notes to the financial statements.
In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings
per Share" ("SFAS No. 128") , was issued. This statement establishes standards
for computing and presenting earnings per share. Adoption of SFAS No. 128 is not
expected to have a material impact on the Company.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
- -------
The Company is a vertically integrated steel processor that supplies blanks,
stampings and processed steel to the automotive, heavy truck and other
industries. The Company currently provides a broad range of intermediate steel
processing services, which include: (i) blanking and stamping; and (ii)
other steel processing services (which include pickling hot rolled steel,
slitting, edge trimming, roller leveling and cutting to length of both hot and
cold rolled steel). The Company operates through eight subsidiaries, Shiloh
Corporation, Valley City Steel Company, The Sectional Die Company, Medina
Blanking, Inc., Sectional Stamping, Inc., Liverpool Coil Processing, Inc.,
Shiloh of Michigan, L.L.C., the Company's joint venture with Rouge Steel
("SOM"), and Greenfield Die & Manufacturing Company ("GDM").
In 1995, the Company prepared a long-term, business plan which included a
strategic decision to concentrate on the core steel processing business. As a
result, the Company sought inquires from prospective bidders for the sale of
its subsidiary, Shafer Valve Company ("Shafer Valve"). Effective April 30,
1996, the Company accounted for Shafer Valve as a discontinued operation. In
May 1996, the Company entered into an agreement to sell the stock of Shafer
Valve to Bettis Corporation. The sale was completed on July 9, 1996.
The Company typically experiences decreased revenue and operating income during
the first fiscal quarter of each year, usually resulting from generally slower
overall automobile production during the winter months. The revenues and
operating income in the third fiscal quarter can also be affected by the
typically lower automobile production activities in July due to manufacturers'
changeover in production lines.
In analyzing the financial aspects of the Company's steel processing
operations, a number of factors must be considered. First, plant utilization
levels are very important to profitability because of the capital intensive
nature of these operations. Because the Company performs a number of different
processing operations, however, it is not meaningful to analyze simply the
total tons of steel processed. For example, blanking and stamping involve more
operational processes, from the design and manufacture of tools and dies to the
production and packaging of the final product, than the Company's other steel
processing services and therefore generally have higher margins. Second, a
significant portion of the Company's steel processing products and services is
provided to the customers on a toll processing basis. Under these arrangements,
the Company charges a specified toll processing fee for the processing
operations performed without acquiring ownership of the steel and being
burdened with the attendant costs of ownership and risk of loss. Although the
proportion of tons processed by the Company that are directly owned and toll
processed may fluctuate from quarter to quarter primarily based on the
customers for which the Company is providing services during the period, the
Company estimates that in 1994, 1995 and 1996 approximately 85.9%, 86.4% and
85.4%, respectively, of total tons processed were on a toll processing basis.
Revenues from operations involving directly owned steel include a component of
raw material cost whereas toll processing revenues do not, consequently, toll
processing generally results in lower gross profit, but higher gross margin,
than directly owned steel processing. Therefore, an increase in the proportion
of total revenues attributable to directly owned steel processing may result in
higher revenues and gross profits but lower gross margins. The Company's
blanking and stamping operations use more directly owned steel than do its
other steel processing operations. In addition, changes in the price of steel
can impact the Company's results of operations because raw material costs are
by far the largest component of cost of sales in processing directly owned
steel.
10
<PAGE> 11
Results of Operations
- ---------------------
THREE MONTHS ENDED APRIL 30, 1997
COMPARED TO THREE MONTHS ENDED APRIL 30, 1996
REVENUES. Revenues increased by $12.7 million, or 21.8%, to $70.7 million for
the second quarter of fiscal 1997 from $58.0 million for the comparable period
in fiscal 1996. The increase in revenues is primarily due to the inclusion of
$10.0 million of revenues from GDM, which was acquired in November 1996.
