UNITED STATES
SECURITIES AND 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 October 1, 1999.
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: 000-25939
THE KELLER MANUFACTURING COMPANY, INC.
- ------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 35-0435090
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
701 N. Water Street, Corydon, Indiana 47112
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(812) 738-2222
- -------------------------------
(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 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 [ ]
As of October 1, 1999, the registrant had 5,677,363 shares of Common Stock, no
par value, outstanding.
<PAGE>
THE KELLER MANUFACTURING COMPANY, INC.
AND SUBSIDIARY
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of
October 1, 1999 and December 31, 1998
Consolidated Statements of Income for the Three Months
ended and Nine Months ended October 1, 1999 and September
30, 1998
Consolidated Statements of Cash Flows for the Nine
Months ended October 1, 1999 and September 30, 1998
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Index to Exhibits
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
THE KELLER MANUFACTURING COMPANY, INC.
AND SUBSIDIARY
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
OCTOBER 1, 1999 AND DECEMBER 31, 1998
<S> <C> <C>
October 1, 1999 December 31, 1998
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,651,379 $ 3,985,786
Accounts receivable, less allowance for doubtful
accounts of $293,739 (1999) and 6,807,155 6,284,517
$291,000 (1998)
Inventories 17,527,745 16,066,490
Current deferred tax asset 241,600 259,533
Income taxes receivable 3,193 278,862
Other current assets 406,322 536,924
------------ -----------
Total current assets 28,637,394 27,412,112
PROPERTY, PLANT AND EQUIPMENT - net 9,861,973 9,798,174
INVESTMENT SECURITY AVAILABLE FOR SALE 500,000
PREPAID PENSION COSTS 1,686,097 1,760,759
------------ -----------
TOTAL $40,185,464 $39,471,045
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 1,658,729 $1,825,343
Commissions, salaries and withholdings 1,631,870 1,582,327
Accrued vacation 587,625 435,591
Other current liabilities 987,533 1,410,341
------------ -----------
Total current liabilities 4,865,757 5,253,602
LONG-TERM LIABILITIES -
Deferred income taxes 1,105,433 1,085,054
------------ -----------
Total liabilities 5,971,190 6,338,656
------------ -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - no par value, 40,000,000 shares authorized,
5,790,987 shares issued and outstanding as of October 1,
1999 and 5,851,767 shares issued and outstanding as of
December 31, 1998 (net of treasury stock) (808,017) 696,825
Retained earnings
35,022,291 32,435,564
------------ -----------
Total stockholders' equity 34,214,274 33,132,389
------------ -----------
TOTAL $40,185,464 $39,471,045
============ ===========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
THE KELLER MANUFACTURING COMPANY, INC.
AND SUBSIDIARY
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED AND NINE MONTHS ENDED OCTOBER 1, 1999 AND SEPTEMBER 30, 1998
(UNAUDITED)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED NINE MONTHS ENDED
October 1, September 30, October 1, September 30,
1999 1998 1999 1998
----------- ------------- ----------- -------------
NET SALES $13,138,745 $14,941,439 $42,816,613 $45,302,947
COST OF SALES 9,721,651 10,786,452 31,136,969 32,519,556
----------- ------------- ----------- -------------
GROSS PROFIT 3,417,094 4,154,987 11,679,644 12,783,391
SELLING, GENERAL AND ADMINISTRATIVE 1,961,156 2,027,676 6,535,742 5,764,379
----------- ------------- ----------- -------------
INCOME BEFORE INCOME TAXES 1,455,938 2,127,311 5,143,902 7,019,012
INCOME TAXES 590,068 807,518 1,950,020 2,664,418
----------- ------------- ----------- -------------
NET INCOME $ 865,870 $ 1,319,793 $ 3,193,882 $ 4,354,594
=========== ============= =========== =============
NET INCOME PER SHARE OF COMMON STOCK $0.15 $0.23 $0.55 $0.74
=========== ============= =========== =============
basic and dilutive -
based on weighted average number of shares
outstanding of 5,789,333 and 5,854,689 for the
nine months ended October 1, 1999 and
September 30, 1998, respectively; and 5,708,637
and 5,851,796 for the three months ended
October 1, 1999 and September 30, 1998,
respectively.
