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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 November 30, 1997.
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( ) 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 November 30, 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>
November 30, 1997 August 31, 1997
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(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 31 $ 119
Accounts Receivable (Net of Reserve) 3,602 3,213
Other Current Receivables 167 144
Inventories:
Raw Materials $ 2,129 $ 1,604
Work in Process 492 469
Finished Products 794 3,415 668 2,741
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Prepaid Expenses and Other Current Assets 218 31
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Total Current Assets 7,433 6,248
Fixed Assets (Net of Dep'n)
Property and Equipment (at cost) 5,864 5,803
Other Assets
CSV Life Insurance and Other Unamortized Assets 435 436
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Total Assets $13,732 $12,487
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LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 2,278 $ 1,422
Accrued Expenses 245 239
Accrued Income Taxes 13 12
Stockholder Dividend Payable 49 --
Notes & Mortgages Payable 3,860 3,410
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Total Current Liabilities 6,445 5,083
Long Term Liabilities
Notes & Mtges, Due After One Year $ 2,973 $ 3,086
Deferred Income Taxes 551 3,524 551 3,637
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Total Liabilities 9,969 8,720
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Stockholders' Equity
Capital Stock (Authorized 5,000,000 Shares $0.03
Par - 1,620,096 (1998), 1,617,096 (1997)
Shares Issued and Outstanding $ 49 $ 49
Paid-In Capital 1,344 1,344
Donated Capital 124 124
Retained Earnings 2,246 3,763 2,250 3,767
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Total Liabilities and Equity $13,732 $12,487
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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
November 30, 1997 December 1, 1996
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<S> <C> <C>
Net Sales $ 5,587 $ 4,776
Cost of Sales 4,620 4,015
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Gross Profit 967 761
Costs and Expenses:
Selling 275 235
General and Administrative 257 257
Other Income and Expense - Net 228 196
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Total Expenses 760 688
Income From Operations 207 73
Interest Expense 149 151
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Income Before Income Taxes 58 (78)
Income Taxes 13 (31)
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Net Income $ 45 $ (47)
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Earnings Per Share (1,617,096 Shares) $ (0.03)
Earnings Per Share (1,620,096 Shares) $ 0.03
Dividends Paid Per Share $ 0.00 $ 0.00
======= =======
</TABLE>
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Glassmaster Company
Consolidated Statement of Cash Flows
(Thousands)(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
November 30, 1997 December 1, 1996
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<S> <C> <C>
Cash Flows From Operating Activities
Net Income $ 45 $ (47)
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
Depreciation 201 187
Amortization 2 2
Changes in Operating Assets & Liabilities:
Decrease (Increase) in Receivables (412) (324)
Decrease (Increase) in Inventories (675) (335)
Decrease (Increase) in Prepaid Expenses &
Other Current Assets (187) (164)
Increase (Decrease) in Accounts Payable 778 732
Increase (Decrease) in Accrued Expenses 85 (9)
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Net Cash Provided (Used) By Operating Activities (163) 42
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Cash Flows From Investing Activities
Additional Investment in Fixed Assets 263 93
Disposal of Fixed Assets - Net Book Value 0 0
Increase (Decrease) in CSV Life Insurance 0 0
Additional Investment in Other Assets 0 0
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Net Cash Used By Investing Activities 263 93
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Cash Flows From Financing Activities
Proceeds from Exercise of Stock Options 0 0
Proceeds from Short-Term Borrowings 0 0
Repayment of Short-Term Borrowings (49) (81)
Proceeds from Long-Term Obligations 0 0
Repayment of Long-Term Obligations (115) (167)
Net Increase (Decrease) in Short-Term Revolving
Line of Credit 502 250
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Net Cash Provided (Used) By Financing Activities 338 2
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Net Increase (Decrease) In Cash (88) (49)
Cash At Beginning of Period 119 129
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Cash At End of Period $ 31 $ 80
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Supplemental Disclosures of Cash Flow Information
Cash Paid For:
Interest (Net of Amount Capitalized) $ 148 $ 153
Income Taxes 12 2
</TABLE>
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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 three-month period ended November 30,
1997 are not necessarily indicative of the results that may be expected for the
year ended August 31, 1998. 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, 1997. Certain prior
year amounts may have been reclassified to conform with the 1998 presentation.