Revenues from the blanking and stamping and the other steel processing
operations for the second quarter of fiscal 1997 increased approximately 28.2%
and 6.4%, respectively, from the comparable period in fiscal 1996. The
percentage of revenues from directly owned steel processed decreased slightly to
71.6% for the second quarter of fiscal 1997 from 71.9% for the comparable
period in fiscal 1996. Revenues from toll processed steel increased slightly to
28.4% for the second quarter of fiscal 1997 from 28.1% for the comparable
period in fiscal 1996. The slight decrease in the percentage of revenues from
directly owned steel processed was primarily due to increased tolling at Valley
City Steel as well as the inclusion of SOM revenues, offset by the inclusion of
GDM which predominantly processes directly owned steel.
GROSS PROFIT. Gross profit increased by $3.8 million, or 34.0%, to $15.1
million for the second quarter of fiscal 1997 from $11.3 million for the
comparable period in fiscal 1996. Gross margin increased to 21.4 % for the
second quarter of fiscal 1997 from 19.4% for the comparable period in fiscal
1996. The increase in gross margin is primarily attributable to the value added
services provided by the inclusion of GDM, and a shift in the mix of toll and
directly owned steel processing at certain facilities, off-set by start-up costs
related to certain expansion projects.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 58.0% to $6.1 million for the second quarter
of fiscal 1997 from $3.9 million for the comparable period in fiscal 1996. As a
percentage of revenues, selling, general and administrative expenses increased
to 8.7% for the second quarter of fiscal 1997 from 6.7% for the comparable
period in fiscal 1996. The largest component of the increase, both as a
percentage of sales and in dollars, arose principally from the inclusion of GDM.
In addition, the increase was attributable to increased personnel costs at the
Company's corporate offices in connection with the addition of new personnel and
start-up costs related to certain expansion projects.
OTHER. The Company incurred interest expense of $.5 million in the second
quarter of fiscal 1997 due primarily to increased average borrowings during the
period and the Company had no interest expense in the comparable period of
fiscal 1996.. Interest expense of approximately $.4 million relating to
expansion of several facilities was capitalized during the period. The provision
for income taxes was $3.1 million in the second quarter of fiscal 1997 compared
with $2.9 million for the comparable period in fiscal 1996, representing
effective tax rates of 36.6% and 38.6%, respectively. The lower rate in the
second quarter of fiscal 1996 reflects the effect of state tax credits.
DISCONTINUED OPERATIONS. On July 9, 1996 the Company sold Shafer Valve which had
been accounted for as a discontinued operation effective April 30, 1996.
NET INCOME. Net income from continuing operations for the second quarter of
fiscal 1997 increased by $.9 million, or 19.7%, to $5.4 million from $4.5
million for the comparable period in fiscal 1996. This increase was
substantially the result of the inclusion of GDM, which was acquired by the
Company in November 1996.
11
<PAGE> 12
SIX MONTHS ENDED APRIL 30, 1997
COMPARED TO SIX MONTHS ENDED APRIL 30, 1996
REVENUES. Revenues increased by $25.7 million, or 23.4%, to $135.3 million for
the first six months of fiscal 1997 from $109.6 million for the comparable
period in fiscal 1996. The increase in revenues is primarily due to the
inclusion of $20.2 million of revenues from GDM. Revenues from the blanking
and stamping and the other steel processing operations for the first six months
of fiscal 1997 increased approximately 27.5% and 13.5%, respectively, from the
comparable period in fiscal 1996. The percentage of revenues from directly owned
steel processed increased to 73.0% for the first six months of fiscal 1997 from
71.2 % for the comparable period in fiscal 1996. Revenues from toll processed
steel declined to 27.0% for the first six months of fiscal 1997 from 28.9% for
the comparable period in fiscal 1996. The increase in the percentage of revenues
from directly owned steel processed was primarily due to the inclusion of GDM
which predominantly processes directly owned steel.