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
THE KELLER MANUFACTURING COMPANY, INC.
AND SUBSIDIARY
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED OCTOBER 1, 1999 AND SEPTEMBER 30, 1998
(UNAUDITED)
<S> <C> <C>
Nine Months Ended
------------------------------
October 1, September 30,
1999 1998
------------ -------------
OPERATING ACTIVITIES:
Net income $ 3,193,882 $ 4,354,594
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,195,096 1,076,950
Deferred income taxes 38,312 32,940
Common stock awards 307,660 312,329
Changes in assets and liabilities:
Accounts receivable (522,638) (1,821,963)
Inventories (1,461,255) (640,481)
Other current assets 130,602 (133,566)
Prepaid pension costs 74,662 12,754
Accounts payable (166,614) (536,800)
Commissions, salaries and withholdings 49,543 (331,047)
Other current liabilities (270,774) 181,088
Income taxes receivable 275,669 93,584
------------ ------------
Net cash provided by operating activities 2,844,145 2,600,382
------------ ------------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1,258,895) (1,719,750)
Sale of investment security available for sale 500,000
------------ ------------
Net cash used in investing activities (758,895) (1,719,750)
FINANCING ACTIVITIES:
Purchase of common stock (1,812,502) (224,441)
Dividends paid (607,155) (526,899)
------------ ------------
Net cash used in financing activities (2,419,657) (751,340)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (334,407) 129,292
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,985,786 3,902,289
------------ ------------
CASH AND CASH EQUIVALENTS, END OF QUARTER $ 3,651,379 $4,031,581
============ ============
CASH PAID DURING THE YEAR FOR:
Interest $266 $7,307
============ ============
Income taxes $ 2,278,682 $ 2,877,388
============ ============
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
THE KELLER MANUFACTURING COMPANY, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The interim financial statements are unaudited and reflect all adjustments
(consisting solely of normal recurring adjustments) that, in the opinion of
management, are necessary for a fair statement of results for the interim
periods presented. This report should be read in conjunction with the audited
consolidated financial statements included in the Form 10 filed by the Company
with the Securities and Exchange Commission. The results of operations for the
nine months ended October 1, 1999 are not necessarily indicative of the results
to be expected for the full year or any other interim period.
Note 2. Inventories
The following is a summary of the major classes of inventories:
October 1, 1999 December 31, 1998
--------------- -----------------
(Unaudited)
Raw Materials $ 6,752,886 $ 6,801,656
Work-in-process 8,053,095 6,488,392
Finished Goods 2,721,764 2,776,442
----------- -----------
Net inventories $17,527,745 $16,066,490
=========== ===========
Note 3. Income Taxes
The Company made an overpayment of approximately $140,000 in federal income
taxes for the fiscal year ended December 31, 1998. This overpayment contributed
to a reduction in income taxes paid as reflected on the Company's Consolidated
Statement of Cash Flows for the nine months ended October 1, 1999. The major
contributor to this reduction, however, is the drop in net income for the first
nine months of 1999 as compared to the first nine months of 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This discussion contains statements that constitute forward looking statements
within the meaning of the securities laws. Such statements may include
statements regarding the intent, belief or current expectations of The Keller
Manufacturing Company, Inc. (the "Company") or its officers with respect to (i)
the Company's strategic plans, (ii) the policies of the Company regarding
capital expenditures, financing or other matters, and (iii) industry trends
affecting the Company's financial condition or results of operations. Readers of
this discussion are cautioned that any such forward looking statements are not
guarantees of future performance and involve risks and uncertainties and that
actual results may differ materially from those in the forward looking
statements as a result of various factors. This report should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Form 10 Registration Statement filed by
the Company with the Securities and Exchange Commission.
