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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 1998
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 333-41939
STELLEX INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3971931
(State of Incorporation) (I.R.S. Employer Identification No.)
1430 Broadway, 13th Floor
New York, New York 10018 10018
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (212) 391-1392
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 ___ No X
As of May 1, 1998, the number of shares outstanding of the registrant's Common
Stock, no par value, was 1,000 shares. There is no trading market for the Common
Stock. Accordingly, the aggregate market value of the Common Stock held by
non-affiliates of the registrant is not determinable.
- ------------------------------------------------------------------------------
1
<PAGE>
STELLEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
ASSETS 1998 1997
---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $ 3,193,100 $ 3,304,200
Account receivables - net of allowances 17,767,300 15,232,200
Inventories 26,996,100 27,884,200
Prepaid and other assets 787,800 3,753,000
Deferred income taxes 3,155,400 2,172,400
--------- ---------
Total current assets 51,899,700 52,346,000
Property, plant and equipment, net 31,498,600 31,506,000
Goodwill, net 42,487,600 42,919,700
Other intangible assets, net 12,004,600 12,594,800
Deferred financing costs, net 5,220,700 5,356,800
Other assets 1,597,500 1,059,100
--------- ---------
Total assets $144,708,700 $145,782,400
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of notes and capital lease
obligations $ 137,200 139,700
Accounts payable 5,467,300 4,637,900
Accrued liabilities 12,348,000 12,031,100
Advance billings and customer deposits 1,751,400 2,678,900
--------- ---------
Total current liabilities 19,703,900 19,487,600
9 1/2% senior subordinated notes 100,000,000 100,000,000
Long-term obligations, less current portion 12,166,600 12,181,800
Deferred employee benefits 1,737,800 1,704,000
Deferred income taxes 2,499,500 2,446,700
Minority interest in KII Holding Corp. 1,793,500 1,078,100
--------- ---------
Total liabilities and minority interest 137,901,300 136,898,200
----------- -----------
Stockholders' equity:
Common stock, no par value, 1,000 shares
authorized and outstanding 50,000 50,000
Preferred stock, no par value: 500 shares
authorized, 229 shares issued and
outstanding 11,450,000 11,450,000
Additional paid-in capital - -
Retained earnings (accumulated deficit) (4,692,600) (2,615,800)
---------- ----------
Total stockholders' equity 6,807,400 8,884,200
--------- ---------
Total liabilities and stockholders' equity $144,708,700 $145,782,400
See accompanying notes to unaudited consolidated financial statements
2
<PAGE>
ITEM 1: Financial Statements
STELLEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1998 1997
------------------------
(Predecessor)
Sales ......................................... $ 27,899,100 $ 6,441,600
Cost of sales ................................. 21,951,500 4,647,700
---------- ---------
Gross Profit .................................. 5,947,600 1,793,900
--------- ---------
Operating expenses:
Selling, general and administrative ........... 4,127,700 880,900
Research and development ...................... 940,000 -
Amortization of non compete covenants,
goodwill and other intangible costs ......... 642,000 7,800
------- -----
Total operating costs ....................... 5,709,700 888,700
--------- -------
Income from operations 237,900 905,200
------- -------
Other income (expense):
Interest income ............................ 32,500 2,300
Interest expense ........................... (2,769,600) (181,600)
Other ...................................... (63,200) (13,200)
------- -------
Total other expense ....................... (2,800,300) (192,500)
---------- --------
Income (loss) before provision for income taxes (2,562,400) 712,700
Provision (benefit) for income taxes .......... (771,900) 285,100
-------- -------
Net income (loss) ............................. (1,790,500) 427,600
Preferred stock dividends ..................... (286,300) -
-------- -------
Income (loss) applicable to common stockholders $ (2,076,800) $ 427,600
============ ============
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
STELLEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
------------------------
1998 1997
(Predecessor)
Cash Flows from Operating Activities:
Net income (loss) ............................... $(1,790,500) $ 427,600
Reconciliation to net cash provided
by operating activities:
Depreciation and amortization ................. 2,327,000 433,500
Amortization of step-up in inventory .......... 1,057,400 -
