UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1997
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OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
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Commission File Number: O-1837
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FEDERAL SCREW WORKS
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(Exact name of registrant as specified in its charter)
Michigan 38-0533740
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
535 Griswold Street, Suite 2400, Detroit Michigan 48226
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, and area code (313) 963-2323
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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____
At March 31, 1997, the Company had one class of common stock outstanding,
$1.00 par value common stock. There were 1,086,662 shares of such common
stock outstanding at that time.
(continued)
Part I FINANCIAL INFORMATION
FEDERAL SCREW WORKS
CONDENSED BALANCE SHEETS (UNAUDITED)
(Thousands of Dollars)
March 31 June 30
1997 1996
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ASSETS
Current Assets:
Cash .......................................... $ 130 $ 782
Accounts Receivable, Less Allowance of $25 .... 11,974 10,882
Inventories:
Finished Products ............................. 3,816 4,731
In-Process Products ........................... 4,588 5,388
Raw Materials And Supplies .................... 2,217 2,122
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10,621 12,241
Prepaid Expenses And Other Current Accounts ... 292 471
Deferred Income Taxes ......................... 910 752
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Total Current Assets ....................... 23,927 25,128
Other Assets:
Intangible Pension Asset ...................... 2,548 2,548
Cash Value Of Life Insurance .................. 4,971 4,889
Miscellaneous ................................. 1,256 1,130
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8,775 8,567
Property, Plant And Equipment ................... 76,843 73,420
Less Accumulated Depreciation ................. 45,570 42,755
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31,273 30,665
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Total Assets .................................... $63,975 $64,360
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Part I FINANCIAL INFORMATION (Continued)
March 31 June 30
1997 1996
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable ............................. $ 4,807 $ 2,977
Payroll And Employee Benefits ................ 5,336 5,262
Dividends Payable ............................ 109 109
Federal Income Taxes ......................... 221 415
Taxes, Other Than Income Taxes ............... 1,076 1,318
Other Accrued Liabilities .................... 459 1,035
Current Maturities Of Long-Term Debt ......... 400 400
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Total Current Liabilities ................. 12,408 11,516
Long Term Liabilities:
Long-Term Debt ............................... 2,655 7,960
Unfunded Pension Obligation .................. 2,977 2,977
Postretirement Benefits Other Than Pensions .. 6,407 5,250
Deferred Income Taxes ........................ 1,346 1,122
Employee Benefits ............................ 1,120 1,194
Other Liabilities ............................ 503 440
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Total Long-Term Liabilities ............... 15,008 18,943
Stockholders' Equity:
Common Stock, $1.00 Par Value, Authorized
2,000,000 Shares; 1,086,662 Shares
Outstanding .................................. 1,087 1,087
Additional Capital ........................... 2,947 2,918
Retained Earnings ............................ 34,190 31,561
Unfunded Pension Costs ....................... (1,665) (1,665)
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Total Stockholders' Equity ................ 36,559 33,901
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Total Liabilities and Stockholders' Equity ..... $ 63,975 $ 64,360
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<FN>
See Accompanying Notes.
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FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands of Dollars, Except Per Share)
Three Months Nine Months
Ended Ended
March 31 March 31
l997 1996 1997 1996
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Net Sales .............................. $27,536 $23,517 $75,001 $66,925
Costs And Expenses:
Cost of Products Sold ............... 23,178 20,136 64,484 58,965
Selling And Administrative Expenses . 1,676 1,406 4,360 3,548
Interest Expense .................... 90 212 365 674
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Total Costs and Expenses ......... 24,944 21,754 69,209 63,187
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Earnings Before Federal
Income Taxes ........................ 2,592 1,763 5,792 3,738
Federal Income Taxes ................... 880 600 1,968 1,271
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Net Earnings ........................... $ 1,712 $ 1,163 $ 3,824 $ 2,467
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Per Share Of Common Stock:
Net Earnings Per Share ................. $ 1.58 $ 1.07 $ 3.52 $ 2.27
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Cash Dividends Per Share ............... $ .10 $ .10 $ 1.10 $ 1.00
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<FN>
See Accompanying Notes.