As has been the Company's historical practice, a quarterly newsletter was sent
to the shareholders of the Company. This newsletter, sent concurrently with the
filing of this Form 10-Q, contained abbreviated financial information. In
preparing the financial statements included in this Form 10-Q, a
mis-classification was discovered in that $406,322 as of October 1, 1999 and
$36,924 as of December 31, 1998, had been classified in "Other Assets" rather
than "Current Assets" in the abbreviated financial information of the
newsletter. This created an overstatement in "Other Assets" and an
understatement in "Current Assets" for both the October 1, 1999 and December 31,
1998 columns of the Balance Sheet information in the abbreviated financial
information portion of the newsletter.
Results of Operations
The following table sets forth, for the periods indicated, consolidated
statement of income data as a percentage of net sales.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THREE MONTHS ENDED NINE MONTHS ENDED
October 1, 1999 September 30, 1998 October 1, 1999 September 30, 1998
--------------- ------------------ --------------- ------------------
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 74.0% 72.2% 72.7% 71.8%
Gross Profit 26.0% 27.8% 27.3% 28.2%
Selling, General & Administrative 14.9% 13.6% 15.3% 12.7%
Income Before Taxes 11.1% 14.2% 12.0% 15.5%
Income Taxes 4.5% 5.4% 4.6% 5.9%
Net Income 6.6% 8.8% 7.5% 9.6%
</TABLE>
Three Months Ended October 1, 1999, compared to three months ended September 30,
1998.
Net Sales. Net sales decreased approximately $1.8 million to approximately $13.1
million for the third quarter 1999 compared to approximately $14.9 million in
the third quarter 1998. This was a decrease of approximately 12% in net sales.
The primary factor for the decrease was engineering and manufacturing demands
brought about by the introduction of the new PGA TOUR(R) Group, which has caused
delays in shipments. Directives have been implemented to mitigate the problems.
Orders for the third quarter 1999, however, were up approximately $500,000 to
approximately $15.6 million compared to approximately $15.1 million in the third
quarter 1998.
Cost of Sales. Cost of sales as a percent of net sales increased by 1.8% to 74%
for the third quarter 1999, compared to 72.2% for the third quarter 1998. Actual
cost of sales decreased from $10.8 million for the third quarter 1998 to $9.7
million for the second quarter 1999. The dollar decrease was primarily due to
the decrease in sales during the same time period.
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $66,520 from the third quarter 1998 to the
third quarter 1999. As a percent of net sales, Selling, General and
Administrative Expenses increased from 13.6% for the third quarter 1998 to 14.9%
for the third quarter 1999.
Net Income. As a result of the above factors, net income for the third quarter
declined 34% to approximately $866,000 in 1999 compared to $1,320,000 for the
third quarter 1998.
Nine Months Ended October 1, 1999 Compared to Nine Months Ended September 30,
1998
Net Sales. Net sales decreased approximately $2.5 million to $42.8 million for
the first nine months of 1999 compared to $45.3 million in the first nine months
of 1998. This was a reduction of approximately 5%. The primary reason for the
reduction of sales is due to the introduction of the PGA TOUR(R) Group. There
has been a reduction in productivity due to the loss of efficiencies which is in
line with a typical learning curve. Directives have been implemented to mitigate
the engineering and manufacturing problems. Orders for the first nine months of
1999, however, were up approximately $2.1 million to approximately $43.8 million
compared to approximately $41.7 million for the first nine months of 1998.
Cost of Sales. Total cost of sales decreased by approximately $1.4 million for
the first three quarters of 1999 compared to 1998. As a percent of net sales,
cost of sales increased 0.9% from 71.8% in the first three quarters of 1998
compared to 72.7% for 1999.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $800,000 for the first nine
months of 1999 compared to 1998. As a percent of net sales, this represents an
increase from 12.7% in the first nine months of 1998, compared to 15.3% in the
first nine months of 1999.
