SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
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: April 1, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
_____________ to __________.
Commission File Number 1-2725
HEIN-WERNER CORPORATION
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-0340430
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2120 Pewaukee Road, Waukesha, Wisconsin 53188-2404
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(Address of principal executive offices) (Zip Code)
(414) 542-6611
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(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 [ ]
Number of shares of $1 par value common stock issued and
outstanding at May 10, 1995:
Issued 2,504,126
Treasury 2,957
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Outstanding 2,501,169
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - (Unaudited)
($000)
April 1, December 31,
1995 1994
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ASSETS
CURRENT ASSETS:
Cash $ 368 $ 466
Customers' accounts receivable 22,422 21,545
Less allowance for losses 1,751 1,670
-------- --------
20,671 19,875
Inventories 16,152 16,154
Prepaid expenses and other 440 350
Income tax benefit receivable 557 508
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TOTAL CURRENT ASSETS 38,188 37,353
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 90 90
Buildings 2,851 2,839
Machinery and equipment 13,470 13,101
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16,411 16,030
Less accumulated depreciation 11,144 10,765
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NET PROPERTY, PLANT AND EQUIPMENT 5,267 5,265
OTHER ASSETS:
Patents, net of accumulated amortization
of $517 for 1995 and $513 for 1994 47 51
Excess cost over net assets of
acquired companies, net of accumulated
amortization of $762 for 1995 and
$747 for 1994 1,520 1,535
Deferred debt issuance costs, net of
accumulated amortization of $400
for 1995 and $376 in 1994 73 97
Receivables, net of allowances of
$955 in 1995 and $955 for 1994 1,341 1,452
Other 360 348
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TOTAL OTHER ASSETS 3,341 3,483
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$46,796 $46,101
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[FN]
See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets - (Unaudited)
($000)
April 1, December 31,
1995 1994
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 3,520 $ 3,189
Current installments of long-term debt 327 316
Accounts payable 7,449 7,302
Accrued payroll and related expenses 2,652 2,705
Accrued expenses related to a disposed
business 355 354
Accrued expenses, other 3,040 3,164
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TOTAL CURRENT LIABILITIES 17,343 17,030
Long-term debt, excluding
current installments 12,607 13,256
Liabilities related to a
disposed business 606 689
Other 659 804
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TOTAL LIABILITIES 31,215 31,779
STOCKHOLDERS' EQUITY:
Common stock of $1 par value per share
Authorized: 20,000,000 shares;
Issued: 2,504,421 shares at April 1,
1995 and 2,386,477 at December 31,
1994 2,504 2,386
Capital in excess of par value 11,377 11,377
Retained earnings 1,129 827
Cumulative translation adjustments 949 110
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15,959 14,700
Less cost of common shares in treasury -
21,707 shares at April 1, 1995 and
at December 31, 1994 378 378
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TOTAL STOCKHOLDERS' EQUITY 15,581 14,322
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$46,796 $46,101
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[FN]
See accompanying notes to consolidated financial statements.
Consolidated Statements of Operations - (Unaudited)
($000) (except per share data)
Three months ended
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April 1, April 2,
1995 1994
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Net sales $18,512 $15,873
Cost of sales 11,786 10,261
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Gross profit 6,726 5,612
Selling, engineering and
administrative expenses 5,803 5,142
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Operating profit 923 470
Interest expense 484 396
Other income, net (2) (112)
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Income before income taxes 441 186
Income tax expense 19 63
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NET INCOME $ 422 $ 123
======== ========
Earnings per share - primary $ 0.17 $ 0.05
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Earnings per share - fully diluted $ 0.16 $ 0.07
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[FN]
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows - (Unaudited)
Three Months Ended
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April 1, April 2,
1995 1994
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CASH FROM OPERATING ACTIVITIES:
Net income $ 422 $ 123
Adjustment to net income for expenses
(gains) not affecting cash:
Depreciation and amortization 330 334
Bad debt expenses 120 42
Increase (decrease) in cash due to changes
in:
Accounts receivable (916) 851
Inventories 2 (1,116)
Prepaid expenses and other assets (54) (16)
Accounts payable 147 (365)
Accrued expenses and other liabilities (406) 336
-------- --------
Cash provided by (used in) operating
activities............................... (355) 189
CASH USED IN INVESTING ACTIVITIES:
Capital expenditures......................... (275) (210)
CASH FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable 332 17
Proceeds from long-term debt -- 372
Repayment of long-term debt (638) (351)
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Cash provided by (used in) financing
activities............................... (306) 38
Cumulative translation adjustments........... 838 193
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TOTAL CASH PROVIDED (USED) (98) 210
CASH - BEGINNING OF THE PERIOD 466 339
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CASH - END OF THE PERIOD $ 368 $ 549
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[FN]
See accompanying notes to consolidated financial statements.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
The financial statements reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results of the interim periods presented. All adjustments, other
than adjustments to the accrual of expenses related to the
discontinued business which is included as a current liability on
the balance sheet, are normal and recurring. All items stated
herein are subject to year-end audit.