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FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)
Nine Months
Ended March 31
1997 1996
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Operating Activities
Net Earnings ......................................... $ 3,824 $ 2,467
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization .................... 2,852 2,623
Increase In Cash Value of Life Insurance ......... (82) (106)
Change In Deferred Income Taxes .................. 66 338
Employee Benefits ................................ (74) (103)
Amortization of Restricted Stock ................. 18 35
Other ............................................ 1,106 1,093
Changes In Operating Assets And Liabilities:
Accounts Receivable ............................. (1,092) (231)
Inventories And Prepaid Expenses ................ 1,799 (1,044)
Accounts Payable And Accrued Expenses ........... 891 (2,443)
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Net Cash Provided By Operating Activities .............. 9,308 2,629
Investing Activities
Purchases of Property, Plant And Equipment-Net ....... (3,460) (3,965)
Financing Activities
Proceeds and Repayments From Bank Borrowings ......... (5,105) 2,300
Principal Payments on Lease Purchase Obligations ..... (200) (200)
Dividends Paid ....................................... (1,195) (1,087)
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Net Cash Provided By (Used In) Financing Activities .... (6,500) 1,013
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Decrease In Cash ....................................... (652) (323)
Cash At Beginning Of Period ............................ 782 395
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Cash At End Of Period .................................. $ 130 $ 72
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<FN>
See Accompanying Notes.
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FEDERAL SCREW WORKS
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial reporting. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the nine
months ended March 31, 1997, are not necessarily indicative of the results to
be expected for the fiscal year ending June 30, 1997.
Note B - Debt
On October 24, 1995, the Company entered into a $25,000,000 Revolving Credit
and Term Loan Agreement with a Bank. This agreement replaces the agreement in
effect as of September 21, 1989, as amended. On October 23, 1996, the Bank
approved a one year extension of the revolving credit facility and term loan
option. The Company now has the option to convert borrowings thereunder
(classified as long-term debt) to a term note through October 31, 1999, the
new expiration date of the Agreement. Payments under the term note, if the
conversion option is exercised, would be made quarterly and could extend to
October 31, 2001. The Company had the option to extend the Agreement one year
later than the revolving credit maturity date then in effect. As of March 31,
1997, there was $1,855,000 in outstanding borrowings under the Revolving
Credit and Term Loan Agreement.
Note C - Dividends
Cash dividends per share are based on the number of shares outstanding at the
respective dates of declaration.
Note D - Earnings Per Share and Capital Structure
The Financial Accounting Standards Board (FASB) issued this year "Statements of
Financial Accounting Standards No. 128, Earnings Per Share, and No. 129,
Disclosure of Information About Capital Structure." The adoption of these
standards will not have a material effect on the Company's financial statements.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS: Net sales for the Company's third quarter ended March
31, 1997, increased $4,019,000, or 17.1%, compared with net sales for the
third quarter of the prior year. Net sales for the nine month period ended
March 31, 1997, increased $8,076,000, or 12.1%, compared with the nine month
period of the prior year. The increase is largely attributable to the strong
demand for current automotive and refrigeration products, as well as new
products developed to serve these industries.
Gross profit for the three month period ended March 31, 1997, increased
$977,000, or 28.9%, as compared with gross profit for the third quarter of
the prior year. Gross profit for the nine month period ended March 31, 1997,
increased $2,557,000, or 32.1%, compared with the nine month period of the
prior year. The increase is attributable mainly to the new product programs,
as well as to the increase in sales.
Selling and administrative expenses increased $270,000, or 19.2%, for the
third quarter ended March 31, 1997, as compared with the third quarter of the
prior year. Selling and administrative expenses increased $812,000, or 22.9%,
as compared with the nine month period ended March 31, 1996. The increase is
mainly attributable to increases in compensation.
DIVIDENDS: The Board of Directors, in February 1997, declared a $.10 per
share dividend paid April 1, 1997, to shareholders of record March 7, 1997.
LIQUIDITY AND CAPITAL RESOURCES: Working capital decreased by $2,093,000 from
$13,612,000 at June 30, 1996, to $11,519,000 at March 31, 1997.
At March 31, 1997, the Company had available $23,145,000 under its bank
credit agreement.
Capital expenditures for the nine month period ended March 31, 1997, were
approximately $3.5 million, and, for the year, are expected to approximate
$6.5 million, of which approximately $1.9 million has been committed as of
March 31, 1997.
There have been no material changes concerning environmental matters since
those reported in the Registrant's Form 10-K for the fiscal year ended June
30, 1996.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth at the conclusion of the Liquidity and
Capital Resources discussion in Item 2 of Part I concerning environmental
matters is incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K. There was no SEC Form 8-K filed this
quarter. There were no unusual charges or credits to income, nor a change in
independent accountants.
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.
Federal Screw Works
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Date May 13, 1997 /s/ W. T. ZurSchmiede, Jr.
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W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date May 13, 1997 /s/ John M. O'Brien
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John M. O'Brien
Vice President
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