1
INDEX TO EXHIBITS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended FEBRUARY 28, 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 0-14057
MET-COIL SYSTEMS CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 42-1027215
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(State or Other Jurisdiction of Incorporation) (I.R.S. Employer No.)
5486 SIXTH STREET SW, CEDAR RAPIDS, IOWA 52404
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (319) 363-6566
NOT APPLICABLE
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(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
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 _______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ________ No ________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date 2,904,496
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MET-COIL SYSTEMS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
PAGE
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ITEM 1. FINANCIAL STATEMENTS
Consolidated condensed balance sheets, February 28, 1995
(unaudited) and May 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited consolidated condensed statements of operations,
three months and nine ended February 28, 1995 and 1994 . . . . . . . . . . . . . . . . . 4
Unaudited consolidated condensed statements of cash flows,
nine months ended February 28, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
INDEX TO EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exhibit 11 - Computation of earnings (loss) per common
and common equivalent share . . . . . . . . . . . . . . . . . . . . . . 13
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MET-COIL SYSTEMS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except shares) February 28, May 31,
1995 1994*
(Unaudited)
============================================================================
Current assets
Cash $ 334 $ 1,304
Cash, restricted for debt repayment 750 750
Trade receivables, net 8,368 6,500
Notes and other receivables 1,055 764
Inventories 13,884 10,986
Prepaid expenses 2,394 1,477
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Total current assets 26,785 21,781
Property and equipment, net 8,094 8,751
Cash, restricted for debt repayment 313 1,209
Investments and other assets 2,403 2,656
Intangibles, net 3,137 3,280
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TOTAL ASSETS $ 40,732 $ 37,677
===========================================================================
Current liabilities
Notes payable to banks and current maturities of $ 6,930 $ 7,014
long-term debt
Accounts payable and accrued expenses 7,580 6,739
Customer deposits 1,853 1,558
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Total current liabilities 16,363 15,311
Long-term debt 15,848 16,802
Other 840 673
Preferred stock, convertible and redeemable at $13 3,395 1,472
Stockholders' Equity:
Common stock, $.01 par value, authorized 10,000,000; 29 28
1995 issued 2,904,496; 1994 issued 2,821,448
Additional paid-in capital 15,827 15,472
Retained earnings (deficit) (11,465) (11,800)
Foreign currency translation 42 33
Cost of common stock reacquired for treasury, 38,077 (147) (147)
shares
Employee Stock Ownership Plan debt guarantee -- (167)
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Net equity 4,286 3,419
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LIABILITIES AND STOCKHOLDERS' EQUITY $ 40,732 $ 37,677
===========================================================================
* Condensed from audited financial statements
See notes to financial statements
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MET-COIL SYSTEMS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
February 28, February 28,
1995 1994 1995 1994
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Net revenues $10,863 $8,563 $31,370 $33,302
Cost of goods sold 7,873 6,340 22,424 25,450
Operating expenses 2,340 2,225 6,825 7,058
Interest expense, net 631 545 1,823 1,841
Other (income) expense, net (2) 50 (90) 145
Loss on business sold --- 454 --- 454
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Income (loss) before taxes 21 (1,051) 388 (1,646)
Income tax credits --- 275 --- 275
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Net income (loss) $ 21 $ (776) $ 388 $(1,371)
=====================================================================
Earnings (loss) per common
and common
equivalent share:
Primary $ 0.01 $(0.28) $ 0.14 $(0.51)
=====================================================================
Assuming full dilution $ 0.01 $ --- $ 0.11 $ ---
=====================================================================
Shares used in computing
earnings (loss) per
common and common
equivalent share:
Primary 2,898 2,734 2,855 2,699
=====================================================================
Assuming full dilution 3,683 --- 3,441 ---
=====================================================================
See notes to financial statements
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MET-COIL SYSTEMS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
(In thousands)
Nine Months Ended
February 28,
1995 1994
=======================================================================================
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income (loss) $ 388 $(1,371)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation 1,241 1,487
Amortization 330 258
Accretion of discount on debt and preferred stock 427 386
Loss on sale of business --- 454