GROSS PROFIT. Gross profit increased by $6.4 million, or 30.1%, to $27.7
million for the first six months of fiscal 1997 from $21.3 million for the
comparable period in fiscal 1996. Gross margin increased to 20.5% for the first
six months of fiscal 1997 from 19.4% for the comparable period in fiscal 1996.
The increase in gross margin is primarily attributable to higher gross margins
realized with the inclusion of GDM, off-set by pre-operating costs incurred at
SOM and start-up costs related to certain expansion projects.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $3.7 million, or 48.8% to $11.4 million
for the first six months of fiscal 1997 from $7.7 million for the comparable
period in fiscal 1996. As a percentage of revenues, selling, general and
administrative expenses increased to 8.5% for the first six months of fiscal
1997 from 7.0% for the comparable period in fiscal 1996. The largest component
of the increase, both as a percentage of sales and in dollars, arose principally
from the inclusion of GDM. In addition, the increase was attributable to
increased personnel costs at the Company's corporate offices in connection with
the addition of new personnel and start-up costs related to certain expansion
projects.
OTHER. Interest expense increased to $.7 million for the first six months of
fiscal 1997 from $.1 million for the comparable period in fiscal 1996 due
primarily to increased average borrowings during the first six months of fiscal
1997 that were primarily in connection with the acquisition of GDM. Interest
expense of approximately $.9 million relating to expansion of several facilities
was capitalized during the first six months of fiscal 1997. The provision for
income taxes was $6.0 million for the first six months of fiscal 1997 compared
with $5.2 million for the comparable period in fiscal 1996, representing
effective tax rates of 37.5% and 38.6%, respectively.
DISCONTINUED OPERATIONS. On July 9, 1996 the Company sold Shafer Valve which had
been accounted for as a discontinued operation effective April 30, 1996.
NET INCOME. Net income from continuing operations for the first six months of
fiscal 1997 increased by $1.7 million, or 20.3%, to $10.0 million from $8.3
million for the comparable period in fiscal 1996. This increase was
substantially the result of the inclusion of GDM.
12
<PAGE> 13
Liquidity and Capital Resources
- -------------------------------
At April 30, 1997, the Company had $48.6 million of working capital,
representing a current ratio of 2.6 to 1 and a debt-to-capitalization ratio of
33.3% . As a result of the financial condition of the Company , the Company
believes that it will be able to continue its planned investment in new
equipment and facilities through fiscal 1997.
Net cash provided by operating activities is primarily generated from net income
of the Company plus non-cash charges for depreciation and amortization, which,
because of the capital intensive nature of the Company's business, are
substantial. Net cash provided by operating activities during the first six
months of fiscal 1997 was $10.8 million as compared to $10.0 million for the
comparable period of fiscal 1996. Net cash provided by operating activities has
historically been used by the Company to fund a portion of its capital
expenditures.
Capital expenditures were $22.8 million during the first six months of fiscal
1997 and $14.7 million for the comparable period in fiscal 1996. Approximately
$14.4 million of the capital expenditures during the first half of fiscal 1997
were for expansions of the Company's current blanking and stamping facilities.
In addition, approximately $5.3 million was for construction and equipment at
SOM. For fiscal 1997, the Company has remaining planned capital expenditures of
up to approximately $37.6 million. The Company's planned capital expenditures
for fiscal 1997 of up to $60.4 million included the planned construction of a
new $17 million stamping facility for GDM, and an $11.4 million tooling center
in Wellington, Ohio, as well as $26.4 million for new machinery and equipment
and the expansion of existing operating facilities and $5.6 million in
sustaining capital expenditures. Such facilities and machinery and equipment are
being constructed or obtained to support increased business and anticipated new
business and to enhance productivity.
Prior to January 31, 1997, the Company had a $30 million revolving credit
facility ("Facility") with KeyBank National Association ("KeyBank"). On January
31, 1997, the Company increased this Facility to $70 million. The term of the
Facility extends to February 28, 2001 with an option for successive one year
term extensions available at the Company's request and KeyBank's approval, upon
proper written notification. The Company has the option to select the applicable
interest rate at KeyBank's prime rate or the LIBOR rate plus 1/2% fixed in
increments of 30, 60 or 90 days. The terms of the agreement require an annual
commitment fee equal to 1/4% on the average unused amount of the Facility.
