Item 1. Business - - ------- --------
Howell Industries, Inc., a Michigan corporation (the "Company"), organized on July 9, 1934, is engaged in one industry segment, the original manufacture of structural components for the automotive industry.
Products.
The Company's principal products are steel automotive and truck structural supports and other stampings and assemblies. The products manufactured by the Company and the sales and profitability of individual products vary from year to year in accordance with the requirements of vehicle manufacturing demand. For the fiscal years ended July 31, 1994, July 31, 1995 and July 31, 1996, structural components accounted for 97%, 99% and 100%, respectively, of the Company's total sales.
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
The Company manufactures underbody structural parts and miscellaneous steel stampings in its Masury, Ohio and Lapeer, Michigan plants. These products are used primarily in light duty trucks and also in automobiles.
Suspension control arms are also manufactured in the Masury, Ohio plant and are used primarily in light duty trucks and automobiles. Suspension control arms consist of metal stampings assembled with bushings and ball joints, which provide support between the vehicle frame and axle.
The Company's sales are usually made pursuant to purchase orders and releases which are subject to cancellation and change by the customers. The amount of such sales is thus largely dependent upon the volume of production of the Company's customers.
Customers and Methods of Distribution. For the fiscal year ended July 31, 1996, sales to Chrysler Corporation and Ford Motor Company amounted to approximately 57% and 41% of total sales, respectively. The Company ships primarily by commercial carrier to its customers.
Competition. The metal stamping industry is highly competitive. There are numerous suppliers of the same steel products and some of these competitors have financial resources greater than those of the Company. In addition, some automobile and truck manufacturers produce a portion of their own requirements of the products manufactured by the Company. The Company does not produce a significant portion of the metal stampings and assemblies used by automobile and truck manufacturers.
Raw Materials. The Company's primary raw material in the manufacture of structural components is steel. Although steel is available in an adequate supply, a significant increase in the price of this raw material could affect operating results adversely. The Company also uses rubber and miscellaneous other supplies, which are readily available in an adequate supply.
Employees. The Company employs about 500 persons, of whom about 408 are factory production employees and about 92 are in office, executive, supervisory or administrative positions. All factory employees are covered by union contracts.
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
Item 2.
Item 2. Properties - - ------- ----------
The following is a brief description of the plant and properties owned and leased by the Company.
Southfield, Michigan - The Company leases its executive and administrative office facilities located at 17515 West Nine Mile Road, Suite 650, Southfield, Michigan. These offices contain approximately 8,092 square feet of floor space in a modern office building. The lease is at an annual rental of $99,480 and terminates on December 31, 1996.
Masury, Ohio - The Company owns a plant in Masury, Ohio located on approximately 6.5 acres. The plant consists of approximately 150,000 square feet of floor space, all constructed since 1965. The plant is used for the manufacture of underbody plate parts, suspension control arms and other structural supports. The approximate average percentage utilization on a three shift basis during the fiscal year was 80%. The Company leases an additional 44,000 square feet of manufacturing space at an annual rental of $78,000 and the lease terminates on March 14, 1997. The approximate average percentage utilization for this additional space on a one shift basis during the fiscal year was 90%.
Lapeer, Michigan - The Company owns a plant in Lapeer, Michigan located on approximately 10 acres of land in two parcels. The plant is used for the manufacture of miscellaneous steel stampings and has approximately 85,000 square feet of floor space. The approximate average percentage utilization on a one shift basis during the fiscal year was 70%.
Warren, Michigan - The Company leases a facility at 3161 E. Nine Mile Road, Warren, Michigan. The facility is used primarily in connection with the Company's manufacture and repair of dies for automobile parts. The facility consists of approximately 4,250 square feet. The annual rental is $36,000.
All real and personal property of the Company is deemed by the Company to be in satisfactory condition for the operation of its business.
Item 3.
Item 3. Legal Proceedings - - ------- -----------------
In June, 1994, Wilkie Brothers Conveyors, Inc. filed a civil action against the Company in the Michigan Circuit Court for the County of St. Clair (No. 94-001603) to recover past and future response costs and for declaratory relief in connection with alleged environmental contamination at a plant formerly owned by the Company in Marysville, Michigan. The
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
Company sold the plant to the plaintiff in 1984. In September, 1995, the City of Marysville filed a civil action against the Company and Wilkie Brothers Conveyors, Inc. in the Michigan Circuit Court for the County of St. Clair (No. 95-002693) to require the Company and Wilkie Brothers to take certain clean-up and remediation actions in connection with the contamination at the plant. In 1996, the Company agreed to pay $575,000 in settlement of the litigation relating to this facility, subject to government approvals.