Gain on sale of property ...................... (2,600) (1,900)
Deferred income taxes ......................... (930,200) 81,300
Stock compensation ............................ 715,400 -
Changes in assets and liabilities:
Accounts receivable ........................... (2,535,100) (459,100)
Inventories ................................... (169,300) (771,200)
Prepaid and other assets ...................... 2,965,200 (88,900)
Due from parent ............................... -- (2,200)
Other assets .................................. (538,400) (33,200)
Accounts payable .............................. 829,400 191,300
Accrued and other liabilities ................. 64,400 236,600
Customer deposits ............................. (927,500) 100
-------- ---
Net cash provided by operating activities .... 1,065,200 13,900
--------- ------
Cash Flows from Investing Activities:
Additions to fixed assets ....................... (1,183,100) (478,600)
Proceeds from sale of fixed assets .............. 24,500 33,500
Net cash used in investing activities ........ (1,158,600) (445,100)
---------- --------
Cash Flows From Financing Activities:
Net borrowings on line of credit ................ - 350,000
Repayments under capital lease obligations ...... (2,500) -
Repayment of debt and notes payable ............. (15,200) (14,000)
------- -------
Net cash provided by (used in) financing
activities .................................. (17,700) 336,000
----------- -----------
Net decrease in cash and cash equivalents .... (111,100) (95,200)
Cash and cash equivalents, beginning of period .. 3,304,200 406,000
Cash and cash equivalents, end of period ........ 3,193,100 310,800
========= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ..................................... $ 52,929 $ 183,098
=========== ===========
Income taxes, net ............................ $ - 55,300
=========== ===========
See accompanying notes to unaudited financial statements
4
<PAGE>
STELLEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Description of Business
Formation of Stellex Industries, Inc. - On September 5, 1997, Stellex Holdings
Corp. was incorporated as a Delaware corporation, which on October 23, 1997
amended its articles of incorporation to change its name to Stellex Industries,
Inc. ("Stellex"). On September 12, 1997, Stellex issued 1,000 shares of its
common stock to Greystoke Capital Management Limited LDC in exchange for (i)
8,010 shares of common and 84 shares of Series A preferred stock of KII Holding
Corp. ("KII Holdings"), (ii) $50,000 cash and (iii) the assumption of a
$4,000,000 promissory note. KII Holdings had previously been formed to effect
the acquisition of Kleinert Industries and subsidiaries ("Kleinert") on July 1,
1997, as described more fully below. As a result of the September 12, 1997
transaction, Stellex acquired an 80.1% interest in KII Holdings; the remaining
equity interests are held by certain members of Kleinert management. The
transaction has been accounted for as a reincorporation of KII Holdings;
accordingly, the financial statements of Stellex reflect the results of its
operations commencing with the acquisition of Kleinert in July 1, 1997. Kleinert
is the predecessor of Stellex, and all references to the "Company" include both
Stellex and its predecessor, Kleinert.
Kleinert Acquisition - On July 1, 1997, KII Holdings through a wholly-owned
subsidiary (KII Acquisition Corp., a Delaware company), acquired all of the
outstanding capital stock of Kleinert from Kleinert Industries Holding AG. The
acquisition was accounted for using the purchase method of accounting, and,
accordingly, the net purchase price of approximately $26.5 million (including
the assumption of $2.6 million of indebtedness and the issuance to the seller of
a note for approximately $1.75 million) was allocated to the assets purchased
and the liabilities assumed based upon the fair values at the date of
acquisition. There was no excess purchase price over the fair values of the net
assets acquired in connection with the acquisition. Kleinert's corporate name
was subsequently changed to Stellex Aerospace. Kleinert commenced operations in
1988, and provided management services for its wholly-owned subsidiaries -
Paragon Precision Products ("Paragon"), General Inspection Laboratories, Inc.
("GIL"), Scanning Electron Analysis Laboratories, Inc. ("SEAL"), and Bandy
Machining International ("Bandy").
Paragon specializes in the manufacture of precision aerospace components. GIL
provides non-destructive testing services for inspecting critical parts and
manufactured components. SEAL specializes in materials analysis and
problem-solving for government and industry. Bandy manufactures precision
hinges, door panels and hinge assemblies for both aerospace and industrial
applications.
