<PAGE>
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UNITED STATES
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 29, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-75072
STEINWAY MUSICAL INSTRUMENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 35-1910745
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
800 South Street, Suite 425
Waltham, Massachusetts 02154
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (617) 894-9770
and
THE SELMER COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4432228
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
600 Industrial Parkway, Elkhart, Indiana 46516
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (219) 522-1675
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 during the past 90 days. Yes [X] No [ ]
Number of shares of Common Stock issued and outstanding as of April 30, 1997:
Class A 477,953
Ordinary 8,944,984
---------
Total 9,422,937
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<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
FORM 10Q
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets
March 29, 1997 and December 31, 1996. . . . . . . . . . . . . . .3
Condensed Consolidated Statements of Operations
Three months ended March 29, 1997 and March 30, 1996. . . . . . .4
Condensed Consolidated Statements of Cash Flows
Three months ended March 29, 1997 and March 30, 1996. . . . . . .5
Notes to Condensed Consolidated Financial Statements . . . . . . . .6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2
<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,845 $ 3,277
Accounts, notes and leases receivable, net of allowance for
bad debts of $7,686 and $7,120 in 1997 and 1996, respectively 49,580 45,563
Inventories 81,976 82,950
Prepaid expenses and other current assets 4,761 2,867
Deferred tax asset 5,485 5,696
------------ ------------
Total current assets 144,647 140,353
Property, plant and equipment, net of accumulated depreciation of
$15,307 and $13,904 in 1997 and 1996, respectively 59,822 62,101
Other assets, net 24,631 26,291
Cost in excess of fair value of net assets acquired, net of accumulated
amortization of $2,087 and $1,894 in 1997 and 1996, respectively 35,149 36,621
------------ ------------
TOTAL ASSETS $ 264,249 $ 265,366
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 2,400 $ 2,354
Accounts payable 5,838 6,453
Other current liabilities 30,580 28,913
------------ ------------
Total current liabilities 38,818 37,720
Long-term debt 115,805 116,037
Deferred taxes 28,131 30,003
Non-current pension liability 12,849 13,728
------------ ------------
Total liabilities 195,603 197,488
Commitments and Contingencies
Stockholders' equity:
Common stock 9 9
Additional paid in capital 68,729 68,729
Retained earnings 4,230 792
Accumulated translation adjustment (4,322) (1,652)
------------ ------------
Total stockholders' equity 68,646 67,878
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 264,249 $ 265,366
------------ ------------
------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
-------------------------
March 29, March 30,
1997 1996
---------- ----------
Net sales $ 73,726 $ 69,049
Cost of sales 50,105 47,329
---------- ----------
Gross profit 23,621 21,720
Operating Expenses:
Sales and marketing 8,620 8,272
Provision for doubtful accounts 201 229
General and administrative 4,253 3,931
Amortization 984 1,100
Other expense 154 81
---------- ----------
Total Operating Expenses 14,212 13,613
---------- ----------
Earnings from operations 9,409 8,107
Interest expense, net 3,039 4,660
---------- ----------
Income before income taxes 6,370 3,447
Provision for income taxes 2,932 1,866
---------- ----------
Net income $ 3,438 $ 1,581
---------- ----------
---------- ----------
Net income per share $ .36 $ .27
---------- ----------
---------- ----------
Weighted average common and
common equivalent shares outstanding 9,422,937 5,957,127
---------- ----------
---------- ----------
See notes to condensed consolidated financial statements.
4
<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Three Months Ended
-------------------------
March 29, March 30,
1997 1996
---------- ----------
Cash flows from operating activities
Net income $ 3,438 $ 1,581
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 2,687 2,773
Deferred tax benefit (576) (582)
Other 196 252
Changes in operating assets and liabilities:
Accounts, notes and leases receivable (4,446) (5,274)
Inventories 419 1,959
Prepaid expense and other current assets (41) (200)
Accounts payable (553) (3,408)
Accrued expenses 2,424 3,815
---------- ----------
Net cash flows from operating activities 3,548 916
Cash flows from investing activities
Capital expenditures (849) (706)
Proceeds from disposals of fixed assets 33 12
Acquisition of Emerson Musical Instruments, Inc.
