-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TxcjHRUIABqXLzdbwTL91q9k3e3zytkWdk1JRz5kTgoSpmUxnAghNHl3xMZ50u9D gVx3SZ0AgeEi6H/UR3b8lQ== 0000898531-99-000250.txt : 19990817 0000898531-99-000250.hdr.sgml : 19990817 ACCESSION NUMBER: 0000898531-99-000250 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CADE INDUSTRIES INC CENTRAL INDEX KEY: 0000356211 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT ENGINES & ENGINE PARTS [3724] IRS NUMBER: 391371038 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12808 FILM NUMBER: 99692960 BUSINESS ADDRESS: STREET 1: 2365 WOODLAKE DRIVE STREET 2: SUITE 120 CITY: OKEMOS STATE: MI ZIP: 48864 BUSINESS PHONE: 5173471333 MAIL ADDRESS: STREET 1: 2365 WOODLAKE DRIVE STREET 2: SUITE 120 CITY: OKEMOS STATE: MI ZIP: 48864 10-Q 1 CADE INDUSTRIES, INC. FORM 10-Q --------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 ------------- 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 0-12808 ------- Cade Industries, Inc. -------------------- (Exact name of registrant as specified in its charter) Wisconsin 39-1371038 - ---------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2365 Woodlake Drive, Suite 120, Okemos, Michigan 48864 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) (517) 347-1333 ------------------------------------------------------ (Registrant's telephone number, including area code) ------------------------------------------------------ (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 periods 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 CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common stock (including Common Stock Purchase Rights), $0.001 Par Value - 21,606,207 shares as of August 11, 1999 INDEX CADE INDUSTRIES, INC. --------------------- PAGE PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Income for the three months ended June 30, 1999 and 1998 3 Condensed Consolidated Statements of Income for the six months ended June 30, 1999 and 1998 4 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 1998 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 14 PART I, ITEM 1 - FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS CADE INDUSTRIES, INC. June 30, 1999 December 31, (Unaudited) 1998* ------------- ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 581,044 $ 580,489 Trade accounts receivable - net 15,404,437 13,172,191 Costs and estimated earnings in excess of billings on uncompleted contracts 3,827,635 3,923,693 Inventories: Finished goods and work in progress 8,098,995 8,416,597 Materials and supplies 9,155,978 8,671,324 ----------- ----------- 17,254,973 17,087,921 Deferred income taxes 2,184,000 2,184,000 Prepaid expenses and other current assets 700,299 780,685 ----------- ----------- TOTAL CURRENT ASSETS 39,952,388 37,728,979 PROPERTY, PLANT AND EQUIPMENT Land and improvements 803,365 803,365 Buildings 7,916,327 7,766,606 Machinery and equipment 15,758,596 13,489,504 Tooling 13,156,307 13,336,445 ----------- ----------- 37,634,595 35,395,920 Less accumulated depreciation and amortization 17,393,724 16,199,252 ----------- ----------- 20,240,871 19,196,668 INTANGIBLE AND OTHER ASSETS Goodwill - net 5,030,810 5,130,957 Other assets 142,032 218,227 ----------- ----------- 5,172,842 5,349,184 ----------- ----------- $65,366,101 $62,274,831 ----------- ----------- ----------- ----------- See notes to condensed consolidated financial statements. LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Note payable to bank $ 4,845,000 $ 150,000 Current portion of long-term debt 3,460,468 3,467,066 Trade accounts payable 6,675,977 7,034,214 Employee compensation and amounts withheld 2,713,296 2,446,571 Billings in excess of costs and estimated earnings on uncompleted contracts 5,798,183 9,600,327 Accrued expenses 2,482,238 3,543,335 ----------- ----------- TOTAL CURRENT LIABILITIES 25,975,162 26,241,513 LONG TERM DEBT 9,430,139 8,313,322 DEFERRED INCOME TAXES 666,000 666,000 SHAREHOLDERS' EQUITY Preferred Stock, 10% cumulative, non-voting, stated value $300 per share; authorized 500 shares, none issued Common Stock, par value $.001 per share; authorized 100,000,000 shares, issued 22,348,859 shares in 1999 and 1998 22,349 22,349 Additional paid-in capital 9,482,361 9,491,975 Retained earnings 21,420,916 18,717,424 ----------- ----------- 30,925,626 28,231,748 Less cost of Common Stock in treasury (742,652 and 550,232 shares in 1999 and 1998, respectively) 1,630,826 1,177,752 ----------- ----------- 29,294,800 27,053,996 ----------- ----------- $65,366,101 $62,274,831 ----------- ----------- ----------- ----------- See notes to condensed consolidated financial statements. * The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) CADE INDUSTRIES, INC. Three Months Ended June 30, ----------------------------- 1999 1998 ----------- ----------- Sales $26,413,239 $24,098,408 Operating expenses: Cost of sales 20,238,111 18,752,711 Selling, general and administrative expenses 3,860,088 3,542,038 ----------- ----------- 24,098,199 22,294,749 ----------- ----------- INCOME FROM OPERATIONS 2,315,040 1,803,659 Interest expense - net 334,649 325,972 ----------- ----------- INCOME BEFORE INCOME TAXES 1,980,391 1,477,687 Income taxes 580,000 398,000 ----------- ----------- NET INCOME $ 1,400,391 $ 1,079,687 ----------- ----------- ----------- ----------- NET INCOME PER SHARE Basic $ 0.06 $ 0.05 Diluted 0.06 0.05 See notes to condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) CADE INDUSTRIES, INC. Six