TSMD Acquisition - On October 31, 1997, Stellex, through a wholly-owned
subsidiary, TSMD Acquisition Corp., purchased 100% of the outstanding common
stock of Stellex Microwave Systems, Inc. ("Stellex Microwave"), which comprised
the operations of the Tactical Subsystems and Microwave Devices Sectors ("TSMD")
of the Watkins-Johnson Company ("Watkins-Johnson"), for a net purchase price of
approximately $82.1 million. The acquisition was accounted for using the
purchase method of accounting with estimated fair value being assigned to the
assets acquired and liabilities assumed. The purchase was financed primarily
with the net proceeds from offering of senior subordinated notes totaling $92.3
million. Stellex Microwave designs, markets and manufactures a broad range of
microwave devices, modular subsystems and electronic equipment operating over
the RF and microwave frequency bands for sale primarily for military and
aerospace applications. Stellex's consolidated financial statements herein
include the results of operations of Stellex Microwave during the three months
ended March 31, 1998 only.
5
<PAGE>
2. Basis of Presentation
Stellex is a holding company which has no operations or assets separate from its
investments in its subsidiaries. The consolidated balance sheet at March 31,
1998 and the consolidated statements of income and consolidated statements of
cash flows for the period ended March 31, 1998 include the accounts of Stellex
Microwave and KII Holdings and its 80% subsidiary, Stellex Aerospace and its
wholly-owned subsidiaries (collectively, "Stellex Aerospace"). All significant
intercompany transactions have been eliminated in consolidation. The comparative
financial statements for the period ended March 31, 1997 are of Kleinert (the
predecessor of Stellex) and include the accounts of Kleinert Industries, Inc.
and its wholly-owned subsidiaries. All significant intercompany transactions
have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation which were of a normal and
recurring nature have been included. The results of operations for any interim
period are not necessarily indicative of the results for the year. These
unaudited consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
3. Inventories
Inventories consisted of the following:
March 31, December 31,
1998 1997
Raw materials $ 9,485,700 $ 8,088,400
Work-in-process 11,538,300 12,957,300
Finished goods 5,972,100 6,838,500
------------ ------------
Total $ 26,996,100 $ 27,884,200
============= =============
4. Long-Term Debt
Long-term debt consisted of the following:
March 31, December 31,
1998 1997
Revolving line of credit $ 7,500,000 $ 7,500,000
7.785% Mortgage note payable 2,608,800 2,624,000
8% Note payable to seller of the 1,750,000 1,750,000
predecessor
Obligations under capital leases 445,000 447,500
------------ ------------
12,303,800 12,321,500
Less current portion 137,200 139,700
------------ ------------
Total $ 12,166,600 $12,181,800
============= ===========
6
<PAGE>
5. Commitments and Contingencies
The Company is involved from time to time in lawsuits that arise in the normal
course of business. The Company actively and vigorously defends all lawsuits.
Management believes that there are no lawsuits that will have a material affect
on the Company's financial position.
6. Subsequent Events
Stellex Industries , Inc. signed a definitive agreement to acquire Monitor
Aerospace Corporation on April 28, 1998 for total consideration of $95.0mm.
Monitor, which has sales of $86.3 million, is an aerospace subcontractor that is
engaged in the manufacture and assembly of precision-machined structural
aircraft components and assemblies. The acquisition will be financed with credit
facilities underwritten by a bank syndication. The acquisition of Monitor, which
is subject to regulatory approval and the satisfaction of closing conditions, is
expected to close by the end of May 1998.