(net of cash acquired) (1,606)
Changes in other assets (1,819) 595
---------- ----------
Net cash flows from investing activities (4,241) (99)
Cash flows from financing activities
Net borrowings (repayments)
under line of credit agreement 492 (1,973)
Repayments of long-term debt (231) (269)
---------- ----------
Net cash flows from financing activities 261 (2,242)
Effect of foreign exchange rate changes on cash - (135)
---------- ----------
Decrease in cash (432) (1,560)
Cash, beginning of period 3,277 3,706
---------- ----------
Cash, end of period $ 2,845 $ 2,146
---------- ----------
---------- ----------
Supplemental Cash Flow Information
Interest paid $ 171 $ 189
---------- ----------
---------- ----------
Taxes paid $ 1,742 $ 1,258
---------- ----------
---------- ----------
See notes to condensed consolidated financial statements.
5
<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Steinway
Musical Instruments, Inc. and subsidiaries (the "Company") for the three months
ended March 29, 1997 and March 30, 1996 are unaudited. In the opinion of
management, these statements have been prepared on the same basis as the audited
consolidated financial statements as of and for the year ended December 31,
1996, and include all adjustments which are of a normal and recurring nature,
necessary for the fair presentation of financial position, results of operations
and cash flows for the interim period. The condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996. The
results of operations for the three months ended March 29, 1997 are not
necessarily indicative of the results which may be expected for the entire year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements of
the Company include the accounts of all of its direct and indirect
wholly-owned subsidiaries, including The Selmer Company, Inc. ("Selmer") and
The Steinway Piano Company, Inc. ("Steinway"). Significant intercompany
balances have been eliminated in consolidation.
RECLASSIFICATIONS - Certain reclassifications of 1996 amounts have been
made to conform to the financial statement classification adopted in 1997.
(3) COMMITMENTS AND CONTINGENCIES
Certain environmental matters are pending against the Company, which might
result in monetary damages, the amount of which, if any, cannot be determined at
the present time. Philips Electronics, a previous owner of the Company, has
agreed to hold the Company harmless from any financial liability arising from
these environmental matters which were pending as of December 29, 1988.
Management believes that these matters will not have a material adverse impact
on the Company's results of operations or financial condition.
6
<PAGE>
(4) SUMMARIZED FINANCIAL INFORMATION
The Company is a holding company whose only material asset consists of its
investment in its wholly-owned subsidiary, The Selmer Company, Inc. Summarized
financial information for The Selmer Company, Inc. and subsidiaries is as
follows:
Three Months Ended
March 29, December 31, March 29, March 30,
1997 1996 1997 1996
--------- ------------ --------- ---------
Current assets $ 142,040 $ 140,335
Total assets 261,311 265,348
Current liabilities 41,749 37,673
Stockholder's equity 69,578 68,718
Total revenues $ 73,035 $ 69,049
Gross profit 23,520 21,720
Net income 3,530 1,581
(5) SUMMARY OF MERGER AND GUARANTEES
The acquisition of Steinway in May 1995 was funded by Selmer's issuance of
$105 million of 11% Senior Subordinated Notes due 2005 and available cash
balances of the Company. Selmer's payment obligations under the Senior
Subordinated Notes are fully and unconditionally guaranteed on a joint and
several basis by the Company as Parent (the "Guarantor Parent"), and by Steinway
and certain direct and indirect wholly-owned subsidiaries of the Company, each a
"Guarantor" (the "Guarantor Subsidiaries"). These subsidiaries, together with
the operating divisions of Selmer, represent all of the operations of the
Company conducted in the United States. The remaining subsidiaries, which do
not guarantee the Notes, represent foreign operations (the "Non Guarantor
Subsidiaries").
The following condensed consolidating supplementary data illustrates the
composition of the combined Guarantors. Separate complete financial statements
of the respective Guarantors would not provide additional material information
which would be useful in assessing the financial composition of the Guarantors.
No single Guarantor has any significant legal restrictions on the ability of
investors or creditors to obtain access to its assets in event of default on the
Guarantee other than its subordination to senior indebtedness.
Investments in subsidiaries are accounted for by the parent on the cost
method for purposes of the supplemental consolidating presentation. Earnings of
subsidiaries are therefore not reflected in the parent's investment accounts and
earnings. The principal elimination entries eliminate investments in
subsidiaries and intercompany balances and transactions.
