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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 1, 1997.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 0-2331
GLASSMASTER COMPANY
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(Exact name of small business issuer as specified in its charter)
South Carolina 57-0283724
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(State or other jurisdiction of (IRS Employer
Incorporation of organization Identification No.)
PO Box 788, Lexington SC 29071
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number, including area code: 803-359-2594
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No Change
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(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
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(2) Has been subject to such filing requirements for the past 90
days
YES X NO
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Common shares outstanding June 1, 1997: 1,620,096 par value $0.03
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Glassmaster Company
Consolidated Comparative Balance Sheet
(Thousands)
<TABLE>
<CAPTION>
June 1, 1997 August 31, 1996
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(Unaudited)
ASSETS
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<S> <C> <C> <C> <C>
Current Assets:
Cash $ 35 $ 129
Accounts Receivable (Net of Reserve) 3,425 2,725
Other Current Receivables 334 176
Inventories:
Raw Materials $ 1,961 $ 1,617
Work in Process 611 652
Finished Products 468 3,040 631 2,900
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Prepaid Expenses and Other Current Assets 138 82
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Total Current Assets 6,972 6,012
Fixed Assets (Net of Dep'n)
Property and Equipment (at cost) 6,072 5,876
Other Assets
CSV Life Insurance and Other Unamortized Assets 333 339
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Total Assets $13,377 $12,227
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LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
Current Liabilities:
Accounts Payable $ 1,927 $ 1,268
Accrued Expenses 307 195
Accrued Income Taxes 43 2
Notes & Mortgages Payable 3,645 3,050
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Total Current Liabilities 5,922 4,515
Long Term Liabilities
Notes & Mtges, Due After One Year $ 3,299 $ 3,669
Deferred Income Taxes 514 3,813 514 4,183
------- ------- ------- ------
Total Liabilities 9,735 8,698
Stockholders' Equity
Capital Stock (Authorized 5,000,000 Shares $0.03
Par - 1,620,096 (1997), 1,617,096 (1996)
Shares Issued and Outstanding $ 49 $ 49
Paid-In Capital 1,344 1,341
Donated Capital 124 124
Retained Earnings 2,125 3,642 2,015 3,529
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Total Liabilities and Equity $13,377 $12,227
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</TABLE>
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Glassmaster Company
Consolidated Comparative Income Statement
(In thousands except per share amounts)(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 1, 1997 June 2, 1996
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<S> <C> <C>
Net Sales $5,641 $6,407
Cost of Sales 4,569 5,439
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Gross Profit 1,072 968
Costs and Expenses:
Selling 289 289
General and Administrative 264 312
Other Income and Expense - Net 207 182
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Total Costs and Expenses 760 783
Income From Operations 312 185
Interest Expense 164 159
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Income Before Income Taxes 148 26
Income Taxes 45 7
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Net Income $ 103 $ 19
====== ======
Earnings Per Share (1,620,096 Shares) 0.06
Earnings Per Share (1,613,096 Shares) 0.01
Dividends Paid Per Share $ 0.00 $ 0.00
====== ======
</TABLE>
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Glassmaster Company
Consolidated Comparative Income Statement
(In thousands except per share amounts)(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 1, 1997 June 2, 1996
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<S> <C> <C>
Net Sales $15,819 $17,704
Cost of Sales 12,995 14,877
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Gross Profit 2,824 2,827
Costs and Expenses:
Selling 799 821
General and Administrative 783 834
Other Income and Expense - Net 622 619
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Total Costs and Expenses 2,204 2,274
Income From Operations 620 553
Interest Expense 468 473
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Income Before Income Taxes 152 80
Income Taxes 43 15
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Net Income $ 109 $ 65
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Earnings Per Share (1,620,096 Shares) 0.07
Earnings Per Share (1,613,096 Shares) 0.04
Dividends Paid Per Share $ 0.00 $ 0.03
======= =======
</TABLE>
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Glassmaster Company
Consolidated Statement of Cash Flows
(Thousands)(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 1, 1997 June 2, 1996
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $ 109 $ 65
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
Depreciation 560 491
Amortization 6 8
Changes in Operating Assets & Liabilities:
Decrease (Increase) in Receivables (857) (379)
Decrease (Increase) in Inventories (142) (131)
Decrease (Increase) in Prepaid Expenses &
Other Current Assets (56) (18)
Increase (Decrease) in Accounts Payable 677 570
Increase (Decrease) in Accrued Expenses 135 (7)
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Net Cash Provided (Used) By Operating Activities 432 599
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Cash Flows From Investing Activities
Additional Investment in Fixed Assets 756 405
Additional Investment in Other Assets 0 10
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Net Cash Used By Investing Activities 756 415
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Cash Flows From Financing Activities
Proceeds from Exercise of Stock Options 3 18
Payment of Dividend 0 (48)
Proceeds from Short-Term Borrowings 100 255
Repayment of Short-Term Borrowings (152) (125)
Proceeds from Long-Term Obligations 132 1,419
Repayment of Long-Term Obligations (502) (1,679)
Net Increase (Decrease) in Short-Term Revolving
Lines of Credit 649 (81)
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Net Cash Provided (Used) By Financing Activities 230 (241)
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Net Increase (Decrease) In Cash (94) (57)
Cash At Beginning of Period 129 162
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Cash At End of Period $ 35 $ 105
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Supplemental Disclosures of Cash Flow Information
Cash Paid For:
Interest (Net of Amount Capitalized) $ 457 $ 476
Income Taxes (6) (32)
</TABLE>
5
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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 1, 1997
are not necessarily indicative of the results that may be expected for the year
ended August 31, 1997. 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, 1996. Certain prior
year amounts may have been reclassified to conform with the 1997 presentation.