Net Income. As a result of the above factors, net income for the first nine
months declined 27% to $3,194,000 for 1999 compared to $4,355,000 for 1998.
Liquidity and Capital Resources.
There was no significant changes in the Company's liquidity. Cash is down
approximately $300,000 while accounts receivable is up approximately $500,000.
The reduction in cash is partly a result of net income being down approximately
$1,161,000 for the first three quarters of 1999 compared to the first three
quarters of 1998. The Company also repurchased approximately $840,000 of its
stock in this quarter, contributing to the reduction in cash. The largest change
was in inventory, increasing approximately $1,460,000 as of October 1, 1999 as
compared to December 31, 1998. This inventory increase is due, in large part, to
the production and engineering problems associated with the introduction of the
new PGA TOUR group.
Year 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar ordinary business activities.
"Year 2000 compliant," as used in this discussion, means that a date-handling
problem relating to the Year 2000 date change that would cause computers,
software or other equipment to fail to correctly perform, process and handle
date-related data for the dates within and between the 20th and 21st centuries,
is not expected to interfere with normal business operations.
Since 1996 the Company has been steadily re-engineering its information systems
to prepare for the conversion to the Year 2000. This effort began with the
purchase of a comprehensive enterprise information system ("EMS Information
System") that is designed to be Year 2000 compliant. The EMS Information System
is a comprehensive Company wide information system encompassing a high majority
of the Company's computerized operations. The EMS system is now in operation
except for the Order Entry and Accounts Receivable, which are planned to be
implemented in the first quarter of 2000. All Year 2000 testing on the EMS
system was completed on August 17, 1999. The Company has engaged a consulting
company to advise and assist it in the installation and implementation of the
system.
<PAGE>
In the event that all applications have not been replaced by the end of the
year, the Company intends for both the old and the new systems to be capable of
handling the Year 2000 issues. Another consulting company was engaged to
ascertain that the old information system is Year 2000 compliant. Testing of
this system was completed on July 31, 1999. The old system is gradually being
phased out as each application is replaced by the new system but is still
expected to be in operation on some applications at year end.
The Company formed a Year 2000 Project Team in 1998 to identify and correct Year
2000 problems with hardware, software, and imbedded microprocessors throughout
the Company. This team is cross-functional and is composed of eleven people.
They have identified many suspected problems and are now involved in the testing
and correction of these problems. This team is also working with key suppliers
and third-party service providers to identify external weaknesses and provide
solutions to prevent the disruption of business activities. Key suppliers and
service providers are identified by the Company as being those that would
materially affect the operations of the Company if the Company experienced
disruptions in materials or services from these suppliers. These include, but
are not limited to, suppliers of raw materials, utility providers, banking
services and insurance providers (particularly medical).
The team's work is proceeding well and is substantially completed. The Company
has received responses, both written and verbal, from its key suppliers and
expects no serious Year 2000 supply disruptions. The team's estimated
percentages of completion are as follows:
Present December 31, 1999
------- -----------------
New system installation 85% 90%
Old system modification 100% 100%
Operating systems 99% 100%
Hardware and Imbedded Chips 99% 100%
New system installation is not expected to be completed by December 31, 1999.
This is not expected to have a material adverse effect on Company results or
operations since the old systems which are slated for replacement after December
31, 1999 have been tested and are Year 2000 compliant.
Through 1998, the Company has incurred capital costs on the Year 2000 project of
approximately $1,018,000 and expenses of approximately $353,000. Capital costs
for 1999 are budgeted at $196,000 and expected expenses for programing and
consulting have been revised upward to $300,000 from the $100,000 estimation
previously disclosed due to unforseen programming and consulting costs due to
increased system integrations. Almost all of these costs are associated with the
new information system software and hardware which were purchased primarily to
provide management with information and tools to better manage the Company and
serve its customers. The expenses relating to Year 2000 compliance are expected
to be paid from existing capital and the Company does not expect these costs to
have a material adverse effect on its future results of operations, liquidity,
or capital resources.