7
<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 29, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non
Guarantor Issuer Guarantor Guarantor
Parent of Notes Subsidiaries Subsidiaries Eliminations Consolidated
--------- --------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ - $ (94) $ 1,231 $ 1,708 $ - $ 2,845
Accounts, notes and leases receivable, net 35,981 6,932 6,667 49,580
Inventories 29,794 29,896 22,776 (490) 81,976
Prepaid expenses and other current assets 839 1,338 197 2,387 4,761
Deferred tax asset 700 2,024 3,734 (973) 5,485
--------- --------- --------- --------- --------- ---------
Total current assets 839 67,719 40,280 37,272 (1,463) 144,647
Property, plant and equipment, net 74 14,808 27,397 17,543 59,822
Investment in subsidiaries 71,143 168,557 30,698 (270,398) -
Other assets, net 613 1,647 15,143 8,541 (1,313) 24,631
Cost in excess of fair value
of net assets acquired, net 9,841 11,696 13,612 35,149
--------- --------- --------- --------- --------- ---------
TOTAL ASSETS $ 72,669 $ 262,572 $ 125,214 $ 76,968 $(273,174) $ 264,249
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current
portion of long-term debt $ - $ - $ - $ 2,400 $ - $ 2,400
Accounts payable 106 2,884 1,592 1,256 5,838
Other current liabilities (3,230) 12,154 12,665 10,573 (1,582) 30,580
--------- --------- --------- --------- --------- ---------
Total current liabilities (3,124) 15,038 14,257 14,229 (1,582) 38,818
Long-term debt 126 107,790 4,939 2,950 115,805
Intercompany 6,958 55,547 (64,945) 2,440 -
Deferred taxes 1,165 11,461 15,505 28,131
Non-current pension liability 721 12,849 (721) 12,849
--------- --------- --------- --------- --------- ---------
Total liabilities 3,960 180,261 (34,288) 47,973 (2,303) 195,603
Stockholders' equity 68,709 82,311 159,502 28,995 (270,871) 68,646
--------- --------- --------- --------- --------- ---------
Total $ 72,669 $ 262,572 $ 125,214 $ 76,968 $(273,174) $ 264,249
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
8
<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 29, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non
Guarantor Issuer Guarantor Guarantor
Parent of Notes Subsidiaries Subsidiaries Eliminations Consolidated
--------- --------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ - $ 40,439 $ 21,653 $ 12,971 $ (1,337) $ 73,726
Cost of sales 27,213 15,109 9,099 (1,316) 50,105
--------- --------- --------- --------- --------- ---------
Gross profit - 13,226 6,544 3,872 (21) 23,621
Operating expenses:
Sales and marketing 4,121 2,767 1,761 (29) 8,620
Provision for doubtful accounts 150 33 18 201
General and administrative 665 1,559 932 1,097 4,253
Amortization 115 518 351 984
Other (income) expense (521) 47 428 171 29 154
--------- --------- --------- --------- --------- ---------
Total operating expenses 144 5,992 4,678 3,398 - 14,212
--------- --------- --------- --------- --------- ---------
Earnings (loss) from operations (144) 7,234 1,866 474 (21) 9,409
Interest (income) expense:
Interest income (132) (3,876) (22) 3,872 (158)
Interest expense 4,707 2,230 132 (3,872) 3,197
--------- --------- --------- --------- --------- ---------
Interest expense, net - 4,575 (1,646) 110 - 3,039
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes (144) 2,659 3,512 364 (21) 6,370
Provision for (benefit of) income taxes (50) 1,187 1,491 321 (17) 2,932
--------- --------- --------- --------- --------- ---------
Net income (loss) $ (94) $ 1,472 $ 2,021 $ 43 $ (4) $ 3,438
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
9
<PAGE>
STEINWAY MUSICAL INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 29, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non
Guarantor Issuer Guarantor Guarantor
Parent of Notes Subsidiaries Subsidiaries Eliminations Consolidated
--------- --------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ (94) $ 1,472 $ 2,021 $ 43 $ (4) $ 3,438
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation and amortization 6 777 1,174 730 2,687
Deferred tax benefit (244) (332) (576)
Other 150 33 13 196
Changes in operating assets and liabilities:
Accounts, notes and leases receivable 25 (6,420) (793) 2,742 (4,446)
Inventories 4,913 (3,338) (1,177) 21 419
Prepaid expense and other current assets (619) 122 692 (236) (41)
Accounts payable 68 135 (982) 226 (553)
Accrued expenses (4,028) 1,854 4,185 430 (17) 2,424
--------- --------- --------- --------- --------- ---------
Net cash flows from operating activities (4,642) 3,003 2,748 2,439 3,548
Cash flows from investing activities
Capital expenditures (10) (368) (367) (104) (849)