7. Condensed Financial Information of Stellex and its Subsidiaries
The $100 million principal amount 9 1/2% senior subordinated notes are
guaranteed by all subsidiaries of Stellex including Stellex Microwave, a
wholly-owned subsidiary and KII Holding an 80.1% owned subsidiary, which owns
100% of Stellex Aerospace. Condensed consolidating financial information as of
March 31, 1998 and the three-month period then ended follows:
Condensed Consolidating Balance Sheet
<TABLE>
<S> <C> <C> <C> <C> <C>
Stellex Stellex Stellex
(Parent only) Microwave KII Holdings Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
Cash ......................... $ 475,600 1,757,500 960,000 - 3,193,100
Accounts receivable .......... - 11,834,900 5,932,400 - 17,767,300
Inventories .................. - 13,625,200 13,370,900 - 26,996,100
Other current assets ......... 4,336,700 2,984,600 952,700 (4,330,800) 3,943,200
------------ ------------ ------------ ------------ ------------
Total current assets ......... 4,812,300 30,202,200 21,216,000 (4,330,800) 51,899,700
Property, plant and
equipment ................. - 16,713,600 14,785,000 - 31,498,600
Goodwill and intangibles ..... - 54,492,200 - - 54,492,200
Investment in and
advances to subsidiaries ..... 118,625,000 - - (118,625,000) -
Other assets
- 4,747,700 2,070,500 - 6,818,200
------------ ------------ ------------ ------------ ------------
Total assets ................. $123,437,300 $106,155,700 $ 38,071,500 $(122,955,800) $144,708,700
============ ============ ============ ------------ ============
Current liabilities .......... $ 4,716,200 $ 14,957,400 $ 4,425,600 $ (4,395,300) $ 9,703,900
9 1/2% senior subordinated
notes ...................... 100,000,000 - - - 100,000,000
Intercompany notes ........... - 93,709,100 20,943,000 (114,652,100) -
Other long-term liabilities .. 7,500,000 753,400 8,150,500 1,793,500 18,197,400
Stockholders' equity ...... 11,221,100 (3,264,200) 4,552,400 (5,701,900) 6,807,400
------------ ------------ ------------ ------------ ------------
Total liabilities
and stockholders' equity ..... $123,437,300 $106,155,700 $ 38,071,500 $(122,955,800) $144,708,700
============ ============ ============= ============= ============
</TABLE>
7
<PAGE>
7. Condensed Financial Information of Stellex and Its Subsidiaries -
(Continued)
Condensed Consolidation Statement of Operations
<TABLE>
<S> <C> <C> <C> <C> <C>
Stellex Stellex Stellex
(Parent only) Microwave KII Holdings Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
Sales ..................... $ - $ 19,628,000 $ 8,271,100 $ - $ 27,899,100
Cost of sales ............. - 16,075,100 5,876,400 - 21,951,500
Operating expenses ........ 22,100 3,132,600 1,197,600 715,400 5,067,700
Amortization of intangibles - 642,000 - - 642,000
------------ ------------ ------------ ------------ ------------
Operating income (loss) ... (22,100) (221,700) 1,197,100 (715,400) 237,900
Interest expense .......... (2,545,000) (2,329,900) (610,800) 2,716,100 (2,769,600)
Other income (expense) .... 2,722,200 21,600 (58,400) (2,716,100) (30,700)
------------ ------------ ------------ ------------ ------------
Income (loss) before
income taxes ........... 155,100 (2,530,000) 527,900 (715,400) (2,562,400)
Provision (benefit) for
income taxes ........... - (983,000) 211,100 - (771,900)
------------ ------------ ------------ ------------ ------------
Net income (loss) ......... 155,100 (1,547,000) 316,800 (715,400) (1,790,500)
Preferred stock dividend .. (286,300) - - - (286,300)
------------ ------------ ------------ ------------ ------------
Loss applicable to
common shareholders . $ (131,200) $(1,547,000) $ 316,800 $ (715,400) $ (2,076,800)
Condensed Consolidation Statement of Cash Flows
Net income (loss) $ 155,100 $(1,547,000) $ 316,800 $ (715,400) $ (1,790,500)
Depreciation and
amortization - 2,936,000 448,400 - 3,384,400
Deferred taxes and other - - 50,200 715,400 765,600
Change in operating assets
and liabilities 103,900 (1,155,500) 242,700) - (1,294,300)
------- ---------- ------- ------- ----------
Net cash provided by
operations 259,000 233,500 572,700 - 1,065,200
------- ------- ------- ------- ---------
Fixed asset additions - (411,500) (771,600) - (1,183,100)
Proceeds from sale of