The Company is also involved in various ordinary routine litigation incidental to its business, which in the opinion of management is not deemed to be material.
Item 4.
Item 4. Submission of Matters to - - ------ a Vote of Security Holders --------------------------
None.
PART II -------
Item 5.
Item 5. Market For The Registrant's Common - - ------- Stock and Related Security Matters ---------------------------------- Incorporated by reference pursuant to Rule 12b-23 from "Common Stock Prices," page 2 of the Registrant's 1996 Annual Report to Shareholders, which section is hereby incorporated into this Form 10-K.
Item 6.
Item 6. Selected Financial Data - - ------- -----------------------
Incorporated by reference pursuant to Rule 12b-23 from "Selected Financial Data," page 14 of the Registrant's 1996 Annual Report to Shareholders, which section is hereby incorporated into this Form 10-K.
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
Item 7.
Item 7. Management's Discussion and Analysis of - - ------- Financial Condition and Results of Operations ---------------------------------------------
Incorporated by reference pursuant to Rule 12b-23 from "Management's Discussion and Analysis of Financial Condition and Results of Operations," page 15 of the Registrant's 1996 Annual Report to Shareholders, which section is hereby incorporated into this Form 10-K.
Item 8.
Item 8. Financial Statements and Supplementary Data - - ------- -------------------------------------------
Partially incorporated by reference pursuant to Rule 12b-23 from pages 4-13 and page 14 of the Registrant's 1996 Annual Report to Shareholders, which pages are hereby incorporated into this Form 10-K. The Independent Auditor's signed report appears on page 13 of the Annual Report attached to originally executed copies of this Form 10-K.
Item 9.
Item 9. Changes in and Disagreements with - - ------- Accountants on Accounting and Financial Disclosure --------------------------------------------------
Not applicable.
PART III --------
Item 10.
Item 10. Directors and Executive - - -------- Officers of the Registrant --------------------------
Partially incorporated by reference pursuant to Rule 12b-23 from pages 2-3 of the Registrant's 1996 Proxy Statement furnished in connection with the 1996 Annual Meeting of Shareholders. All officers serve at the discretion of the Board of Directors.
NAME AGE POSITION ---- --- --------
Morton I. Schiff 62 President, Chief Executive Officer and Treasurer
Ronald Sakuta (1) 60 Former Vice President and Chief Operating Officer
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
NAME AGE POSITION ---- --- --------
Mark Duddles (2) 44 Vice President, Manufacturing
Dean McLeod (3) 43 Vice President, Sales
(1) Mr. Sakuta resigned from his employment with the Company effective March 1, 1996.
(2) Mr. Duddles has served as Vice President, Manufacturing since March, 1996. From 1992 to March, 1996, Mr. Duddles served as Corporate Quality Director. Between 1991 and 1992, Mr. Duddles served as Plant Manager of the Company's Lapeer, Michigan plant. Mr. Duddles began his employment with the Company in 1989 as Quality Manager.
(3) Mr. McLeod has served as Vice President, Sales since March, 1996. Mr. McLeod began his employment with the Company in May, 1989 as Ford Account Manager. In 1991, he became Sales Manager, while retaining his position as Ford Account Manager, until his most recent promotion in March, 1996.
Additional information concerning the Company's executive officers is incorporated by reference from pages 3-5 of the Registrant's 1996 Proxy Statement furnished in connection with the 1996 Annual Meeting of Shareholders.
Item 11.
Item 11. Executive Compensation - - -------- ----------------------
Incorporated by reference pursuant to Rule 12b-23 from pages 3-5 of the Registrant's 1996 Proxy Statement furnished in connection with the 1996 Annual Meeting of Shareholders.
Item 12.
Item 12. Security Ownership of Certain - - -------- Beneficial Owners and Management --------------------------------
Incorporated by reference pursuant to Rule 12b-23 from pages 1-2 of the Registrant's 1996 Proxy Statement furnished in connection with the Registrant's 1996 Annual Meeting of Shareholders.
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
Item 13.