Item 2. Management's Discussion and Analysis
RESULT OF OPERATIONS
Consolidated sales for the third quarter ended June 1, 1997 were
$5,641,301, a decrease of approximately 12% when compared to the third quarter
of the 1996 fiscal year. The decrease in third quarter sales is due to a 15%
decline in sales of monofilament products and a 44% decrease in composites and
antenna sales when compared to the prior year period. Sales of control cables
and panels during the third quarter were 13% higher than last year's comparable
period. Year-to-date sales total $15,818,744 and are 10.6% less than last year's
nine-month total sales. Year-to-date sales are lower by 21% at Composites, 11%
at Monofilament, and 3% at Controls. The decrease in sales at Composites is due
to the decision by a key customer to discontinue purchasing a certain antenna
that contributed significantly to the revenue base of this division. Product
development efforts continue that will enable this division to generate
additional sales in specialty fiberglass and composites markets during the 1998
fiscal year. Sales by the Monofilament Division are lower due to a continuing
transition from high volume, low margin products such as bulk trimmer line to
lesser volume, higher margin products like polyester weaving filaments. Trimmer
line sales accounted for approximately 32% of year-to-date sales last year but
have been reduced to 17% of sales so far this fiscal year. At Glassmaster
Controls Company, orders and shipments improved throughout the third quarter. An
improving outlook by this division's largest segment of customers, heavy-duty
truck manufacturers, and efforts to expand product offerings into electronic
control panel and cable assemblies, should enable sales generated by Controls to
continue to exceed prior year levels into the 1998 fiscal year.
Gross profit margins during the third quarter were 19.0% this year
compared to 15.1% in last year's third quarter. Year-to-date profit margins have
increased to 17.9% of sales versus 16.0% of sales last year to date. The
increase in gross margins compared to the prior year is due to a better mix of
products sold and favorable raw material costs at Monofilament and improved
manufacturing efficiencies at Controls. This improvement in consolidated gross
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profit margins has been restrained due to the addition of technical and
production personnel at Composites to assist in new product development efforts.
Profit margins at Composites will continue to be impacted until additional
product sales are realized.
Selling, General and Administrative, and Other Expenses were 2.9% lower
during this year's third quarter when compared to last year and are 3.0% lower
this year to date compared with the same nine-month period during the 1996
fiscal year. Lower overall costs associated with employee benefits are
responsible for the decrease. Interest expense is relatively unchanged when
compared to the prior year quarterly and year-to-date periods as average debt
levels and interest rates have remained relatively stable.
Net Income for the third quarter was $103,092 compared to $19,496 last
year, and year-to-date Net Income totals $109,286 versus $64,621 last year. This
year's third quarter and year-to-date results include a provision for Income
Taxes of $44,843 and $42,670, respectively, compared with the prior year
quarterly and year-to-date totals of $6,854 and $15,497, respectively. Earnings
Per Share for the third quarter was $0.06 compared with $0.01 during the prior
year quarter and on a year-to-date basis totals $0.07 this year versus $0.04
last year.
LIQUIDITY AND CAPITAL RESOURCES
The working capital of the company totals $1.05 million as of the end
of the third quarter and has decreased by approximately $350,000 during the
third quarter and $447,000 so far this year. The decrease in working capital
during the quarter is due to the acquisition of additional production equipment
that has been funded with a short-term revolving credit line pending the
completion of a long-term leasing agreement.
The net operating assets and liabilities of the company have increased
by approximately $243,000 so far this year due to increases in accounts
receivable and inventories. the increased operating capital requirement has been
funded by supplier trade credit and by borrowings under short-term credit
facilities secured by receivables and inventories. These financing agreements
provide for total revolving credit of up to $4.5 million. As of June 1, 1997,
borrowings outstanding under these credit lines totalled approximately $2.6
million.
Other than the long-term lease previously discussed, the company
currently anticipates that its cash requirements during the remainder of this
fiscal year and into the 1998 fiscal year will be provided by operating
activities and from existing and committed credit facilities.
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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
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27 June 1, 1997 Financial Data Schedule
(SEC Use Only)
b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter
ended June 1, 1997.
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 11, 1997 /s/ Raymond M. Trewhella
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Raymond M. Trewhella
(President and
Principal Executive Officer)
Date July 11, 1997 /s/ Steven R. Menchinger
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Steven R. Menchinger
(Treasurer, Controller, and
Principal Financial Officer)
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EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule
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 1, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> JUN-01-1997
<CASH> 35
<SECURITIES> 0
<RECEIVABLES> 3,857
<ALLOWANCES> 98
<INVENTORY> 3,040
<CURRENT-ASSETS> 6,972
<PP&E> 11,189
<DEPRECIATION> 5,117
<TOTAL-ASSETS> 13,377
<CURRENT-LIABILITIES> 5,922
<BONDS> 3,299
0
0
<COMMON> 49
<OTHER-SE> 3,593
<TOTAL-LIABILITY-AND-EQUITY> 13,377
<SALES> 5,641
<TOTAL-REVENUES> 5,641
<CGS> 4,569
<TOTAL-COSTS> 4,569
<OTHER-EXPENSES> 760
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 164
<INCOME-PRETAX> 148
<INCOME-TAX> 45
<INCOME-CONTINUING> 103
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
