-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ro9uXiXbKmrBhvs4LP7SmoVQmW2nw1twivPlBOUksbVUyE6clY3shSxvcSWiBG6H TKJ5u1tVG+MKMBx1RwPwWQ== 0000950123-94-000925.txt : 19940518 0000950123-94-000925.hdr.sgml : 19940518 ACCESSION NUMBER: 0000950123-94-000925 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANDY & HARMAN CENTRAL INDEX KEY: 0000045333 STANDARD INDUSTRIAL CLASSIFICATION: 3350 IRS NUMBER: 135129420 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05365 FILM NUMBER: 94528671 BUSINESS ADDRESS: STREET 1: 250 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10177 BUSINESS PHONE: 2126612400 MAIL ADDRESS: STREET 2: 250 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10177 10-Q 1 HANDY & HARMAN, 3/31/94 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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 period ended March 31, 1994 -------------------------------------------------- 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: 1-5365 ------------------------------------------------ HANDY & HARMAN - - ----------------------------------------------------------------------- (Exact name of registrant as specified in its charter) STATE OF NEW YORK 13-5129420 - - ----------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 250 Park Avenue, New York, New York 10177 - - ----------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (212) 661-2400 - - ------------------------------------------------------------------------ (Registrant's telephone number, including area code) - - ------------------------------------------------------------------------ (Former name, former address and former fiscal year, if changed since last year.) 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 ---- ---- The number of shares of issuer's Common Stock, par value $1.00 per share outstanding as of May 10, 1994 was 14,023,780. 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HANDY & HARMAN AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (unaudited-thousands of dollars except per share)
Three Months Ended ---------------------------------------------------- March 31, 1994 March 31, 1993 - - --------------------------------------------------------------------------------------------------------------- Sales and service revenues $ 188,731 $ 157,809 Cost of sales and services 162,830 133,413 - - --------------------------------------------------------------------------------------------------------------- Gross profit 25,901 24,396 Selling, general and administrative expenses 14,660 14,730 - - --------------------------------------------------------------------------------------------------------------- 11,241 9,666 - - --------------------------------------------------------------------------------------------------------------- Other deductions (income): Interest expense-net 3,643 4,411 Other net (35) (8) - - --------------------------------------------------------------------------------------------------------------- 3,608 4,403 - - --------------------------------------------------------------------------------------------------------------- Income before income taxes and cumulative effect of accounting change 7,633 5,263 Income tax provision 3,180 2,137 - - --------------------------------------------------------------------------------------------------------------- Income before cumulative effect of accounting change 4,453 3,126 Cumulative effect of accounting change -- 576 - - --------------------------------------------------------------------------------------------------------------- Net Income $ 4,453 $ 3,702 =============================================================================================================== Earnings per share before cumulative effect of accounting change $ .32 $ .22 Cumulative effect of accounting change per share -- .04 - - --------------------------------------------------------------------------------------------------------------- Earnings per share $ .32 $ .26 =============================================================================================================== Dividends per share $ .05 $ .05 =============================================================================================================== Average shares outstanding 14,023,000 14,016,000 ===============================================================================================================
See Accompanying Notes to Consolidated Financial Statements. -1- 3 HANDY & HARMAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (thousands of dollars)
March 31, 1994 December 31, 1993 (unaudited) - - ------------------------------------------------------------------------------------------------------------------------------ ASSETS Current Assets: Cash $ 2,573 $ 3,320 Receivables (Note b) 128,618 127,743 Refundable income taxes 500 500 Inventories - at cost (Note d) 87,953 88,692 Prepaid expenses and deposits 10,029 9,946 Current assets of discontinued operations (net) 1,741 2,999 - - ------------------------------------------------------------------------------------------------------------------------------ Total current assets 231,414 233,200 - - ------------------------------------------------------------------------------------------------------------------------------ Investment in 50% or less-owned companies 1,873 1,824 Property, plant and equipment - at cost 252,173 249,384 Less accumulated depreciation and amortization 146,234 143,164 - - ------------------------------------------------------------------------------------------------------------------------------ 105,939 106,220 Prepaid retirement costs (net) 44,440 43,627 Intangibles, net of amortization 1,117 1,120 Deferred charges 1,787 1,696 Other assets 1,706 1,518 Noncurrent assets of discontinued operations 23,700 23,714 - - ------------------------------------------------------------------------------------------------------------------------------ $ 411,976 $ 412,919 ============================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term borrowings $ 49,000 $ 28,000 Current maturities of long-term debt 7,000 7,000 Accounts payable 44,749 53,739 Advances from smelter 7,625 8,935 Other current liabilities 23,416 23,619 - - ------------------------------------------------------------------------------------------------------------------------------ Total