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 _______June 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____
______________________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________
(Address of Principal Executive Offices)
_______________(516) 273-0900_________________
(Issuer's Telephone Number, Including Area Code)
_______________________________________________________________
(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________________________________
<PAGE>
UNITED-GUARDIAN, INC.
INDEX
Page No.
--------
Part I. Financial Information:
Consolidated Statements of Earnings -
Three and Six Months Ended
June 30, 1996 and 1995 2
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 3-4
Consolidated Statements of Cash Flows -
Six Months Ended
June 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
1
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ----
Revenue:
Net sales $ 4,058,741 $ 3,572,010 $ 2,129,355 $ 1,885,489
Fees and retainers 25,000 25,000 25,000 25,000
--------- --------- --------- ---------
4,083,741 3,597,010 2,154,355 1,910,489
--------- --------- --------- ---------
Costs and expenses:
Cost of Sales 2,596,856 2,321,635 1,351,102 1,160,992
Operating expenses 983,039 921,933 495,519 471,790
--------- --------- --------- ---------
3,579,895 3,243,568 1,846,621 1,632,782
--------- --------- --------- ---------
Earnings from operations 503,846 353,442 307,734 277,707
Other income (expense):
Interest income 4,166 4,212 2,257 1,833
Interest expense (45,869) (57,875) (23,316) (28,615)
---------- ---------- ---------- ----------
Earnings before income taxes 462,143 299,779 286,675 250,925
Provision for income taxes 175,300 113,800 108,700 96,300
--------- --------- --------- ----------
Net earnings 286,843 185,979 177,975 154,625
========= ========= ========= =========
Earnings per common share $ 0.06 $ 0.04 $ 0.04 $ 0.03
========= ========= ========= =========
</TABLE>
See notes to financial statements.
2
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30 DECEMBER 31
1996 1995
------------ -------------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 310,833 $ 307,061
Accounts receivable
(less allowance for doubtful
accounts of $24,802 at
June 30, 1996 and
December 31, 1995) 1,061,632 1,044,678
Inventories 2,186,285 2,289,328
Prepaid expenses and other
current assets 187,649 148,678
Deferred income taxes 59,503 59,503
----------- -----------
Total current assets 3,805,902 3,849,248
----------- -----------
Property, plant and equipment:
Land 69,000 69,000
Factory equipment and fixtures 2,028,518 1,973,589
Building and improvements 1,725,063 1,698,205
Waste disposal plant 133,532 133,532
----------- -----------
3,956,113 3,874,326
Less: Accumulated depreciation 2,469,732 2,380,652
----------- -----------
1,486,381 1,493,674
Assets under capital leases, net 14,735 22,965
----------- -----------
1,501,116 1,516,639
----------- -----------
Other assets:
Processes and patents, net 415,690 459,546
Other 177,368 90,382
----------- -----------
593,058 549,928
----------- -----------
$ 5,900,076 $ 5,915,815
=========== ===========
See notes to financial statements.
3
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
1996 1995
----------------- --------------
LIABILITIES AND (UNAUDITED)
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 351,347 $ 545,901
Notes payable - banks --- 100,000
Accrued expense and other 200,132 147,670
Current portion of long term
debt and capital lease
obligations 118,519 119,382
--------- ---------
Total current liabilities 669,998 912,953
--------- ---------
Long-term debt 670,000 727,462
--------- ---------
Capital lease obligations 2,888 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 948,400 661,557
--------- ---------
Total stockholders' equity 4,514,069 4,227,226
--------- ---------
$ 5,900,076 $ 5,915,815
========= =========
See notes to financial statements.