Equity in earnings of affiliate (128) (171)
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2,258 1,043
Changes in assets and liabilities:
Trade receivables (1,868) (26)
Notes and other receivables (478) (343)
Tax refund claim 187 926
Inventories (2,898) (1,685)
Accounts payable and accrued expenses 841 504
Customer deposits and progress billings 295 395
Prepaids and other (917) (67)
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Net cash provided by (used in) operating activities (2,580) 747
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INVESTING ACTIVITIES
Proceeds from sale of investments and other assets --- 1,000
Collection of notes 187 ---
Purchase of property and equipment, net (584) (299)
Other, net 329 11
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Net cash provided by (used in) investing activities (68) 712
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FINANCING ACTIVITIES
Net borrowings (repayments) under revolving credit
agreements 410 (705)
Repayments of long-term debt (1,780) (2,064)
Use of restricted cash for debt repayment 750 ---
Reduction in Employee Stock Ownership Plan debt
guarantee 167 610
Dividends on preferred stock (53) ---
Issuance of common stock 356 331
Issuance of preferred stock 1,828 ---
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Net cash provided by (used in) financing activities 1,678 (1,828)
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CASH
Decrease (970) (369)
Beginning balance 1,304 2,039
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Ending balance $334 $1,670
=======================================================================================
See notes to financial statements
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MET-COIL SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. PRESENTATION OF FINANCIAL INFORMATION
The condensed unaudited consolidated financial statements have
been prepared by the Company in accordance with the instructions for
Securities and Exchange Commission's Form 10-Q and do not include all
of the information and footnotes required by generally accepted
accounting principles for audited financial statements. The condensed
unaudited consolidated financial statements include the accounts of
the Company and its subsidiaries. All material intercompany items and
transactions have been eliminated in the consolidation. In the
preparation of the unaudited amounts, all adjustments (consisting
solely of normal recurring adjustments) have been made which are, in
the opinion of management, necessary to a fair statement of the
results for the interim periods. The results for the interim periods
are not necessarily indicative of the results of operations that may
be expected for the year. It is suggested that the condensed
unaudited consolidated financial statements contained herein be read
in conjunction with the statements and notes included in the Company's
Annual Report on Form 10-K for the year ended May 31, 1994.
NOTE 2. INVENTORIES
The composition of the inventories, using the FIFO method, which
approximates replacement cost, is as follows:
(in thousands)
February 28, May 31,
1995 1994
------------ ---------
Raw materials & parts ....... $ 9,358 $ 7,498
Work in process ............. 4,409 3,419
Finished goods .............. 546 498
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$14,313 $11,415
Reduction to LIFO basis ..... 429 429
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$13,884 $10,986
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NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3. INVESTMENT IN AFFILIATE
The Company is accounting for its investment in Met-Coil Ltd.
(50% owned) by the equity method of accounting. Selected financial
information of the investment in affiliate is as follows (in
thousands):
Three Months Ended Nine Months Ended
February February 28
1995 1994 1995 1994
------------------------ -----------------------
Net revenues . . . . . . . . . . . $2,910 $2,809 $8,313 $ 8,842
Gross profit . . . . . . . . . . . 861 894 2,807 2,853
Operating income . . . . . . . . . - - - 244 512 844
Net income . . . . . . . . . . . - - - 242 256 342
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Income from equity
investments, included
in net revenues . . . . . . . . $ - - - $ 121 $ 128 $ 171
======= ====== ====== =======
NOTE 4. DEBT
For information concerning the Company's amended loan agreements
and accompanying terms and restrictions see Note 4 to Financial
Statements in the Company's Annual Report on Form 10-K for the year
ended May 31, 1994 herein incorporated by reference thereto.
NOTE 5. PREFERRED STOCK - REDEEMABLE CONVERTIBLE
The Company has authorized 1,000,000 shares of $1 par value
preferred stock. During the quarter ended February 28, 1995 the
Company in a second offering issued 200,000 shares of preferred stock
at $10 per share ($10 liquidation value per share). The companies
preferred stock provides for cumulative annual dividends of 6% payable
semiannually. The preferred stock is convertible into three shares of
common stock at any time at the option of the holder. After December
31, 1998 either the Company or the holder may redeem the preferred
stock at a redemption price of $13 per share, plus accumulated but
unpaid dividends. The Company is increasing the carrying amount of its
preferred stock, using the interest method, so that the carrying amount
will equal the redemption amount of $4,706,000 at December 31, 1998.