Item 13. Certain Relationships and Related Transactions - - -------- ----------------------------------------------
Incorporated by reference pursuant to Rule 12b-23 from page 7 of the Registrant's 1996 Proxy Statement furnished in connection with the Registrant's 1996 Annual Meeting of Shareholders.
PART IV -------
Item 14.
Item 14. Exhibits, Financial Statement Schedules, - - -------- and Reports on Form 8-K ----------------------------------------
14(a)(1) Financial Statements
All financial statements are incorporated by reference from the Registrant's Annual Report to Shareholders.
Independent Auditors' Report of Deloitte & Touche LLP Balance Sheets as of July 31, 1996 and July 31, 1995 Statements of Operations for the years ended July 31, 1996, July 31, 1995 and July 31, 1994 Statements of Cash Flows for the years ended July 31, 1996, July 31, 1995 and July 31, 1994 Statements of Shareholders' Investment for the years ended July 31, 1996, July 31, 1995 and July 31, 1994 Notes to Financial Statements for the years ended July 31, 1996, July 31, 1995 and July 31, 1994
14(a)(2) Financial Statement Schedules
Schedules are omitted because of the absence of the conditions under which they are required or because the information called for is included in financial statements or notes thereto.
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
14(a)(3) Exhibits
Each management contract or compensatory plan or arrangement filed as an exhibit to this Report is identified in the following list with an asterisk before the exhibit number.
(3)(a) Restated Articles of Incorporation, as amended to date, incorporated by reference from Exhibit (3)(a) of the Registrant's Annual Report on Form 10-K for the year ended July 31, 1995.
(3)(b) By-laws, as amended to date, incorporated by reference from Exhibit (3)(b) of Registrant's Form 10-Q for the quarter ended April 30, 1993.
(10) Material contracts:
* (i) Executive Employment Agreement for Morton I. Schiff, dated August 18, 1994, incorporated by reference from Exhibit 10(i) to the Registrant's Annual Report on Form 10-K for the year ended July 31, 1994.
* (ii) Executive Employment Agreement for Ronald Sakuta, dated August 18, 1994, incorporated by reference from Exhibit 10(ii) to the Registrant's Annual Report on Form 10-K for the year ended July 31, 1994.
(iii) Indemnification Agreements for Alan E. Schwartz and Richard H. Cummings, dated March 30, 1993, incorporated by reference from Exhibit (10)(ii) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended April 30, 1993.
* (iv) Indemnification Agreement for Morton I. Schiff, dated July 19, 1993, incorporated by reference from Exhibit 10(iii) to the Registrant's Annual Report on Form 10-K for the year ended July 31, 1993.
(v) Stock Purchase Agreement, dated September 22, 1994, between NBD Bank, N.A., as Co-Trustee, and Howell Industries, Inc., incorporated by reference from Exhibit 10(v) to the Registrant's Annual Report on Form 10-K for the year ended July 31, 1994.
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
* (vi) Howell Industries, Inc. Retirement Plan for Non-Employee Directors, incorporated by reference from Exhibit (10)(vi) to the Registrant's Annual Report on Form 10-K for the year ended July 31, 1995.
(13) Annual report to Shareholders for the year ended July 31, 1996.
(27) Financial Data Schedule.
14(b) The Company did not file any reports on Form 8-K during the last quarter of the fiscal year covered by this Report.
14(d)(5) Schedules (Pages following the signature page of this Form 10-K)
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
SIGNATURES
Pursuant to the requirements of Section 13 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, on October 29, 1996.
HOWELL INDUSTRIES, INC. (Registrant)
By: /s/ Morton I. Schiff ---------------------------- Morton I. Schiff, President, Chief Executive Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on October 29, 1996.
Signature Capacity - - --------- --------
/s/ Morton I. Schiff President, Chief Executive Officer, - - ------------------------- Treasurer and Director (principal Morton I. Schiff executive, financial and accounting officer)
/s/ Richard H. Cummings Director - - ------------------------- Richard H. Cummings
/s/ Alan E. Schwartz Director - - ------------------------- Alan E. Schwartz
Year ended Form 10-K HOWELL INDUSTRIES, INC. July 31, 1996
INDEX TO EXHIBITS
Each management contract or compensatory plan or arrangement filed as an exhibit to this Report is identified in the following list with an asterisk before the exhibit number.