U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
- --------- Act of 1934
For the quarterly period ended September 30, 1996
----------------------
_________ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to ___________
Commission File Number 0-7855
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UNITED-GUARDIAN, INC.
- -----------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 11-1719724
- ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
230 Marcus Boulevard., Hauppauge, New York 11788
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(Address of Principal Executive Offices)
(516) 273-0900
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(Issuer's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
---------- -----------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after
the distribution of securities under a plan confirmed by a court.
Yes _________ No ____________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date
4,762,889
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UNITED-GUARDIAN, INC.
INDEX
Page No.
Part I. Financial Information:
Consolidated Statements of Earnings -
Three and Nine Months Ended
September 30, 1996 and 1995 2
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3-4
Consolidated Statements of Cash Flows -
Nine Months Ended
September 30, 1996 and 1995 5
Consolidated Notes to Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II. Other Information 8
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UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
--------- --------- --------- ---------
Revenue:
Sales $ 5,794,771 $ 5,153,384 $ 1,736,000 $1,581,374
Fees and retainers 35,000 25,000 10,000 ---
--------- --------- --------- ---------
5,829,771 5,178,384 1,746,030 1,581,374
--------- --------- --------- ---------
Costs and expenses:
Cost of sales 3,663,646 3,295,572 1,066,790 973,937
Operating expenses 1,486,573 1,376,873 503,534 454,940
--------- --------- --------- ---------
5,150,219 4,672,445 1,570,324 1,428,877
Earnings from --------- --------- --------- ---------
operations 679,552 505,939 175,706 152,497
Other income (expense):
Interest income 9,419 6,815 5,253 2,603
Interest expense (65,222) (82,166) (19,353) (24,291)
Gain on sale of
equipment 45,000 --- 45,000 ---
--------- ---------- --------- ---------
Earnings before
income taxes 668,749 430,588 206,606 130,809
Provision for income
taxes 254,300 162,500 79,000 48,700
--------- ---------- --------- ---------
Net earnings $ 414,449 $ 268,088 $ 127,606 $ 82,109
========= ========== ========= =========
Earnings per common
share $ .09 $ .06 $ .03 $ .02
========= ========= ========= =========
See notes to financial statements.
2
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UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 498,555 $ 307,061
Accounts receivable
(less allowance for doubtful
accounts of $24,981 at
September 30, 1996 and
$24,802 at December 31,1995) 808,606 1,044,678
Inventories 2,237,289 2,289,328
Prepaid expenses and other
current assets 180,833 148,678
Deferred income taxes 59,503 59,503
------------ -----------
Total current assets 3,784,786 3,849,248
------------ -----------
Property, plant and equipment:
Land 69,000 69,000
Factory equipment and fixtures 2,093,007 1,973,589
Building and improvements 1,744,192 1,698,205
Waste disposal plant 133,532 133,532
------------ -----------
4,039,731 3,874,326
Less: Accumulated depreciation 2,527,119 2,380,652
------------ -----------
1,512,612 1,493,674
Assets under capital leases,net 10,944 22,965
------------ -----------
1,523,556 1,516,639
------------ -----------
Other assets:
Processes and patents, net 393,762 459,546
Other 177,335 90,382
------------ -----------
571,097 549,928
------------ -----------
$ 5,879,439 $ 5,915,815
============ ===========
See notes to financial statements.
3
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UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 DECEMBER 31,1995
------------------ ----------------
LIABILITIES AND (UNAUDITED)
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 328,111 $ 545,901
Notes payable - banks ---- 100,000
Accrued expense and other 247,040 147,670
Current portion of long term
debt and capital lease
obligations 116,019 119,382
------------ -----------
Total current liabilities 691,170 912,953
------------ -----------
Long-term debt 501,667 727,462
------------ -----------
Capital lease obligations 1,806 5,053
------------ -----------
Deferred income taxes 43,121 43,121
------------ -----------
Stockholders' equity:
Common stock $.10 par value, 476,289 476,289
authorized 10,000,000 shares,
issued and outstanding
4,762,889 shares
Capital in excess of par value 3,089,380 3,089,380
Retained earnings 1,076,006 661,557
------------ -----------
Total stockholders' equity 4,641,675 4,227,226
------------ -----------
$ 5,879,439 $ 5,915,815
============ ===========
See notes to financial statements.
4
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
-------- --------
Cash flows provided by operating activities:
Net earnings $ 414,449 $ 268,088
Adjustments to reconcile net earnings (loss)
to net cash flows from operations:
Depreciation and amortization 224,272 225,511
Gain on sale of equipment (45,000) ----
(Increase) decrease in assets:
Accounts receivable 236,072 (25,567)
Inventories 52,039 (172,060)
Prepaid expense and other assets (119,108) 5,236
Increase (decrease) in liabilities:
Accounts payable (217,790) (238,174)
Accrued expenses and other 99,370 (657)
--------- ---------
Net cash provided by operating activities 644,304 62,377
--------- ---------
Cash flows from investing activities:
Acquisition of property, plant and equipment (165,405) (192,341)
Proceeds from sale of equipment 45,000 ----
--------- ---------
Net cash (used in) investing activities (120,405) (192,341)
--------- ---------
Cash flows from financing activities:
Increase (decrease) notes payable-bank, net (100,000) (50,000)
Principal payments on long-term debt (225,795) (86,234)
Principal payments on capital lease
obligations (6,610) (10,608)
--------- ---------
Net cash (used in) financing activities (332,405) (146,842)
--------- ---------
Net increase(decrease)in cash and cash equivalents 191,494 (276,806)
Cash and cash equivalents at beginning
of period 307,061 477,324
--------- ---------
Cash and cash equivalents at
end of period $ 498,555 $ 200,518
========= =========
See notes to financial statements.
