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, 1995
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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 ______________________
Commission File Number: 0-1837
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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.)
2400 Buhl Building, 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, 1995, 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
1995 1994
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ASSETS
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . $ 76 $ 1,373
Accounts Receivable, Less Allowance of $25,000 . 11,147 9,320
Inventories:
Finished Products. . . . . . . . . . . . . . . . 3,626 2,297
In-Process Products. . . . . . . . . . . . . . . 4,886 4,750
Raw Materials And Supplies . . . . . . . . . . . 2,923 1,710
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11,435 8,757
Prepaid Expenses And Other Current Accounts. . . 175 445
Deferred Income Taxes . . . . . . . . . . . . . 282 625
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Total Current Assets. . . . . . . . . . . . . 23,115 20,520
Other Assets:
Intangible Pension Asset . . . . . . . . . . . . 2,964 2,964
Cash Value Of Life Insurance . . . . . . . . . . 4,645 4,622
Miscellaneous. . . . . . . . . . . . . . . . . . 796 452
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8,405 8,038
Property, Plant And Equipment. . . . . . . . . . . 67,409 61,911
Less Accumulated Depreciation. . . . . . . . . . 39,684 37,544
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27,725 24,367
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Total Assets . . . . . . . . . . . . . . . . . . . $59,245 $52,925
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Part I FINANCIAL INFORMATION (Continued)
March 31 June 30
1995 1994
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable . . . . . . . . . . . . . . . . $ 5,655 $ 2,985
Payroll And Employee Benefits. . . . . . . . . . 3,627 4,834
Dividends Payable. . . . . . . . . . . . . . . . 109 109
Federal Income Taxes . . . . . . . . . . . . . . 51 684
Taxes, Other Than Income Taxes . . . . . . . . . 1,198 1,023
Accrued Pension Contributions. . . . . . . . . . 131 921
Other Accrued Liabilities. . . . . . . . . . . . 948 423
Current Maturities Of Long-Term Debt . . . . . . 400 400
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Total Current Liabilities . . . . . . . . . . 12,119 11,379
Long Term Liabilities:
Long-Term Debt . . . . . . . . . . . . . . . . . 8,335 6,020
Unfunded Pension Obligation. . . . . . . . . . . 4,049 4,049
Postretirement Benefits Other Than Pensions. . . 3,270 1,880
Deferred Income Taxes. . . . . . . . . . . . . . 781 604
Employee Benefits. . . . . . . . . . . . . . . . 1,336 1,417
Other Liabilities. . . . . . . . . . . . . . . . 65 111
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Total Long-Term Liabilities . . . . . . . . . 17,836 14,081
Stockholders' Equity:
Common Stock, $1.00 Par Value, Authorized
2,000,000 Shares, 1,086,662 Shares
Outstanding at March 31, 1995 and 1,087,612
at June 30, 1994, respectively . . . . . . . . . 1,087 1,088
Additional Capital . . . . . . . . . . . . . . . 2,654 2,580
Retained Earnings. . . . . . . . . . . . . . . . 26,758 25,006
Unfunded Pension Costs . . . . . . . . . . . . . (1,209) (1,209)
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Total Stockholders' Equity. . . . . . . . . . 29,290 27,465
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Total Liabilities and Stockholders' Equity . . . . $59,245 $52,925
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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
1995 1994 1995 1994
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Net Sales ................................ $ 24,914 $ 22,181 $ 66,486 $ 57,754
Costs And Expenses:
Cost of Products Sold ................. 21,528 19,972 58,582 53,088
Selling And Administrative Expenses ... 1,543 1,228 3,782 3,020
Interest Expense ...................... 149 (1) 378 345
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Total Costs And Expenses ........... 23,220 21,199 62,742 56,453
-------- -------- -------- --------
Earnings Before Federal
Income Taxes .......................... 1,694 982 3,744 1,301
Federal Income Taxes ..................... 553 318 1,219 423
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Net Earnings ............................. $ 1,141 $ 664 $ 2,525 $ 878
======== ======== ======== ========
Per Share Of Common Stock:
Net Earnings Per Share ................... $ 1.05 $ .61 $ 2.32 $ .81
======== ======== ======== ========
Cash Dividends Per Share ................. $ .10 $ .10 $ .70 $ .50
======== ======== ======== ========
<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
1995 1994
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Operating Activities
Net Earnings ....................................... $ 2,525 $ 878