current liabilities 131,790 121,293 - - ------------------------------------------------------------------------------------------------------------------------------ Long-term debt, less current maturities 173,772 188,750 Deferred income taxes 11,245 11,276 Shareholders' equity: Common stock - par value $1; 60,000,000 shares authorized; 14,611,432 shares issued 14,611 14,611 Capital surplus 11,607 11,296 Retained earnings 74,166 70,414 Foreign currency translation adjustment (1,033) (951) - - ------------------------------------------------------------------------------------------------------------------------------ 99,351 95,370 Less: Treasury stock 587,652 shares - 1994 and 588,252 shares - 1993 at cost 3,767 3,770 Unearned compensation 415 -- - - ------------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 95,169 91,600 - - ------------------------------------------------------------------------------------------------------------------------------ $ 411,976 $ 412,919 ==============================================================================================================================
See Accompanying Notes to Consolidated Financial Statements. -2- 4 HANDY & HARMAN AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited-thousands of dollars)
Increase (Decrease) in Cash Three Months Ended -------------------------------------------- March 31, 1994 March 31, 1993 - - --------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 4,453 $ 3,702 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 3,800 4,171 Provision for doubtful accounts 210 186 (Gain) loss on disposal of property, plant and equipment -- (6) Net retirement cost (813) (500) Equity in earnings of 50% or less-owned companies (56) (42) Earned compensation - 1988 long-term incentive and outside director stock option plans 56 56 Changes in assets and liabilities: Accounts receivable (1,086) 4,288 Inventories 739 (5,595) Prepaid expenses (82) (603) Deferred charges and other assets (438) (18) Accounts payable and other current liabilities (8,021) 3,477 Advances from smelter (1,310) -- Deferred income taxes (31) 884 - - --------------------------------------------------------------------------------------------------------------------------- Net cash (used) provided by operating activities (2,579) 10,000 - - --------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from sale of property, plant and equipment 42 1,267 Capital expenditures (3,481) (3,104) - - --------------------------------------------------------------------------------------------------------------------------- Net cash (used) by investing activities (3,439) (1,837) - - --------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Short-term borrowings 21,000 (22,500) Current maturities of long-term debt -- 6 Increase (decrease) in long-term debt (14,978) 14,785 Dividends paid (701) (700) - - --------------------------------------------------------------------------------------------------------------------------- Net cash (used) provided by financing activities 5,321 (8,409) - - --------------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on net cash (50) (20) - - --------------------------------------------------------------------------------------------------------------------------- Net change in cash (747) (266) Cash at beginning of year 3,320 2,812 - - --------------------------------------------------------------------------------------------------------------------------- Cash at end of period $ 2,573 $ 2,546 - - ---------------------------------------------------------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements. -3- 5 HANDY & HARMAN AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS a. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to a fair statement of the results for the interim periods. b. Accounts receivable at March 31, 1994 and December 31, 1993 is comprised as follows (in thousands):
March 31, 1994 December 31, 1993 (Unaudited) - - --------------------------------------------------------------------------------------------------------------- Trade accounts $ 80,150 $ 70,761 Notes 203 221 Allowance for doubtful accounts (3,782) (3,721) - - --------------------------------------------------------------------------------------------------------------- 76,571 67,261 Sales of precious metals for future delivery 52,047 60,482 - - --------------------------------------------------------------------------------------------------------------- $ 128,618 $ 127,743 ===============================================================================================================
c. Inventories at March 31, 1994 and December 31, 1993 is comprised as follows (in thousands):
March 31, 1994 December 31, 1993 (unaudited) - - --------------------------------------------------------------------------------------------------------------- Precious metals: Fine and fabricated metals in various stages of completion $ 39,242 $ 38,879 Non-precious metals: Base metals, factory supplies and raw materials 24,277 25,635 Work in process 15,618 14,893 Finished goods 8,816 9,285 - - --------------------------------------------------------------------------------------------------------------- $ 87,953 $ 88,692 ===============================================================================================================
Lifo inventory - the excess of period end market value over Lifo cost was $151,865,000 at March 31, 1994 and $141,273,000 at December 31, 1993. d. These statements should be read in conjunction with the Summary of Significant Accounting Policies and notes contained in the registrant's Annual Report (Form 10-K for the year ending December 31, 1993). e. In February 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The Company had adopted this standard in 1993, the cumulative effect of which is a benefit of $576,000 or $ .04 per share recorded in first quarter of 1993. -4- 6 HANDY & HARMAN AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS f. The following table presents certain selected financial data by industry segment (expressed in thousands of dollars) for the three months ended March 31, 1994 and 1993:
Three Months Ended ------------------------------------------------ March 31, 1994 March 31, 1993 - - -------------------------------------------------------------------------------------------------------------- Sales and service revenues: Precious metals $100,707 $ 72,505 Automotive (OEM) 46,809 42,273 Wire/Tubing 37,621 35,855 Other non-precious metal businesses 3,594 7,176 - - -------------------------------------------------------------------------------------------------------------- Total $188,731 $157,809 ============================================================================================================== Profit contribution before unallocated expenses: Precious metals $ 3,191 $ 1,638 Automotive (OEM) 4,585 4,507 Wire/Tubing 3,525 4,070 Other non-precious metal businesses 425 (41) - - -------------------------------------------------------------------------------------------------------------- Total 11,726 10,174 General corporate expenses (450) (500) Interest expense (net) (3,643) (4,411) - - -------------------------------------------------------------------------------------------------------------- Income from continuing operations before taxes $ 7,633 $ 5,263 ==============================================================================================================
-5- 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Company's precious metal inventories, consisting principally of gold and silver, may be considered as an equivalent to cash. Furthermore, these precious metals inventories which are stated in the balance sheet at LIFO cost have a market value substantially in excess of such cost. It is the Company's policy to obtain funds necessary to finance inventories and receivables from various banks under commercial lines of credit. Trade accounts receivable resulting from sales of fabricated precious metals are financed primarily by bank borrowings. Fluctuations in the market prices of gold and silver have a direct effect on the dollar volume of sales and the corresponding amount of customer receivables. In addition, receivables resulting from sales of precious metals for future delivery are also financed by bank borrowings. The Company adjusts the level of its short-term borrowings and credit facilities from time to time in accordance with its borrowing needs for receivables, as well as other working capital items, and maintains bank lines of credit well in excess of anticipated requirements. The Company has a credit facility with twelve banks which provides $161,250,000 for a three year period (extended an additional year in 1993) and $53,750,000 for 364 days, of which $139,000,000 was utilized at March 31, 1994. The Company also has arrangements for $50,000,000 of long-term borrowings maturing in 2002. The proceeds are currently used to reduce portions of the previously mentioned credit facility. The Company's program to expand productive capacity through acquisition of new businesses and expenditures for new property, plant and equipment will continue to be financed with internally generated funds and long-term debt, if necessary. The Company's foreign operations consist of four wholly owned subsidiaries, (one in Canada, two in the United Kingdom and one in Mexico), and three equity investments (one in Asia, one in Mexico and one in Brazil). Substantially all unremitted earnings of such entities are free from legal or contractual restrictions. -6- 8 Comparison of First Quarter of 1994 vs. First Quarter of 1993 Sales for the precious metals segment increased $28,202,000 (39%). Sales of refined metal in bullion form increased from $16,350,000 in 1993 to $33,427,000 in 1994. The profit margin on this business is less than the margins on fabricated products. The average price for gold was $384.46 per ounce and the average price for silver was $5.29 per ounce representing increases of 17% for gold and 45% for silver from the first quarter of 1993. The profit contribution (pre-tax income before deducting interest and corporate expenses) increased $1,553,000 (95%) for this segment primarily due to new product sales to the telecommunications industry. The introduction of new products as well as continued improvement in refinery earnings should enhance the profit contribution for this segment for the balance of this year. The automotive (OEM) segment sales increased $4,536,000 (11%) and the profit contribution increased $78,000 (2%). Continued strength in the automotive industry's North American production rate should maintain this level of operating performance in the next quarter. Maintaining this same level of performance in the second half of 1994 is not anticipated. Sales for the wire/tubing segment increased $1,766,000 (5%) primarily due to volume increases in wire. The profit contribution decreased $545,000 (13%) primarily due to reduced levels of fabricated tubular sales to the medical industry. Although the wire/tubing segment's profit contribution was in a decline for the quarter, it is anticipated this segment will strengthen over the balance of the year. In the other non-precious metal segment, sales decreased $3,582,000 (50%) primarily due to the sale of three subsidiaries in 1993, however, profit contribution increased $466,000 due to the elimination of operating losses associated with the sold subsidiaries. Interest expense decreased $768,000 (17%) primarily due to lower effective interest rates in 1994 partially offset by higher borrowings. The effective income tax rate was 41.7% for 1994 and 40.6% for 1993. -7- 9 PART II OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the Company's Form 10-K Annual Report for the year ended December 31, 1993, and to the proceedings described therein under Part I, Item 3. Legal Proceedings. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits as required by Item 601 of Regulation S-K: None required. (b) Reports on Form 8-K: None filed during the quarter for which this report is submitted. -8- 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HANDY & HARMAN ------------------------------ (Registrant) Date: May 12, 1994 J.M. McLoone /s/ ------------ ------------------------------ J.M. McLoone, Vice President - Financial Services Date: May 12, 1994 D.C. Kelly /s/ ------------ ------------------------------ D.C. Kelly - Controller -9- -----END PRIVACY-ENHANCED MESSAGE-----