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Previous: VANGUARD MONEY MARKET RESERVES INC, NSAR-A, 1996-07-15 |
Next: TEMTEX INDUSTRIES INC, 10-Q, 1996-07-15 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 2, 1996 .
----------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 0-2331
------
GLASSMASTER COMPANY
- ---------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0283724
- ---------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
Incorporation of organization Identification No.)
PO Box 788, Lexington SC 29071
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number, including area code: 803-359-2594
---------------------------
No Change
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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
YES X NO
--- ---
(2) Has been subject to such filing requirements for the past 90 days
YES X NO
--- ---
Common shares outstanding June 2, 1996: 1,613,096 par value $0.03
---------------------------------
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Glassmaster Company
Consolidated Comparative Balance Sheet
(Thousands)
<TABLE>
<CAPTION>
June 2, 1996 August 31, 1995
-------------- ---------------
(Unaudited)
ASSETS
<S> <C> <C> <C> <C>
Current Assets
Cash $ 105 $ 162
Accounts Receivable, less allowances of
$144 in 1996 and $76 in 1995 3,965 3,580
Other Current Receivables 16 22
Inventories:
Raw Materials $ 1,683 $ 1,643
Work in Process 549 489
Finished Products 649 2,881 618 2,750
------- -------
Prepaid Expenses and Other Current Assets 91 141
------- -------
Total Current Assets 7,058 6,655
Fixed Assets
Property, Plant and Equipment, net of allowance
for dep'n of $4,388 in 1996 and $3,897 in 1995 5,592 5,679
Other Assets
CSV Life Insurance and Other Unamortized Assets 256 253
------- -------
Total Assets $12,906 $12,587
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 2,207 $ 1,656
Accrued Expenses 215 250
Accrued Income Taxes (21) -0-
Notes & Mortgages Payable 3,502 3,453
------- -------
Total Current Liabilities 5,903 5,359
Long Term Liabilities
Notes & Mtges, Due After One Year $3,087 $3,347
Deferred Income Taxes 453 3,540 453 3,800
------ ------- ------ -------
Total Liabilities 9,443 9,159
Stockholders' Equity
Capital Stock (Authorized 5,000,00 Shares $0.03
Par) - Shares Issued and Outstanding
1,613,096 (1996), 1,601,029 (1995) $ 48 $ 48
Paid-In Capital 1,342 1,323
Donated Capital 124 124
Retained Earnings 1,949 3,463 1,933 3,428
------ ------- ------ -------
Total Liabilities and Equity $12,906 $12,587
======= =======
</TABLE>
2
<PAGE> 3
Glassmaster Company
Consolidated Comparative Income Statement
(In thousands except per share amounts)(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 2, 1996 June 4, 1995
------------ ------------
<S> <C> <C>
Net Sales $6,407 $6,531
Cost of Sales 5,439 5,615
------ ------
Gross Profit 968 916
Costs and Expenses:
Selling 289 297
General and Administrative 312 285
Other Income and Expense - Net 182 243
------ ------
Total Costs and Expenses 783 825
Income From Operations 185 91
Interest Expense 159 151
------ ------
Income Before Income Taxes 26 (60)
Income Taxes 7 (19)
------ ------
Net Income $ 19 $ (41)
====== ======
Earnings Per Share (1,601,737 Shares) (0.03)
Earnings Per Share (1,613,096 Shares) 0.01
Dividends Paid Per Share $ 0.00 $ 0.00
====== ======
</TABLE>
3
<PAGE> 4
Glassmaster Company
Consolidated Comparative Income Statement
(In thousands except per share amounts)(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 2, 1996 June 4, 1995
------------ ------------
<S> <C> <C>
Net Sales $17,704 $18,400
Cost of Sales 14,877 15,311
------- -------
Gross Profit 2,827 3,089
Costs and Expenses:
Selling 821 902
General and Administrative 834 855
Other Income and Expense - Net 619 776
------- -------
Total Costs and Expenses 2,274 2,533
Income From Operations 553 556
Interest Expense 473 396
------- -------
Income Before Income Taxes and
Extraordinary Item 80 160
Income Taxes 15 64
------- -------
Income Before Extraordinary Item 65 96
Extraordinary Gain - Storm Damage
(Net of Income Taxes of $170,772) 0 287
------- -------
Net Income $ 65 $ 383
======= =======
Earnings Per Share (1,601,737 Shares) 0.24
Earnings Per Share (1,613,096 Shares) 0.04
Dividends Paid Per Share $ 0.03 $ 0.06
======= =======
</TABLE>
4
<PAGE> 5
Glassmaster Company
Consolidated Statement of Cash Flows
(Thousands)(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 2, 1996 June 4, 1995
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $ 65 $ 383
