UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 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 Quarterly Period Ended September 30, 1996
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 0-27748
OCAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4544569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14538 Keswick Street
Van Nuys, California 91405
(Address of principal executive offices)
(818) 782-0711
(Registrant's telephone number, including area code)
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____
The number of outstanding shares of the Registrant's Common Stock, par
value $.001 per share, was 5,780,000 at November 1, 1996.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
OCAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $ 7,193 $ 5,987 $18,925 $18,796
Cost of goods sold 5,021 4,048 13,041 12,439
Gross margin 2,172 1,939 5,884 6,357
Selling, general and administrative expenses 1,102 935 2,859 2,856
Stockholders' compensation 78 97 234 1,072
Operating income 992 907 2,791 2,429
Interest income (expense), net 30 (116) (30) (280)
Income before income taxes 1,022 791 2,761 2,149
Provision for income taxes 410 4 970 10
Net income $ 612 $ 787 $ 1,791 $ 2,139
Average common and common equivalent
shares outstanding 5,780 3,250 5,038 3,250
Net income per share $ 0.11 $ 0.24 $ 0.36 $ 0.66
</TABLE>
<TABLE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (NOTE 3)
(In thousands, except per share data)
(Unaudited)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $ 7,193 $ 5,987 $18,925 $18,796
Cost of goods sold 5,021 4,048 13,041 12,439
Gross margin 2,172 1,939 5,884 6,357
Selling, general and administrative expenses 1,102 935 2,859 2,856
Stockholders' compensation 78 78 234 234
Pro forma operating income 992 926 2,791 3,267
Interest income (expense), net 30 (116) (30) (280)
Pro forma income before income taxes 1,022 810 2,761 2,987
Pro forma provision for income taxes 410 325 1,110 1,195
Pro forma net income $ 612 $ 485 $ 1,651 $ 1,792
Average common and common equivalent
shares outstanding 5,780 3,250 5,038 3,250
Pro forma net income per share $ 0.11 $ 0.15 $ 0.33 $ 0.55
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
OCAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 6,456 $ 127
Accounts receivable, net 3,872 3,090
Notes receivable - stockholder and related parties - 1,765
Inventories 6,282 7,248
Prepaid expenses and other current assets 188 182
Total Current Assets 16,798 12,412
Property, plant and equipment, at cost 2,645 2,469
Less accumulated depreciation and amortization 1,293 1,073
Net property and equipment 1,352 1,396
Other Assets
Deferred offering costs - 490
Other noncurrent assets 97 -
Total Other Assets 97 490
Total Assets $18,247 $14,298
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 1,486 $ 2,075
Accrued expenses 713 774
Income taxes payable 241 11
Notes payable - bank - 5,802
Current portion of notes payable - stockholders 1,500 377
Total Current Liabilities 3,940 9,039
Other Liabilities
Long-term notes payable - stockholders 1,757 -
Deferred income taxes 100 -
Total Other Liabilities 1,857 -
Stockholders' Equity
Capital Stock
Preferred stock - -
Common stock 6 3
Additional paid-in capital 10,708 711
Retained earnings 1,736 4,545
Total Stockholders' Equity 12,450 5,259
Total Liabilities and Stockholders' Equity $18,247 $14,298
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
OCAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,791 $ 2,139
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 220 201
Deferred income taxes 100 -
Changes in assets and liabilities:
Accounts receivable, net (782) (699)
Inventories 966 (34)
Prepaid expenses and other (6) (48)
Accounts payable (589) (483)
Accrued expenses (61) 173
Income taxes payable 230 -
Net cash provided by operating activities 1,869 1,249
INVESTING ACTIVITIES
Purchase of property and equipment (176) (67)
Repayment by (loan to) stockholder and related parties 1,645 (1,616)
Other items, net (97) -
Net cash provided by (used in) investing activities 1,372 (1,683)
FINANCING ACTIVITIES
Borrowings from (repayment of) notes payable - bank (5,802) 3,748
Repayment of notes payable - supplier - (700)
Repayment of notes payable - related parties - (2,403)
Net proceeds from (costs of) sale of common stock 10,490 (210)
Distribution of S corporation retained earnings
to prior S corporation shareholders (4,600) -
Additions to notes payable - stockholders 3,000 -
Net cash provided by financing activities 3,088 435
Net increase in cash 6,329 1
Cash at beginning of year 127 79
Cash at end of period $ 6,456 $ 80
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 209 $ 311
Income taxes $ 629 $ 21
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
OCAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL
The accompanying condensed consolidated financial statements of OCAL, Inc.