Months Ended June 30, ----------------------------- 1999 1998 ----------- ----------- Sales $52,482,328 $46,011,756 Operating expenses: Cost of sales 40,405,395 35,390,047 Selling, general and administrative expenses 7,592,273 7,129,456 ----------- ----------- 47,997,668 42,519,503 ----------- ----------- INCOME FROM OPERATIONS 4,484,660 3,492,253 Interest expense - net 586,168 654,129 ----------- ----------- INCOME BEFORE INCOME TAXES 3,898,492 2,838,124 Income taxes 1,195,000 840,000 ----------- ----------- NET INCOME $ 2,703,492 $ 1,998,124 ----------- ----------- ----------- ----------- NET INCOME PER SHARE Basic $ 0.12 $ 0.09 Diluted 0.12 0.09 See notes to condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CADE INDUSTRIES, INC. Six Months Ended June 30, ----------------------------- 1999 1998 ----------- ----------- NET CASH PROVIDED BY (USED IN): OPERATING ACTIVITIES $(2,546,146) $ 2,302,347 INVESTING ACTIVITIES Additions to property, plant and equipment (2,850,675) (1,577,475) Other 54,845 ----------- ----------- (2,795,830) (1,577,475) FINANCING ACTIVITIES Increase in note payable to bank 4,695,000 (610,000) (Payments) of long-term debt - net of new borrowing proceeds 1,110,219 (1,201,387) Exercise of stock options 93,125 Purchase of common stock for treasury (551,940) (28,910) Other 89,252 86,994 ----------- ----------- 5,342,531 (1,660,178) ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 555 (935,306) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 580,489 1,093,176 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 581,044 $ 157,870 ----------- ----------- ----------- ----------- See notes to condensed consolidated financial statements. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CADE INDUSTRIES, INC. JUNE 30,1999 NOTE A - BASIS OF PRESENTATION - ------------------------------ The condensed consolidated financial statements as of and for the three and six month periods ended June 30, 1999 and 1998, have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, such condensed consolidated financial statements reflect all adjustments necessary (consisting only of normal recurring accruals) for a fair presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1998. NOTE B - EARNINGS PER SHARE - --------------------------- The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended June 30 Six Months Ended June 30 -------------------------- -------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Numerator: Numerator for basic and diluted earnings per share - income available to common shareholders $ 1,400,391 $ 1,079,687 $ 2,703,492 $ 1,998,124 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Denominator: Denominator for basic earnings per share - weighted average shares 21,621,539 22,034,891 21,676,941 22,007,499 Effect of dilutive stock options - potential common shares 436,812 710,286 439,985 633,284 ----------- ----------- ----------- ----------- Denominator for diluted earnings per share - adjusted weighted-average shares 22,058,351 22,745,177 22,116,926 22,640,783 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Basic Earnings Per Share $0.06 $ 0.05 $0.12 $ 0.09 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Diluted Earnings Per Share $0.06 $ 0.05 $0.12 $ 0.09 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NOTE C - BUSINESS SEGMENTS - -------------------------- Financial information segregated by reportable product segments for the three and six month periods ended June 30, 1999 and 1998 is as follows: Three Months Ended June 30 Six Months Ended June 30 -------------------------- -------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Sales - ----- Engine and airframe products and services $17,259,300 $12,151,300 $34,012,900 $24,066,800 Test facilities and equipment 9,153,900 11,947,100 18,469,400 21,944,900 ----------- ----------- ----------- ----------- Consolidated sales $26,413,200 $24,098,400 $52,482,300 $46,011,700 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Operating Income - ---------------- Engine and airframe products and services $ 2,450,900 $ 1,562,600 $ 4,746,400 $ 2,881,700 Test facilities and equipment 568,500 901,100 968,100 1,770,500 Other (704,400) (660,100) (1,229,800) (1,159,900) ----------- ----------- ----------- ----------- Consolidated operating income $ 2,315,000 $ 1,803,600 $ 4,484,700 $ 3,492,300 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NOTE D - NEW ACCOUNTING PRONOUNCEMENT - ------------------------------------- In June 1998 the Financial Accounting Standards Board issued Statement No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities", which is effective for years beginning after June 15, 2000. The Company has not completed its evaluation of the effect of adopting SFAS 133, however, it believes there will be no impact on its financial position and results of operations from such statement adoption. PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CADE INDUSTRIES, INC. RESULTS OF OPERATIONS --------------------- SALES - ----- The Company's net sales of $26,413,000 in the second quarter of 1999 represented an increase of 9.6% or $2,315,000 from the same quarter of 1998, while net sales of $52,482,000 for the six months ended June 30, 1999, represented an increase of $6,471,000 or 14.1% compared to the same six-month period of the prior year. The higher sales for both the second quarter and six-month periods primarily reflect the Company's continued product diversification and