Proceeds from disposals of fixed assets 9 24 33
Acquisition of Emerson Musical
Instruments, Inc. (net of cash acquired) (1,730) 124 (1,606)
Changes in other assets (4) (338) (60) (1,417) (1,819)
--------- --------- --------- --------- --------- ---------
Net cash flows from investing activities (1,744) (706) (294) (1,497) - (4,241)
Cash flows from financing activities
Net borrowings (repayments) under
line of credit agreement (9) (2,210) 2,501 210 492
Repayments of long-term debt (231) (231)
Intercompany dividend 7,203 (7,203) -
Intercompany 6,377 (7,034) 1,259 (602) -
--------- --------- --------- --------- --------- ---------
Net cash flows from financing activities 6,368 (2,041) (3,443) (623) - 261
Effect of exchange rate changes on cash - - - - - -
Increase (decrease) in cash (18) 256 (989) 319 - (432)
Cash, beginning of period 18 (350) 2,220 1,389 - 3,277
--------- --------- --------- --------- --------- ---------
Cash, end of period $ - $ (94) $ 1,231 $ 1,708 $ - $ 2,845
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
10
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS) (UNAUDITED)
INTRODUCTION
The Company, through its subsidiaries Steinway and Selmer, is one of the
world's leading manufacturers of musical instruments. In January 1997, the
Company acquired Emerson Musical Instruments, Inc. ("Emerson"), a manufacturer
of flutes and piccolos, for approximately $2.0 million, including assumed
liabilities. The acquisition is being accounted for as a purchase for financial
reporting purposes.
Certain statements contained in the following Discussion and Analysis of
Financial Condition and Results of Operations are "forward-looking statements"
within the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended. These forward-looking statements represent the Company's present
expectations or beliefs concerning future events. The Company cautions that
such statements are necessarily based on certain assumptions which are subject
to risks and uncertainties, including, but not limited to, changes in general
economic conditions, exchange rate fluctuations, and the availability of
production capacity which could cause actual results to differ materially from
those indicated herein. Further information on these risk factors is included
in the Company's Annual Report on Form 10-K for the year ended December 31, 1996
and its Final Prospectus filed in August, 1996.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 29, 1997 COMPARED TO THREE MONTHS ENDED MARCH 30, 1996
NET SALES - Net sales increased by $4.7 million (6.8%) to $73.7 million
in the first quarter of 1997. Band instrument sales accounted for $4.4
million of the increase, with instrument unit growth of 5% at Selmer
representing $1.6 million, and the Emerson acquisition contributing $0.7
million. Steinway piano sales increased slightly from the previous year.
Unit volume increases of 20% in U.S. piano shipments were essentially offset
by the translation of flat foreign sales at a stronger dollar exchange rate.
GROSS PROFIT - Consistent with the increase in sales, gross profit
increased by $1.9 million (8.7%) to $23.6 million in the first quarter of 1997.
Gross margins increased to 32.0% for the first quarter of 1997 compared to 31.5%
in 1996, primarily due to continued manufacturing efficiencies throughout U.S.
production facilities combined with a reduction in the cost of the Boston piano
line caused by the increase in the dollar against the yen.
OPERATING EXPENSES - Operating expenses increased by $0.6 million (4.4%) to
$14.2 million in the first quarter of 1997. This reflects inflation, increased
sales volume, and the incurrence of over $0.1 million in new expenses associated
with being publicly held. Expenses decreased slightly as a percentage of sales
from 19.7% in 1996 to 19.3% in 1997.
EARNINGS FROM OPERATIONS - Earnings from operations increased by $1.3
million (16.1%) to $9.4 million in the first quarter of 1997. These improved
earnings resulted from increased sales combined with consistent profit margins
and firm control over operating expenses.
11
<PAGE>
NET INTEREST EXPENSE - Net interest expense decreased by $1.6 million
(34.8%) to $3.0 million in the first quarter of 1997 primarily due to the $1.5
million savings realized from the retirement of the Company's Senior Secured
Notes in August 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company has relied primarily upon cash provided by operations,
supplemented as necessary by seasonal borrowings under its working capital line,
to finance its operations, repay long-term indebtedness and fund capital
expenditures.