("OCAL" or the "Company") and its subsidiaries are unaudited and have
been prepared in conformity with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission
regulations. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. In the opinion of management, the accompanying financial
statements reflect all adjustments (of a normal recurring nature) necessary to
provide a fair statement of the results for the interim periods presented. The
interim financial statements should be read in conjunction with the financial
statements and related notes included in the Company's Registration Statement
on Form S-1 and related Prospectus dated March 12, 1996. The results of
operations for the three and nine months ended September 30, 1996 are not
necessarily indicative of the results of operations that may be expected for the
full year ending December 31, 1996.
NOTE 2. BASIS OF PRESENTATION
Concurrent with the closing of the Company's initial public offering of
2,200,000 shares of common stock on March 18, 1996 (Note 7), all of the
outstanding capital stock of OCAL, Incorporated ("Ocal Alabama"),
Occidental Coating Company ("Occidental"), Ocal Data Company ("Ocal
Data"), and Ocal Transport Co. ("Ocal Transport"), was acquired by the
Company through capital contributions by their respective prior stockholders
in exchange for an aggregate of 3,250,000 shares of the Company's common
stock (the "Reorganization"). On April 15, 1996, the Underwriters exercised
their full overallotment option and purchased an additional 330,000 shares of
the Company's common stock. The Company's Chairman, CEO and President
was the sole or majority shareholder of each of the contributed companies and
is the 53.0% shareholder of the Company as of September 30, 1996.
The accounts of Ocal Alabama, Occidental, Ocal Data and Ocal Transport are
included in the accompanying condensed consolidated financial statements of
the Company on their historical basis. The stockholders' equity section of the
condensed consolidated balance sheet at December 31, 1995 has been
reclassified from that reported in the Registration Statement and Prospectus
related to the Company's initial public offering to reflect the Company's
capital structure and the Reorganization with the common stock of Ocal
Alabama, Occidental, Ocal Data and Ocal Transport classified as paid-in
capital. Certain other previously reported amounts have been reclassified to
conform to the current period presentation.
<PAGE>
OCAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PRESENTATION (Continued)
Net income per share information is based on the following (amounts in 000's):
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Average outstanding common and
common equivalent shares 5,780 3,250 5,038 3,250
3. PRO FORMA FINANCIAL INFORMATION
The pro forma condensed consolidated statements of income are prepared on
a basis consistent with those appearing in the Registration Statement and
Prospectus related to the Company's initial public offering. The pro forma
statements include adjustments (i) to reflect levels of stockholder's
compensation for certain stockholders whose compensation is classified as
stockholder's compensation in the accompanying condensed consolidated
statements of income (based on the $312,500 of salaries and bonuses
anticipated to be paid to those stockholders for the year ending December 31,
1996) and (ii) to provide related income taxes as if all of the Company's
income were taxed at C corporation rates based upon pro forma income before
income taxes. Reconciliations between historical and pro forma results of
operations follow (in thousands except per share amounts):
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Income before income taxes $ 612 $ 787 $ 1,791 $ 2,139
Pro forma adjustments (described
above):
(i) Stockholders' compensation - 19 - 838
Pro forma income before income taxes 612 806 1,791 2,977
(ii) Tax provision - (321) (140) (1,185)
Pro forma net income $ 612 $ 485 $ 1,651 $ 1,792
Pro forma net income per share $ 0.11 $ 0.15 $ 0.33 $ 0.55
<PAGE>
OCAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. INVENTORIES
Inventories consist of the following (amounts in thousands):
September 30, December 31,
1996 1995
Raw materials $ 2,625 $ 3,372
Finished goods 3,657 3,875
$ 6,282 $ 7,247
5. REVOLVING BANK LINE OF CREDIT
On March 18, 1996, the Company repaid borrowings outstanding under its
bank line of credit, then totaling $3,948,000, with a portion of the proceeds
received from the Company's initial public offering. The bank line provides
for maximum borrowings of $6,500,000 (subject to certain specified
percentages of the Company's accounts receivable and inventories) and is
collateralized by the Company's accounts receivable and inventories. Interest
is payable at the bank's prime interest rate plus .75%. At September 30,
1996, there were no borrowings outstanding under the bank line of credit.