increased sales of gas turbine engine components and overhaul and repair services. At June 30, 1999, the Company's backlog was $84.0 million ($87.7 million at June 30, 1998) which includes both firm orders supported by customer purchase orders with fixed delivery dates, and blanket purchase orders against which customers issue production releases covering relatively short time periods. The decrease in order backlog at 1999 quarter end compared to 1998 primarily reflects the continued increase in sales of overhaul and repair services and the reduction in subcontract expense content of engine test facility and equipment contracts. Overhaul and repair orders, representing approximately 27% of 1999 second quarter and year-to-date sales, are not included in the order backlog due to their very short lead times. COST OF SALES - ------------- Cost of sales for the second quarter of 1999 increased $1,485,000 or 7.9% from the same quarter of 1998 and for the six-months ended June 30, 1999 increased $5,015,000 or 14.2% from the comparable period in 1998. The increases for both the quarter and six-month periods were primarily due to the higher sales (including subcontract revenue) in 1999. Cost of sales as a percent of sales in the second quarter of 1999 decreased to 76.6% from 77.8% in the prior year's quarter and for the six-months ended June 30, 1999 was relatively unchanged at 77.0% compared to 76.9% in the comparable period of 1998. The largest percentage change in cost of sales components was a decrease in subcontract costs in both the 1999 second quarter and year-to-date period. A portion of the Company's revenues are derived from contracts to manufacture engine test facilities that involve building construction by subcontractors. These subcontract costs, which are expensed as material costs, are passed on to customers at margins substantially below historical manufacturing results. The material, labor, overhead and tooling amortization components of cost of sales as a percent of sales (excluding the effect of subcontract costs and revenues) reflected only modest changes for both the 1999 second quarter and year-to-date period from the comparable 1998 periods. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - -------------------------------------------- Selling, general and administrative expenses ("administrative expenses") as a percent of sales were 14.6% and 14.7% for the second quarters of 1999 and 1998, respectively, and 14.5% and 15.5% for the six months ended June 30, 1999 and 1998, respectively. The percentages of administrative expenses to sales for the 1999 second quarter and year-to-date period were impacted by higher costs related to management information systems, product warranty and travel. The 1999 second quarter percentage was further impacted by decreased commission and royalty expenses although these same expenses, as well as costs related to investor relations, increased during the 1999 six-month period. Sales commissions and royalties are directly related to the sales mix of products and/or customers. Offsetting these 1999 percentage increases was the effect of the increases in sales and the corresponding spreading of the administrative costs over a larger sales base. Actual amounts expended in the three and six month periods of 1999 increased by $318,000 and $463,000, respectively, from the same periods in 1998. Factors contributing to the higher dollar level of administrative expenditures were increased costs related to the development and implementation of enterprise resource planning systems, product warranty, travel-related costs incurred to support the higher current and expected sales volumes, and expenses related to investor relations efforts. NET INTEREST EXPENSE - -------------------- Net interest expense as a percent of sales was approximately 1.2% for both the second quarter of 1999 and the six-month period ended June 30, 1999 and was 1.4% for the 1998 quarter and six-month period ended June 30, 1998. Actual interest expense for the second quarter of 1999 increased by $9,000 to $335,000 due primarily to higher average short-term borrowings, with partial offset from lower interest rates on variable rate debt. For the six months ended June 30, 1999 interest expense decreased by $68,000 to $586,000 due to lower average short and long-term borrowings and lower interest rates on variable rate debt. INCOME TAX EXPENSE - ------------------ Income taxes were $580,000 or an effective tax rate of 29.3% in the 1999 second quarter compared to $398,000 or an effective tax rate of 26.9% for the same quarter of 1998. Income taxes for the six month period ended June 30, 1999 increased by $355,000 to $1,195,000 from the comparable period of the prior year and the effective tax rates were 30.7% and 29.6%, respectively. The effective tax rate is lower than the statutory rate due primarily to tax savings arising from the Company's foreign sales corporation. NET INCOME - ---------- Net income of $1,400,000 in the 1999 second quarter represents an increase in after-tax earnings of $321,000 or 30%, from the 1998 second quarter. Net income of $2,703,000 for the first six months of 1999 represents an increase in after- tax earnings of $705,000 or 35%, from the comparable period of 1998. Factors contributing to these changes are discussed above. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company has historically met its working capital and longer term capital needs through operating cash flow, short and long-term bank debt and leasing arrangements on certain items of capital equipment. During the first six months of 1999, capital was used principally to fund the Company's inventory and accounts receivable, its warranty expense, its plant, equipment and tooling expenditures and to meet its debt repayment obligations. The Company will continue to seek acquisition opportunities to expand and/or diversify its markets. The Company acquires shares of its stock on an ongoing basis when market conditions and cash position warrant. For 1999 management is authorized to purchase up to one million shares under specified conditions. During the first half of 1999, the Company acquired 230,000 shares of its common stock for approximately $552,000. At the end of the quarter, the Company maintained a $10,000,000 unsecured credit line with a bank, $4,970,000 of which was available at June 30, 1999, after consideration of actual line of credit usage and credit line commitments to support foreign exchange contracts and letters of credit. The Company also had outstanding approximately $12,229,000 of secured term debt, and $661,000 of subordinated notes. Management believes that expected increased revenues and on-going emphasis on working capital management will provide adequate cash flow from operations. As a result, the Company's cash flow from operations, its current credit facilities and available financing opportunities are felt to be adequate to finance its operations and capital expenditure requirements at present and anticipated levels. Year 2000 Update - ---------------- The Company has developed a Year 2000 Action Plan ("Action Plan") to address the issue of computer programs, information technology and embedded computer chips being unable to distinguish between the year 1900 and the year 2000. During 1998, as discussed in the Company's annual report on Form 10-K for the year ended December 31, 1998, management undertook a company-wide project for the improvement of its business and manufacturing information systems through the purchase of enterprise resource planning software ("ERP"). The ERP software will serve as the common base platform for the integration of the manufacturing, financial, sales and procurement systems of each of the Company's operations, replacing primarily dissimilar manually-driven systems. This new system combined with upgrades to the Company's other business software programs is expected to make the Company's business computer systems Year 2000 compliant in the fourth quarter of 1999. The Company has developed a contingency plan to make the programs that are scheduled to be replaced by the ERP system Year 2000 compliant, if necessary. The Action Plan consists of three major sections: 1) information technology ("IT") systems; 2) non-IT systems; and 3) third-party communications. Phases common to each of the three major sections are: inventory of all equipment and software; assessment of Year 2000 compliance of inventoried equipment and software with prioritization of non compliant items determined to be material to the Company; repair or replacement of material, non compliant items; testing of material items; and development and implementation of contingency plans in the event of material system failures. At June 30, 1999, the inventory and assessment phases of the IT system section of the Action Plan were complete. The IT systems section includes both hardware and systems software as well as applications software. Non compliance in this section may be corrected through full replacements or supplemental corrective solutions to the extent they are available from vendors and are reliable. The testing phase of this section, scheduled for completion in the third quarter of 1999, is on going as hardware or system software is remediated, upgraded or replaced. Contingency planning for this section is approximately 95% complete and scheduled for completion in the third quarter of 1999. The non IT systems section includes the hardware, software and related embedded computer chips that are used in the operation of all Company facilities and associated systems. At June 30, 1999, the inventory and assessment phases of the non-IT system section were complete. The Company estimates the repair and testing of non-IT systems to be approximately 90% complete, with all repair and testing scheduled to be completed in the third quarter of 1999. Contingency planning for this section is in process and scheduled for completion by mid- 1999. The third party communications section includes: the identification and prioritization of suppliers and customers where material relationships exist, including direct interface; and communications with them regarding their plans and progress in addressing the Year 2000 issue. Communications and detailed evaluations of the most critical suppliers and customers are scheduled for completion in the third quarter of 1999. The development of contingency plans for this section is complete. The Company estimates that this section was on schedule at June 30, 1999. The Company believes that the cost, including the ERP-related hardware and software, of its Year 2000 identification, assessment, remediation and testing efforts, as well as currently anticipated costs to be incurred by the Company with respect to Year 2000 issues of third parties, will not exceed $1,425,000, which expenditures will be funded from operating cash flows and debt financing. As of June 30, 1999, the