fixed assets - - 24,500 - 24,500
------ ------ ------ ------ ------
Cash used for investing
activities - (411,500) (747,100) - (1,158,600)
Repayment of debt - - (2,500) - (2,500)
Intercompany loans (740,000) 740,000 - - -
Repayments under capital
lease obligation - - (15,200) - (15,200)
------- ------- ------- ------- -------
Cash provided by (used
in) financing activities (740,000) 740,000 (17,700) - (17,700)
-------- ------- ------- ------- -------
Net increase (decrease)in cash (481,000) 562,000 (192,100) - (111,100)
======== ======= ======== ======== ========
</TABLE>
8
<PAGE>
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
The following table segregates the operating data of the Company into its two
operating segments, Stellex Microwave and Stellex Aerospace, for the three
months ended March 31, 1998. Comparative figures for the period ended March 31,
1997 are of Kleinert (the predecessor of Stellex). All figures set forth below
are a percentage of net sales:
Stellex Aerospace Stellex Microwave
Three Months Ended Three Months
March 31, Ended
March 31,
1998 1997 1998
---- ---- ----
(Predecessor)
Net sales 100.0% 100.0% 100.0%
Cost of sales 71.0 72.2 81.9
---- ---- ----
Gross Profit 29.0 27.8 18.1
Selling, general and administrative 14.5 13.7 11.2
Research and development 0.0 0.0 4.8
Amortization of intangible assets 0.0 3.2
-- ----- -- ---
0.0
Operating income 14.5 14.1 (1.1)
Other expense (income):
Interest expense 7.4 2.8 11.9
Other 0.2 (0.1)
-- ----- - -----
0.7
(Loss) income before income taxes 6.4 11.1 (12.9)
(Benefit) provision for income taxes 4.6 (4.9)
-- ----- - -----
2.6
Net (loss) income 6.5 (8.0)
== ===== = =====
3.8
Results of Operations
Three Months Ended March 31, 1998 compared to Three months Ended March 31, 1997.
Net Sales
Sales for the quarter were $27.9 million and included both Stellex Aerospace and
Stellex Microwave. Sales at Stellex Aerospace were $8.3 million or 28.4% greater
than the first quarter of 1997 and continue to grow as a result of the strong
demand in the commercial aviation market for new aircraft production, primarily
at Boeing, and increases in manufacturing requirements for military aircraft.
Stellex Microwave's sales of $19.6 million decreased by $4.1 million due
primarily to the results of efforts made to reduce the level of delinquent
shipments arising from production planning problems associated with the poor
implementation of a new production planning software system in 1996. In
addition, the tactical subsystems business was completing a major order of
AMRAAM subsystems resulting in an unusually high shipping level in the first
quarter of 1997.
Gross Margins
Gross margins at Stellex Aerospace increased from 27.8% in 1997 to 29.0% in 1998
as a result of increased volume and improved manufacturing efficiencies. Stellex
Microwave's gross profit for the quarter totaled approximately 18.1% which was
negatively impacted by production inefficiencies resulting from new programs
within its tactical subsystems business and certain supplier delays which have
improved significantly since the first quarter.
9
<PAGE>
Selling, general and administrative and research and development expenses
Selling, general and administrative expenses at Stellex Aerospace, net of
non-cash compensation expense totaling approximately $700,000, increased 33.3%
from $0.9 million in 1997 to $1.2 million in 1998 as a result of additional
staff employed. Stellex Microwave's selling general and administrative expenses
totaled $3.1 million, or 16.0% of net sales, reflecting continuing cost
reduction efforts in administrative costs offset by increasing research and
development costs to support new product introduction efforts.
Earnings before Interest, Taxes, Depreciation and Amortization and non-cash
charges ("EBITDA")
EBITDA for the three months ended March 31, 1998 totaled $4.2 million.
Liquidity and Capital Resources
The Company provided cash flows from operations totaling $1.1 million and
$13,900 during the three months ended March 31, 1998 and 1997, respectively. The
increase in cash flows from operations resulted primarily from additional cash
flows provided from Stellex Microwave, which was acquired in October 1997, and
improvements in managing inventory levels.
