SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 1996
Commission file number 0-22924
----------------------------------
HILITE INDUSTRIES, INC.
(Exact name of registrant specified in its charter)
DELAWARE 75-2147742
- - ------------------------------------------------ --------------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
1671 S. BROADWAY
CARROLLTON, TEXAS 75006
- - ------------------------------------------ --------------------------
(Address of principal executive offices) (Zip code)
(214) 466-0475
------------------------------------------
(Registrant's telephone number, including area code)
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
--- ---
As of May 9, 1996, the Company had 4,900,000 shares of Common Stock outstanding.
<PAGE>
HILITE INDUSTRIES, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
Part I FINANCIAL STATEMENTS PAGE
-------------------- ----
Item 1. Financial Statements
Balance Sheets as of June 30, 1995 (Audited) and
March 31, 1996 (Unaudited).................................3
Statements of Income for the Three and Nine Months
Ended March 31, 1996 and 1995 (Unaudited)..................4
Statements of Cash Flows for the Nine Months Ended
March 31, 1996 and 1995 (Unaudited)........................5
Notes to Financial Statements (Unaudited)..................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................9
Part II. OTHER INFORMATION.................................................14
-----------------
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<PAGE>
HILITE INDUSTRIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
------------- ---------------
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ....................... $ 156,752 $ 1,120,543
Accounts receivable, less allowance for doubtful
accounts of $70,000 at the end of each period 11,078,667 5,871,712
Tooling receivables ............................ -- 654,767
Inventories .................................... 10,695,553 5,420,737
Deferred income taxes .......................... 305,292 308,000
Prepaid expenses and other ..................... 1,317,183 207,334
------------ ------------
Total current assets ......................... 23,553,447 13,583,093
------------ ------------
Property, plant and equipment, at cost ............ 37,517,132 24,149,658
Less: accumulated depreciation and amortization ... (9,465,464) (7,485,224)
------------ ------------
Property, plant and equipment, net ................ 28,051,668 16,664,434
Goodwill, net of amortization of $216,184 ......... 6,269,337 --
------------ ------------
TOTAL ASSETS ...................................... $ 57,874,452 $ 30,247,257
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ........... $ 9,654,500 $ 4,175,341
Long-term debt - current portion ................ 2,368,213 1,346,000
Income taxes payable ............................ 484,164 13,337
------------ ------------
Total current liabilities .................... 12,506,877 5,534,678
------------ ------------
Note payable ...................................... 6,886,791 --
Long-term debt .................................... 12,391,240 3,419,167
Deferred income taxes ............................. 1,290,500 1,265,000
Subordinated debt ................................. 2,000,000 --
------------ ------------
Total non-current liabilities ................ 22,568,531 4,684,167
Shareholders' equity:
Preferred Stock, $.01 par value; 5,000,000 shares
authorized, none issued and outstanding ...... -- --
Common stock, $.01 par value; 15,000,000 shares
authorized 4,900,000 issued and outstanding .. 49,000 49,000
Additional paid-in capital ..................... 9,105,674 9,105,674
Retained earnings .............................. 13,644,370 10,874,008
------------ ------------
Total shareholders' equity .................. 22,799,044 20,028,682
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........ $ 57,874,452 $ 30,247,527
============ ============
</TABLE>
The accompanying notes are an integral part of these
interim financial statements.
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<PAGE>
HILITE INDUSTRIES, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales ......................... $17,907,061 $11,828,097 $52,314,617 $33,747,447
Cost of sales ..................... 14,369,290 9,110,161 41,176,883 26,010,263
----------- ----------- ----------- -----------
Gross profit ...................... 3,537,771 2,717,936 11,137,734 7,737,184
Selling, general and administrative
expenses ........................ 1,978,256 1,137,192 5,575,872 3,328,708
----------- ----------- ----------- -----------
Operating income .................. 1,559,515 1,580,744 5,561,862 4,408,476
Interest expense, net ............. 451,903 46,475 1,214,585 105,553
----------- ----------- ----------- -----------
Income before income taxes ........ 1,107,612 1,534,269 4,347,277 4,302,923
Income tax provision .............. 397,066 567,500 1,576,915 1,555,673
----------- ----------- ----------- -----------
Net income ........................ $ 710,546 $ 966,769 $ 2,770,362 $ 2,747,250
=========== =========== =========== ===========
Per share data:
Earnings per Share ................ $ .15 $ .20 $ .57 $ .56
=========== =========== =========== ===========
Weighted average number of
shares outstanding .............. 4,900,000 4,900,000 4,900,000 4,900,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
interim financial statements.