Prior to February 24, 1997, the Company was acting as an 80% guarantor for a $23
million unsecured revolving credit facility ("SOM Facility") entered into by
Shiloh of Michigan with KeyBank. On February 24, 1997, the Company increased the
SOM Facility to $28 million and remains an 80% guarantor of the SOM Facility.
Shiloh of Michigan has the option to select the applicable interest rate at
KeyBank's prime rate or the LIBOR rate plus 1/2% fixed in increments of 30, 60
or 90 days. The terms of the agreement require an annual commitment fee equal to
1/4% on the average unused amount of the SOM Facility.
The Company executed a promissory note as of December 6, 1996 in favor of
Richland Bank in the aggregate principal amount of $4.0 million. Interest
accrues on the outstanding principal balance thereunder at LIBOR rate plus 3/4%.
In addition, the Company executed a promissory note as of January 31, 1997 in
favor of KeyBank and received an aggregate amount of $3.0 million for working
capital purposes. Interest accrues on the outstanding principal balance of this
promissory note at approximately 6.1% per annum.
In March 1995, Medina County, Ohio issued on the behalf of the Company an
aggregate of $5.4 million in principal amount of variable rate industrial
revenue bonds due 2010, which are secured by the Company with a letter of
credit. The funds from these bonds were used to finance a portion of the
expansion at the Company's steel pickling operations in Valley City, Ohio. The
entire $5.4 million of such proceeds was outstanding as of April 30, 1997.
13
<PAGE> 14
The Company believes that it currently has sufficient liquidity and available
capital resources to meet its existing needs, and the financial capability to
increase its long-term borrowing level if that becomes appropriate due to
changes in its capital requirements. Total availability under the Company's
unsecured lines of credit and revolving credit facilities is $105 million, $42.3
million of which was unused at April 30, 1997.
FORWARD-LOOKING STATEMENTS
The statements contained in this Report that are not historical
facts are forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties with respect to the Company's
operations in fiscal 1997 as well as over the long term such as, without
limitation, (i) a downturn in the automotive industry, which is highly cyclical,
dependent on consumer spending and subject to the impact of domestic and
international economic conditions and regulations and policies regarding
international trade, (ii) the ability of the Company to accomplish its strategic
objectives with respect to external expansion through selective acquisitions,
internal expansion and the construction of new facilities and (iii) increases in
the price of, or limitations on the availability of steel, the Company's primary
raw material. Any or all of these risks and uncertainties could cause actual
results to differ materially from those reflected in the forward-looking
statements. These forward-looking statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception
of historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. In addition, such
statements are subject to a number of assumptions, risks and uncertainties,
including, without limitation, the risks and uncertainties identified in this
Report, general economic and business conditions, the business opportunities (or
lack thereof) that may be presented to and pursued by the Company, changes in
laws or regulations and other factors, many of which are beyond the control of
the Company. Investors and prospective investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On March 6 , 1997, at the Annual Meeting of Stockholders of Shiloh Industries,
Inc., the stockholders took the following actions:
(1) Elected as Class I Directors all nominees designated in the Proxy
Statement dated February 10, 1997; and
(2) Approved the amendments to the 1993 Key Employee Stock Incentive
Plan; and
(3) Approved the appointment of the independent certified public
accountants of the Company for the current fiscal year.
