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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995 Commission File Number 1-9897
VALLEY FORGE CORPORATION
(Exact name of Registrant as specified in its charter)
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<S> <C>
GEORGIA 58-0833796
(State of incorporation) (I.R.S. Employer Identification Number)
</TABLE>
100 Smith Ranch Road, Suite 326, San Rafael, California 94903-1994
(Address of principal executive offices) (Zip code)
(415) 492-1500
(Registrant's telephone number, including area code)
Indicate by a 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 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 [ ]
The number of shares outstanding of Registrant's Common Stock, par value $.50
per share, at May 9, 1995 was 1,773,267.
The Exhibit Index is located on Page 2.
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VALLEY FORGE CORPORATION AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1995
INDEX
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Page
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PART I: FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
a) Condensed Consolidated Statements of Income for
the Three Months Ended March 31, 1995
and 1994 3
b) Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1995
and 1994 4
c) Condensed Consolidated Balance Sheets at
March 31,1995 and December 31, 1994 5
d) Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II: OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 10
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
VALLEY FORGE CORPORATION AND SUBSIDIARIES
(Unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1995 1994
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<S> <C> <C>
REVENUES $18,863 $15,795
Costs and expenses:
Cost of goods sold 11,310 9,561
Selling and administrative 5,577 4,563
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OPERATING INCOME 1,976 1,671
Other income (expense):
Interest expense (317) (139)
Interest income 12 1
Other expense, net (17) (303)
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INCOME BEFORE INCOME TAXES 1,654 1,230
Income taxes 646 492
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NET INCOME $ 1,008 738
======= =======
NET INCOME PER SHARE $.55 $.42
======= =======
Dividends per share $.085 $.075
======= =======
Weighted average shares outstanding 1,818 1,761
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See Notes to Condensed Consolidated Financial Statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
VALLEY FORGE CORPORATION AND SUBSIDIARIES
(Unaudited, in thousands)
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<CAPTION>
Three Months Ended March 31,
-------------------------------
1995 1994
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<S> <C> <C>
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES $(1,106) $451
INVESTING ACTIVITIES
Additions to property, plant, and equipment (843) (602)
Proceeds from sale of constructed facility 2,821 -
Payments received on notes receivable - 25
Other (35) (19)
------- ----
Net cash provided by (used for) investing activities 1,943 (596)
------- ----
FINANCING ACTIVITIES
Net borrowings on line of credit agreement 1,048 363
Repayment of construction loan (1,728) -
Proceeds from construction loan 84 -
Net proceeds from short-term notes payable - 200
Principal payments on long-term debt (125) (929)
Stock options exercised 35 641
Dividends paid (151) (130)
------- ----
Net cash (used for) provided by financing activities (837) 145
CHANGE IN CASH - -
Cash at beginning of year - -
------- ----
CASH AT END OF PERIOD $ - $ -
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See Notes to Condensed Consolidated Financial Statements.
4
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CONDENSED CONSOLIDATED BALANCE SHEETS
VALLEY FORGE CORPORATION AND SUBSIDIARIES
(Unaudited, in thousands)
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<CAPTION>
March 31, December 31,
1995 1994
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Accounts receivable, net $11,782 $ 9,535
Inventories 16,367 15,653
Other current assets 1,531 3,922
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Total current assets 29,680 29,110
Property, plant, and equipment, net 6,948 6,483
Goodwill, net 13,652 13,851
Building held for sale 901 901
Other assets 576 600
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$51,757 $50,945
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loans and notes payable $ 4,987 $ 5,583
Current portion of long-term debt 19 143
Accounts payable and accrued expenses 5,971 5,347
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Total current liabilities 10,977 11,073
Long-term debt 11,382 11,383
Deferred income taxes 833 828
Minority interest 1,342 1,322
Stockholders' equity 27,223 26,339
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$51,757 $50,945
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</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VALLEY FORGE CORPORATION AND SUBSIDIARIES
(Unaudited, in thousands, except per share amounts)
GENERAL
All financial information provided in this Form 10-Q is unaudited.