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<PAGE>
HILITE INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------------
1996 1995
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operations:
Net income ..................................... $ 2,770,362 $ 2,747,250
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation ............................. 2,107,873 1,127,575
Amortization ............................. 216,184 --
Increase in net deferred income taxes .... 28,208 37,836
------------ ------------
Cash provided from operations before changes in
operating assets and liabilities ............ 5,112,627 3,912,661
(Increase) decrease in accounts receivable .. (2,214,110) 285,353
(Increase) decrease in tooling receivable ... 654,767 (1,596,974)
Increase in inventories ..................... (1,999,916) (2,309,527)
(Increase) decrease in prepaid expenses and
other current assets ..................... (442,688) 444,126
Increase (decrease) in accounts payable and
accrued expenses .......................... 1,404,137 (165,954)
Increase in income taxes payable ............ 470,827 317,623
------------ ------------
Net cash provided by operations .................. 2,995,644 887,308
------------ ------------
Cash flows used in investing activities:
Acquisition of subsidiary ..................... (7,789,000) --
Net additions to property, plant and equipment (5,128,782) (5,358,643)
------------ ------------
Net cash used in investing activities ............ (12,917,782) (5,358,643)
------------ ------------
Cash flows from financing activities:
Proceeds from acquisition financing ........... 15,397,000 --
Proceeds from long-term debt .................. 1,497,000 900,000
Repayment of debt and capital lease ........... (9,070,256) (664,500)
Net increase in note payable .................. 1,297,217 --
------------ ------------
Net cash from financing activities ............... 9,120,961 235,500
------------ ------------
Net decrease in cash and cash equivalents ........ (801,177) (4,235,835)
Cash and cash equivalents at beginning of period . 1,120,543 5,313,397
------------ ------------
Cash and cash equivalents at end of period ....... $ 319,366 $ 1,077,562
============ ============
</TABLE>
The accompanying notes are an integral part of these
interim financial statements.
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<PAGE>
HILITE INDUSTRIES, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The interim financial statements of Hilite Industries, Inc. (the
"Company") at March 31, 1996 and for the nine-month period ended March 31,
1995, are unaudited, but include all adjustments (consisting of normal
recurring adjustments) which the Company considers necessary for a fair
presentation. The June 30, 1995 balance sheet was derived from the balance
sheet included in the Company's audited Financial Statements as included
in the Company's Annual Report on Form 10-K.
The accompanying unaudited 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, and should be read in conjunction with the
Company's audited Financial Statements. Operating results for the
nine-month period ended March 31, 1996 are not necessarily indicative of
the results that may be expected for the fiscal year ending June 30, 1996.
2. INVENTORIES
Inventories at March 31, 1996 and June 30, 1995 consisted of the
following:
March 31 June 30
------------------- --------------------
(Unaudited) (Audited)
Raw materials.......... $3,863,810 $2,117,695
Work in process....... 2,490,232 1,179,521
Finished goods......... 4,341,511 2,123,521
------------------- --------------------
$10,695,553 $5,420,737
=================== ====================
The inventory balance at March 31, 1996 includes North American Spring and
Stamping Corporation which was acquired on July 21, 1995.
3. DEBT
Effective July 21, 1995, the Company, in conjunction with its acquisition
of North American Spring and Stamping Corporation ("NASS") or ("Specialty
Components and Assemblies division"), executed an amendment to its
existing loan agreement ("the Agreement") with a bank to reflect new
credit facilities totaling $26,700,000. The credit facilities consist of
the following:
1) A revolving line of credit of $10,000,000 with interest payable
monthly, at the Company's option, of either prime rate less 1/2%
(7.75% at March 31, 1996) or LIBOR plus 1 1/4%
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<PAGE>
(7.1875% at March 31, 1996). The revolving line of credit expires on
July 21, 1998. A commitment fee of 1/4% is charged on the average
unused portion of the revolving line of credit to the bank payable
quarterly. As of March 31, 1996, $6,887,000 had been used on the
line of credit, of which $5,590,000 was used to complete financing
on the acquisition, and $3,113,000 is available,
2) Term loans of $13,700,000 original principal balance and $12,395,000
at March 31, 1996. Principal payments on the term loan of
approximately $163,000 together with interest are payable monthly.