INVENTORY:
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(Amounts in thousands)
4/1/95 12/31/94
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Raw Material $ 5,790 $ 5,902
Work-in-Process 1,686 1,481
Finished Goods 8,675 8,771
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$ 16,151 $ 16,154
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MATERIAL CONTINGENCIES:
A) Financial Instruments with Off-Balance-Sheet Risk.
To meet the financing needs of consumers of its collision repair
and engine rebuilding products the Company is, in the normal
course of business, a party to financial instruments with off-
balance-sheet risk. The instruments are guarantees of notes
payable to financing institutions arranged by the Company. The
Company performs credit reviews on all such guarantees. These
guarantees extend for periods up to six years and expire in
decreasing amounts through 2000. The amount guaranteed to each
institution is contractually limited to a portion of the amount
financed in a given year. The notes are collateralized by the
equipment financed. Proceeds from the resale of recovered
equipment have generally been 80% to 90% of repurchased notes.
The maximum credit risk to the Company at December 31, 1994 was
approximately $3,400,000.
B) Litigation
The Company is involved in legal proceedings, claims and
administrative actions arising in the normal course of business.
In the opinion of management, the Company's liability, if any,
under any pending litigation or administrative proceeding would
not materially affect its financial condition or operations.
C) Environmental Claims
From time to time the Company is identified as a potentially
responsible party in environmental matters, primarily related to
waste disposal sites, which contain residuals from the
manufacturing process which were previously disposed of by the
Company in accordance with applicable regulations in effect at
the time of disposal. Materials generated by the Company in
these sites have been small and claims against the Company have
been handled on a de minimis basis. In addition, the Company has
indemnified purchasers of property previously sold by the
Company, against any environmental damage which may have existed
at the time of the sale. In the opinion of management, the
Company's liability, if any, under any pending administrative
proceeding or claim, would not materially affect its financial
condition or operations.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net sales for the first quarter of 1995 were $18.5 million, up
16.6% over the same period of 1994. Sales originating in North
America rose 17.2% to $12.4 million for the quarter compared to
$10.6 million in the same period of the prior year. European
sales were also up for the quarter from $5.3 million in 1994 to
$6.1 million for the first quarter of 1995. Net sales for all
three business segments were again higher in the 1995 quarter
than in the comparable quarter of 1994.
Gross profit margins in North America improved in the first
quarter from 29.4% in 1994 to 30.2% in 1995. Margins in Europe
also improved moving from 47.3% in 1994 to 48.8% for the 1995
first quarter. Consolidated gross profit margins were 36.3% for
the first quarter of 1995 compared to 35.4% for the same period
of 1994.
Operating expenses decreased as a percent of net sales, from
32.4% in the 1994 period to 31.3% in 1995. While actual expenses
were slightly higher in 1995 than in 1994, the bulk of the
increased spending was in sales commissions and in other
marketing expenses. The increases were attributed to the
increased sales volume.
Interest expense rose slightly for the three months ended April
1, 1995, as a result of rising interest rates.
Financial Condition
Continued improved operating results along with aggressive
inventory management emphasis has resulted in a decline in long-
term borrowing. Continued improvements are expected. The
Company expects its liquidity requirements will be met by cash
generated from operations and from its credit facilities.
Short-term credit facilities in Europe are considered sufficient
to supplement cash from operating activities to satisfy liquidity
requirements there. Changes in short-term borrowing are
primarily due to seasonal cash usage patterns.
PART II - OTHER INFORMATION
ITEM 6: (a) Exhibits
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Form 8-K
There were no reports on Form 8-K filed for the
three months ended April 1, 1995.
SIGNATURE
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.
HEIN-WERNER CORPORATION
("Registrant")
Edward F. Duffy
Vice President - Finance and
Treasurer
(Principal Financial Officer)
May 10, 1995
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Date
Index of Exhibits
Exhibit No. Description
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(11) Computation of Earnings Per Share
(27) Financial Data Schedule