All adjustments, which are in the opinion of management necessary to a fair
presentation of results for the interim periods, have been included herein.
All adjustments are of a normal and recurring nature. Certain
reclassifications have been made to the 1994 condensed consolidated financial
statements to conform to the 1995 presentation. Detailed footnote disclosure
required annually has not been reflected in the accompanying financial
statements and, therefore, the statements do not contain all disclosures
required by generally accepted accounting principles. Reference should be made
to the Valley Forge Corporation Annual Report on Form 10-K for the year ended
December 31, 1994.
Due to seasonal variations, the results of operations for the periods reported
are not necessarily indicative of the entire year.
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<CAPTION>
INVENTORIES March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Raw materials $ 7,923 $ 8,292
Work-in-process 2,962 2,274
Finished goods 5,482 5,087
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$16,367 $15,653
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PURCHASE OF ASSETS OF THE GUEST COMPANY, INC.
On June 1, 1994, Atlantic Guest, Inc., a newly formed subsidiary of Valley
Forge Corporation, acquired substantially all of the assets of The Guest
Company, Inc. ("Guest") for a purchase price of approximately $6.5 million in
cash and the assumption of certain liabilities totaling $392,000. Guest,
located in Meriden, Connecticut, is a manufacturer of marine products including
battery chargers, battery switches, and lighting products.
The Company's results of operations include the results of Guest since June 1,
1994.
The pro forma results of operations had this acquisition occurred on January 1,
1994 follow:
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<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
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<S> <C> <C>
Revenues $18,863 $17,205
Net income 1,008 773
Per share net income $.55 $.44
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EARNINGS PER SHARE
Earnings per share are based upon the weighted average number of common shares
and equivalents outstanding during the periods. There was no difference
between primary and fully diluted earnings per share.
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes and interest during the three months ended March 31,
1995 and 1994 was as follows:
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<CAPTION>
1995 1994
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<S> <C> <C>
Income taxes $148 $207
Interest $302 $131
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
VALLEY FORGE CORPORATION AND SUBSIDIARIES
March 31, 1995
FINANCIAL CONDITION
In January 1995, the Company sold a constructed operating facility for $2.8
million and repaid the related construction loan of $1.7 million. In addition
to the cash generated from the sale, borrowings on the credit line ($1.0
million) were sufficient to meet working capital requirements in excess of cash
flow from operations ($1.1 million) and invest in property, plant, and
equipment ($843 thousand). Management believes that cash flow from operations
and bank borrowings will be adequate to meet the Company's working capital
needs for the remainder of 1995.
RESULTS OF OPERATIONS
Revenues and Related Costs
Consolidated revenues increased $3.1 million (19%) in the quarter ended March
31, 1995 over the same quarter in the prior year. This increase reflects a 30%
increase in recreational sales and an 8% increase in industrial sales.
Excluding the revenues of Guest, which was acquired in June 1994, the increase
in recreational sales would have been 9%. Gross profits for the quarter
increased $1.3 million (21%) over 1994, with recreational gross profits
increasing 37% and industrial gross profits increasing 5%. Excluding the gross
profit of Guest, the increase in recreational gross profits would have been
15%. The consolidated gross profit margin percentage increased .5 % from 39.5%
in 1994 to 40% in 1995.
Selling and Administrative Expenses
Consolidated selling and administrative expenses increased $1.0 million (22%)
for the quarter ended March 31, 1995. Excluding the expenses of Guest,
consolidated selling and administrative expenses increased 11%. Selling and
administrative expenses as a percentage of sales increased from 29% for the
first quarter of 1994 to 30% for the first quarter of 1995.
Other Income (Expense)
Interest expense for the quarter ended March 31, 1995 increased $178 thousand
(128%) over the same quarter in the prior year due principally to the increase
in debt used to acquire Guest.