5
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as
of September 30, 1996 and the results of operations for the three and
nine months ended September 30, 1996 and 1995 and cash flows for the nine
months ended September 30, 1996 and 1995.The accounting policies followed
by the Company are set forth in the Company's financial statements
included in the December 31, 1995 Annual Report.
2. The results of operations for the three and nine months ended
September 30, 1996 and 1995 are not necessarily indicative of the results
to be expected for the full year.
3. For purposes of the Statement of Cash Flows, the Company
considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
Cash payments for interest were $66,610 and $83,948 for the nine
months ended September 30, 1996 and 1995 respectively.
Cash payments for taxes were $173,183 and $157,245 for the nine
months ended September 30, 1996 and 1995 respectively.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Gross Revenue from Operations. Revenue increased $651,387
(12.6%) for the nine months ended September 30, 1996 as compared to the
comparable period in 1995. The Guardian division had a sales increase of
$317,874 (8.1%) while the Eastern division had a sales increase of
$323,513 (25.8%). The Guardian sales increase was primarily due to
increased sales volume and price increases on some cosmetic products. The
Eastern sales increase was primarily due to increased demand for its
products.
For the three month period ended September 30, 1996, revenue
increased $164,656 (10.4%) over the comparable period in 1995. Sales of
the Eastern division increased $95,212 (22.3%) while sales of the
Guardian division increased $59,444 (5.1%). The sales increases were
primarily due to increased demand for the Company's products.
Cost of Sales. As a percentage of sales, cost of sales decreased
from 63.9% for the nine months ended September 30, 1995 to 63.2% in the
comparable period in 1996. This decrease is mainly due to the absorption
of plant fixed costs by higher revenue in 1996 as compared to 1995.
Cost of sales, as a percentage of sales, decreased from 61.6%
for the three month period ended September 30, 1995 to 61.4% for the
comparable period in 1996. This increase was mainly due to the absorption
of plant fixed costs by higher revenue in 1996 as compared to 1995.
Operating Expenses increased $109,700 (8%) in the nine months
ended September 30, 1996 when compared to the comparable period in 1995.
For the three months ended September 30, 1996 there was an increase of
$48,594 (10.7%) over the comparable period in 1995. These increases were
primarily due to increases in payroll and payroll related costs.
Interest Expense decreased $16,944 (20.6%) in the nine months
ended September 30, 1996 when compared to the comparable period in 1995
and $4,938 (20.3%) in the three month period ended September 30, 1996
over the comparable period in 1995. These decreases were mainly due to a
lower average balance of bank loans outstanding.
Gain on Sale of Equipment. The Company realized a gain on sale
of equipment amounting to $45,000 during the three and nine month periods
ended September 30, 1996. No gains were realized during the comparable
three and nine month periods in 1995.
FINANCIAL CONDITION
Working capital increased from $2,936,295 at December 31, 1995
to $3,093,616 at September 30, 1996 primarily as a result of cash
provided by operations. The working capital ratio increased from 4.2 to 1
at December 31, 1995 to 5.5 to 1 at September 30, 1996. The Company
believes that its working capital is and will continue to be sufficient
to support its operating requirements.
7
<PAGE>
PART II - OTHER INFORMATION
Item 6 (b) Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
No reports have been filed on Form 8-K during this quarter.
UNITED-GUARDIAN, INC.
SIGNATURES
In accordance with 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.
UNITED-GUARDIAN, INC.
(Registrant)
By: Alfred R. Globus
Chief Executive Officer and
Chief Financial Officer
Date: November 1, 1996
8
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<ARTICLE> 5
<CIK> 0000101295
<NAME> UNITED-GUARDIAN, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 498,555
<SECURITIES> 0
<RECEIVABLES> 808,606
<ALLOWANCES> 24,981
<INVENTORY> 2,237,289
<CURRENT-ASSETS> 3,784,786
<PP&E> 4,039,731
<DEPRECIATION> 2,527,119
<TOTAL-ASSETS> 5,879,439
<CURRENT-LIABILITIES> 691,170
<BONDS> 501,667
0
0
<COMMON> 476,289
<OTHER-SE> 4,165,386
<TOTAL-LIABILITY-AND-EQUITY> 5,879,439
<SALES> 5,794,771
<TOTAL-REVENUES> 5,829,771
<CGS> 3,663,646
<TOTAL-COSTS> 3,663,646
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,222
<INCOME-PRETAX> 668,749
<INCOME-TAX> 254,300
<INCOME-CONTINUING> 414,449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 414,449
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