The Company used cash flows from investing activities totaling $1.2 million and
$0.4 million during the three months ended March 31, 1998 and 1997,
respectively. The increase in cash flows used resulted from the increased
capital expenditure requirements due to the Stellex Microwave acquisition.
The Company provided (used) cash flows from financing activities totaling
($17,700) and $336,000 during the three months ended March 31, 1998 and 1997,
respectively. The results reflect no borrowings against the Company's revolver
facility and repayments against outstanding capital lease and a mortgage note.
The Company has signed a purchase agreement to acquire all of the capital stock
of Monitor Aerospace Corporation for approximately $95.0 million, and is
anticipating the consumation of this transaction by the end of May 1998. This
transaction will be financed primarily through a refinancing transaction whereby
the existing $25.0 million Revolving Credit Facility will be replaced with
Tranche A and Tranche B term debt and a revolving line of credit. The terms of
the refinancing have not yet been finalized.
The Company's remaining liquidity demands for the near term will consist of
normal levels of capital expenditure requirements sufficient to accommodate
growth in backlog, working capital needs and debt service funding. Management
believes that based on its current level of operations and anticipated growth,
its cash flows from operations and availability on its revolving line of credit
will be adequate to satisfy its near term liquidity demands.
The Year 2000 Issue
The Company has made an assessment of the impact of the Year 2000 issue on its
internal operations and has developed a plan to bring all of its computer
systems into compliance before the end of 1998. Based on the assessment of the
Company's computer systems software, it has been determined that certain of the
Company's hardware and software systems are either currently Year 2000 compliant
or have an existing upgrade available from the software vendor that is Year 2000
compliant. It is management's intention that all systems that are not currently
Year 2000 compliant will either be upgraded to be Year 2000 compliant or
replaced with alternative systems that are Year 2000 compliant by the end of the
third quarter in 1998.
While achieving Year 2000 compliance is a major task, the costs to be incurred
in addressing the Year 2000 issues are not expected to have a material impact on
the Company's future financial results.
10
<PAGE>
Recent Accounting Standards
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("FASB") No. 130, "Reporting Comprehensive
Income". The standard establishes guidelines for the reporting and display of
comprehensive income and its components in financial statements. Disclosure of
comprehensive income and its components will be required beginning with the
Company's fiscal year ending 1998.
Also in June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information". The standard requires that companies
disclose "operating segments" based on the way management disaggregates the
company for making internal operating decisions. The new rules will be effective
for the Company's 1998 fiscal year end.
In February 1998, the FASB issued SFAS No. 132, "Employers" Disclosures about
Pensions and Other Postretirement Benefits," which standardizes the disclosure
requirement for pensions and other postretirement benefits. The implementation
of SFAS No. 132 is not expected to have an impact on the Company's financial
statements. The standard will be effective for the Company for the year ended
December 31, 1998.
Cautionary Statement on Forward-Looking Statements
This Report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
any forward-looking statements, including statements regarding the intent,
belief, or current expectations of the Company or its management, are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those in the forward-looking
statements as a result of various factors including, but not limited to (i) loss
of certain significant military programs and (ii) a downturn in the commercial
aircraft industry.
Part II - Other Information
Item 6. Exhibit and Reports on Form 8-K
(a) Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K: None
11
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused the Report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, as of May 15, 1998.
STELLEX INDUSTRIES, INC
By:/s/ William L. Remley
------------------------
William L. Remley
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed by the following persons in the capacities
and as of dates indicated.
Signature Title Date
/s/ Richard L. Kramer Chairman of the Board of May 15,1998
- --------------------- Directors and
Richard L. Kramer Director of Stellex
Industries, Inc.
/s/ William L. Remley Vice Chairman, President, May 15,1998
- --------------------- Chief Executive Officer,
William L. Remley Treasurer and
Director of Stellex
Industries, Inc.
/s/ P. Roger Byer Chief Financial Officer of May 15,1998
- --------------------- Stellex Industries, Inc.
P. Roger Byer (principal financial and
accounting officer)
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
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0
11,450
<COMMON> 50
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<INCOME-TAX> (772)
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<EPS-PRIMARY>
0
<EPS-DILUTED>
0
</TABLE>