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
Depreciation 491 551
Amortization 8 6
Loss on Disposal of Assets 0 45
Increase in Deferred Income Taxes 0 171
Changes in Operating Assets & Liabilities:
Decrease (Increase) in Receivables (379) (1,317)
Decrease (Increase) in Inventories (131) (1,149)
Decrease (Increase) in Prepaid Expenses &
Other Current Assets (18) (21)
Increase (Decrease) in Accounts Payable 570 1,140
Increase (Decrease) in Accrued Expenses (7) (466)
------ ------
Net Cash Provided (Used) By Operating Activities 599 (657)
------ ------
Cash Flows From Investing Activities
Additional Investment in Fixed Assets 405 1,835
Disposal of Fixed Assets - Net Book Value 0 (42)
Increase (Decrease) in CSV Life Insurance 0 (1)
Additional Investment in Other Assets 10 3
------ ------
Net Cash Used By Investing Activities 415 1,795
------ ------
Cash Flows From Financing Activities
Proceeds from Exercise of Stock Options 18 13
Proceeds from Conversion of Debentures to Common Stock 0 47
Proceeds from Short-Term Borrowings 255 648
Repayment of Short-Term Borrowings (125) (599)
Proceeds from Long-Term Obligations 1,419 1,430
Repayment of Long-Term Obligations (1,679) (712)
Net Increase (Decrease) in Short-Term Revolving
Lines of Credit (81) 1,750
Payment of Dividend (48) (96)
------ ------
Net Cash Provided (Used) By Financing Activities (241) 2,481
------ ------
Net Increase (Decrease) In Cash (57) 29
Cash At Beginning of Period 162 91
------ ------
Cash At End of Period $ 105 $ 120
====== ======
Supplemental Disclosures of Cash Flow Information
Cash Paid For:
Interest (Net of Amount Capitalized) $ 476 $ 436
Income Taxes (32) 375
</TABLE>
5
<PAGE> 6
Glassmaster Company
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the nine-month
period ended June 2, 1996 are not necessarily indicative of the results that
may be expected for the year ended August 31, 1996. For further information,
refer to the Consolidated Financial Statements and Notes to Financial
Statements included in the Company's Annual Report on Form 10-KSB for the year
ended August 31, 1995. Certain prior year amounts may have been reclassified
to conform with the 1996 presentation.
Item 2. Management's Discussion and Analysis
RESULTS OF OPERATIONS
Consolidated net sales for the third quarter ended June 2, 1996 were $6.41
million, a decrease of approximately 2% when compared to the corresponding 1995
third quarter sales of $6.53 million. Year-to-date sales of $17.7 million are
lower by 3.8% when compared to last year's nine-month sales of $18.4 million.
The decrease in third quarter sales is primarily attributable to a 10.8%
decline in sales reported by Glassmaster Controls Company ("Controls").
Shipments of cables and control panels to heavy duty truck manufacturers have
been negatively impacted due to this industry adjusting production levels to
revised forecasts that indicated demand would slow from record levels attained
in 1994 and 1995. The slowdown being experienced by the industry is expected
to continue into 1997. The Industrial Products and Composites division
reported third quarter sales decreased by 5.4% compared to the prior year third
quarter and on a year-to-date basis have declined 14% compared to 1995. A new
line of commercial and recreational fiberglass antennas introduced in late 1995
hindered overall sales initially but are now beginning to experience wider
product acceptance and improved shipments as the old product line is sold from
dealer inventories and stock is replaced with the new line.
The Monofilament division reported third quarter sales increased by 2%
when compared to the prior year third quarter. Increased shipments of nylon
and polyester weaving filaments were mostly offset by decreases in Nybrad
abrasive monofilament and sewing thread. Year-to-date sales of monofilament
products are lower by 3.8% when compared to last year. Year-to-date sales
increases in all major product categories have been offset by a decline in
aftermarket packaged trimmer line sales.
Gross profit increased 8.1% to $968,000, or 15.1% of sales, in the third
quarter of 1996 compared to $895,000, or 13.7% of sales, in the comparable
period of 1995. The improvement in gross profit as a percentage of sales
during the quarter resulted primarily
6
<PAGE> 7
from an improved sales mix coupled with price increases on products sold by
Industrial Products and Composites. On a comparative year-to-date basis, gross
profit as a percentage of sales has declined from 16.7% to 16.0% due to higher
manufacturing costs at Monofilament.