Management believes that the most likely "worst-case" scenario will involve the
failure of business partners or service providers to be compliant, thereby
potentially causing temporary business interruptions and possibly affecting the
Company's normal operations. Management does not expect such disruptions to be
long-term or to materially affect the operations of the Company. The Company
cannot guarantee, however, that Year 2000 issues of all business partners will
be corrected in a timely manner or that the failure of its business partners to
correct these issues would not have a material adverse effect on its future
results of operations or financial condition.
The Company's Year 2000 contingency plan (the "Plan") was completed on July 30,
1999. The objective of the Plan is to provide the minimum level of acceptable
output and services in the event of a system or process failure. The Plan covers
the following areas: 1) utilities; 2) trucking operations; 3) manufacturing
equipment; 4) engineering applications; 5) personnel; 6) purchasing; 7) payroll;
8) accounting; 9) production scheduling; 10) the IBM, EMS and Windows NT
systems; and 11) the Company's wide area network. For each of the above listed
areas, the Plan contains:
1. A Response Team. The names of members who are assigned to react in the
event of a failure.
2. A Team Leader. A party who is responsible for ensuring that the proposed
actions are carried out.
<PAGE>
3. A Communication Plan. A list of individuals to contact in the event of a
failure.
4. A Contact Number. The telephone number(s) of a software vendor or service
provider which is to be contacted.
5. Activation Threshold. At what point and who is to decide to activate the
Plan.
6. Procedure. The recovery procedure to be followed after the Plan is
activated due to a degraded system and/or operation.
The Company also has a Year 2000 Command Team which is the first to be contacted
in the event of a Year 2000 related failure. The Command Team is responsible for
coordinating the various response teams in the event of a system(s) and/or
operation(s) failure. The Command Team is also scheduled to report to work on
January 1, 2000, in order to test various critical functions of the Company. The
Company believes it is taking the necessary steps to prevent major interruptions
to its business resulting from the Year 2000 issues.
Year 2000 Risks
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Company's efforts are expected
to significantly reduce the Company's level of uncertainty about the Year 2000
problem and, in particular, about the Year 2000 compliance and readiness of its
material external agents. The Company believes that, with the implementation of
new business systems and the completion of its projects as scheduled, the
possibility of significant interruptions of normal operations should be reduced.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
(The remainder of this page intentionally left blank.)
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In Clark v. The Keller Manufacturing Company, Inc. and Ray Menefee, filed on
December 29, 1998, in the United States District Court for the Eastern District
of Virginia, Richmond Division, the plaintiff claims racial harassment and
intentional infliction of emotional distress by the Company's employees. The
plaintiff seeks relief in the amount of $100,000 in compensatory damages, and
$1,000,000 in punitive damages, together with all costs and attorney's fees. In
Brown v. The Keller Manufacturing Company, Inc., filed on September 30, 1998, in
the United States District Court for the Southern District of Indiana, the
plaintiff claims sexual harassment by a Company employee, negligent retention
and supervision of such employee by the Company, negligent infliction of
emotional distress, constructive discharge and retaliatory actions by the
Company in violation of her rights protected by state law and Title VII of the
Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991. The
plaintiff seeks compensatory damages, consequential damages and punitive damages
in such amount as to be determined at trial, together with costs and attorney's
fees. In Oakes v. The Keller Manufacturing Company, Inc., filed June 9, 1999, in
the United States District Court for the Southern District of Indiana, the
plaintiff claims she was wrongfully terminated from her employment with the
Company in violation of the Americans with Disabilities Act of 1990, as amended.
The plaintiff seeks an award for lost wages and benefits, compensatory and
punitive damages, costs and attorney's fees.