NOTE 6. LITIGATION SETTLEMENT
For information concerning the 1992 litigation settlement see
Note 11 to Financial Statements in the Company's Annual Report on Form
10-K for the year ended May 31, 1994 herein incorporated by reference
thereto.
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NOTE 7. SALE OF ROPER WHITNEY
On December 7, 1993, the Company sold the business operations
of Roper Whitney Company ("Roper Whitney"), a wholly-owned subsidiary.
As part of the proceeds, the Company received a note receivable, due
over a period of five years, for $875,000. The Company recognized a
loss of $454,000 during the quarter ended February 28, 1994 from the
sale of Roper Whitney due primarily to termination benefits paid
former employees and the liquidation of inventory.
NOTE 8. SUPPLEMENTAL CASH FLOW DATA
Cash paid for Interest ........ $ 1,423 $ 1,665
========= =========
Income tax refunds ............ $ 187 $ 1,201
========= =========
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MET-COIL SYSTEMS CORPORATION
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
SECOND QUARTER AND SIX MONTH RESULTS OF OPERATIONS
Revenues of $10.9 million for the third quarter of fiscal 1995
increased from $8.6 million in the third quarter of fiscal 1994. The
increase was due to strong order backlog at all three locations which
are experiencing favorable market conditions. The 1995 third quarter
gross margin of 28% increased from a 1994 third quarter margin of 26%.
The increased margin was attributable to the effect of increased
volume and the return to traditional products at Rowe. Operating
expense, interest expense and other income and expenses remained
relatively consistent and totalled $3.0 million and $2.8 million for
the third quarters ended February 28, 1995 and 1994, respectively.
During the third quarter of fiscal 1994, the Company recognized a
$454,000 loss on the disposal of Roper Whitney, previously a
wholly-owned subsidiary, which was sold effective December 7, 1993.
Reported net income for the third quarter of fiscal 1995 was $21,000
or $.01 income per share as compared to losses of $776,000 or $.28
loss per share for the third quarter of fiscal 1994.
For the first 9 months of fiscal 1995 and 1994 respectively, reported
revenues were $31.3 million and $33.3 million. The decrease of 6% was
due to the exclusion of the Roper Whitney operations in fiscal 1995,
on a comparable basis revenues from on-going operations increased 15%.
The 1995 margin through the third quarter was 29% up from 24% in 1994
due to the sale of Roper Whitney and the aforementioned reasons.
Operating expense, interest expense and other income and expenses
decreased from the first nine months of the prior year and totalled
$8.6 million and $9.0 million for fiscal 1995 and 1994, respectively.
Nine month income of $388,000 or $.11 income per share on a fully
diluted basis for fiscal 1995 compared favorably to nine month losses
of $1,371,000 or $.51 loss per share for fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
Operating working capital of $10.4 million increased $2.2 million from
the second quarter and was $4.0 million higher than the prior year end
level. Backlog for on-going operations, was $16.1 million at February
28, 1995 -- an increase of 59% over February 28, 1994, excluding Roper
Whitney.
On March 31, 1995 the Company will pay the regularly scheduled
semi-annual $0.60 per share dividend to holders of the Company's 6%
preferred shares, which have been declared by the Company's Board of
Directors. The Company continues to omit quarterly dividends to its
common shareholders due to loan covenants which prohibit the payment
of these dividends.
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MET-COIL SYSTEMS CORPORATION
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS -- See Index to Exhibits included elsewhere herein.
(b) FORM 8-K -- A report on Form 8-K was filed on March 10, 1995
regarding the conclusion of the preferred stock
offering.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: April 4 , 1995 Met-Coil Systems Corporation
---
Joseph H. Ceryanec
Vice President Finance and
Chief Financial Officer
/s/ Joseph H. Ceryanec
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MET-COIL SYSTEMS CORPORATION
INDEX TO EXHIBITS
Page
EXHIBIT 11 Computation of Earnings (Loss) Per Common and
Common Equivalent Share . . . . . . . . . . . . . . . . . . 13