4
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------
1996 1995
------- ------
Cash flows provided by operating activities:
Net earnings $ 286,843 $ 185,979
Adjustments to reconcile net earnings
to net cash flows from operations:
Depreciation and amortization 141,166 150,237
(Increase) decrease in assets:
Accounts receivable (16,954) 686
Inventories 103,043 60,505
Prepaid expense and other assets (125,957) (20,178)
Increase (decrease) in liabilities:
Accounts payable (194,554) (236,559)
Accrued expenses and other 52,462 2,898
--------- ---------
Net cash provided by operating activities 246,049 143,568
--------- ---------
Cash flows from investing activities:
Acquisition of property, plant and equipment (81,787) (143,522)
--------- ---------
Net cash (used in) investing activities (81,787) (143,522)
--------- ---------
Cash flows from financing activities:
Increase (decrease) notes payable-bank, net (100,000) (100,000)
Principal payments on long-term debt (57,462) (57,465)
Principal payments on capital lease
obligations (3,028) (7,915)
--------- ---------
Net cash (used in) financing activities (160,490) (165,380)
-------- ---------
Net increase (decrease) in cash and cash
equivalents 3,772 (165,334)
Cash and cash equivalents at beginning
of period 307,061 477,324
--------- ---------
Cash and cash equivalents at end of period $ 310,833 $ 311,990
========= =========
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 June 30,
1996 and the results of operations for the three and six months ended June
30, 1996 and 1995 and cash flows for the six months ended June 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 six months ended June
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 $47,257 and $58,871 for the six months
ended June 30, 1996 and 1995 respectively.
Cash payments for taxes were $125,308 and $76,409 for the six months
ended June 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 $486,731 (13.5%) for
the six months ended June 30, 1996 as compared to the comparable period in
1995. The Guardian division had a sales increase of $258,430 (9.4%) while
the Eastern division had a sales increase of $228,301 (27.7%). 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 June 30, 1996, revenue increased
$243,866 (12.8%) over the comparable period in 1995. Sales of the Eastern
division increased $187,308 (46.2%) while sales of the Guardian division
increased $56,558 (3.8%). 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
65% for the six months ended June 30, 1995 to 64% 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, increased from 61.6% for the
three month period ended June 30, 1995 to 63.5% for the comparable period
in 1996. This increase was mainly due to the substantial increase in sales
of the Eastern division which operates at a higher cost factor than the
Guardian division.
Operating Expenses increased $61,106 (6.6%) in the six months ended
June 30, 1996 when compared to the comparable period in 1995. For the three
months ended June 30, 1996 there was an increase of $23,729 (5%) over the
comparable period in 1995. These increases were primarily due to increases
in payroll and payroll related costs.
Interest Expense decreased $12,006 (20.7%) in the six months ended
June 30, 1996 when compared to the comparable period in 1995 and $5,299
(18.5%) in the three month period ended June 30, 1996 over the comparable
period in 1995. These decreases were mainly due to the decrease in interest
rates and a lower average balance of bank loans outstanding.
FINANCIAL CONDITION
- -------------------
Working capital increased from $2,936,295 at December 31, 1995 to
$3,135,904 at June 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 5.7 to 1 at June 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: August 14, 1996
8
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000101295
<NAME> UNITED-GUARDIAN, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 310,833
<SECURITIES> 0
<RECEIVABLES> 1,061,632
<ALLOWANCES> 24,802
<INVENTORY> 2,186,285
<CURRENT-ASSETS> 3,805,902
<PP&E> 3,956,113
<DEPRECIATION> 2,469,732
<TOTAL-ASSETS> 5,900,076
<CURRENT-LIABILITIES> 669,998
<BONDS> 670,000
0
0
<COMMON> 476,289
<OTHER-SE> 4,037,780
<TOTAL-LIABILITY-AND-EQUITY> 5,900,076
<SALES> 4,058,741
<TOTAL-REVENUES> 4,083,741
<CGS> 2,596,856
<TOTAL-COSTS> 2,596,856
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,869
<INCOME-PRETAX> 462,143
<INCOME-TAX> 175,300
<INCOME-CONTINUING> 286,843
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 286,843
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