The Company intends to vigorously contest these claims and believes that the
outcome of the above actions, in the aggregate, will not have a material adverse
effect on its business, operations or financial condition.
In addition to matters described in the foregoing paragraphs, the Company is
involved in routine litigation incidental to the conduct of its business. The
Company believes that the outcome of these routine matters will not have a
material adverse effect on its business, operations or financial condition.
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Share Repurchase Program
On October 29, 1999, the Company's board of directors authorized the President
of the Company, effective as of the filing of this Form 10-Q, to purchase up to
500,000 shares of the Company's common stock in open market or privately
negotiated transactions. After due inquiry, the board of directors considered
the Company's stock an attractive investment opportunity and the repurchase of
the stock to be in the best interests of the Company's shareholders. This
authorization continues a prior authorization of the Company's board of
directors, passed on December 20, 1991, which authorized the purchase of up to
50% of the Company's stock in open market or privately negotiated transactions.
This 50% authorization was reduced to 10% by the board of directors on December
19, 1997. For the years 1997, 1998 and the current year to date, the Company has
purchased 59,815, 15,286 and 205,170 Company shares respectively pursuant to
these prior authorizations.
Dividends
The Company's board of directors declared a dividend of $.035 per share for the
third quarter of 1999 versus a $.03 dividend per share declared for the third
quarter of 1998. Historically the Company has paid quarterly dividends as well
as a special year-end dividend. In the future, the Company plans to incorporate
the special dividend into quarterly distributions thereby increasing the
quarterly dividend payments to keep the aggregate annual dividend payment
consistent with previous distributions. This adjustment will not result in an
increase in the annual dividend payment to shareholders. This change in the
Company's policy from five to four distributions is consistent with the dividend
policy of many other public companies. It is important to note that dividend
payments are made only upon affirmative action of the Company's board of
directors and are subject to the Company's ability to pay them. Dividends to
Company shareholders are in no manner mandatory or guaranteed.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. See Index to Exhibits
(b) Reports on Form 8-K. No report on Form 8-K was filed during the
quarter for which this report is filed.
<PAGE>
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.
THE KELLER MANUFACTURING COMPANY, INC.
/s/ Robert W. Byrd
-------------------------------------
Robert W. Byrd
President and Chief Executive Officer
/s/ Danny L. Utz
-------------------------------------
Danny L. Utz
Vice President, Finance
Chief Financial Officer
Date: November 15, 1999
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
<S> <C> <C>
Sequential Numbering
Number Assigned in System Page Number of
Regulation S-K Item 601 Description of Exhibit Exhibit
(2) No Exhibit
(3) 3.01 Restated Articles of Incorporation
of the Company (Incorporated by
reference to Exhibit 3.01 to the
Company's Amendment number 2 Form
10, filed July 23, 1999, File No.
000-25939).
3.02 Articles of Amendment
of the Restated Articles
of Incorporation of the
Company (Incorporated
by reference to Exhibit
3.02 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
3.03 Articles of Amendment
of the Restated Articles
of Incorporation of the
Company (Incorporated
by reference to Exhibit
3.03 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
3.04 Bylaws of the Company
(Incorporated by reference to
Exhibit 3.04 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
(4) 4.01 Form of Shareholders
Rights Agreement, dated
as of December 18,
1998, by and between
the Company and J.J.B.
Hilliard, W.L. Lyons,
Inc. as Rights Agent
(Incorporated
by reference to Exhibit
4.01 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
4.02 See Article IV of the
Restated Articles of
Incorporation of the
Company found in
Exhibit 3.01 (Incorporated
by reference to Exhibit
4.02 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
<PAGE>
4.03 See Article II of the
Bylaws of the Company
found in Exhibit 3.04
(Incorporated
by reference to Exhibit
4.03 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
(10) 10.01 Form of "Lease of Space
in International Home
Furnishings Center"
dated as of May 1, 1999,
by and between the
Company and
International Home
Furnishings Center, Inc.