Cash provided by operations in the first quarter was $3.5 million in 1997
and $0.9 million in 1996. The increase in cash provided by operations in 1997
results from $1.7 million of additional cash earnings from operations and $0.9
million from lower working capital requirements for receivables, inventory and
current liabilities.
The Company's investing activities used $1.6 million of cash to acquire
Emerson in January 1997. Capital expenditures were $0.8 million and $0.7
million for the first quarter of 1997 and 1996, respectively. These capital
expenditures were mainly used for the purchase of new machinery and building
improvements. The Company expects to increase its level of capital expenditures
in the future in order to modernize, expand and renovate its equipment and
facilities.
The Company's domestic, seasonal borrowing requirements are accommodated
through a committed, revolving credit facility with a domestic bank (the
"Facility"). The Facility provides the Company with a potential borrowing
capacity of up to $60 million, based on eligible accounts receivable and
inventory balances. As of March 29, 1997, $2.9 million was outstanding, and
availability was approximately $55.9 million. Open account loans with foreign
banks also provide for borrowings by Steinway's foreign subsidiaries of up to 20
million deutsche marks.
The Company's long-term financing consists primarily of $110 million of
Senior Subordinated Notes. The Company's debt agreements contain restrictive
covenants that place certain restrictions on the Company, including restrictions
to the Company's ability to incur additional indebtedness, to make investments
in other entities, or to pay cash dividends.
Management believes that cash on hand, together with cash flow anticipated
from operations and available borrowings under the Facility, will be adequate to
meet debt service requirements, fund continuing capital requirements and satisfy
working capital and general corporate needs through 1997.
NEW ACCOUNTING PRONOUNCEMENTS
During the first quarter of 1997, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities". The adoption
of this standard had no effect on the Company's results of operation, financial
position or cash flows.
The Company plans to adopt SFAS No. 128, "Earnings per Share", as of
December 31, 1997. The proforma effect of adopting SFAS No. 128 as of March 29,
1997 would not change the reported earnings per share.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27.1. Steinway Musical Instruments, Inc. - Financial Data
Schedule
Exhibit 27.2 The Selmer Company, Inc. - Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended March 29, 1997.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized.
STEINWAY MUSICAL INSTRUMENTS, INC.
/s/ Dana D. Messina
------------------------------------------------
Dana D. Messina
Director, President and Chief Executive Officer
/s/ Dennis M. Hanson
------------------------------------------------
Dennis M. Hanson
Vice President and Chief Financial Officer
THE SELMER COMPANY, INC.
/s/ Thomas T. Burzycki
------------------------------------------------
Thomas T. Burzycki
Director, President and Chief Executive Officer
/s/ Michael R. Vickrey
------------------------------------------------
Michael R. Vickrey
Executive Vice President and Chief Financial Officer
Date: May 9, 1997
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000911583
<NAME> STEINWAY MUSICAL INSTRUMENTS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-29-1997
<CASH> 2,845
<SECURITIES> 0
<RECEIVABLES> 57,266
<ALLOWANCES> 7,686
<INVENTORY> 81,976
<CURRENT-ASSETS> 144,647
<PP&E> 75,129
<DEPRECIATION> 15,307
<TOTAL-ASSETS> 264,249
<CURRENT-LIABILITIES> 38,818
<BONDS> 115,805
0
0
<COMMON> 9
<OTHER-SE> 68,729
<TOTAL-LIABILITY-AND-EQUITY> 264,249
<SALES> 73,726
<TOTAL-REVENUES> 73,726
<CGS> 50,105
<TOTAL-COSTS> 12,873
<OTHER-EXPENSES> 1,138
<LOSS-PROVISION> 201
<INTEREST-EXPENSE> 3,039
<INCOME-PRETAX> 6,370
<INCOME-TAX> 2,932
<INCOME-CONTINUING> 3,438
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,438
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000918904
<NAME> THE SELMER COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-29-1997
<CASH> 2,828
<SECURITIES> 0
<RECEIVABLES> 56,735
<ALLOWANCES> 7,671
<INVENTORY> 80,749
<CURRENT-ASSETS> 142,040
<PP&E> 74,713
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0
0
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</TABLE>