The maturity date of the term loans is August 1, 2002. The term
loans bear interest, at the Company's option, at either prime rate
or LIBOR plus 1 1/2% (7.375% at March 31, 1996). The term loans were
used for funding the acquisition and for refinancing existing
Company debt,
3) An equipment acquisition facility of $3,000,000 for the financing of
equipment purchases. Any term loans issued under this facility will
bear interest, at the Company's option, at either prime rate or
LIBOR plus 1 1/2% (7.125% at March 31, 1996). As of March 31, 1996,
$1,497,000 had been used under this facility and $1,503,000 is
available. Principal payments on the equipment acquisition facility
of approximately $25,000 together with interest are payable monthly.
In addition to the above credit facility, the Company also has a fifteen
year real estate note with the same bank that expires on November 1, 2007.
The note, which has an original principal amount of $960,000 and a
$747,000 outstanding balance at March 31, 1996, is payable in monthly
installments of $5,333 plus interest at the prime rate (8.25% at March 31,
1996). The real estate note's due date can be accelerated, at the bank's
option, to July 21, 1998.
All of the notes and line of credit are collateralized by accounts
receivable, inventory, equipment and real estate of the Company.
4. ACQUISITION OF SUBSIDIARY
On July 21, 1995, the Company acquired 100% of the outstanding common
stock of NASS from its three stockholders ("Selling Shareholders"). In
consideration for the transaction, the Company paid $17,397,000, subject
to certain post-closing adjustments. The amount paid at closing included:
July 21, 1995
--------------
Cash paid to Selling Shareholders.............. $ 7,789,000
Cash used to refinance certain
long-term debt of NASS....................... 7,608,000
--------------
Total cash portion of acquisition............ 15,397,000
Subordinated notes payable
("Subordinated Notes") issued to
the Selling Shareholders.................... 2,000,000
Total $ 17,397,000
==============
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<PAGE>
The transaction was accounted for by the purchase method of accounting.
The division's assets, subsequent to the acquisition, were recorded at
their fair market value as of the effective date of the transaction, July
21, 1995. The Company's consolidated statements of income include the
results of operations of NASS subsequent to July 21, 1995.
The Subordinated Notes issued to the Selling Shareholders bear interest at
9%, payable quarterly, and are due on July 21, 2000.
The following unaudited proforma summary presents the consolidated results
of operations as if the acquisition occurred at July 1, 1994 and does not
purport to be indicative of what would have occurred had the acquisition
actually been made as of such date or of results which may occur in the
future.
For the three-months ended For the nine-months ended
March 31, March 31,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
Net sales .............. $17,907,000 $17,812,000 $53,418,000 $55,281,000
Net income ............. 711,000 1,134,000 2,737,000 3,089,000
Net income per share ... $ 0.15 $ 0.23 $ 0.56 $ 0.63
Adjustments made in arriving at the proforma unaudited results of
operations include the difference in depreciation expense resulting from
the change in carrying value of property and equipment to their estimated
fair values, differences in cost of sales for the change in inventory
valued on the FIFO method of inventories rather than the LIFO method and
increase in goodwill amortization resulting from the transaction.
5. NON-CASH TRANSACTION
As part of the acquisition of NASS, $2,000,000 in subordinated notes were
issued to the Selling Shareholders as consideration for the purchase
price. The issuance of the subordinated notes increased the price for the
acquisition. See Note 4.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- - ---------------------
QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995
Net sales for the quarter ended March 31, 1996 were $17,907,000 compared to
$11,828,000 for the quarter ended March 31, 1995, representing an increase of
$6,079,000 (51.4%). The increase primarily resulted from sales of $6,776,000 by
the specialty components and assemblies division, which was acquired on July 21,
1995. The brake valve division sales increased $44,000 (0.8%) to $5,778,000 in
the current quarter from $5,734,000 in the third quarter of the prior year.
Strong sales to Chrysler for the new mini-van were offset by a decline in sales
of brake valves to Ford and General Motors as compared to the same period of the
prior year as a result of lower automotive production rates. The loss of brake
valve sales due to the General Motors strike during the quarter was
approximately $200,000. Power transmission component sales were $5,354,000 for
the quarter, a decrease of 12.1% from $6,094,000 in the third quarter of the
prior year. This division, which is undergoing a major change in product mix,
was also impacted by low vehicle production rates in the U.S. Increased sales of
clutches for the heavy truck market were offset by declining demand for "shift
on the fly clutches" and lower sales of air conditioning mounting brackets which
had been significant in the comparable quarter of the prior year. The impact of
price changes was not significant.