6. TRANSACTIONS WITH RELATED PARTIES
As part of the Reorganization on March 18, 1996, Ocal Alabama declared a
distribution to its then stockholders in an amount equal to all of its
undistributed S corporation retained earnings which aggregated approximately
$4,600,000. Such distribution was paid as follows:
(i) $1,600,000 was paid in cash on March 25, 1996 and
(ii) $3,000,000 in notes payable were issued to the shareholders of Ocal
Alabama which bear interest at the rate of 6.5% per annum and are payable
$1,500,000 on September 18, 1997 and $1,500,000 on March 18, 1999.
The amount of distribution is subject to adjustment upon completion of Ocal
Alabama's income tax returns for the period from January 1, 1996 through
March 18, 1996.
In addition to the $3,000,000 note described in (ii) above, there is a $257,000
note payable to the major stockholder of the Company, which bears interest at
the rate of 6.5% per annum and is due on March 18, 1999.
All other notes receivable and payable to stockholders and related parties were
settled concurrently with the Reorganization and distribution described above.
<PAGE>
OCAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. INITIAL PUBLIC OFFERING
On March 18, 1996, the Company completed the initial public offering of
2,200,000 shares of its common stock at a price of $5.00 per share. On
April 15, 1996, the underwriters exercised their overallotment option by
purchasing an additional 330,000 shares of the Company's common stock at a price
of $5.00 per share. After underwriters' discounts, commissions and expenses,
the net proceeds of the offering and overallotment exercise to the Company were
$11,390,000. Other expenses of the offering charged to paid-in capital
aggregated $1,390,000, $490,000 of which were paid in 1995 and reflected as
deferred offering costs in the December 31, 1995 financial statements.
8. INCOME TAXES
Through March 18, 1996, the date of the Reorganization and the Company's
initial public offering, Ocal Alabama and Ocal Data had elected to be taxed as
S corporations under the provisions of the Internal Revenue Code. Pursuant
to such elections, stockholders of these companies included their proportionate
share of the taxable income (loss) of these companies in their personal income
tax returns. Accordingly, no provision for federal income tax is required or
has been provided for the operations of Ocal Alabama and Ocal Data through
March 18, 1996.
As of March 18, 1996, as a result of the Reorganization, the Company and all
of its subsidiaries became C corporations subject to state and federal income
taxes at statutory rates. Such income taxes are provided on the results of
operations in the accompanying consolidated statement of income for the
period from March 18, 1996 through September 30, 1996.
Included in the provision for income taxes for the nine months ended
September 30, 1996 is a one-time accrual of deferred income taxes in the
amount of $100,000 as a result of terminating Ocal Alabama's S corporation
status due to the Reorganization. These deferred income taxes relate primarily
to temporary depreciation differences.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with management's
discussion and analysis of financial condition and results of operations
incorporated in the Company's Registration Statement on Form S-1 and related
prospectus dated March 12, 1996.