Other Expense for the quarter ended March 31, 1994 includes a charge to write
down a building held for sale to its estimated net realizable value.
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Income Taxes
The effective tax rate decreased from 40% for the first quarter of 1994 to 39%
for the first quarter of 1995 primarily because of an increase in estimated
pretax income for 1995.
QUARTERLY RESULTS
The following table sets forth unaudited consolidated summary financial data
for each quarter of 1993, 1994, and 1995 to date. This quarterly information
has been prepared on the same basis as the annual consolidated financial
statements and, in the opinion of management, reflects all adjustments,
consisting only of normal recurring adjustments, necessary to state fairly the
information set forth herein. The operating results for any quarter are not
necessarily indicative of results for any future period. Dollars in thousands,
except per share amounts:
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1993 First Quarter Second Quarter Third Quarter Fourth Quarter
- ---- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues $12,004 $13,874 $13,246 $14,132
Gross profit 4,798 5,480 5,167 5,324
Net income 464 606 467 578
Net income per share $.27 $.34 $.27 $.33
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<CAPTION>
1994 First Quarter Second Quarter Third Quarter Fourth Quarter
- ---- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues $15,795 $18,156 $15,961 $16,124
Gross profit 6,234 7,480 6,017 6,044
Net income 738 904 614 561
Net income per share $.42 $.50 $.34 $.31
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<CAPTION>
1995 First Quarter
- ---- -------------
<S> <C>
Revenues $18,863
Gross profit 7,553
Net income 1,008
Net income per share $.55
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PART II OTHER INFORMATION
VALLEY FORGE CORPORATION AND SUBSIDIARIES
For the Quarter Ended March 31, 1995
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits required by Item 601 of Registration S-K:
Exhibit 11 - Computation of Earnings per Share.
b) Reports on Form 8:
None.
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Exhibit 11
COMPUTATION OF EARNINGS PER SHARE
VALLEY FORGE CORPORATION AND SUBSIDIARIES
(Unaudited)
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<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
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<S> <C> <C>
PRIMARY:
Weighted average common shares outstanding 1,770,684 1,699,156
Common equivalent shares 47,173 61,809
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Weighted average common shares and
common equivalent shares outstanding 1,817,857 1,760,965
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Net income $1,008,000 $ 738,000
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Primary earnings per share $.55 $.42
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FULLY DILUTED:
Weighted average common shares
outstanding 1,770,684 1,699,156
Common equivalent shares 49,191 68,460
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Weighted average common shares and
common equivalent shares outstanding 1,819,875 1,767,616
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Net income $1,008,000 $ 738,000
---------- ----------
Fully diluted earnings per share $.55 $.42
==== ====
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VALLEY FORGE CORPORATION AND SUBSIDIARIES
SIGNATURES
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.
VALLEY FORGE CORPORATION
Registrant
Date: May 15, 1995 ________________________
Monica J. Burke
Vice President Finance
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Exhibit Index
Ex. 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 11,964
<ALLOWANCES> 182
<INVENTORY> 16,367
<CURRENT-ASSETS> 29,680
<PP&E> 17,652
<DEPRECIATION> 10,704
<TOTAL-ASSETS> 51,757
<CURRENT-LIABILITIES> 10,977
<BONDS> 11,382
<COMMON> 954
0
0
<OTHER-SE> 26,269
<TOTAL-LIABILITY-AND-EQUITY> 51,757
<SALES> 18,863
<TOTAL-REVENUES> 18,863
<CGS> 11,310
<TOTAL-COSTS> 11,310
<OTHER-EXPENSES> 5,577
<LOSS-PROVISION> 31
<INTEREST-EXPENSE> 317
<INCOME-PRETAX> 1,654
<INCOME-TAX> 646
<INCOME-CONTINUING> 1,008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,008
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
</TABLE>