The Company's gross profit of $3,538,000 (19.8% of net sales) for the third
quarter of the 1996 fiscal year represents an increase of 30.2% compared to the
gross profit of $2,718,000 (23.0% of net sales) for the third quarter of the
1995 fiscal year. The primary reason for the increase in gross profit is
increased sales volume due to the acquisition of the specialty components and
assemblies division. The decline in the gross profit percentage in comparison to
the same period of the prior year was affected by the acquisition, whose gross
margin percentage is slightly lower than that of the combined margins of the
already existing divisions. Also, the gross margin percentage is affected by the
timing and extent of the changes in product mix, sales volume, new product
start-up costs as well as other factors which can cause fluctuations between
quarters. Brake valve gross margins improved slightly during the quarter and are
expected to continue to improve in subsequent quarters, but the lower than
planned sales volumes have affected the ability of the Company to absorb the
increased depreciation of $140,000 as well as increases in other fixed costs
related to the recently completed expansion of facilities and equipment. The
gross margin percentage decreased in the power transmission component division
due to the under utilization of capacity, resulting from lower sales and
changing product mix as new business, which is still in a start-up phase, is not
yet comparable to the mature Explorer clutch business that it will replace.
Selling, general and administrative expenses were $1,978,000 (11.0% of net
sales) in the third quarter of the 1996 fiscal year compared to $1,137,000 (9.6%
of net sales) in the third quarter of the 1995 fiscal year. The increase of
$841,000 in selling, general and administrative expenses is primarily due to
expenses associated with the acquisition and amortization expense on goodwill of
$81,000. The selling, general and administrative expenses of the Company,
excluding those attributable to the
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<PAGE>
acquired business, increased approximately $125,000 over the comparable period
of the prior year primarily due to higher research and development expenses.
Net interest expense was $452,000 for the three months ended March 31, 1996
compared to $46,000 for the three months ended March 31, 1995. The increase is
primarily due to the debt incurred in connection with the acquisition of the
specialty components and assemblies division.
Net income in the third quarter of the 1996 fiscal year was $711,000 (4.0% of
net sales), representing an decrease of 26.5% over the net income of $967,000
(8.2% of net sales) in the comparable period of the prior year. Net income as a
percentage of net sales is lower in the current year primarily due to lower
gross margins and the impact of interest and goodwill amortization associated
with the acquisition.
NINE MONTHS ENDED MARCH 31, 1996 COMPARED TO NINE MONTHS ENDED MARCH 31, 1995
Net sales for the nine months ended March 31, 1996 were $52,315,000 compared to
$33,747,000 for the nine months ended March 31, 1995, representing an increase
of $18,568,000 (55.0%). The increase primarily resulted from sales by the
specialty components and assemblies division which was acquired on July 21,
1995. Sales by the specialty components and assemblies division were
$19,158,000. The brake valve division sales increased 1.7%, or $285,000, to
$17,249,000 in the first nine months of the current year from $16,964,000 in the
first nine months of the prior year. The strong sales to Chrysler for the
mini-van, after a late start, were offset by a decline in sales to Ford and
General Motors as compared to last year. Power transmission component sales were
$15,909,000 for the first nine months of fiscal 1996, a decrease of 5.2% from
$16,783,000 in the first nine months of the prior year. This division, which is
undergoing a major change in product mix, was also impacted by low vehicle
production rates in the U.S. Sales of clutches for the heavy truck market were
offset by declining demand for "shift on the fly clutches" and lower sales of
air conditioning mounting brackets which had been strong in the comparable
period of the prior year. The impact of price changes was not significant.