Item 2. Management's Discussion and Analysis
RESULT OF OPERATIONS
Consolidated sales for the first quarter ended November 30, 1997
(fiscal 1998) were $5,586,429, an increase of 17.0% when compared to sales of
$4,776,220 during the first quarter of the 1997 fiscal year. The improvement in
first quarter sales is due to a 44% increase in sales by Glassmaster Controls
Company ("Controls") and a 13% increase in sales by the Monofilament Division.
First quarter sales by the Composites Division declined 14% when compared with
the prior year period.
Gross profit margins realized during the first quarter improved to
17.3% of sales versus 15.9% of sales in the prior year quarter. The increase in
profit margins is primarily due to improved manufacturing efficiencies and
favorable raw material pricing at Monofilament. The improvement in profit
margins, however, was restrained during the first quarter due to lower sales
volumes and increased costs of production associated with process and product
development efforts at Composites. The Composites Division will introduce a new
product line, The Glassmaster Composite Modular Building SystemTM, during the
second quarter of this fiscal year. The company expects further improvement in
gross profit margins as this new product line begins to gradually generate sales
revenue during the last half of the 1998 fiscal year.
Selling, G&A, and Other Expenses totalled $760,071 during the first
quarter, an increase of approximately 10% when compared to the first quarter of
the 1997 fiscal year, though as a percent of sales, these expenses decreased
from 14.4% last year to 13.6% this year. Interest Expense was $149,253 this year
compared with $151,042 during the prior year first quarter reflecting stable
interest rates and comparable total average debt levels.
Net Consolidated Income (Loss) during the current year first quarter
was $44,772 compared with ($47,319) last year. Earnings Before Income Taxes
improved to $57,336 this year compared with ($77,784) last year primarily due to
the increase in gross profit. The provision for Income Taxes was $12,564 this
year whereas last year's first quarter included an income tax benefit of $30,465
due to the pre-tax operating loss.
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LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities were ($163,000) during the first
quarter of this fiscal year whereas the prior year first quarter operating
activities provided $42,000. The decline in cash generated during the 1998
fiscal period was primarily due to an increase in inventories at Monofilament
resulting from increased production requirements.
Cash used by investing activities during the first quarter totalled
$263,000 as the company acquired additional plant equipment and tooling at
Controls and Composites to expand product lines and manufacturing capabilities.
During the prior year quarter approximately $93,000 was invested in capital
additions. The company plans to spend approximately $500,000 during the second
and third quarters of this fiscal year to add extrusion capacity at
Monofilament. The company intends to fund this capital investment with either
five-year term debt or a five-year operating lease.
Net cash provided by financing activities during the first quarter was
$338,000 compared with $2,000 during the prior year period. This year's increase
in cash provided was due to a net increase of $502,000 in the company's
short-term revolving lines of credit which more than offset repayments of
short-term and long-term borrowings. These revolving credit agreements provide
for borrowings of up to $4.5 million. Total borrowings under these agreements
were $2.8 million as of November 30, 1997. The current revolving credit
agreements expire during the second and third quarters of this fiscal year, and
the company intends to renew these financing agreements for an additional two to
three-year period.
The company currently anticipates its cash requirements during the
remainder of the 1998 fiscal year will be provided from operations and from
borrowings under existing and committed credit lines as well as the expected
additional and renewed financing agreements previously discussed.
PART II - OTHER INFORMATION
Item 5. Other Information - None.
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Glassmaster Company
Lexington SC
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits.
Exhibit No. Description
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27 November 30, 1997 Financial Data Schedule
b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter
ended November 30, 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 January 9, 1998 /s/ Raymond M. Trewhella
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Raymond M. Trewhella
(President and
Principal Executive Officer)
Date January 9, 1998 /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 (for SEC use only)
8
<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 NOVEMBER 30, 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-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 31
<SECURITIES> 0
<RECEIVABLES> 3,833
<ALLOWANCES> 64
<INVENTORY> 3,415
<CURRENT-ASSETS> 7,433
<PP&E> 11,358
<DEPRECIATION> 5,494
<TOTAL-ASSETS> 13,732
<CURRENT-LIABILITIES> 6,445
<BONDS> 2,974
0
0
<COMMON> 49
<OTHER-SE> 3,714
<TOTAL-LIABILITY-AND-EQUITY> 13,732
<SALES> 5,587
<TOTAL-REVENUES> 5,587
<CGS> 4,620
<TOTAL-COSTS> 4,620
<OTHER-EXPENSES> 760
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 149
<INCOME-PRETAX> 58
<INCOME-TAX> 13
<INCOME-CONTINUING> 45
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