Company had expended approximately $1,100,000, including $425,000 in 1998, on Year 2000 issues. The failure to correct a material Year 2000 problem could result in an interruption in, or a failure of, certain normal business activities or operations. Such failures could have a material, adverse affect on the Company's results of operations, liquidity and financial condition. The Company is currently unable to determine whether the effects of Year 2000 failures will have a material impact on the Company's results of operations, liquidity or financial condition due to the overall uncertainty inherent in the Year 2000 problem, particularly the uncertainty about the Year 2000 readiness of material customers and suppliers. The Year 2000 Action Plan is expected to significantly reduce the Company's level of uncertainty about the Year 2000 issue, especially about the Year 2000 compliance and readiness of its material third party agents. The Company believes that, with the implementation of the new business system and completion of the Action Plan as scheduled, the likelihood of major interruptions of normal operations should be reduced. Certain of the information contained in Item 2 is of a forward looking nature and is subject to various uncertainties. See Part II, Item 5. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ------- Not applicable. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- Other than as described below in Item 5, the Company is not involved in any material pending legal proceedings other than ordinary routine litigation incidental to its business. ITEM 5. OTHER INFORMATION - ------- In its prior filings, the Company has discussed the circumstances surrounding an acoustic emissions problem at an engine test facility sold by its Cade Cenco ("Cenco") subsidiary. The Company has completed the remedial work on the test facility within the original cost estimates of $7 million to $8 million. The facility now meets the contract specifications, has been issued an unrestricted use permit by local authorities, and is fully operational at this time. The Company believes that the costs of remedial work and interim engine test facilities will, for the most part, be offset by potential insurance recoveries that may be available under a combination of a policy of insurance guaranteeing the design work of the subcontractor and an errors and omissions insurance policy covering damages resulting from Cenco design and engineering deficiencies, by warranty and other reserves established by the Company and other sources. The Company has filed claims or initiated litigation seeking recovery under the insurance policies. The Company's officers may, when appropriate, make public statements that contain forward looking information as to industry conditions and the Company's sales and earnings. Statements in this Form 10-Q as to future sales, earnings, cash flow, operating margins, potential insurance recoveries, and economic and industry conditions are forward looking information. Forward looking information is subject to risks and uncertainties that may significantly impact expected results. Among the factors that could cause actual results to differ materially from those which are anticipated are the following: business conditions generally and conditions specifically in the aircraft and aerospace industries; timing of receipt and delivery of orders; the timing and satisfactory completion of engine test facilities; price fluctuations for raw materials and labor; competitive factors, including price competition from other suppliers of similar products and overhaul and repair services; risk of obsolescence of tooling inventory before full amortization on project costs; cancellation of orders; foreign currency exchange rates, the ability to obtain effective hedges against fluctuations in currency exchange rates; foreign trade and fiscal policies; insurance recoveries; and unexpected developments while implementing the modifications necessary to mitigate Year 2000 compliance issues, including the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes, the indirect impacts of third parties with whom we do business and who do not mitigate their Year 2000 compliance problems and similar unforeseen consequences of the Year 2000 issue. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- (a) The following exhibit is filed herewith: Exhibit 27. Financial Data Schedule (b) The Company has not filed any Reports on Form 8-K during the quarter for which this report is filed. 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. CADE INDUSTRIES, INC. --------------------- August 13, 1999 By /s/ Edward B. Stephens ----------------------------- Edward B. Stephens Vice President, Treasurer and Chief Financial Officer CADE INDUSTRIES, INC. * * * EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1999 EXHIBIT INCORPORATED HEREIN FILED NUMBER DESCRIPTION BY REFERENCE TO: HEREWITH ------- --------------- ------------------- -------- 27 Financial Data Schedule X EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CADE INDUSTRIES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. 6-MOS DEC-31-1999 JUN-30-1999 581,044 0 15,690,437 286,000 17,254,973 39,952,388 37,634,595 17,393,724 65,366,101 25,975,162 9,430,139 22,349 0 0 29,272,451 65,366,101 52,482,328 52,482,328 40,405,395 40,405,395 7,592,273 0 586,168 3,898,492 1,195,000 2,703,492 0 0 0 2,703,492 .12 .12
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