OVERVIEW
Concurrent with the closing of the Company's initial public offering of
2,200,000 shares of common stock on March 18, 1996, all of the outstanding
capital stock of OCAL, Incorporated ("Ocal Alabama"), Occidental Coating
Company ("Occidental"), Ocal Data Company ("Ocal Data") and Ocal
Transport Co. ("Ocal Transport") was acquired by the Company through
capital contributions by their respective prior stockholders in exchange for an
aggregate of 3,250,000 shares of the Company's common stock (the
"Reorganization"). On April 15, 1996, the Underwriters exercised their full
overallotment option and purchased an additional 330,000 shares of the
Company's common stock. The Company's Chairman, CEO and President
was the sole or majority shareholder of each of the contributed companies and
is the 53.0% shareholder of the Company as of September 30, 1996. The
accounts of Ocal Alabama, Occidental, Ocal Data and Ocal Transport are
included in the accompanying condensed consolidated financial statements of
the Company on their historical basis. The stockholders' equity section of the
condensed consolidated balance sheet at December 31, 1995 has been
reclassified from that reported in the Registration Statement and Prospectus
related to the Company's initial public offering to reflect the Company's
capital structure and the Reorganization with the common stock of Ocal
Alabama, Occidental, Ocal Data and Ocal Transport classified as paid-in
capital.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996 and 1995
Sales. The Company's third quarter 1996 net sales of $7,193,000 increased
20.1% over third quarter net sales in the prior fiscal year. The net sales
increase is the result of volume increases which averaged approximately 27%
on the Company's major products, slightly offset by price reductions. The
Company continues to respond to pricing pressures in the industry in order to
successfully obtain business in competitive situations. These pricing pressures
are expected to continue for the foreseeable future. Although the Company
does not currently anticipate any particular difficulties, there can be no
assurance that the competitive pricing situation will not have an adverse
effect on the Company's revenues and results of operations in future periods.
In addition, the Company's revenue in future periods could be impacted by the
effect of general downturns in the economy, as the industries using the
Company's products are cyclical in nature and vulnerable to such downturns.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
RESULTS OF OPERATIONS (Continued)
Gross margin. The Company's gross margin for the third quarter of 1996 was
30.2% of sales, compared to 32.4% of sales for the third quarter of 1995. The
decline in gross margin as a percentage of sales was directly related to the
increased pricing pressures in the industry, although there was a partial offset
due to manufacturing efficiencies realized as a result of the higher unit
production and shipment volumes during the quarter.
Selling, general and administrative. Selling, general and administrative
("SG&A") expenses as a percentage of sales decreased to 15.3% for the third
quarter of 1996, from 15.6% for the third quarter of the prior fiscal year.
Absolute spending increased by $167,000 due primarily to increased expenses
associated with being a public company, such as public relations costs,
directors and officers liability insurance, and stock issuance fees which were
non-existent in 1995.
Stockholders' compensation. Stockholders' compensation decreased to
$78,000 for the third quarter of 1996 from $97,000 for the third quarter of the
prior fiscal year. Before the Company's Reorganization on March 18, 1996,
Ocal Alabama paid bonuses to its stockholders each year primarily to provide
stockholders with funds to satisfy their income tax obligations on the
Company's S corporation income taxed directly to the stockholders. The
Company has agreed to limit compensation in fiscal 1996 to the stockholders'
whose compensation is included in stockholders' compensation expense, to an
aggregate of $312,500.
Interest income (net). Interest income (net) for the third quarter of 1996 was
$30,000, compared to interest expense (net) of $116,000 for the third quarter
of the prior fiscal year. The Company is no longer utilizing its line of credit
with the bank and is instead receiving interest on its unused portion of the
proceeds received from its initial public offering on March 18, 1996 and
subsequent over-allotment option exercised by the Underwriters on April 15,
1996. Interest expense continues to be paid on the notes payable due to
stockholders.
Provision for income taxes. The Company's provision for income taxes
increased by $406,000, to $410,000, for the third quarter of 1996, due to the
conversion of certain subsidiaries of the Company from S corporation to
C corporation status upon the Reorganization on March 18, 1996, which subjects
the Company to state and federal income taxes at statutory rates beginning as
of that date. The effective income tax rate for the third quarter of 1996 was
40%, the rate which has been in effect since the Reorganization.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
RESULTS OF OPERATIONS (Continued)
Nine Months Ended September 30, 1996 and 1995
Sales. The Company's net sales of $18,925,000 for the nine months ended
September 30, 1996 increased 0.7% over the same period of the prior fiscal
year. The nominal increase in net sales is the result of modest increases in
volumes of the Company's major products, almost entirely offset by price
reductions.
