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 _____March 31, 1997_____
_________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.
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(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 Months Ended
March 31, 1997 and 1996 2
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 3-4
Consolidated Statements of Cash Flows -
Three Months Ended
March 31, 1997 and 1996 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
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
---- ----
Net sales $ 1,894,588 $ 1,929,386
---------- ----------
Costs and expenses:
Cost of sales 1,192,057 1,245,754
Operating expenses 470,024 487,520
---------- ----------
1,662,081 1,733,274
---------- ----------
Earnings from operations 232,507 196,112
Other income (expense):
Interest income 4,893 1,909
Interest expense (14,027) (22,553)
---------- ---------
Earnings before income taxes 223,373 175,468
Provision for income taxes 84,900 66,600
---------- ---------
Net earnings $ 138,473 $ 108,868
========== =========
Earnings per common share $ .03 $ .02
========== =========
See notes to financial statements.
2
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1997 1996
---------- -----------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 551,632 $ 826,079
Accounts receivable
(less allowance for doubtful
accounts of $ 38,900 at
March 31, 1997 and
December 31, 1996) 1,033,332 859,146
Inventories 1,637,275 1,812,629
Prepaid expenses and other
current assets 150,143 199,516
Deferred income taxes 116,233 116,233
---------- ----------
Total current assets 3,488,615 3,813,603
---------- ----------
Property, plant and equipment:
Land 69,000 69,000
Factory equipment and fixtures 2,159,245 2,119,223
Building and improvements 1,774,703 1,766,174
Waste disposal plant 133,532 133,532
---------- ----------
4,136,480 4,087,929
Less: Accumulated depreciation 2,647,021 2,583,297
---------- ----------
1,489,459 1,504,632
Assets under capital leases, net 4,692 6,934
---------- ----------
1,494,151 1,511,566
---------- ----------
Other assets:
Processes and patents, net 330,851 351,835
Other 263,684 177,135
---------- ----------
594,535 528,970
---------- ----------
$ 5,577,301 $ 5,854,139
========== ==========
See notes to financial statements.
3
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
LIABILITIES AND (UNAUDITED)
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 209,955 $ 222,743
Dividends payable --- 238,144
Accrued expenses and other 89,868 100,772
Current portion of long term
debt and capital lease
obligations 110,658 114,241
Taxes payable 32,005 155,231
----------- ------------
Total current liabilities 442,486 831,131
----------- ------------
Long-term debt 448,334 475,000
----------- ------------
Capital lease obligations --- ---
----------- ------------
Deferred income taxes 31,618 31,618
----------- ------------
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 1,089,194 950,721
----------- ------------
Total stockholders' equity 4,654,863 4,516,390
----------- ------------
$ 5,577,301 $ 5,845,139
=========== ============
See notes to financial statements.
4
<PAGE>
UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
---- ----
Cash flows from operating activities:
Net earnings $ 138,473 $ 108,868
Adjustments to reconcile net earnings
to net cash flows provided by
(used in) operations:
Depreciation and amortization 86,950 74,763
(Increase) decrease in assets:
Accounts receivable (174,186) 138,083
Inventories 175,354 11,032
Prepaid expenses and other assets (37,176) (106,427)
Increase (decrease) in liabilities:
Accounts payable (12,788) (47,145)
Accrued expenses and other (134,130) 20,646
--------- --------
Net cash provided by (used in)
operating activities 42,497 199,820
--------- --------
Cash flows from investing activities:
Acquisition of property, plant and
equipment (48,551) (74,270)
--------- --------
Net cash (used in) investing activities (48,551) (74,270)
--------- --------
Cash flows from financing activities:
Dividends paid (238,144) ---
Increase notes payable-bank, net --- 40,000
Principal payments on long-term debt (29,166) (28,720)
Proceeds from long term debt --- 20,000
Principal payments on capital lease
obligations (1,083) (1,082)
--------- --------
Net cash provided by (used in)
financing activities (268,393) 30,198
--------- --------
Net increase (decrease) in cash
and cash equivalents (274,447) 155,748
Cash and cash equivalents at beginning
of period 826,079 307,061
---------- --------
Cash and cash equivalents at
end of period $ 551,632 $ 462,809
========== ========
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 March 31, 1997 and December 31, 1996 and the results of operations and
cash flows for the three months ended March 31, 1997 and 1996. The
accounting policies followed by the Company are set forth in the
Company's financial statements included in the December 31, 1996 Annual
Report.
2. The results of operations for the three months ended March
31, 1997 and 1996 are not necessarily indicative of the results to be
expected for the full year. Certain prior year amounts have been
reclassified to conform with the current year presentation.
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 $14,171 and $22,266 for the three
months ended March 31, 1997 and March 31, 1996 respectively.
Cash payments for income taxes were $208,126 and $35,183 for the
three months ended March 31, 1997 and March 31, 1996 respectively.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net Sales. Net Sales decreased $34,798 (1.8%) for the three months
ended March 31, 1997 as compared to the comparable period in 1996. The
Guardian Laboratories division ("Guardian") had a sales increase of
$13,528 (.9%) while the Eastern Chemical subsidiary ("Eastern") had a
sales decrease of $48,326 (10.5%). The decrease in Eastern's sales and
the increase in Guardian's sales were both attributable to normal
fluctuations in the purchasing patterns of their respective customers.
Cost of Sales. As a percentage of sales, cost of sales decreased
from 64.6% for the three months ended March 31, 1996 to 62.9% in the
comparable period in 1997. This decrease was due to several factors.
First, the lower sales of Eastern, which operates at a lower profit
margin than Guardian. Second, a reduction in the cost of a key raw
material in one of Guardian's core products.
Operating Expenses decreased $17,496 (3.6%) for the three months
ended March 31, 1997 when compared to the comparable period in 1996. The
decrease was due primarily to the elimination of the costs associated
with two different consulting arrangements that had been in place in the
prior year.
Interest Expense decreased $8,526 (37.8%) for the three months ended
March 31, 1997 when compared to the comparable period in 1996. This
decrease was mainly due to a lower average balance of bank loans
outstanding.
Interest Income increased $2,984 (156.3%) for the three months ended
March 31, 1997 when compared to the comparable period in 1996. This
increase is primarily due to an increase in short term invested balances.
Financial Condition
Working capital was $2,982,472 at December 31, 1996 and $3,046,129
at March 31, 1997. The current ratio increased from 4.59 to 1 at December
31, 1996 to 7.88 to 1 at March 31, 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: May 13, 1997
8
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<CIK> 0000101295
<NAME> UNITED-GUARDIAN, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 551,632
<SECURITIES> 0
<RECEIVABLES> 1,033,332
<ALLOWANCES> 38,900
<INVENTORY> 1,637,275
<CURRENT-ASSETS> 3,488,615
<PP&E> 4,136,480
<DEPRECIATION> 2,647,021
<TOTAL-ASSETS> 5,577,301
<CURRENT-LIABILITIES> 442,486
<BONDS> 448,334
0
0
<COMMON> 476,289
<OTHER-SE> 3,859,805
<TOTAL-LIABILITY-AND-EQUITY> 5,577,301
<SALES> 1,894,588
<TOTAL-REVENUES> 1,894,588
<CGS> 1,192,057
<TOTAL-COSTS> 1,192,057
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,027
<INCOME-PRETAX> 223,373
<INCOME-TAX> 84,900
<INCOME-CONTINUING> 138,473
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,473
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
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