The Company's gross profit of $11,138,000 (21.3% of net sales) for the first
nine months of the 1996 fiscal year represents an increase of 44.0% compared to
the gross profit of $7,737,000 (22.9% of net sales) for the first nine months of
the 1995 fiscal year. The primary reason for the increase in gross profit is
increased sales volume due to the acquisition. The decline in the gross profit
percentage in comparison to the prior year was affected by the specialty
components and assemblies division, whose gross margin percentage is slightly
lower than that of the combined margins of the already existing divisions. Also,
the gross margin percentage is affected by the timing and extent of the changes
in product mix, under utilization of capacity resulting from the lower sales
volume, new product start-up costs as well as other factors which can cause
fluctuations between quarters. Brake valve gross margins improved slightly
during the current year and are expected to continue to improve in subsequent
quarters as a result of the Company's investment in machinery and facilities
over the past two fiscal years. Improving margins has been slowed by the under
utilization of capacity caused by the sluggish automotive industry. The gross
margin percentage decreased slightly in the power transmission component
division due to the change in product mix as the new business, which is still
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<PAGE>
in a start-up phase, is not yet comparable to the mature Explorer clutch
business that it replaced.
Selling, general and administrative expenses were $5,576,000 (10.7% of net
sales) in the first nine months of the 1996 fiscal year compared to $3,329,000
(9.9% of net sales) in the first nine months of the 1995 fiscal year. The
increase of $2,247,000 in selling, general and administrative expenses is due to
expenses associated with NASS, which includes amortization expense of $216,000
associated with the acquisition.. The selling, general and administrative
expenses of the Company, excluding those attributable to the acquired business
were approximately $130,000 higher than the comparable period of the prior year
due to higher net research and development expenses.
Net interest expense was $1,215,000 for the nine months ended March 31, 1996
compared to $106,000 for the nine months ended March 31, 1995. This large
increase is primarily due to the debt incurred in connection with the
acquisition of NASS.
Net income in the first nine months of the 1996 fiscal year was $2,770,000 (5.3%
of net sales), representing an increase of 0.8% over the net income of
$2,747,000 (8.1% of net sales) in the comparable period of the prior year. Net
income as a percentage of net sales is lower in the current year primarily due
to lower gross margins and the impact of interest and goodwill amortization
associated with the acquisition.
Liquidity and Capital Resources
- - -------------------------------
During the nine month period ended March 31, 1996, the Company's cash flow was
affected significantly by the acquisition of NASS. At March 31, 1996 the
Company's working capital was $11,047,000 compared to working capital of
$8,048,000 at June 30, 1995. The current ratio decreased to 1.9 to 1 at March
31, 1996 from 2.5 to 1 at June 30, 1995. The decline in the current ratio is
primarily due to the payment of the purchase price for the acquisition of NASS.
During the nine months ended March 31, 1996, the book value per share has
increased from $4.09 per share at June 30, 1995 to $4.65 at March 31, 1996.
Net cash provided from operations increased $2,109,000 to $2,996,000 for the
nine months ended March 31, 1996 as compared to $887,000 for the nine months
ended March 31, 1995. The increase is primarily due to the specialty components
and assemblies division, which made a positive contribution to cash provided
from operations before changes in operating assets and liabilities.
Of the $4,600,000 increase in accounts receivable, $2,400,000 relates to the
acquisition of NASS and $2,200,000 is primarily due to an increase in the
average number of days outstanding to 55 days at March 31, 1996 from 47 days at
June 30, 1995. The increase in the average number of days outstanding is due to
special terms granted to a certain significant customer and a more diversified
customer base. As of March 31, 1996, no significant amounts were considered
uncollectible.
Inventory balances increased $5,300,000 over the balance at June 30, 1995.
Excluding the impact of the acquisition of $2,300,000, the remaining increase of
$2,000,000 is primarily due to the brake valve division which has successfully
increased its inventory levels to two weeks on most products. In the past, due
to capacity constraints, this division has not been able to build adequate
levels of inventory which, as a result, has caused significant overtime in this
division.
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<PAGE>
Offsetting the increase in accounts receivable and inventory was a $5,500,000
increase in accounts payable and accrued expenses of which $4,100,000 relates to
the acquisition and $1,400,000 is due to the increase in inventory.
The Company's capital expenditures were $5,129,000 for the nine months ended
March 31, 1996. The Company presently estimates capital expenditures for the
year ending June 30, 1996 will approximate an aggregate of $6,000,000. Included
in this amount is approximately $1,000,000 for plant expansion which is
substantially complete. As of March 31, 1996, commitments for capital equipment
and tooling, net of progress payments, are estimated to be approximately
$1,500,000, of which $900,000 represents tooling and is expected to be
reimbursed from customers.