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization .................. 2,244 1,906
Increase In Cash Value of Life Insurance ....... (23) (60)
Change In Deferred Income Taxes ................ 520 (376)
Employee Benefits .............................. (81) (34)
Amortization of Restricted Stock ............... 60 81
Other .......................................... 1,016 1,499
Changes In Operating Assets And Liabilities:
Accounts Receivable .......................... (1,827) (347)
Inventories And Prepaid Expenses ............. (2,408) (1,119)
Accounts Payable And Accrued Expenses ........ 740 199
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Net Cash Used In Operating Activities ................ 2,766 2,229
Investing Activities
Purchases of Property, Plant And Equipment-Net ..... (5,602) (4,824)
Financing Activities
Proceeds From Bank Borrowings ...................... 2,515 2,515
Principal Payments on Lease Purchase Obligations ... (200) (200)
Purchases of Common Stock .......................... (14) (9)
Dividends Paid ..................................... (762) (545)
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Net Cash Provided By Financing Activities ............ 1,539 1,761
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Decrease In Cash ..................................... (1,297) (834)
Cash At Beginning Of Period .......................... 1,373 1,217
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Cash At End Of Period ................................ $ 76 $ 383
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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, 1995, are not necessarily indicative of the results to be expected for the
year ending June 30, 1995.
NOTE B - DEBT
The Company has a $16,000,000 Revolving Credit and Term Loan Agreement with a
bank. The Company has the option to convert borrowings thereunder (classified
as long-term debt) to a term note through October 31, 1995, the 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, 1997. As
of March 31, 1995, there were $6,735,000 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.
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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, 1995, increased $2,733,000, or 12.3%, compared with net sales for the
third quarter of the prior year. Net sales for the nine month period ended
March 31, 1995, increased $8,732,000, or 15.1%, compared with the nine month
period ended March 31, 1994. The increase is largely attributable to the
continued strong demand in both the refrigeration and automotive industries.
Gross profit for the three month period ended March 31, 1995, increased
$1,177,000, or 53.3%, compared with gross profit for the third quarter of the
prior year. Gross profit for the nine month period ended March 31, 1995,
increased $3,238,000, or 69.4%, compared with the nine month period ended
March 31, 1994. The increase is largely attributable to the increase in sales.
Selling and administrative expenses increased $315,000, or 25.7%, for the
third quarter ended March 31, 1995, as compared with the third quarter of the
prior year. Selling and administrative expenses increased $762,000, or 25.2%,
as compared with the nine month period ended March 31, 1994. The increase is
mainly attributable to increases in compensation and the adoption of an
Outside Directors' Retirement Plan.
DIVIDENDS: The Board of Directors, in February 1995, declared a $.10 per share
dividend paid April 3, 1995, to shareholders of record March 10, 1995.
LIQUIDITY AND CAPITAL RESOURCES: Working capital increased by $1,855,000 from
$9,141,000 at June 30, 1994, to $10,996,000 at March 31, 1995. The principal
factors contributing to the change was an increase in accounts receivable,
inventories and the payment of employee benefits which existed at June 30,
1994.
At March 31, 1995, the Company had available $9,265,000 under its bank credit
agreement.
Capital expenditures for the nine month period ended March 31, 1995, were
approximately $5.6 million, and, for the year, are expected to approximate
$7.5 million, of which approximately $0.8 million has been committed as of
March 31, 1995.
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, 1994.
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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) Exhibit - Lease Agreement between the Equitable Life Assurance
Society of the United States and Federal Screw Works for the
lease of the 24th floor of The Buhl Building, Detroit, Michigan,
effective January 1, 1995.
(b) 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 11, 1995 /s/ W. T. ZurSchmiede, Jr.
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W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date May 11, 1995 /s/ John M. O'Brien
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John M. O'Brien
Vice President
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