The Directors were elected pursuant to the following vote:
BROKER
NOMINEE FOR WITHHELD NON-VOTE
- ------- --- -------- --------
Dominick C. Fanello 11,185,662 5,807 --
Richard . Gray 11,186,162 5,307 --
David J. Hessler 11,186,162 5,307 --
The approval of the amendments to the 1993 Key Employee Stock Incentive Plan was
approved by the following vote:
BROKER
FOR AGAINST ABSTAIN NON-VOTE
- --- ------- ------- --------
11,189,519 --- 1,950 --
The approval of appointment of Price Waterhouse as independent certified public
accountants to the Company for its current fiscal year was approved by the
following vote:
BROKER
FOR AGAINST ABSTAIN NON-VOTE
- --- ------- ------- --------
10,979,011 163,041 49,417 --
15
<PAGE> 16
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 10 1993 Key Employee Stock Incentive Plan, as amended, is
incorporated herein by reference to Exhibit A of the
Company's Proxy Statement on Schedule 14A for the fiscal
year ended October 31, 1996 (Commission File No. 0-21964).
Exhibit 27 Financial Data Schedule.
Exhibit 99 Press Release dated June 12, 1997.
b. Reports on Form 8-K: None.
16
<PAGE> 17
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.
Date: June 12, 1997 SHILOH INDUSTRIES, INC.
By: /s/ Robert L. Grissinger
------------------------------
Robert L. Grissinger,
Chairman,
President and Chief
Executive Officer
By: /s/ Craig A. Stacy
------------------------------
Craig A. Stacy,
Chief Financial Officer
and Treasurer
17
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000904979
<NAME> SHILOH INDUSTRIES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<CASH> 2,301,440
<SECURITIES> 0
<RECEIVABLES> 43,922,141
<ALLOWANCES> 0
<INVENTORY> 27,287,334
<CURRENT-ASSETS> 78,961,919
<PP&E> 207,107,950
<DEPRECIATION> 56,944,728
<TOTAL-ASSETS> 240,668,670
<CURRENT-LIABILITIES> 30,364,530
<BONDS> 0
<COMMON> 130,387
0
0
<OTHER-SE> 38,743,406
<TOTAL-LIABILITY-AND-EQUITY> 240,668,670
<SALES> 135,256,520
<TOTAL-REVENUES> 135,256,520
<CGS> 107,577,497
<TOTAL-COSTS> 119,018,692
<OTHER-EXPENSES> (451,565)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 741,695
<INCOME-PRETAX> 15,947,698
<INCOME-TAX> 5,980,387
<INCOME-CONTINUING> 9,967,311
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,967,311
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
<PAGE> 1
Exhibit 99
FOR IMMEDIATE RELEASE CONTACT: Robert Grissinger
President and
Chief Executive Officer
Shiloh Industries, Inc.
(419) 525-2315
SHILOH AND MTD ANNOUNCE
PROPOSED TRANSACTION
-----------------------
Mansfield, Ohio, June 12, 1997--Shiloh Industries, Inc. (NASD:SHLO)
and MTD Products, Inc. ("MTD") today announced that certain stockholders of
Shiloh have indicated that they would support a proposed transaction by MTD for
the acquisition for $19.00 per share of all the outstanding shares of common
stock of Shiloh not currently owned by MTD. MTD, owner of approximately 36
percent of Shiloh's outstanding common stock, and these stockholders of Shiloh
own in the aggregate approximately 66 percent of the outstanding common stock
of Shiloh.
Shiloh also announced that it intends to form a special committee of
its Board of Directors to consider and negotiate the terms of the proposed
transaction. Any transaction involving Shiloh, MTD and the other stockholders of
Shiloh will be subject to, among other things, the negotiation and execution of
definitive agreements. No assurances can be given, however, that MTD and Shiloh
will reach agreement on the terms and conditions of any proposed transaction or
if reached, that such transaction will be consummated.
MTD Products is a privately held manufacturer of outdoor power
equipment and tools, dies and stampings for the automotive industry.
Based in Mansfield, Ohio, Shiloh Industries is a supplier of
high-quality steel blanks, stampings and processed steel to automotive,
appliance and other industrial manufacturers. The Company currently operates six
facilities in Ohio and two in Michigan.