The Company's long-term debt includes consolidated term and mortgage notes
(original principal amounts of $13,700,000 and $960,000, respectively and
current balances at March 31, 1996 of $12,395,000 and $747,000, respectively)
which are payable in monthly installments of $163,095 and $5,333, respectively,
plus interest at either the prime rate or LIBOR plus 1 1/2%. All amounts
borrowed under the consolidated term and mortgage notes are secured by the
Company's real estate, accounts receivable, inventory, machinery and equipment
and have maturities of August 1, 2002 and November 1, 2007, respectively. The
consolidated term note limits dividends payable by the Company.
The Company has a credit agreement of $10,000,000 and an equipment acquisition
facility of $3,000,000 (collectively the "Credit Facilities") for working
capital and capital equipment needs. The Credit Facilities mature on July 21,
1998. As of March 31, 1996, $3,113,000 was available under the credit agreement
and $1,503,000 was available under the equipment acquisition facility. An annual
fee of one quarter of one percent is payable monthly on the unused portion of
the Credit Facilities. The bank has the right to accelerate each of the maturity
dates of the consolidated term note and real estate note to coincide with the
maturity date of the Credit Facilities.
Management anticipates that cash flow from operations and bank credit
availability will be adequate to fund the existing acquisition debt, anticipated
capital and tooling requirements and working capital needs for the next two
years.
Seasonality
- - -----------
Net sales and operating results do not follow a predictable seasonal pattern
from quarter to quarter because the development, initial production and sales of
new products may occur at different times of the year. Generally, in these
periods certain inefficiencies are experienced which result in higher costs to
the Company. In addition, the Company usually experiences somewhat lower sales
in the quarters ended December 31 and September 30 as automobile manufacturers
traditionally close their plants for vacations or model changeovers during these
periods resulting in lower demand for the Company's products.
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<PAGE>
Inflation
- - ---------
The Company believes that the relatively moderate rate of inflation has not had
a significant impact on the Company's revenues or profitability.
-13-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is attached to this report.
11(b) Calculation of fully-diluted earnings per share.
(b) There were no reports on Form 8-K filed during the quarter for which this
report is filed.
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<PAGE>
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.
HILITE INDUSTRIES, INC.
Date: May 9, 1996 /S/ DANIEL W. BRADY
---------------- --------------------
Daniel W. Brady
Chief Executive Officer
Date: May 9, 1996 /S/ ROY WIEGMANN
---------------- --------------------
Roy Wiegmann
Chief Financial Officer
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EXHIBIT 11(B)
HILITE INDUSTRIES, INC.
CALCULATION OF FULLY-DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding .................... 4,900,000 4,900,000 4,900,000 4,900,000
Incremental weighted average shares
associated with stock options and other
common stock equivalents .............. 4,087 -- 1,343 --
----------- ----------- ----------- -----------
4,904,087 4,900,000 4,901,343 4,900,000
=========== =========== =========== ===========
Net income .............................. $ 710,546 $ 966,769 $ 2,770,362 $ 2,747,250
=========== =========== =========== ===========
FULLY-DILUTED EARNINGS PER SHARE:
Earnings per weighted average share ..... $ .15 $ .20 $ .57 $ .56
outstanding
Effect of incremental weighted average
shares associated with stock options
and other common stock equivalents .... (.01) -- (.01) --
----------- ----------- ----------- -----------
Fully-diluted earnings per share ........ $ .14 $ .20 $ .56 $ .56
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000915197
<NAME> HILITE INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 156,752
<SECURITIES> 0
<RECEIVABLES> 11,078,667
<ALLOWANCES> (70,000)
<INVENTORY> 10,695,553
<CURRENT-ASSETS> 23,553,447
<PP&E> 37,517,132
<DEPRECIATION> (9,465,464)
<TOTAL-ASSETS> 57,874,452
<CURRENT-LIABILITIES> 12,506,877
<BONDS> 0
0
0
<COMMON> 49,000
<OTHER-SE> 22,750,044
<TOTAL-LIABILITY-AND-EQUITY> 57,874,452
<SALES> 52,314,617
<TOTAL-REVENUES> 52,314,617
<CGS> 41,176,883
<TOTAL-COSTS> 46,752,755
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,214,585
<INCOME-PRETAX> 4,347,277
<INCOME-TAX> 1,576,915
<INCOME-CONTINUING> 2,770,362
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,770,362
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.56
</TABLE>