Gross margin. The Company's gross margin for the nine months ended
September 30, 1996 was 31.1% of sales, compared to 33.8% of sales for the
same period of 1995. The decline in gross margin as a percentage of sales was
directly related to the increased pricing pressures in the industry.
Selling, general and administrative. Selling, general and administrative
("SG&A") expenses as a percentage of sales decreased to 15.1% for the nine
months ended September 30, 1996, from 15.2% for the same period of 1995.
Increased expenses associated with being a public company, such as public
relations costs, directors and officers liability insurance, and stock issuance
fees were offset by a lower average number of employees in both the
California administrative and Texas sales offices during the nine months ended
September 30, 1996 as compared to the same period of 1995.
Stockholders' compensation. Stockholders' compensation decreased to
$234,000 for the nine months ended September 30, 1996 from $1,072,000 for
same period of 1995. Before the Company's Reorganization on March 18, 1996,
Ocal Alabama paid bonuses to its stockholders each year primarily to provide
stockholders with funds to satisfy their income tax obligations on the
Company's S corporation income taxed directly to the stockholders. The
Company has agreed to limit compensation in fiscal 1996 to the stockholders'
whose compensation is included in stockholders' compensation expense, to an
aggregate of $312,500.
Interest expense (net). Interest expense (net) for the nine months ended
September 30, 1996 was $30,000, compared to $280,000 for the same period
of 1995. The Company is no longer utilizing its line of credit with the bank
and is instead receiving interest on its unused portion of the proceeds received
from its initial public offering on March 18, 1996 and subsequent over-allotment
option exercised by the Underwriters on April 15, 1996.
Provision for income taxes. The Company's provision for income taxes
increased by $960,000, to $970,000, for the nine months ended September 30,
1996, due to the conversion of certain subsidiaries of the Company from
S corporation to C corporation status upon the Reorganization on March 18,
1996, which subjects the Company to state and federal income taxes at
statutory rates beginning as of that date.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
LIQUIDITY AND CAPITAL RESOURCES
On March 18, 1996, the Company completed its initial public offering
whereby it sold 2,200,000 shares of its common stock at $5.00 per share and
received net proceeds, after all underwriters' expenses and other costs of the
offering, of $8,515,000. On April 15, 1996, the Underwriters exercised their
over-allotment option by purchasing an additional 330,000 shares of the
Company's common stock at a price of $5.00 per share and the Company
received net proceeds, after underwriting discounts, commissions and expense
allowances, of $1,485,000. The proceeds of the offering were used
principally to pay off the $3,948,000 balance remaining on the Company's
note payable to the bank and to pay the $1,600,000 cash portion of Ocal
Alabama's distribution of its S corporation retained earnings to its former
stockholders to enable them to satisfy tax liabilities associated with
S corporation earnings. The balance of the proceeds were added to the
Company's working capital. Working capital increased from $3,373,000 at
December 31, 1995 to $12,858,000 at September 30, 1996 primarily attributable
to the proceeds of the initial public offering and over-allotment option
exercised by the Underwriters.
The Company has a revolving bank line of credit which provides for
borrowings of up to $6,500,000 (subject to certain specified percentages of the
Company's accounts receivable and inventories). All of the outstanding
balance under the credit line was repaid on March 18, 1996, with a portion of
the proceeds from the Company's initial public offering. There were no
outstanding borrowings on the line of credit at September 30, 1996.
The Company believes that cash provided by operating activities, existing cash
and cash equivalents, and available credit will be sufficient to fund future
operating and capital cash needs for at least the next 12 to 18 months. The
Company intends to pursue a strategy of growth by selective acquisitions that
complement the Company's strengths in low-cost, high-quality manufacturing
and knowledge of the electrical conduit industry. Such acquisitions may
necessitate the issuance of additional debt or equity securities of the Company.