(Incorporated
by reference to Exhibit
10.01 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.02 Form of Lease
Agreement by and
between 1355 Market
Street Associates, L.P.
d/b/a San Francisco Mart
and the Company.
(Incorporated
by reference to Exhibit
10.02 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.03 Form of "Effective
Management Systems,
Inc. Software License,
Professional Services
and Support Purchase
Agreement" dated as of
July 6, 1998, by and
between the Company
and Effective
Management Systems, Inc.
(Incorporated
by reference to Exhibit
10.03 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.04 Form of "Extended Hour
Support Agreement" by
and between the
Company and Effective
Management Systems, Inc.
(Incorporated
by reference to Exhibit
10.04 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
<PAGE>
10.05 Form of "Lease
Agreement" by and
between the Company
and Trailer Leasing Company.
(Incorporated
by reference to Exhibit
10.05 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.06 Form of "Ryder Truck
Rental, Inc Truck Lease
and Service Agreement"
by and between the
Company and Ryder
Truck Rental, Inc. with
accompanying schedules
(Incorporated
by reference to Exhibit
10.06 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.07 Schedules to Exhibits
10.05 and 10.06.
(Incorporated
by reference to Exhibit
10.07 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.08 The Keller Manufacturing
Company, Inc. Craftsman
Stock Option Plan
(Incorporated by reference
to Exhibit 10.08 to the
Company's Amendment
number 2 Form 10, filed
July 23, 1999, File No.
000-25939).
10.09 The Keller
Manufacturing
Company, Inc. Board of
Directors' Stock Bonus
Awards Plan (Incorporated
by reference to Exhibit
10.09 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
<PAGE>
10.10 The Keller Manufacturing
Company, Inc. Incentive
Program for Executive
Personnel (Incorporated
by reference to Exhibit
10.10 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.11 License Agreement by
and between the
Company and PGA TOUR
Licensing (Incorporated)
by reference to Exhibit
10.11 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
10.12 Sponsorship Agreement
by and between the
Company and PGA
TOUR, Inc. (Incorporated
by reference to Exhibit
10.12 to the Company's
Amendment number 2
Form 10, filed July 23,
1999, File No. 000-25939).
(11) No Exhibit
(15) No Exhibit
(18) No Exhibit
(19) No Exhibit
(22) No Exhibit
(23) No Exhibit
(24) No Exhibit
(27) 27.01 Financial Data Schedule
(99) No Exhibit
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements of The Keller Manufacturing Company, Inc. and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 OCT-1-1999
<CASH> 3,985,786 3,651,379
<SECURITIES> 0 0
<RECEIVABLES> 6,284,517 6,807,155
<ALLOWANCES> 291,000 293,739
<INVENTORY> 16,066,490 17,527,745
<CURRENT-ASSETS> 27,412,112 28,637,394
<PP&E> 19,555,956 20,814,849
<DEPRECIATION> 9,757,782 10,952,876
<TOTAL-ASSETS> 39,471,045 40,185,464
<CURRENT-LIABILITIES> 5,253,602 4,865,757
<BONDS> 0 0
0 0
0 0
<COMMON> 696,825 (808,017)
<OTHER-SE> 32,435,564 35,022,291
<TOTAL-LIABILITY-AND-EQUITY> 39,471,045 40,185,464
<SALES> 60,144,243 42,816,613
<TOTAL-REVENUES> 60,144,243 42,816,613
<CGS> 43,076,105 31,136,969
<TOTAL-COSTS> 50,964,429 37,672,711
<OTHER-EXPENSES> 9,059 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 9,170,755 5,143,902
<INCOME-TAX> 3,514,750 1,950,020
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,656,005 3,193,882
<EPS-BASIC> 0.97 0.55
<EPS-DILUTED> 0.97 0.55
</TABLE>