Selling expenses attributable to the third quarter remained relatively
unchanged from the prior year third quarter and were 4.5% of sales.
Year-to-date selling expenses total 4.6% of sales compared with last year's
4.9% of sales. General and Administrative expenses during the quarter
increased 9.4% to $312,000 compared to the prior year third quarter primarily
due to higher costs associated with employee benefit plans and an increase in
the reserve for bad debts at Monofilament. However, on a year-to-date basis
G&A expenses are unchanged from the prior year at 4.7% of sales. Other
Expenses during the third quarter decreased 25% and are down by 20% year to
date compared to the corresponding periods of the 1995 fiscal year. The
decreases in Other Expense are the result of sharp reductions in corporate
bonus plan allocations due to lower year-to-date pre-tax profit this year
versus last year. Interest expense increased 5.3% during the third quarter
compared to last year and is 19% higher year to date versus last year due to
higher average long-term debt at Controls and higher average short-term
revolving credit balances associated with the parent company operations.
Third quarter Net Income was $19,000 versus last year's quarterly loss of
$41,000. Year-to-date Net Income totals $65,000 compared with the prior year
nine-month period of $383,000. The prior year-to-date Net Income includes an
Extraordinary Gain of $287,061 (net of income taxes of $170,772) that resulted
from the excess of insurance proceeds over the net book value of assets
destroyed by tornado in August, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The working capital of the company totals $1.15 million as of the end of
the third quarter and has decreased by approximately $141,000 so far this
fiscal year. During the first nine months of the current fiscal year working
capital was used to fund additional fixed assets totalling $404,000 (primarily
at Controls), pay a stockholder dividend of $48,000 ($0.03 per share), and
reduce long-term debt by $260,000. Working capital was provided primarily by
net earnings and non-cash depreciation and amortization expense.
Year-to-date increases in Accounts Receivable ($379,000) and Inventories
($130,000) due primarily to seasonal factors have been funded by trade credit
and by borrowings against short-term revolving credit facilities secured by
receivables and inventory. In South Carolina, the financing agreement provides
for a revolving line of credit up to $4.0 million. As of June 2, 1996,
borrowings outstanding against this credit line were approximately $2.2
million. In Michigan, Glassmaster Controls has in place a similar credit line
and there was $250,000 outstanding with approximately $500,000 available for
borrowing as of June 2, 1996.
During the third quarter of this fiscal year a seven-year operating lease
involving monofilament extrusion equipment expired. On June 18, 1996 the
company exercised its option to purchase the equipment for $360,000. A
five-year term loan was secured to fund the acquisition of the equipment and
will also provide the company with additional working capital of approximately
$386,000.
The company anticipates that its cash requirements during the remainder of
this fiscal year and into the foreseeable future will be provided by operating
activities and from existing and committed credit facilities.
7
<PAGE> 8
Glassmaster Company
Lexington SC
PART II - OTHER INFORMATION
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits.
Exhibit No. Description
----------- -----------
27 June 2, 1996 Financial Data Schedule
b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter ended June
2, 1996.
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.
GLASSMASTER COMPANY
Date July 12, 1996 /s/ Raymond M. Trewhella
-------------------- ------------------------------
Raymond M. Trewhella
(President and
Principal Executive Officer)
Date July 12, 1996 /s/ Steven R. Menchinger
-------------------- -----------------------------
Steven R. Menchinger
(Treasurer, Controller, and
Principal Financial Officer)
8
<PAGE> 9
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
27 Financial Data Schedule (for SEC only)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED JUNE 2, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> JUN-02-1996
<CASH> 105
<SECURITIES> 0
<RECEIVABLES> 4,109
<ALLOWANCES> 144
<INVENTORY> 2,881
<CURRENT-ASSETS> 7,058
<PP&E> 9,980
<DEPRECIATION> 4,388
<TOTAL-ASSETS> 12,906
<CURRENT-LIABILITIES> 5,903
<BONDS> 3,087
0
0
<COMMON> 48
<OTHER-SE> 3,415
<TOTAL-LIABILITY-AND-EQUITY> 12,906
<SALES> 17,704
<TOTAL-REVENUES> 17,704
<CGS> 14,877
<TOTAL-COSTS> 14,877
<OTHER-EXPENSES> 2,274
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 473
<INCOME-PRETAX> 80
<INCOME-TAX> 15
<INCOME-CONTINUING> 65
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
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