The Company intends to pursue this strategy with careful regard for
profitability, the need for liquidity, and the potential dilutive effect of any
additional issuance of equity securities. There can be no assurance, however,
that any acquisitions will occur or that an acquisition that does occur will not
adversely affect the Company's net income or liquidity.
Cash flow provided from operations for the first nine months of fiscal 1996
was $1,869,000, compared to $1,249,000 for the same period in 1995. The
improvement in cash flow is primarily the result of a decrease in inventory of
$1,000,000, partially offset by a reduction of net income of $348,000 for the
two periods of comparison.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Cash provided by investing activities during the first nine months of fiscal
1996 was $1,372,000, compared to cash used in investing activities of
$1,683,000 for the same period in 1995. The primary cause for the change
was the March 1996 repayment of a loan (with interest) of $1,645,000 by the
primary stockholder of the Company. The repayment occurred in conjunction
with the Reorganization on March 18, 1996. The loan was originally made in
1995 in order to allow the primary stockholder to furnish a personally owned
certificate of deposit as security on the Company's revolving line of credit.
Cash provided by financing activities during the first nine months of fiscal
1996 was $3,088,000, compared to $435,000 for the same period in 1995.
During the nine months ended September 30, 1996, the Company received net
proceeds from sale of common stock of $10,490,000, offset in part by
repayment of the note to the bank of $5,802,000 and the distribution of
$1,600,000 of Ocal Alabama's S corporation earnings to the former
shareholders (net of note payable issued to the former shareholders). During
the nine months ended September 30, 1995, borrowings from the bank were
increased by $3,748,000 and were used to repay notes payable to a supplier
and related parties.
The Company's principal commitments at September 30, 1996 consisted of
obligations under operating leases for facilities.
INCOME TAXES
As of March 18, 1996, as a result of the Reorganization, the Company and all
of its subsidiaries became C corporations subject to state and federal income
taxes at statutory rates which the Company estimates will subject its taxable
income after that date to a combined tax rate of approximately 40%. Such
income taxes are provided in the accompanying condensed consolidated
statements of income for the period from March 18, 1996 through September 30,
1996. Previously, the Company only recorded a provision for state income
taxes at S corporation tax rates which were nominal in amount. Included in
the provision for income taxes for the nine months ended September 30, 1996,
is a one-time accrual of deferred income taxes in the amount of $100,000 as
a result of terminating Ocal Alabama's S corporation status due to the
Reorganization on March 18, 1996. These deferred income taxes relate
primarily to temporary depreciation differences.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
September 30, 1996.
<PAGE>
SIGNATURE
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.
OCAL, INC.
(Registrant)
Date: November 11, 1996 By: Lida R. Frankel
Lida R. Frankel
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> SEP-30-1996 SEP-30-1995
<CASH> 6,456 80
<SECURITIES> 0 0
<RECEIVABLES> 3,872 4,562
<ALLOWANCES> 0 0
<INVENTORY> 6,282 6,430
<CURRENT-ASSETS> 16,798 11,233
<PP&E> 2,645 2,412
<DEPRECIATION> 1,293 1,003
<TOTAL-ASSETS> 18,247 12,852
<CURRENT-LIABILITIES> 3,940 6,538
<BONDS> 1,757 0
0 0
0 0
<COMMON> 6 0
<OTHER-SE> 12,444 6,314
<TOTAL-LIABILITY-AND-EQUITY> 18,247 12,852
<SALES> 18,925 18,796
<TOTAL-REVENUES> 18,925 18,796
<CGS> 13,041 12,439
<TOTAL-COSTS> 13,041 12,439
<OTHER-EXPENSES> 234 1,072
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 30 280
<INCOME-PRETAX> 2,761 2,149
<INCOME-TAX> 970 10
<INCOME-CONTINUING> 1,791 2,139
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,791 2,139
<EPS-PRIMARY> 0.36 0.66
<EPS-DILUTED> 0 0
